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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-K

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

         For the fiscal year ended January 29, 1999.

[ ]      TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
         ACT OF 1934

         For the transition period from ______________ to ____________________.

Commission file number 0-21862

                                OROAMERICA, INC.
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)

                  Delaware                                        94-2385342
       -------------------------------                       -------------------
       (State or other jurisdiction of                        (I.R.S. Employer
       incorporation or organization)                        Identification No.)

443 North Varney Street, Burbank, California                        91502
--------------------------------------------                     ----------
  (Address of principal executive offices)                       (Zip Code)

Registrant's telephone number, including area code: (818) 848-5555

Securities registered pursuant to Section 12(b) of the Act:  None

Securities registered pursuant to Section 12(g) of the Act:

                          Common Stock, $.001 par value
                          -----------------------------
                                (Title of class)

         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 in response
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 amendment to this Form 10-K. [X]

         The aggregate market value of the voting stock held by non-affiliates
of the registrant as of April 23, 1999, computed by reference to the closing
sales price as reported on The Nasdaq National Market on such date, was
$22,872,475. In determining such market value, shares of Common Stock
beneficially owned by each executive officer and director have been excluded.

         Indicate the number of shares outstanding of each of the registrant's
classes of common stock, as of the latest practicable date.

Class                             Number of Shares Outstanding on April 23, 1999
---------                         ----------------------------------------------
Common Stock, $.001 par value                      6,271,378

                       DOCUMENTS INCORPORATED BY REFERENCE

         Pursuant to General Instruction G(3) to this form, the information
required by Part III (Items 10, 11, 12 and 13) hereof is incorporated by
reference from the registrant's definitive Proxy Statement for its Annual
Meeting of Stockholders scheduled to be held on June 14, 1999.


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ITEM 1.  BUSINESS

GENERAL

         Since its inception in 1977, OroAmerica, Inc. ("OroAmerica" or the
"Company") has grown to become the nation's largest manufacturer and distributor
of karat gold jewelry. The Company offers its customers a large selection of
jewelry styles, consistent product quality, and prompt delivery of product
orders, and provides a wide range of specialized services. The Company's
customers include mass merchandisers, discount stores, home shopping networks,
catalogue showrooms, warehouse clubs, and jewelry wholesalers and distributors.
In fiscal 1999, sales were made to approximately 800 customers, and sales to the
Company's ten largest customers accounted for approximately 59% of net sales.

         OroAmerica's principal product line consists of an extensive selection
of 14-karat gold chains that are offered in a variety of popular styles, gauges,
and lengths. The Company also offers its customers a wide assortment of 14-karat
gold charms, earrings, rings, and bracelets and a line of 10-karat gold jewelry
that includes both chain and non-chain products. Although OroAmerica intends to
continue to aggressively market its karat gold chain product lines, it also
intends to continue its strategy of attempting to increase its sales of
non-chain karat gold products by regularly introducing new styles and building
upon relationships with existing customers. The Company also has a line of
sterling silver jewelry and, since May 1994, has designed, manufactured, and
distributed karat gold jewelry accented with diamonds and colored gemstones.

         The Company operates a manufacturing plant at its Burbank, California,
facility where it makes a substantial portion of its products from semi-finished
materials, gold bullion, and other raw materials. The Company also has three
other manufacturing plants at which the Company manufactures rope chain and
other karat gold jewelry products. These plants are located in South America and
the Caribbean. The Company believes that its manufacturing capabilities better
enable it to respond to customer requests for customized products, provide it
with greater flexibility, and complement its outside sources of supply. The
Company's manufacturing expertise and experience also enable it to better
support and monitor the operations of its outside suppliers.

         During fiscal 1998, the Company launched a premium cigar business with
the formation of CigarAmerica, Inc., a wholly owned subsidiary of the Company.
Please see "CIGAR BUSINESS" below for additional information concerning
OroAmerica's cigar product lines.

JEWELRY PRODUCTS

         The Company seeks to provide its customers with a full line of high
quality karat gold jewelry products that incorporate traditional styles and
designs. While the Company regularly updates its product lines and offers new
products, it seeks to avoid designs incorporating fashion trends, which are
expected to have short life cycles. The Company currently offers over 1,800
styles of gold chains, charms, earrings, bracelets, and rings and over 1,000
styles of sterling silver chains, charms, earrings, bracelets, and rings.
Together these styles represent in total approximately 16,000 SKU's. The
Company's products are moderately priced, with the majority of its gold products
retailing at prices between $30 and $200 and a majority of its sterling silver
products retailing at prices between $10 and $30. The Company's products are
intended to appeal to consumers who are value-conscious as well as
fashion-conscious.


         The Company's principal product line consists of an extensive selection
of 14-karat gold rope and flat chains. Rope chains, as their name implies, have
a woven, rope-like appearance and

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typically are handmade. Flat chains are made by specialized machinery, which
hammers the chain into various patterns. The Company's other jewelry products
include 14 karat gold charms, earrings, bracelets and rings, 14 karat gold
jewelry set or accented with diamonds and colored gemstones, a line of 10 karat
gold jewelry which includes both chain and non-chain products, sterling silver
jewelry and a line of 14 karat gold interwoven with sterling silver or with
sterling silver accents. A major portion of the Company's jewelry is finished
using the diamond-cut process, a technique which etches the surface of the
jewelry to create a brilliant, faceted appearance. The Company believes it was
one of the first manufacturers to utilize the diamond-cut process in the
production of rope chains.

         The following table shows sales by product category as a percentage of
total net sales of karat gold and sterling silver products for fiscal 1999,
1998, and 1997.

<TABLE>
<CAPTION>

                                        January 29,          January 30,          January 31,
                                              1999                  1998                 1997
                                        -----------          -----------          -----------
<S>                                     <C>                   <C>                  <C>  
14 karat gold chains                       43.9%                 50.7%                52.7%
14 karat gold non-chains products          26.7                  22.9                 21.5
10 karat gold jewelry(1)                   22.2                  19.0                 20.2
18 karat & 9 karat gold jewelry             0.8                   1.0                  0.2
Sterling silver jewelry                     6.4                   6.4                  5.4
                                          -----                 -----                -----
                                          100.0%                100.0%               100.0%
                                          =====                 =====                =====
</TABLE>
----------------------------------------------
(1) Includes both chain and non-chain products

         The Company maintains a staff of designers at its Burbank facility who
work directly with the Company's senior officers and marketing personnel to
create and develop new products meeting the needs and desires of the Company's
customers. In addition, the Company's marketing and merchandising staff work
closely with major customers to develop products that are sold exclusively by
those customers.

         The Company's product line includes approximately 200 products that are
a permanent part of its jewelry line. These products are traditionally designed
karat gold chains and other jewelry products for which there has been consistent
demand. The Company continually strives to update the balance of its product
line with innovative, new styles. New styles primarily are introduced three
times each year, in connection with major trade shows, and replace older styles
whose performance has declined. The Company closely monitors sales of its new
styles and promptly discontinues any styles which fail to achieve desired sales
levels.

         The Company seeks to obtain proprietary protection for its products
whenever possible. The Company's Silk Rope(R) (a line of rope chain that is
manufactured from an increased number of thinner links as compared to a standard
rope chain of comparable gauge and appearance) is manufactured using processes
covered by a utility patent owned by the Company, which is due to expire in
2004. The Company's SupremeValue Rope(R) (a line of diamond-cut rope chains that
is manufactured using hollow rather than solid gold links) is manufactured using
processes covered by two utility patents that were purchased by the Company from
an unaffiliated party in April 1994, and these patents are due to expire in
2009. The patents previously were utilized by the Company pursuant to the terms
of a license agreement with the prior owner. The Company also offers a line


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of diamond cut rope chain and a line of 14 karat gold diamond cut "tennis"
bracelets, and matching gold earrings, necklaces and rings. These products are
marketed by the Company pursuant to the terms of a license agreement with an
unaffiliated party.

         The Company expanded its line of karat gold jewelry products by
acquiring Jerry Prince, Inc. ("JPI"), a San Diego-based jewelry company, in
October 1997. JPI specializes in the design and distribution of fine gold
jewelry, including necklaces, bracelets, pendants, charms, and other specialty
precious metal jewelry items. In fiscal 1999, the Company expanded its line of 
gold earrings and necklaces by acquiring Eclipse Design, Inc. and Jene karat 
gold jewelry business. See "Recent Business Developments" below.

         The Company generally applies for copyrights covering the design of its
charms and other selected products. During fiscal 1999, sales of products
manufactured or marketed pursuant to patents, license agreements, copyrights and
trademarks accounted for approximately 40.2 % of the Company's net sales. See
"Patents and Trademarks" below.

SALES AND MARKETING

         The Company's jewelry sales and marketing operations are divided into
retail and wholesale divisions, with the retail division accounting for
approximately 80% of the Company's total net sales. The marketing efforts of the
Company's retail division are directed towards large retailers, such as mass
merchandisers and discount stores, catalogue showrooms, national and regional
jewelry chains, home shopping networks, warehouse clubs, and department stores.
The wholesale division markets to jewelry wholesalers and distributors. The
Company's marketing efforts emphasize maintaining and building upon the
Company's relationships with existing customers.

         Providing exceptional customer service is an essential element of the
Company's marketing program. The Company maintains an extensive inventory of
finished goods which, when coupled with its manufacturing capabilities, enables
it to rapidly fill customer orders. The Company's marketing efforts emphasize
its ability to fill orders promptly and reliably.

         In addition to prompt and reliable order fulfillment, the Company
offers a wide variety of customer support services designed to meet the
individual needs of its customers. For many of the Company's retail customers,
the Company prepackages, price tags, and bar codes individual pieces of jewelry,
and then ships an assortment of many prepackaged items to individual retail
locations. Other services provided to retail customers include advertising and
merchandising support, point-of-sale displays, and training for sales employees.
The Company also is able to provide to its customers computer-generated reports
analyzing the customers' sales and information regarding market trends.

         In order to fill customer orders more quickly and efficiently, the
Company has implemented an Electronic Data Interchange ("EDI") program with
certain retail customers. Under this program, the Company electronically
receives purchase orders from participating customers and electronically
transmits to the customer order acknowledgements, invoices, and advance shipping
notices. Certain large retailers require their vendors to utilize EDI programs.
During fiscal 1999, approximately 68% of the Company's net sales were made
pursuant to orders received through the EDI program.

         Sales of new products often are first made by the Company's wholesale
division. The jewelry wholesalers and distributors who purchase the products
from the Company typically will promote the new products to their retail
customers. The promotional efforts of the wholesale division's customers provide
a cost-effective method for determining whether new products will be accepted in


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the marketplace and, in the case of successful products, help generate interest
in the new products throughout the retail sector, including with customers of
the Company's retail division. Customers of the wholesale division also serve as
an outlet for discontinued products that are no longer offered to retail
customers.

         Marketing of the Company's products is conducted primarily from the
Company's Burbank offices through its direct sales force, which includes sales
personnel and customer service representatives. In addition, the Company
maintains a showroom in New York City and a sales office in the Jewelry Mart
area of Los Angeles, which serves small, wholesale customers. The Company also
utilizes the services of independent sales representatives who market to retail
customers and are compensated on a commission basis. The Company's products are
promoted through the use of product catalogues and brochures, advertisements in
trade publications, trade show exhibitions, and promotional events with
retailers. The Company does not advertise its products directly to consumers.

         Prices are based in large part on the price of gold. Prices charged to
individual customers may vary based on the services required by the customer.
The Company protects itself from fluctuations in the price of gold between order
dates and dates of sale by maintaining forward contracts for the purchase of
gold in amounts and for periods of time that approximately correspond to the
Company's obligations under such orders. If the market price of gold increases
between the order date and the date of sale, the Company is able to offset the
increase in the cost of the gold included in the products shipped to the
customer by the gain resulting from the liquidation of its position under the
related forward contracts. To the extent the Company does not maintain
appropriate forward contracts, the Company will be exposed to the costs
associated with a subsequent increase in the price of gold.

         The Company accepts returns of products with defects in materials or
workmanship. The Company also accepts returns of certain items, primarily from
large retailers, in order to maintain customer goodwill and as part of
promotional programs. Returns of products which are not defective generally are
made as part of stock balancing transactions in which the returned products are
replaced with products better suited to the customer's needs. In addition, the
Company makes a limited amount of sales on a consignment basis. In these
consignment transactions, products are delivered to customers for more than 30
days under terms which permit the customer to defer paying for the products
until they are sold to its customers. For further information regarding product
returns, see "Management's Discussion and Analysis of Financial Condition and
Results of Operations - General."

         While the Company sold products to approximately 800 customers in
fiscal 1999, sales to the Company's ten largest customers accounted for
approximately 59% of net sales, and sales to the Company's 50 largest customers
accounted for approximately 87% of net sales. During fiscal 1999, sales to
Wal-Mart accounted for approximately 22% of net sales. No other customer
accounted for more than 10% of net sales. The Company has no long-term
contractual relationships with any of its customers.


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MANUFACTURING AND PURCHASING

         The Company's products are acquired through three sources: (1) products
manufactured by the Company from gold bullion and other raw materials; (2)
products completed by the Company from materials ("semi-finished materials")
partially fabricated by outside manufacturers; and (3) products purchased as
finished goods. During fiscal 1999, the Company manufactured approximately 77%
of its products from semi-finished materials and from gold bullion and other raw
materials and purchased approximately 23% of its products as finished goods. The
principal products manufactured by the Company from raw materials are cast
jewelry, such as charms, rings, earrings and bracelets, and certain styles of
rope chain. Semi-finished materials primarily consist of spools of rope chain in
which the individual links have been woven and soldered by hand by outside
manufacturers and at offshore manufacturing facilities operated by the Company.

         Jewelry manufacturing operations performed by the Company at its
Burbank facility include: combining pure gold with other metals to produce karat
gold; manufacturing cast jewelry; fabricating links used in the manufacture of
the Company's rope chains; manufacturing certain styles of rope chain through
the use of specialized machinery; and finishing operations such as cutting
chains to the desired length, attaching clasps, cleaning, polishing, and diamond
cutting. The Company believes that its manufacturing capabilities better enable
it to respond to requests for customized products, provide it with greater
flexibility, and complement its outside sources of supply. The Company also
believes that the expertise derived from its manufacturing operations better
enables it to support and monitor the activities of its outside manufacturers.

         As part of its manufacturing operations, the Company also completes the
fabrication of semi-finished jewelry items, principally handmade rope chain.
While the Company uses machinery to manufacture certain styles of rope chain,
the individual links in most of the Company's rope chain styles are woven by
hand to form gold chains. Because this process is highly labor intensive, the
Company typically utilizes the services of manufacturers located in countries
with lower labor costs to perform the required weaving and soldering, both with
links fabricated by the Company and with links fabricated by the outside
manufacturers from gold supplied, in most instances, by the Company. The
principal manufacturers currently utilized by the Company are located in South
America. After the hand soldering operations have been completed, the chains are
returned to the Company for finishing. Finishing operations performed by the
Company include diamond cutting, cutting the chain to the desired length,
soldering a clasp to the chain and tumbling, polishing and cleaning the finished
products.

         The Company maintains a close working relationship with, and provides
ongoing technical support to, the outside manufacturers who participate in the
production of its rope chains. For further information regarding the Company's
use of outside manufacturers, including certain risks associated therewith, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - General."

         In order to reduce OroAmerica's reliance on outside manufacturers of
its rope chain products, the Company manufactures rope chain at three facilities
operated by the Company in South America and the Caribbean. In fiscal 1999,
production from these facilities accounted for approximately 80% of the rope
chain products sold by the Company. While the Company anticipates that its
overseas manufacturing facilities will reduce its use of outside manufacturers
for the production of rope chain products, the Company does not intend to
consolidate the production of rope chain products at Company-operated
facilities. Instead, the Company anticipates that it will continue to rely on
the services of independent outside manufacturers for the production of a
substantial portion of its rope chain products.


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         In addition to products manufactured from gold bullion and
semi-finished materials, the Company purchases finished products from suppliers
located principally in Europe and the United States. The principal items
purchased by the Company are machine-made flat chains. Other items purchased as
finished goods include rings, bracelets, earrings, and charms. Jewelry purchased
by the Company frequently is manufactured under an arrangement whereby the
Company supplies all necessary gold bullion and pays a manufacturing charge and
applicable duties at the time of delivery.

         During fiscal 1999, the Company purchased gold products from
approximately 180 suppliers. The largest supplier accounted for approximately
11% of the Company's total purchases, and the ten largest suppliers accounted
for approximately 53% of total purchases. Although a substantial portion of the
Company's purchases are concentrated with a relatively small number of
suppliers, 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
finished goods purchased by the Company are readily available. During recent
years, the Company has increased its outside manufacturing sources and believes
it could shift production to other manufacturers currently providing services to
it and that other sources of supply would be available if the Company were to
lose the services of any of these outside manufacturers. The Company also
believes that the establishment of its own overseas manufacturing facilities for
the production of rope chain products has served to lessen its reliance on the
services provided by independent outside manufacturers. The Company has no
long-term contractual relationships with any of its suppliers.

GOLD CONSIGNMENT ARRANGEMENTS

         The Company's primary source of gold used in the manufacturing process
(including gold supplied by the Company to its outside manufacturers) is gold
acquired through consignment arrangements with various banks and bullion
dealers. The cost to the Company of the consignment program is substantially
less than the costs that would be incurred if the Company were to finance the
purchase of all of its gold requirements at the commencement of the production
process with borrowings under its revolving credit facility or other credit
arrangements. The consignment program allows the Company to maintain high
inventory levels at a relatively low cost, thereby enabling it to respond more
promptly to customer demand.

         The Company currently has in place agreements with several institutions
that provide gold to the Company on a consignment basis. Title to consigned
gold, including consigned gold incorporated into finished products, remains with
the consigning institution until the Company purchases the gold. This
substantially insulates the Company from the risk of gold price fluctuation;
however, during the period of consignment, the entire risk of loss or damage to
the gold is borne by the Company.

         Under the consignment arrangements, the Company may defer the purchase
of gold used in the manufacturing process and held in inventory until the time
of sale of finished products to customers. Financing costs under the consignment
arrangements currently are approximately 3% per annum of the market value of the
gold held under consignment, computed daily. At the time of sale, the Company
purchases the gold included in the finished products at current market prices.
Alternatively, the Company may "replace" the consigned gold with gold purchased
from another institution. The Company generally eliminates the risk of market
fluctuations in the price of the consigned gold by either using the price it
pays for the gold to determine the prices it charges to its customers for
finished products incorporating the consigned gold or by maintaining appropriate
forward contracts for the purchase of gold which protect the Company against
fluctuations in the price of gold between the order date and the date of sale.
See "Sales and Marketing."


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         In addition to gold acquired through the consignment arrangements, the
Company purchases gold from financial institutions in the form of gold bullion
and from outside manufacturers and vendors in the form of semi-finished
materials and finished goods. During fiscal 1999, the Company satisfied
approximately 72% of its gold requirements through purchases under the
consignment program and purchased the remaining 28% of its gold requirements
from manufacturers and vendors. The value of the gold purchased by the Company
and held in inventory, as well as the value of the gold included in returned
merchandise and other gold owned by the Company, is subject to fluctuation based
on changes in the market value of gold. The Company does not engage in hedging
transactions to protect against fluctuations in the market value of the gold
owned by it. The Company's consignment agreements include provisions which
generally limit both the fair market value and amount (by weight) of gold which
the Company may hold under consignment. Based on the value of gold on March 26,
1999, the Company currently is able to hold an aggregate of approximately
290,000 ounces of gold under consignment; the actual amount of gold held by the
Company under consignment on that date was approximately 165,400 ounces. The
amount of gold which the Company is able to acquire under consignment is
subject to fluctuations based on changes in the market value of gold. The
consignment agreements contain covenants restricting the amount of consigned
gold the Company may re-consign or otherwise have outside of its possession.

         The Company's consignment arrangements generally are terminable upon 30
days advance notice to the Company. Gold consignment arrangements are common in
the jewelry industry, and the Company historically has not experienced any
difficulties in obtaining sufficient quantities of consigned gold to meet its
operating needs. If one or more institutions were to terminate the consignment
arrangements, the Company believes that it would not experience any interruption
in its gold supply that would materially adversely affect its business, as it
believes that a number of other institutions would be willing to enter into
similar arrangements. In addition, if the Company's requirements for consigned
gold were to increase, the Company believes that appropriate modifications could
be made to its existing arrangements or consignment arrangements could be
entered into with additional institutions, so that the amount of gold available
to the Company on consignment would be increased to meet its operating needs.
Nevertheless, there can be no assurance that fluctuations in the credit or
precious metals markets would not result in an interruption of the Company's
gold supply or the contractual arrangements necessary to allow the Company to
continue the use of consigned gold.

         For further information regarding the consignment agreements, see
"Management's Discussion and Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources."

BACKLOG

         Substantially all of the Company's wholesale customers' orders are for
immediate shipment and typically are shipped within two to four days of receipt.
Orders from retailers typically have shipment dates which may range from 24
hours to 90 days. The approximate aggregate dollar value of the Company's
backlog at April 14, 1999 and April 15, 1998, was $8.4 million and $7.2 million,
respectively. The Company expects that substantially all of the current backlog
will be shipped during the next 90 days. Annual comparisons of backlog as of any
given date are not necessarily indicative of sales trends, and the Company
believes that backlog is not indicative of the Company's future results of
operations.


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COMPETITION

         The jewelry industry in the United States is highly fragmented and
characterized by a large number of small to medium-sized manufacturers,
wholesalers, and distributors. The Company's business is highly competitive, and
the Company's competitors include domestic and foreign jewelry manufacturers,
wholesalers and importers who may operate on a national, regional or local
level. Based upon its knowledge of the domestic jewelry industry and a review of
available information, the Company believes that it is the largest manufacturer
and distributor of karat gold jewelry in the United States and that its
resources generally are equal to or greater than the resources of most of its
competitors. However, some companies in the jewelry industry may be larger and
have greater financial and other resources than the Company.

         OroAmerica believes that competition is based primarily on product
availability, timeliness of shipment, customer service, product quality, design,
and price. The diverse distribution channels in which the Company markets its
products frequently involve different competitive factors. The ability to
provide specialized services is a particularly important competitive factor in
sales to certain large retailers such as mass merchandisers, discount stores,
and warehouse clubs. Product availability and the ability to offer consistent
product quality at competitive prices tend to be the key competitive factors in
sales to catalogue showrooms and wholesale customers. Some of the Company's
competitors may specialize in sales to particular distribution channels and may
have relationships with customers in those distribution channels that make
competition by the Company more difficult. The Company believes that recent
consolidations at the retail level in the jewelry industry have increased the
level of competition in the markets in which the Company competes.

RECENT BUSINESS DEVELOPMENTS

         In June 1998, the Company acquired Eclipse Design, Inc. ("Eclipse"), a
privately-held company which designs, manufactures and sells gold earrings.
Under the terms of the purchase agreement, the Company acquired all of the
operating assets of Eclipse. In September 1998, the Company acquired the Jene
karat gold jewelry business ("Jene"). Under the terms of the purchase agreement,
the Company acquired primarily inventory and customer lists for approximately $2
million. The Company financed a portion of the inventory acquired under its
consignment agreements. The Company believes that these acquisitions will offer
it the opportunity to increase volume from the sale of product lines acquired
from both Eclipse and Jene.

INSURANCE

         The Company maintains primary all-risk insurance to cover thefts and
damage to inventory and insurance on all goods in transit. Additional insurance
coverage is provided by some of the Company's suppliers. The Company also
maintains limited fidelity insurance (insurance providing coverage against theft
or embezzlement by employees of the Company or its suppliers).

        During September 1998, Hurricane Georges caused approximately $2.4
million of damage to the Company's cigar operations in the Dominican Republic.
The hurricane destroyed primarily tobacco and packaging inventories. This loss,
except for $100,000, was fully covered by insurance.

PATENTS AND TRADEMARKS

         The Company manufactures two lines of diamond cut rope chain using
processes covered by United States utility patents and manufactures a line of
diamond cut rope chain under the terms of a license agreement with an
unaffiliated party. The Company generally applies for copyrights for the designs
of its charms and other selected products. In addition, the Company maintains
and regularly seeks to register trademark applications for marks that it uses or
intends to use on or in connection with certain of its selected jewelry
products. The level of protection available to the Company for proprietary
products, processes, designs, and trademarks varies depending on a number of
factors, including the degree of originality and the distinctiveness of these
intellectual property. No assurance can be given that the Company's patents,
copyrights, trademarks, and other 


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proprietary rights will preclude competitors from developing substantially
equivalent products. See "Jewelry Products."

EMPLOYEES

         At March 31, 1999, the Company employed 386 persons in the United
States, of whom 219 were engaged in jewelry manufacturing and distribution
operations, 111 were engaged in jewelry marketing, customer service, and
merchandising, and 56 were engaged in management and administration. At that
date, the Company also employed 700 persons at its manufacturing facilities in
South America and the Caribbean. None of the Company's employees is covered by a
collective bargaining agreement, and the Company considers its relations with
its employees to be good.

ENVIRONMENTAL MATTERS

         The Company's jewelry manufacturing operations routinely involve the
use of small quantities of materials that are classified as hazardous. The
Company believes that its use of such materials is in compliance in all material
respects with applicable federal, state, and local laws and regulations
concerning the environment and health and safety. The costs incurred by the
Company in complying with such laws and regulations have not been material to
the Company's results of operations.

         The Company's Burbank facility is located in an area of the San
Fernando Valley which is either included in, or adjacent to, an extensive area
of groundwater contamination known as the San Fernando Valley Superfund Site
(the "Site"). In 1986, the United States Environmental Protection Agency (the
"EPA") included portions of the Site on the National Priorities List as
"Superfund Sites" pursuant to the provisions of the Comprehensive Environmental
Response, Compensation, and Liability Act, as amended ("CERCLA"). The Company is
not a party to any litigation involving the Site, has not been identified by the
EPA as a potentially responsible party under CERCLA and does not believe that it
has contributed to the existing groundwater contamination at the Site.
Nevertheless, given the location of the Company's manufacturing facility and the
fact that the Company's operations involve the use of small quantities of
hazardous materials, no assurances can be given that the Company will not be
named as a party to litigation, or as a potentially responsible party, with
respect to the Site.

CIGAR BUSINESS

         In April 1997, the Company launched its premium cigar business through
its wholly owned subsidiary, CigarAmerica, Inc. The Company manufactures,
distributes, and sells two core brands of cigars, including a line of premium
cigars which retail at a prices between $3.00 and $10.00 per cigar and a line of
super-premium cigars which retail at prices of $20.00 and up per cigar. Both
cigar brands are sold to the mass market through wholesale distributors,
tobacconists, and upscale stores, including the Company's flagship store located
on Rodeo Drive in Beverly Hills, California.

         The Company's strategies for its cigar business include the following:

         QUALITY PRODUCT LINES. The Company is producing and selling its first
line of premium cigars under the brand name Fuego del Rey(TM)("Fire of the
King"). This cigar, which is the result of a joint effort between the Company
and an Indonesian company, is handmade in Indonesia and made up 


                                       9
<PAGE>   11
of Indonesian wrapper, Jember binder, and East Javan filler. The Company also
uses Brazilian Maduro wrapper for its Fuego del Rey(TM) cigars. In fiscal 1999,
the Company also introduced a line of flavored cigars.

         The Company has developed a brand of super premium handmade cigars,
which it distributes through appointed dealers, certain retail shops and its
Rodeo Drive flagship store. These cigars are made by hand from Connecticut
Shade, genuine Cameroon, and/or Brazilian Maduro wrapper, while the filler and
binder come from tobacco grown in the Dominican Republic. To date, the Company
has purchased a substantial supply of high-quality Connecticut Shade and
Cameroon wrapper and Dominican Republic filler and binder to make these cigars.
For its super premium cigars, the Company has leased a manufacturing facility in
the Dominican Republic.

         BEVERLY HILLS FLAGSHIP STORE. To promote the Company's super premium
cigars, the Company leased a 1,300 square foot store on Rodeo Drive in Beverly
Hills, California, where the Company operates its flagship cigar store. This
store sells the Company's own brand of super premium cigars, as well as cigars
manufactured by other companies, and includes a mezzanine level cigar lounge and
private humidors.

         The Company has encountered a number of disputes with its former
Indonesian partner. In connection with this, the Company has been prevented
access to its tobacco inventories located in Indonesia. The Company is focused
on resolving these disputes and does not anticipate any material impact on the
results of operations, financial position or cash flows from the ultimate
resolution of these disputes.

         The foregoing discussions contain "forward-looking statements" within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. The Company
cautions investors that there are certain important factors that could cause
future events and results to differ materially from those anticipated by
management in the forward-looking statements included herein, as well as risks
and uncertainties generally applicable to the jewelry and cigar businesses.
Among these important factors, risks and uncertainties are (a) general economic
conditions and their impact on the retail sales environment; (b) fluctuations in
the price of gold, (c) risks related to the concentration of the Company's
customers, particularly the operations of any of its top customers; (d) the
possibility that fashion trends and tastes may change in a manner that results
in decreased demand for gold jewelry products in general or the Company's
products in particular; (e) the possibility that new products or styles that may
be introduced by the Company's competitors which may adversely affect demand
for the Company's products; (f) risks related to the Company's ability to
generate positive cash flow and profit from its cigar operations; (h) social,
political and economic risks associated with foreign operations; (i) extensive
and increasing federal, state and local regulation of tobacco products; (j)
effects of any increase in excise taxes that may occur in the future; and (k)
tobacco industry litigation.


                                       10




<PAGE>   12

ITEM 2.  PROPERTIES

         The Company maintains manufacturing and administrative facilities in a
52,000 square foot building owned by the Company in Burbank, California. The
Company currently utilizes approximately 20,000 square feet of this building as
manufacturing space, approximately 25,000 square feet as distribution,
warehouse, and storage space (including vaults), and approximately 7,000 square
feet as administrative offices. The Company also owns a 15,000 square foot
building, which is located in the vicinity of its current manufacturing
facility. The Company currently utilizes approximately 8,000 square feet of this
building as sales offices and approximately 7,000 square feet as administrative
facilities.

         The Company also owns two buildings adjacent to its manufacturing
facility, with an aggregate of 3,000 square feet, which are used for storage
space. In July 1997, the Company entered into a two-year lease for a 6,800
square foot warehouse facility located next to its Burbank manufacturing
facility, which lease is due to expire in August 1999. The Company also leases a
sales office and showroom in New York City pursuant to a lease which expires in
April 1999. The Company also leases a sales office and a purchasing office in
the Jewelry Mart area of Los Angeles pursuant to leases, which expire in
February 2001. The Company also owns a jewelry manufacturing facility and leases
another in South America. The leased manufacturing facility in South America is
occupied pursuant to a lease which expires in July 1999. The Company also
leases a third manufacturing facility in the Caribbean.

         In connection with its premium cigar business, the Company is leasing a
29,600 square foot manufacturing facility in the Dominican Republic, pursuant to
a lease which expires in June 2003. The Company also has leased a 1,300 square
foot retail cigar shop in Beverly Hills, California, pursuant to a lease which
expires in May 2002. In February 1999, the Company purchased an 8,000 square
foot building near its Burbank manufacturing facility for approximately $901,000
in cash. This building is intended to serve as the principal headquarters for
the Company's premium cigar business.

         The Company believes that its facilities are adequate for the Company's
current operating levels and presently foreseeable growth.

ITEM 3.  LEGAL PROCEEDINGS

         From time to time the Company is involved in litigation incidental to
the conduct of its business. The Company currently is not involved in any
litigation which, individually or in the aggregate, is material to its business
or financial condition.

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

         No matters were submitted to a vote of the Company's security holders
during the fourth quarter of the fiscal year covered by this report.


                                       11

<PAGE>   13

SUPPLEMENTAL ITEM: EXECUTIVE OFFICERS

The executive officers of the Company are as follows:

<TABLE>
<CAPTION>
NAME                       AGE                                POSITION
----                       ---                                --------

<S>                        <C>              <C>                                 
Guy Benhamou               47               Chairman of the Board, President and
                                            Chief Executive Officer
Shiu Shao                  47               Chief Operating Officer, Chief Financial Officer,
                                            Vice President and Director
Claudia Hollingsworth      39               Senior Vice President - Sales
David Wu                   50               Senior Vice President - Manufacturing
Betty Sou                  42               Controller and Secretary
Colm Plunkett              37               Treasurer
Marc J. Kesten             37               General Counsel and Assistant Secretary
</TABLE>

         GUY BENHAMOU is a co-founder of the Company and has been its President,
Chief Executive Officer and a member of its Board of Directors since its
inception in January 1977. Mr. Benhamou was appointed Chairman of the Board in
May 1993.

         SHIU SHAO has been employed by the Company since April 1981. Mr. Shao
served as Controller of the Company from 1981 to 1984 and Vice President -
Finance from 1984 until September 1991, when he was appointed Chief Financial
Officer. Mr. Shao also has served as a director of the Company since May 1993
and was appointed a Vice President in May 1994. In October 1998, Mr. Shao was
appointed Chief Operating Officer.

         CLAUDIA HOLLINGSWORTH has been employed by the Company since May 1988.
Ms. Hollingsworth served as Merchandise Manager until October 1989, when she was
appointed Vice President - Merchandising. In September 1995, Ms. Hollingsworth
was appointed Vice President - Sales. In October 1998, Ms. Hollingsworth was
appointed Senior Vice President - Sales.

         DAVID WU has been employed by the Company since 1987 and served as
Production Manager from 1987 to May 1993, when he was appointed Vice President -
Manufacturing. In October 1998, Mr. Wu was appointed Senior Vice President -
Manufacturing.

         BETTY SOU has been employed by the Company since January 1984. Ms. Sou
served as Accounting Manager from 1984 to January 1987, when she was appointed
Controller. Ms. Sou also has served as the Secretary of the Company since July
1991.

         COLM PLUNKETT has been employed by the Company since December 1989. Mr.
Plunkett served as Assistant Treasurer from December 1989 to March 1994, when he
was appointed Treasurer.

         MARC J. KESTEN has been employed by the Company as in-house counsel
since May 1997. In June 1998, Mr. Kesten was appointed General Counsel and
Assistant Secretary.

         Executive officers are elected by and serve at the discretion of the
Board of Directors. No family relationships exist between any of the officers or
directors of the Company.


                                       12
<PAGE>   14


                                     PART II

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

         The Company's Common Stock has traded in the Nasdaq National Market
under the trading symbol "OROA" since the Company's initial public offering on
September 23, 1993.

         The following table sets forth the range of the high and low sales
prices for the fiscal periods indicated, as reported on the Nasdaq National
Market. On April 23, 1999, there were 27 holders of record of the Common Stock.

YEAR ENDED JANUARY 29, 1999

                                          HIGH              LOW
                                          ----              ---

         First quarter                   $11.63            $4.63
         Second quarter                  $13.63            $9.00
         Third quarter                   $11.25            $5.69
         Fourth quarter                  $11.63            $8.06


YEAR ENDED JANUARY 30, 1998

         First quarter                    $5.12            $4.50
         Second quarter                   $5.88            $4.25
         Third quarter                    $6.00            $4.25
         Fourth quarter                   $5.94            $4.50

         The Company has not paid dividends on the Common Stock since its
initial public offering in September 1993 and does not intend to pay dividends
in the foreseeable future. The Board of Directors currently intends to retain
earnings for use in the Company's business. In addition, the Company's revolving
credit facility and gold consignment agreements contain covenants which
prohibit the payment of dividends on the Common Stock.

ITEM 6.  SELECTED FINANCIAL DATA

         The following table sets forth selected financial data and other
selected data of the Company. The selected historical financial data in the
table for the five years in the period ended January 29, 1999 are derived from
the audited consolidated financial statements of the Company. The data should be
read together with "Management's Discussion and Analysis of Financial Condition
and Results of Operations" and the consolidated financial statements and related
notes and other financial information included elsewhere herein.


                                       13
<PAGE>   15




                                OROAMERICA, INC.
                             SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
For the fiscal years ended
(Dollars in thousands, except per           January 29,     January 30,     January 31,     February 2,     January 27,
share and other data)                              1999            1998            1997            1996            1995
-----------------------------------------------------------------------------------------------------------------------
<S>                                         <C>             <C>             <C>             <C>             <C>       
Net sales                                   $  174,491      $  159,720      $  177,065      $  213,417      $  219,415
Cost of goods sold                             131,522         123,800         144,398         178,865         183,188
-----------------------------------------------------------------------------------------------------------------------
Gross profit                                    42,969          35,920          32,667          34,552          36,227
Selling, general and administrative,
and other expenses (1)                          31,193          23,079          25,907          30,229          25,862
-----------------------------------------------------------------------------------------------------------------------
Operating income                                11,776          12,841           6,760           4,323          10,365
Interest expense                                 1,532           1,894           2,885           3,423           3,170
-----------------------------------------------------------------------------------------------------------------------
Income before income taxes                      10,244          10,947           3,875             900           7,195
Provision for income taxes                       3,790           4,269           1,685             554           3,030
-----------------------------------------------------------------------------------------------------------------------
Net income                                  $    6,454      $    6,678      $    2,190      $      346      $    4,165
=======================================================================================================================
Net income per share:
Basic net income per share                  $     1.03      $     1.07      $     0.35      $     0.06      $     0.67
Diluted net income per share                $     1.02      $     1.06      $     0.35      $     0.06      $     0.67
=======================================================================================================================
Weighted average shares outstanding          6,287,556       6,254,212       6,250,711       6,248,378       6,236,674
-----------------------------------------------------------------------------------------------------------------------
Weighted average shares outstanding
    assuming dilution                        6,337,885       6,270,761       6,256,075       6,248,378       6,257,023
-----------------------------------------------------------------------------------------------------------------------
Other Data:
Amount of gold sold by weight
(in ounces of fine gold)                       337,545         309,900         306,763         337,855         379,223
Average daily gold price per ounce (2)      $      294      $      325      $      384      $      386      $      384
-----------------------------------------------------------------------------------------------------------------------
Balance Sheet Data:
Working capital                             $   50,727      $   48,211      $   40,663      $   39,022      $   37,572
Total assets                                    90,103          86,665          75,261          73,544          76,371
Long-term debt, including current
    portion                                       --             2,688           3,199           4,537           2,806
Total stockholders' equity                      72,457          66,197          59,510          57,301          56,574
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

1)   Selling, general and administrative, and other expenses include bad debt
     expense, depreciation and amortization expense, and other income and other
     expense, in addition to selling, general and administrative expenses. In
     fiscal 1998, selling, general and administrative, and other expenses have
     been reduced by other income of $6.6 million, including $4.7 million of
     proceeds from the settlement of litigation with the Company's insurer to
     recover losses from two former gold jewelry manufacturers.

2) Based on the Second London Gold Fixing.


                                       14
<PAGE>   16


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

         The following discussion and analysis should be read together with the
consolidated financial statements and notes thereto included elsewhere herein.

GENERAL

Gross Sales; Returns

         The Company reduces gross sales by the amount of returns and discounts
to determine net sales. Each month the Company estimates a reserve for returns
based on historical experience and the amount of gross sales. The total of
actual returns and the provision for the returns reserve amounted to 11.2% of
gross sales in fiscal 1999, 13.0% of gross sales in fiscal 1998, and 14.3% of
gross sales in fiscal 1997. The Company has implemented quality control
procedures to reduce returns of defective merchandise. Discounts to customers
have not had a material effect on the Company's results of operations. For
further information regarding the reserve for returns, see Note 1 of Notes to
Consolidated Financial Statements.

         Prices for the Company's jewelry products generally are determined by
reference to the current market price of gold. Consequently, the Company's sales
are affected by increases, decreases or volatility in the price of gold.

Inventories

         The Company accounts for its jewelry inventories at the lower of cost
or market, using the last in, first out (LIFO) method to determine cost, less
the allowance for uncollectible vendor advances. As a result, the Company's
gross profit margin can be affected by changes in LIFO reserves and the
allowance for vendor advances, as well as by changes in the amount of gold owned
at each period end and fluctuations in the price of gold.

         Consigned gold is not included in inventory, and there is no related
liability recorded at year-end. Financing costs under the consignment
arrangements currently are approximately 3% per annum of the market value of the
gold held under consignment, computed daily. If the market value of gold
increases, and assuming consignment levels remain constant, the financing costs
incurred by the Company under the consignment arrangements will increase in
proportion to the increase in the market value of gold. At January 29, 1999 and
January 30, 1998, the Company held 191,100 ounces and 155,400 ounces,
respectively, under the consignment arrangements. At January 29, 1999 and
January 30, 1998, the Company owned approximately 5,700 ounces and 10,500 ounces
of gold, respectively.

         For further information regarding the accounting policies applicable to
the Company's inventories, see Note 2 of Notes to Consolidated Financial
Statements.

Outside Manufacturers

         In fiscal 1999, the Company purchased approximately 23% of its products
as finished goods and completed the manufacture of approximately 77% of its
products from semi-finished materials partially fabricated by outside
manufacturers. Of the total amount of products purchased from outside
manufacturers in fiscal 1999, approximately 59% were purchased from foreign
manufacturers and approximately 41% were purchased from domestic manufacturers.
The Company's use of domestic and foreign outside manufacturers minimizes the
capital invested in 


                                       15
<PAGE>   17

property, plant and equipment and the overhead associated with a
Company-employed manufacturing labor force. The use of foreign manufacturers
also allows the Company to take advantage of the lower labor costs prevailing in
developing countries. Risks generally inherent in the use of outside
manufacturers include security at the manufacturer's facility, transport of
materials to and from the manufacturer, theft by the manufacturer or its
employees and bankruptcy or other financial problems of the manufacturer. The
Company's arrangements with its foreign manufacturers are subject to the
additional risks of doing business abroad, including risks associated with
economic or political instability in the countries in which such manufacturers
are located, labor strikes, risks associated with potential import restrictions
and risks associated with United States and foreign governmental policies,
regulations and restrictions affecting the purchase, import and export of gold.
Purchases from foreign vendors are dollar denominated and, therefore, the 
Company is not exposed to currency fluctuation risk.

         Both finished and semi-finished materials frequently are manufactured
under an arrangement whereby the Company supplies all necessary gold (or, in
some instances, supplies funds to purchase the required gold) to an outside
manufacturer and pays a manufacturing charge and applicable duties at the time
of delivery. These arrangements, which the Company believes are common in the
jewelry industry, reduce the costs charged to the Company by its outside
manufacturers and allow the Company to employ qualified manufacturers who might
be unable to finance the acquisition of the gold required in the production
process. The Company typically advances to its manufacturers sufficient gold to
cover manufacturing requirements for a two-to-three week cycle, and as completed
products are shipped to the Company, additional gold is advanced to the
manufacturer.

         The Company uses certain controls and procedures to minimize the
credit risks associated with advancing funds or gold to its outside
manufacturers. The Company believes its procedures will reduce, but will not
eliminate, its exposure to credit losses. The procedures employed by the Company
include monitoring the performance and financial condition of outside
manufacturers, monitoring each manufacturer's "credit limit", inspection visits
made to the production facilities of outside manufacturers and management's
review and evaluation of credit worthiness. The Company attempts to diversify
its sources of supply and broadly allocate production over its base of
manufacturers in order to reduce the amount of orders it places with any single
manufacturer. As of March 26, 1999, $3.8 million of gold owned by or consigned
to the Company was in the possession of outside manufacturers. On that date, the
largest amount held by a single manufacturer was $952,000.

         The Company believes its use of outside manufacturers provides it with
a cost-effective source for products. The Company believes that advancing gold
to its outside manufacturers has resulted in significant cost savings and that
any credit risks associated with this practice can be maintained at an
acceptable level by careful management of the Company's relationships with its
outside manufacturers, the continued diversification of the Company's sources of
supply and the maintenance of adequate reserves. However, no assurances can be
given that possible future financial problems or other factors affecting its
outside manufacturers will not have a material adverse effect on the Company's
financial condition or results of operations.

Seasonality

         The Company's business, and the jewelry business in general, are highly
seasonal. The third and fourth quarters of the Company's fiscal year, which
include customers' purchases for the Christmas shopping season, historically
have accounted for approximately 60% of the Company's annual net sales and a
somewhat higher percentage of the Company's income before taxes. While the
fourth quarter generally produces the strongest results, the relative strengths
of the third and


                                       16
<PAGE>   18

fourth quarters are subject to variation from year to year based on a number of
factors, including the purchasing patterns of the Company's customers. The
seasonality of the Company's business places a significant demand on working
capital resources to provide for a buildup of inventory in the third quarter
(which is primarily satisfied by an increase in the amount of gold held under
consignment) and in turn has led to a seasonal buildup in customer receivables
in the fourth quarter and the first quarter of the succeeding fiscal year.


RESULTS OF OPERATIONS

         The following table sets forth, for the periods indicated, the
percentage of net sales represented by certain items included in the
Consolidated Statements of Income.

<TABLE>
<CAPTION>
                                                            AS A PERCENTAGE OF NET SALES
                                                                     YEAR ENDED
                                                            ----------------------------
                                               January 29,          January 30,          January 31,
                                                      1999                 1998                 1997
                                               -----------          -----------          -----------
<S>                                            <C>                  <C>                  <C>   
Net sales                                           100.0%               100.0%               100.0%
Cost of goods sold                                   75.4                 77.5                 81.6
                                               -----------          -----------          -----------
Gross profit                                         24.6                 22.5                 18.4
Selling, general and administrative,
    and other expenses                               17.8                 14.4                 14.6
                                               -----------          -----------          -----------
Operating income                                      6.8                  8.1                  3.8
Interest expense                                      0.9                  1.2                  1.6
                                               -----------          -----------          -----------
Income before taxes                                  5.9%                 6.9%                  2.2%
                                               ===========          ===========          ===========
</TABLE>

FISCAL 1999 COMPARED TO FISCAL 1998

         Net sales for fiscal 1999 increased by $14.8 million, or 9.2%, from
fiscal 1998. This increase was due primarily to an increase in the amount of
gold jewelry (by weight) sold, offset by decreases in sales prices due to a
reduction in the average market price of gold. The Company attributes the volume
increase to customers obtained as a result of the October 1997 acquisition of
Jerry Prince, Inc. and to new products introduced during the year.

         Gross profit for fiscal 1999 increased by $7.0 million, or 19.6%, from
fiscal 1998. As a percentage of net sales, gross profit increased to 24.6% in
fiscal 1999, from 22.5% in fiscal 1998. Excluding the effect of gold price
fluctuations and LIFO reserve adjustments, the gross profit margins for fiscal
1999 and fiscal 1998 would have been 24.3% and 22.6%, respectively. The increase
in gross profit margin in fiscal 1999 is primarily due to changes in sales
product mix. The gold prices used to value inventory at year-end for fiscal 1999
and fiscal 1998 were $285.40 and $304.85, respectively.

         Selling, general and administrative, and other expenses includes bad
debt expense, depreciation and amortization expense, and other income or other
expense, in addition to selling,


                                       17
<PAGE>   19

general and administrative expenses. Selling, general and administrative, and
other expenses for fiscal 1999 increased by $8.1 million, or 35.2%, from the
prior year. As a percentage of sales, these expenses increased to 17.8%, from
14.4% in fiscal 1998. Selling, general and administrative, and other expenses
for fiscal 1998 include a one-time litigation settlement award of $4.7 million
and a $852,000 gain from the sale of the Company's investment in an affiliated
entity, both of which were accounted for as reductions of selling, general and
administrative, and other expenses. Excluding the settlement award and the gain
on sale of investment, selling, general and administrative, and other expenses
for fiscal 1999 increased $2.6 million, or 9.1%, from the prior year, and
decreased to 17.8% from 17.9% as a percentage of sales. The increase in the
dollar amount of selling, general and administrative, and other expenses,
excluding the settlement award and gain on sale of investment, results primarily
from increased personnel costs of $1.8 million, increased selling and product
expenses of $1.3 million, and increased consulting, professional and outside
service expense of $826,000. These increases were offset by a decrease in bad
debt expense of $632,000 and an increase in other income of $929,000. Selling,
general and administrative, and other expenses for fiscal 1999, included
approximately $1.7 million of expense from the Company's cigar operations.

         Interest expense for the year ended January 29, 1999 decreased
approximately $362,000, or 19.1%, from the prior year. Interest expense declined
due to the pay off of mortgages.

         The provision for income taxes in fiscal 1999 decreased by $479,000 as
compared to fiscal 1998 primarily due to a decrease in taxable income between
years. The effective tax rates for fiscal 1999 and fiscal 1998 were 37% and 39%,
respectively. See Note 8 - Income Taxes.

FISCAL 1998 COMPARED TO FISCAL 1997

         Net sales for fiscal 1998 decreased by $17.3 million, or 9.8%, from
fiscal 1997. This decrease was due primarily to a decrease in sales prices due
to a reduction in the average market price of gold. This decrease was partially
offset by an increase in sales due to the acquisition of Jerry Prince, Inc. in
October 1997. The amount of gold sold (by weight) remained constant between
fiscal 1998 and fiscal 1997.

         Gross profit for fiscal 1998 increased by $3.3 million, or 10.0% from
fiscal 1997. As a percentage of net sales, gross profit increased to 22.5% in
fiscal 1998, from 18.4% in fiscal 1997. Excluding the effects of gold price
fluctuations and LIFO reserve adjustments, the gross profit margins for fiscal
1998 and fiscal 1997 would have been 22.6% and 18.1%, respectively. The increase
in gross profit margin in fiscal 1998 is primarily due to changes in sales
product mix. The gold prices used to value inventory at year-end for fiscal 1998
and 1997 were $304.85 and $345.50 per ounce, respectively.

         Selling, general and administrative, and other expenses include bad
debt expense, depreciation and amortization expense, and other income or other
expense, in addition to selling, general and administrative expenses. Selling,
general and administrative, and other expenses for fiscal 1998 decreased by $2.8
million, or 10.9%, from the prior year. As a percentage of sales, these expenses
decreased to 14.4% from 14.6% in fiscal 1997. The decrease in the dollar amount
of selling, general and administrative expenses is primarily due to an increase
in other income of $6 million and an $816,000 decrease in professional,
consulting and outside service fees. These decreases to selling, general and
administrative, and other expenses were offset by a $1.9 million increase in
personnel costs due to an increase in headcount and to an increase in management
and employee bonus incentives earned in fiscal 1998 as compared to the prior
year, and a $1.4 million increase in selling and product expenses due to an
increase in cooperative advertising with certain customers. Other income
increased primarily due to the receipt of $4.7 million resulting from


                                       18
<PAGE>   20

settlement of certain litigation, an $852,000 gain from the sale of the
Company's investment in an affiliated entity and other income received due to
the investment of excess cash. Outside service fees increased by $751,000 due to
a higher utilization of temporary personnel in the Company's operations, while
professional fees decreased $1.5 million, primarily due to a reduction in legal
fees due to the resolution of certain lawsuits and completion of certain
acquisition activities in fiscal 1997. Selling, general and administrative, and
other expenses for the year ended fiscal 1998, included approximately $711,000
of expense from the Company's cigar operations.

         The provision for income taxes in fiscal 1998 increased by $2.6 million
as compared to fiscal 1997 primarily due to the increase in taxable income
between years. The effective tax rates for fiscal 1998 and fiscal 1997 were
39.0% and 43.5%,respectively. See Note 8 - Income Taxes.

LIQUIDITY AND CAPITAL RESOURCES

         The Company has satisfied its working capital requirements through
internally generated funds, a gold consignment program and borrowings under its
revolving credit facility.

         A substantial portion of the Company's gold supply needs are satisfied
through gold consignment arrangements with several financial institutions.
During fiscal 1999, the Company satisfied approximately 72% of its gold
requirements through purchases under the consignment program and purchased the
remaining 28% of its gold requirements from financial institutions,
manufacturers and vendors. Under the consignment arrangements, the Company may
defer the purchase of gold used in the manufacturing process and held in
inventory until the time of sale of finished goods to customers. Financing costs
under the consignment arrangements currently are approximately 3% per annum of
the market value of the gold held under consignment, computed daily. The maximum
amount of gold that the Company may hold on consignment was 290,000 ounces at
January 29, 1999 and is subject to fluctuation based on changes in the market
value of gold. The gold consignment agreements contain covenants regarding the
amount of consigned gold the Company may reconsign or otherwise have outside its
possession at any one time. At January 29, 1999, the Company held approximately
191,100 ounces of gold under consignment. During fiscal 1999, 1998 and 1997, the
largest amount of gold held under consignment was 220,500 ounces, 182,300 ounces
and 220,400 ounces, respectively, and the average amount of gold held under
consignment was 171,900 ounces, 141,600 ounces, and 168,000 ounces, 
respectively. Use of the consignment arrangements tends to be highest during the
third quarter.

         The Company has a $10 million revolving credit facility with Bank of
America NT&SA, which expires August 1, 2000. Available borrowings may not exceed
the lesser of $10 million or 80% of eligible accounts receivable minus a reserve
amount as provided for under the credit facility. No amounts were outstanding
under the revolving credit facility at January 29, 1999 or January 30, 1998.
During fiscal 1999, 1998 and 1997, the Company's highest outstanding balances
under its revolving credit facilities were $400,000, $300,000, and $1.4 million,
respectively, and the average amounts outstanding were $1,100, $3,000 and
$100,000, respectively. Borrowings under the revolving credit facility tend to
be highest in the fourth quarter. For further information regarding the
consignment agreements and the revolving credit facility, see "Business --Gold
Consignment Arrangements" and Notes 2 and 5 of Notes to Consolidated Financial
Statements.

         The Company incurred capital expenditures of approximately $2.3 million
in fiscal 1999, principally related to improvements of its retail, manufacturing
and distribution facilities and for the purchase of manufacturing and computer
equipment. The Company expects to incur capital expenditures related to its
jewelry business of approximately $1.6 million in fiscal 2000, principally for
the acquisition of manufacturing and computer equipment, and upgrade of the
Company's primary business application software. The Company believes that funds
generated from 


                                       19
<PAGE>   21

operations, the gold consignment program and the borrowing capacity under its
revolving credit facility will be sufficient to finance its working capital and
capital expenditure requirements for the next 12 months.

YEAR 2000

         The Year 2000 issue is the result of computer programs having been
written using two digits, rather than four, to define the applicable year. When
the millennium date change occurs, date-sensitive systems may recognize the year
2000 as the year 1900, or not at all. This inability to recognize or properly
treat the Year 2000 may result in system failures or cause systems to process
critical financial and operational information incorrectly.

         During fiscal 1999, the Company continued to assess the potential
impact of the Year 2000 issue on the Company's internal computerized information
systems. The Company believes that it has identified substantially all of the
major computers, software applications, and related equipment used in connection
with its internal operations that must be modified, upgraded or replaced to
become Year 2000 compliant. The Company is currently upgrading its primary
business application software to the latest version, which is Year 2000
compliant. The Company expects to complete this conversion by the end of the
second quarter of fiscal year 2000. The Company's distribution and electronic
data interchange software applications and equipment are already year 2000
compliant. All remaining business applications will be upgraded or replaced by
June 1999. In addition, the Company's non-information technology systems and
equipment, such as its security and communications systems, are already year
2000 compliant or are currently being upgraded or replaced.

         The total estimated cost of the Company's Year 2000 compliance is
$300,000, of which $150,000 was expended through January 29, 1999. The cost of
the Year 2000 project is being expensed as incurred and is not expected to have
a material adverse effect on the Company's results of operations, liquidity or
capital resources. The estimated cost of implementing the Company's primary
business software upgrade is approximately $1.3 million and is not included in
the Year 2000 project cost estimate. The software upgrade was initiated to meet
future business and industry requirements and the related cost will be
capitalized in accordance with generally accepted accounting principles. The
costs associated with the Company's Year 2000 compliance efforts and software
upgrade are being funded with cash flows from operations.

         The Company has recently begun examining its relationships with certain
key customers and suppliers to determine the extent to which the Company is
vulnerable to failure of those third parties to address their own Year 2000
issues. Year 2000 interruptions in customers' operations could result in reduced
sales, increased inventory or receivable levels and cash flow reductions. The
Company does not currently have any formal information concerning the Year 2000
compliance of its customers but has received indications that its larger
customers are working on Year 2000 compliance. If a significant portion of the
Company's customers do not successfully and timely achieve Year 2000 compliance,
the Company's business operations could be adversely affected. Management does
not believe that the Company's relationship with any individual inventory
supplier is material to the Company's operations and, therefore, does not
believe that the failure of any inventory vendor to be Year 2000 compliant would
have a material adverse effect on the Company.

         To date, the Company has not established a contingency plan for
possible Year 2000 issues. Where needed, the Company will develop such
contingency plans based upon the results of its primary business software
conversion and final assessment of risks associated with third parties.


                                       20
<PAGE>   22

         The discussion of the Company's efforts, and management expectations,
relating to Year 2000 compliance are forward-looking statements. The cost of the
project and the date by which the Company plans to complete its Year 2000
compliance efforts are based on management's estimates, which were derived
utilizing numerous assumptions of future events, including the continued
availability of personnel trained in this area, third party modification plans,
and other factors. Nevertheless, there can be no guarantee that these estimates
will be achieved, and actual results could differ materially from these
estimates.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         The Company is exposed to market risk related to changes in the price
of gold, and selectively uses forward contracts to manage this risk. The Company
enters into forward contracts for the purchase of gold to hedge outstanding
customer orders for future delivery in order to mitigate the risk of price
fluctuations. The Company does not enter into forward contracts or other
financial instruments for speculation or trading purposes. The aggregate 
amounts of forward contracts were $4.3 million and $1.4 million at January 29, 
1999 and January 30, 1998, respectively. The forward contracts outstanding at 
January 29, 1999 expire in February 1999.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

         The following consolidated financial statements are included as a
separate section following the signature page to this Form 10-K and are
incorporated herein by reference:

<TABLE>
<CAPTION>
                                                                                           PAGE #
                                                                                           ------

<S>                                                                                        <C>
Report of Independent Accountants .....................................................      F-1
Consolidated Financial Statements:
    Consolidated Balance Sheets as of January 29, 1999 and
             January 30, 1998 .........................................................      F-2
    Consolidated Statements of Income for the years ended
             January 29, 1999, January 30, 1998 and January 31, 1997 ..................      F-3
    Consolidated Statements of Changes in Stockholders' Equity for
             the years ended January 29, 1999, January 30, 1998 and January 31, 1997...      F-4
    Consolidated Statements of Cash Flows for the years ended
             January 29, 1999, January 30, 1998 and January 31, 1997 ..................      F-5
    Notes to Consolidated Financial Statements ........................................      F-6
</TABLE>


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

        Not applicable.

                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information required by this item is set forth, in part, in the
Supplemental Item, "Executive Officers" in Part I of this report. The balance of
the information required by this item is incorporated by reference from the
Company's definitive proxy statement for its Annual Meeting of Stockholders
scheduled to be held on June 14, 1999.


                                       21
<PAGE>   23

ITEM 11. EXECUTIVE COMPENSATION

         The information required by this item is incorporated by reference from
the Company's definitive proxy statement for its Annual Meeting of Stockholders
scheduled for June 14, 1999.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information required by this item is incorporated by reference from
the Company's definitive proxy statement for its Annual Meeting of Stockholders
scheduled for June 14, 1999.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information required by this item is incorporated by reference from
the Company's definitive proxy statement for its Annual Meeting of Stockholders
scheduled for June 14, 1999.

                                     PART IV

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

(a) 1.   FINANCIAL STATEMENTS:

         The following consolidated financial statements are filed as part of
this report:

<TABLE>
<CAPTION>
                                                                                                                  PAGE #
                                                                                                                  ------
<S>                                                                                                               <C>
     Report of Independent Accountants.............................................................................F-1
     Consolidated Financial Statements:
         Consolidated Balance Sheets as of January 29, 1999 and
                  January 30, 1998.................................................................................F-2
         Consolidated Statements of Income for the years ended
                  January 29, 1999, January 30, 1998 and January 31, 1997..........................................F-3
         Consolidated Statements of Changes in Stockholders' Equity for
                  the years ended January 29, 1999, January 30, 1998 and January 31, 1997..........................F-4
         Consolidated Statements of Cash Flows for the years ended
                  January 29, 1999, January 30, 1998 and January 31, 1997..........................................F-5
         Notes to Consolidated Financial Statements................................................................F-6
</TABLE>


(a) 2.   FINANCIAL STATEMENT SCHEDULES

         The following financial statement schedule is filed as part of this
report:

<TABLE>
<CAPTION>
                                                                                                                  PAGE #
                                                                                                                  ------
<S>                                                                                                               <C>

         Schedule II - Valuation and Qualifying Accounts...........................................................S-1
</TABLE>

         Schedules other than the schedule listed above are omitted for the
reason that they are not required or are not applicable, or the required
information is shown in the consolidated financial statements or notes thereto.

(b)      REPORTS ON FORM 8-K
         NONE.


                                       22
<PAGE>   24

(c)      EXHIBITS

         The following exhibits are filed as part of this report:

         3.1          Certificate of Incorporation of the registrant, together
                      with amendments filed June 15, 1993 and September 23,
                      1993.(l)

         3.2          Certificate of Amendment to Certificate of Incorporation
                      dated July 3, 1995.(6)

         3.3          Bylaws of the registrant.(1)

         10.1         Form of Consignment Agreement between the registrant and 
                      each of the consigning institutions.(2)

         10.2         Form of Loan Agreement between the registrant and each of
                      Fleet  Precious  Metals  Inc.  and ABN AMRO Bank N.V.(2)

         10.3         Sixth Amended and Restated Credit Agreement, dated July
                      22, 1994, between the registrant and Bank of America
                      National Trust and Savings Association.(3)

         10.4         Amendment  No.  Six to  Sixth  Amended  and  Restated  
                      Credit Agreement, dated November 1, 1996, between the
                      registrant and Bank of America National Trust and Savings
                      Association.(8)

         10.5         First Amendment and Agreement, dated July 22, 1994, among
                      the consigning institutions and the lenders named therein
                      and the registrant.(3)

         10.6         Second Amendment and Agreement, dated December 2, 1994,
                      among the consigning institutions and the lenders name
                      therein and the registrant.(5)

         10.7         Third Amendment and Agreement, dated May 30, 1995, among
                      the consigning institutions and the lenders named therein
                      and the registrant.(6)

         10.8         Fourth Amendment and Agreement, dated July 28, 1995, among
                      the consigning institutions and the lenders named therein
                      and the registrant.(7)

         10.9         Second Amended and Restated Intercreditor Agreement, dated
                      July 22, 1994, among the lenders named therein and the
                      registrant.(3)

         10.10        Amended and Restated Security Agreement, dated February
                      25, 1994, among the lenders named therein and the
                      registrant.(2)

         10.11        Trademark Collateral Assignment, dated February 25, 1994,
                      among the lenders named therein and the registrant.(2)

         10.12        First Amendment to Trademark Collateral Assignment, dated
                      July 22, 1994, among the lenders named therein and the
                      registrant.(3)

         10.13        Trademark Collateral Assignment, dated July 22, 1994, 
                      among the lenders named therein and the registrant.(3)

         10.14        Patent Collateral Assignment, dated February 25, 1994, 
                      among the lenders named therein and the registrant.(2)


                                       23
<PAGE>   25

         10.15        First Amendment to Patent Collateral Assignment, dated
                      July 22, 1994, among the lenders named therein and the
                      registrant.(3)

         10.16        Patent Collateral Assignment, dated April 3, 1989, among
                      the lenders named therein and the registrant, together
                      with amendments dated August 11, 1989, December 4, 1989
                      and May 1, 1992.(1)

         10.17        Fourth Amendment to Patent Collateral Assignment.(2)

         10.18        Fifth Amendment to Patent Collateral Assignment, dated 
                      July 22, 1994.(3)

         10.19        Sixth Amendment to Patent Collateral Assignment, dated 
                      May 30, 1995, among the lenders named therein and the
                      registrant.(6)

         10.20        Patent Collateral Assignment, dated July 22, 1994, among 
                      the lenders named therein and the registrant.(3)

         10.21        First Amendment to Trademark Collateral Assignment, dated
                      May 30, 1995, among the lenders named therein and the
                      registrant.(6)

         10.22        Second Amendment to Trademark Collateral Assignment, 
                      dated May 30, 1995, among the lenders named therein and
                      the registrant.(6)

         10.23        First Amendment to Patent Collateral  Assignment,  dated 
                      May 30, 1995, among the lenders named therein and the
                      registrant.(6)

         10.24        Second Amendment to Patent Collateral Assignment, dated
                      May 30, 1995, among the lenders named therein and the
                      registrant.(6)

         10.25        Business Loan Agreement, dated September 10, 1993, between
                      the registrant and Cathay Bank.(1)

         10.26        Business Loan Agreement, dated February 10, 1993, between
                      the registrant and Cathay Bank.(1)

         10.27        Mortgage Loan, dated March 9, 1995, between the registrant
                      and Cathay Bank.(6)

         10.28        Mortgage Loan, dated March 9, 1995, between the registrant
                      and Cathay Bank.(6)

         10.29        Mortgage Loan, dated November 1995, between the registrant
                      and Cathay Bank.(9)

         10.30       Note Secured by Deed of Trust, dated July 31, 1989, by the
                     registrant in favor of Chester Scott and Elizabeth D. 
                     Scott.(1)

         10.31        All-Inclusive Purchase Money Promissory Note Secured by
                      Long Form All-Inclusive Purchase Money Deed of Trust,
                      dated April 13, 1981, by the registrant in favor of Carl
                      Mattera, together with amendments dated May 1, 1991 and
                      August 9, 1991.(1)

         10.32        Employment Agreement, dated June 10, 1993, between the 
                      registrant and Guy Benhamou.*(1)


                                       24
<PAGE>   26

         10.33        Tax Indemnification Agreement, dated June 10, 1993, 
                      between the registrant and Guy Benhamou.*(1)

         10.34        Amended and Restated OroAmerica, Inc. 1988 Incentive Stock
                      Option Plan.*(1)

         10.35        OroAmerica, Inc. Salary Deferral and Profit Sharing Plan,
                      as amended.*(1)

         10.36        Form of awards under the OroAmerica, Inc. Executive/Key 
                      Employee Bonus Plan. *(1)

         10.37        Form of Indemnification Agreement between the registrant 
                      and its directors and executive officers.*(1)

         10.38        Summary of dependent medical insurance coverage for 
                      executive officers.*(1)

         10.39        OroAmerica, Inc. Directors' Stock Option Plan.*(4)

         10.40        OroAmerica, Inc. 1994 Chief Executive Officer Bonus 
                      Plan. *(5)

         10.41        Letter Agreement, dated August 8, 1996, between the 
                      registrant and Shiu Shao. *(10)

         10.42        Letter Agreement, dated August 8, 1996, between the 
                      registrant and Sophia Chalermsopone. *(10)

         10.43        Letter Agreement, dated August 8, 1996, between the 
                      registrant and Claudia Hollingsworth. *(10)

         10.44        Letter Agreement, dated August 8, 1996, between the 
                      registrant and David Wu. *(10)

         10.45        Letter Agreement, dated September 11, 1996, between the 
                      registrant and Betty Sou.*(10)

         10.46        Exclusive License Agreement, dated December 15, 1996, 
                      between Fragrance Business Company Limited and the
                      registrant. (10)

         10.47        Purchase-Sale Agreement, dated August 26, 1997, between 
                      the registrant and Ravel, Inc.(11)

         10.48        Asset Purchase-Sale Agreement, dated October 29, 1997, 
                      between the registrant and Jerry Prince, Inc.(12)

         10.49        Stock Option Agreement, dated as of March 18, 1996, 
                      between the registrant and Ronald A. Katz. (13)

         10.50        Stock Option Agreement, dated as of April 14, 1997, 
                      between the registrant and Bertram K. Massing. (13)

         10.51        OroAmerica, Inc. 1998 Incentive Stock Option Plan. (14)

         10.52        OroAmerica, Inc. Supplemental Non-Employee Director Stock
                      Option Plan. (15)


                                       25
<PAGE>   27

         21.1         Subsidiaries of the registrant.

         23.1         Consent of PricewaterhouseCoopers LLP.

         27.1         Financial Data Schedule.


*        Management contract, compensatory plan or arrangement.

(1)      Previously filed in the Exhibits to the registrant's Registration
         Statement on Form S-1 (File No. 33-63422) and incorporated by reference
         herein.

(2)      Previously  filed in the  Exhibits to the  registrant's  Annual  Report
         on Form 10-K for the fiscal year ended January 28, 1994 and
         incorporated by reference herein.

(3)      Previously filed in the Exhibits to the registrant's Quarterly Report
         on Form 10-Q for the quarterly period ended July 29, 1994 and
         incorporated by reference herein.

(4)      Previously filed in the Exhibits to the registrant's Registration
         Statement on Form S-8 (File No. 33-84028) and incorporated by reference
         herein.

(5)      Previously filed in the Exhibits to the registrant's Annual Report on 
         Form 10-K for the fiscal year ended January 27, 1995 and incorporated
         by reference herein.

(6)      Previously filed in the Exhibits to the registrant's Quarterly Report
         on Form 10-Q for the quarterly period ended July 28, 1995 and
         incorporated by reference herein.

(7)      Previously filed in the Exhibits to the registrant's Quarterly Report
         on Form 10-Q for the quarterly period ended October 27, 1995 and
         incorporated by reference herein.

(8)      Previously filed in the Exhibits to the registrant's Quarterly Report
         on Form 10-Q for the quarterly period ended November 1, 1996 and
         incorporated by reference herein.

(9)      Previously filed in the Exhibits to the registrant's Annual Report on 
         Form 10-K for the fiscal year ended January 31, 1997 and incorporated
         by reference herein.

(10)     Previously filed in the Exhibits to the registrant's Annual Report on 
         Form 10-K for the fiscal year ended January 30, 1998 and incorporated
         by reference herein.

(11)     Previously filed in the Exhibits to the registrant's Current Report on
         Form 8-K dated August 26, 1997 and incorporated by reference herein.

(12)     Previously filed in the Exhibits to the registrant's Amended Current
         Report on Form 8-K/A dated October 29, 1997 and incorporated by
         reference herein.

(13)     Previously filed in the Exhibits to the registrant's Registration 
         Statement on Form S-8 (File No. 333-51703) and incorporated by
         reference herein.

(14)     Previously filed in the Exhibits to the registrant's Registration 
         Statement on Form S-8 (File No. 333-58699) and incorporated by
         reference herein.

(15)     Previously filed in the Exhibits to the registrant's Registration 
         Statement on Form S-8 (File No. 333-63811) and incorporated by
         reference herein.


                                       26
<PAGE>   28


                                   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.

                                          OROAMERICA, INC.


Date:  April 26, 1999                     By: /s/ Guy Benhamou
                                          -------------------------------------
                                          Guy Benhamou, Chairman of the Board,
                                          President and Chief Executive Officer

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

Date:  April 26, 1999                     /s/ Guy Benhamou
                                          -------------------------------------
                                          Guy Benhamou, Chairman of the Board,
                                          President and Chief Executive Officer


Date:  April 26, 1999                     /s/ Shiu Shao
                                          -------------------------------------
                                          Shiu Shao, Chief Operating Officer,
                                          Chief Financial Officer,
                                          Vice President and Director


Date:  April 26, 1999                     /s/ Betty Sou
                                          -------------------------------------
                                          Betty Sou, Controller (Principal
                                          Accounting Officer)



Date:  April 26, 1999                     /s/ Bertram K. Massing
                                          -------------------------------------
                                          Bertram K. Massing, Director



Date:  April 26, 1999                     /s/ Ronald A. Katz
                                          -------------------------------------
                                          Ronald A. Katz, Director



Date:  April 26, 1999                     /s/ David Rousso
                                          -------------------------------------
                                          David Rousso, Director


                                       27

<PAGE>   29

                        REPORT OF INDEPENDENT ACCOUNTANTS


To the Board of Directors and Stockholders of OroAmerica, Inc.

In our opinion, the consolidated financial statements listed in the index
appearing under item 14(a)(1) and (2) on page 22 present fairly, in all material
respects, the financial position of OroAmerica, Inc. and its subsidiaries at
January 29, 1999 and January 30, 1998, and the results of their operations and
their cash flows for each of the three fiscal years in the period ended January
29, 1999, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the Company's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
generally accepted auditing standards which 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,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for the opinion expressed
above.




PricewaterhouseCoopers LLP
Los Angeles, California
April 5, 1999




                                     F - 1
<PAGE>   30

                                OROAMERICA, INC.
                           CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                        January 29,     January 30,
                                                                           1999             1998
                                                                        -----------     -----------
<S>                                                                     <C>              <C>
(Dollars in thousands except share amounts)
ASSETS
Current assets:
   Cash and cash equivalents                                             $ 30,263         $ 30,351
   Accounts receivable less allowance for returns
       and doubtful accounts of $11,797 and $10,802                        19,454           19,627
   Other accounts and notes receivable                                        969              235
   Inventories (Note 2)                                                    13,694           12,772
   Deferred income taxes (Note 8)                                           3,205            2,611
   Prepaid items and other current assets                                     788              742
                                                                         --------         --------
       Total current assets                                                68,373           66,338

Property and equipment, net (Notes 3, 6 and 12)                            11,342           10,406
Goodwill and other intangible assets, net  (Notes 1 and 10)                 5,532            4,302
Patents, net (Note 1)                                                       4,687            5,177
Other assets (Notes 4 and 8)                                                  169              442
                                                                         --------         --------
                                                                         $ 90,103         $ 86,665
                                                                         ========         ========
LIABILITIES AND STOCKHOLDERS' EQUITY 
Current liabilities:
   Current portion of long-term debt (Note 6)                            $     --         $    347
   Accounts payable                                                         8,165            7,426
   Income taxes payable (Note 8)                                            1,660            1,443
   Accrued expenses (Note 7)                                                7,821            8,911
                                                                         --------         --------
       Total current liabilities                                           17,646           18,127

Long-term debt, less current portion (Note 6)                                  --            2,341
                                                                         --------         --------
       Total liabilities                                                   17,646           20,468
                                                                         --------         --------

Commitments and contingencies (Notes 2 and 12)                                 --               --
Stockholders' equity (Note 15):
   Preferred stock, 500,000 shares authorized, $.001 par value;
       none issued and outstanding
   Common stock, 10,000,000 shares authorized, $.001 par value;
       6,366,378 and 6,254,378 shares issued at
       January 29, 1999 and January 30, 1998, respectively                      6                6
   Paid-in capital                                                         43,551           42,979
   Note receivable from stock sales                                          (190)              --
   Treasury stock, 95,000 shares and 0 shares at January 29, 1999
      and January 30, 1998, respectively                                     (576)              --
   Retained earnings                                                       29,666           23,212
                                                                         --------         --------
        Total stockholders' equity                                         72,457           66,197
                                                                         --------         --------
                                                                         $ 90,103         $ 86,665
                                                                         ========         ========
</TABLE>


See accompanying notes to consolidated financial statements.




                                     F - 2
<PAGE>   31

                                OROAMERICA, INC.
                        CONSOLIDATED STATEMENTS OF INCOME



<TABLE>
<CAPTION>
For the fiscal years ended                                January 29,      January 30,      January 31,
(Dollars in thousands, except per share amounts)             1999             1998              1997
------------------------------------------------          -----------      -----------      -----------
<S>                                                       <C>              <C>              <C>        
Net sales                                                 $   174,491      $   159,720      $   177,065
Cost of goods sold, exclusive of depreciation                 131,522          123,800          144,398
                                                          -----------      -----------      -----------
      Gross profit                                             42,969           35,920           32,667
                                                          -----------      -----------      -----------
Selling, general and administrative expenses                   30,740           26,421           23,577
Bad debt expense                                                  115              763              517
Depreciation and amortization                                   2,362            2,502            2,453
Interest expense                                                1,532            1,894            2,885
Other income (Notes 9 and 14)                                  (2,024)          (6,607)            (640)
                                                          -----------      -----------      -----------
      Total expenses                                           32,725           24,973           28,792
                                                          -----------      -----------      -----------
Income before income taxes                                     10,244           10,947            3,875
Provision for income taxes (Note 8)                             3,790            4,269            1,685
                                                          -----------      -----------      -----------
Net income                                                $     6,454      $     6,678      $     2,190
                                                          ===========      ===========      ===========

Basic net income per share                                $      1.03      $      1.07      $      0.35
                                                          ===========      ===========      ===========
Diluted net income per share                              $      1.02      $      1.06      $      0.35
                                                          ===========      ===========      ===========

Weighted average shares outstanding                         6,287,566        6,254,212        6,250,711
Dilutive effect of stock options                               50,319           16,549            5,364
                                                          -----------      -----------      -----------
Weighted average shares outstanding assuming dilution       6,337,885        6,270,761        6,256,075
                                                          ===========      ===========      ===========
</TABLE>



See accompanying notes to consolidated financial statements.




                                     F - 3
<PAGE>   32

                                OROAMERICA, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                      
                                     
For the fiscal years ended            Number of Shares                                        Note
January 31, 1997,                    --------------------                                  Receivable
January 30,1998 and                   Common      Common                                      From       Treasury
January 29, 1999                      Stock      Stock in     Common    Paid-in   Retained    Stock       Stock
(dollars in thousands)                Issued     Treasury     Stock     Capital   Earnings   Purchase     At Cost      Total
----------------------               ---------   --------     ------    -------   --------   --------     -------     --------
<S>                                  <C>          <C>         <C>       <C>        <C>        <C>         <C>         <C>     
BALANCE AT FEBRUARY 2, 1996          6,248,378         --     $    6    $42,951    $14,344    $    --     $    --     $ 57,301

Stock options exercised                  4,000                    --         19                                             19

Net income                                                                           2,190                               2,190
                                     ---------    -------     ------    -------    -------    -------     -------      -------
BALANCE AT JANUARY 31, 1997          6,252,378         --          6     42,970     16,534         --          --       59,510

Stock options exercised                  2,000                    --          9                                              9

Net income                                                                           6,678                     --        6,678
                                     ---------    -------     ------    -------    -------    -------     -------      -------
BALANCE AT JANUARY 30, 1998          6,254,378         --          6     42,979     23,212         --          --       66,197

Stock options exercised (Note 15)      112,000                    --        572                  (190)                     382

Treasury stock acquired at cost                   (95,000)                                                   (576)        (576)

Net income                                                                           6,454                               6,454
                                     ---------    -------     ------    -------    -------    -------     -------     --------
BALANCE AT JANUARY 29, 1999          6,366,378    (95,000)    $    6    $43,551    $29,666    $  (190)    $  (576)    $ 72,457
                                     =========    =======     ======    =======    =======    =======     =======     ========
</TABLE>


          See accompanying notes to consolidated financial statements.




                                     F - 4
<PAGE>   33

                                OROAMERICA, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                For Fiscal Years Ended
                                                       ---------------------------------------
Dollars in thousands,                                  January 29,   January 30,   January 31,
Increase (decrease) in cash                               1999          1998          1997
---------------------------                            ----------    -----------   -----------
<S>                                                     <C>           <C>           <C>     
Cash flows from operating activities:
Net income                                              $  6,454      $  6,678      $  2,190
Adjustments to reconcile net income to net
  cash provided by operating activities:
    Depreciation and amortization                          2,362         2,502         2,453
    Provision for losses on accounts receivable              115           763           517
    Provision for estimated returns                          795           160           140
    Provision for uncollectible vendor advances               --            50          (228)
    Gain on sale of property                                 (39)           --           (20)
    Gain on sale of investment in affiliate                   --          (852)           --
Changes in assets and liabilities, net of
    effects from acquisitions:
    Accounts receivable                                     (835)       (1,145)        5,073
    Other accounts and notes receivable                     (635)          342           226
    Inventories                                             (511)          142         1,824
    Deferred income taxes                                   (594)         (233)         (426)
    Prepaid income taxes and income taxes payable            217         1,000           585
    Prepaid items and other assets, net                      269           311          (612)
    Accounts payable, accrued expenses and
      deferred liabilities                                  (351)        4,095           501
                                                        --------      --------      --------
        Net cash provided by operating activities          7,247        13,813        12,223
                                                        --------      --------      --------

Cash flows from investing activities:
    Capital expenditures                                  (2,254)       (1,889)         (865)
    Acquisitions, net of cash acquired (Note 10)          (2,241)       (4,506)           --
    Proceeds from sale of investment in affiliate             --         1,429            --
    Proceeds from sale of property                            42            --            32
                                                        --------      --------      --------
        Net cash used in investing activities             (4,453)       (4,966)         (833)
                                                        --------      --------      --------

Cash flows from financing activities:
    Gross borrowings under line-of-credit agreement          400           300         3,950
    Repayment of borrowings under line-of-credit            (400)         (300)       (3,950)
    Principal repayments of long-term debt                (2,688)         (886)       (1,338)
    Repurchase of treasury stock                            (576)           --            --
    Issuance of common stock                                 382             9            19
                                                        --------      --------      --------
        Net cash used in financing activities             (2,882)         (877)       (1,319)
                                                        --------      --------      --------

(Decrease) increase in cash and cash equivalents             (88)        7,970        10,071
Cash and cash equivalents at beginning of period          30,351        22,381        12,310
                                                        --------      --------      --------
Cash and cash equivalents at end of period              $ 30,263      $ 30,351      $ 22,381
                                                        ========      ========      ========
</TABLE>



See accompanying notes to consolidated financial statements.




                                     F - 5
<PAGE>   34

                                OROAMERICA, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Line of business

OroAmerica, Inc. (the Company) is a Delaware corporation primarily engaged in
importing, manufacturing and distributing gold jewelry products to large
retailers such as mass merchandisers and discount stores, catalog showrooms,
national and regional jewelry chains, home shopping networks, warehouse clubs
and department stores and to jewelry wholesalers and distributors. During fiscal
1998, the Company entered the premium cigar manufacturing and distribution
business. In fiscal 1998, Cigar operations consisted primarily of securing
tobacco inventories and establishing manufacturing facilities in the Dominican
Republic and Indonesia. In fiscal 1999, the Company began selling cigars to
retailers and opened its retail cigar store in Beverly Hills, California.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and
all majority-owned subsidiaries. Investments in 20% to 50% owned affiliated
companies are accounted for on the equity method where the Company exercises
significant influence over operating and financial affairs. Otherwise,
investments are included at cost. Significant intercompany transactions are
eliminated in consolidation.

Accounting 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 Years

The Company reports results of operations for a fiscal year consisting of a 52
or 53 week period ending the Friday closest to January 31. Each of the three
fiscal years ended January 29, 1999, January 30, 1998, and January 31, 1997,
consists of fifty-two weeks.

Statement of Cash Flows

For the purposes of reporting cash flows, cash and cash equivalents include
amounts held at financial institutions or highly liquid investments with
original maturities of ninety days or less when purchased. The fair value of
cash and cash equivalents approximates their carrying amount.




                                     F - 6
<PAGE>   35

Supplemental cash flow information and non-cash investing and financing
activities are as follows:

<TABLE>
<CAPTION>
Fiscal Year (in thousands)                        1999       1998         1997
--------------------------------------------     ------     -------      -------
<S>                                              <C>        <C>          <C>    
Cash paid during the year for:
    Interest                                     $1,554     $ 1,878      $ 3,046
    Income taxes                                 $4,237     $ 3,234      $ 1,522
Non-cash investing and financing activities:
    Note receivable from stock sales             $  190     $    --      $    --
Acquisitions (Note 10):
    Fair value of assets acquired                $2,241     $ 5,832      $    --
    Liabilities assumed                              --        (942)          --
                                                 ------     -------      -------
      Cash paid                                  $2,241     $ 4,890      $    --
                                                 ======     =======      =======
</TABLE>

Concentrations of Credit Risk

The Company's financial instruments subject to credit risk consist primarily of
cash equivalents and accounts receivable. The Company places its cash
equivalents in high quality securities with a major bank and financial
institution. With respect to accounts receivable, the Company extends credit
based on an evaluation of a customer's financial condition, generally without
requiring collateral. Exposure to losses on receivables is principally dependent
on each customer's financial condition. The Company monitors its exposure for
credit losses and maintains allowances for anticipated losses. The Company's ten
largest customers accounted for approximately 59% of net sales in 1999, 54% of
net sales in 1998 and 51% of net sales in 1997. One customer, Wal-Mart,
accounted for 22%, 16.4% and 17.7% of the Company's net sales for the years
ended January 29, 1999, January 30, 1998, and January 31, 1997, respectively. No
other individual customer accounts for more than 10 percent of sales. At January
29, 1999 and January 30, 1998, gross accounts receivable included balances
totaling $15.3 million and $15.6 million, respectively, from the Company's ten
largest customers.

Allowance for Sales Returns and Doubtful Accounts

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. The
Company provides allowances for doubtful accounts receivable when it determines
that such amounts are uncollectible. Actual bad debt and sales return experience
has been in line with management's expectations. The allowances are as follows
at the following dates:

<TABLE>
<CAPTION>
                           January 29,         January 30,
                              1999                1998
                           ----------          ----------
<S>                        <C>                 <C>       
Doubtful accounts          $1,800,000          $1,600,000
Sales returns              $9,997,000          $9,202,000
</TABLE>




                                     F - 7
<PAGE>   36

Cost of Goods Sold and Inventories

The principal component of inventories and cost of goods sold is the cost of the
bullion and other raw materials used in the production of the Company's jewelry.
Other components of inventories and cost of goods sold include direct costs
incurred by the Company in its manufacturing operations, fees paid to outside
manufacturers, procurement costs such as customs duties, handling charges and
freight, and provisions for uncollectible vendor advances.

The Company accounts for its jewelry inventories at the lower of cost or market,
using the last in, first out (LIFO) method to determine cost. Year end gold
inventory cost used in determining incremental LIFO layers is based on the year
end gold market price at the Second London Gold Fixing. The LIFO cost may
increase or decrease from year to year as a result of changes in quantities and
unit prices in ending inventory. Consigned gold is not included in inventory,
and there is no related liability recorded at year-end.

"Market" consists of the market value of gold in inventory, determined as of the
last day of the reporting period, plus allocated manufacturing costs (labor and
overhead). When market value is lower than LIFO cost and market value declines
from period to period, the carrying value of inventory is reduced, resulting in
an increase in cost of goods sold.

The Company accounts for its tobacco and other inventories at the lower of cost
or market, using the first-in, first-out (FIFO) method to determine cost.

Forward Purchase Contracts

The Company enters into forward contracts for the purchase of gold to hedge
outstanding customer orders for future delivery in order to mitigate the risk of
price fluctuations. The Company does not enter into forward contracts for
trading purposes. The effects of hedging transactions are recognized when
contracts are settled. The aggregate amounts of forward contracts were $4.3
million and $1.4 million at January 29, 1999 and January 30, 1998, respectively.
The forward contracts outstanding at January 29, 1999 expire in February 1999.
The carrying value of the forward purchase contracts approximates their fair 
values because of the relatively short maturity of these contracts.

Property and Equipment

Property and equipment are stated at cost or, in the case of leased assets under
capital leases, at the present value of future minimum lease payments.
Expenditures for major renewals and improvements which substantially increase
the useful lives of assets are capitalized. Repair and maintenance costs are
expensed as incurred. Depreciation of buildings and equipment is provided over
the estimated useful lives of the assets using straight-line and accelerated
methods. Amortization of leasehold improvements is provided using the
straight-line method over the life of the lease or asset, whichever is shorter.
The useful lives range from three to twenty years.

Goodwill and Other Intangible Assets

Goodwill in the amount of $5,793,000, which arose in connection with the
acquisition of a former stockholder's interest in the Company and its affiliates
in 1987, is amortized over twenty-five years. Goodwill in the amount of
$973,000, which arose in connection with the fiscal 1995 acquisition of Jerry
Madison Enterprises, a jewelry company specializing in the production and
distribution of diamond-accented and gemstone jewelry merchandise, is being
amortized over fifteen years. In fiscal 1998, the Company recorded $200,000 of
goodwill related the Jerry Prince acquisition, which 




                                     F - 8
<PAGE>   37
is being amortized over five years (Note 10). In fiscal 1999, the Company
recorded goodwill related to the Eclipse and Jene acquisitions of approximately
$1.1 million, which is being amortized over periods of five and fifteen years,
respectively. Amortization expense for fiscal 1999, 1998 and 1997 was $361,000,
$293,000 and $294,000, respectively. Accumulated amortization at January 29,
1999 and January 30, 1998 was $3,025,000 and $2,664,000, respectively.

Covenants-not-to-compete in the amount of $540,000 were executed in connection
with the fiscal 1999 acquisitions of Jene and Eclipse (See Note 10). These
covenants-not-to-compete are being amortized on a straight-line basis, over
terms ranging from four to five years. Amortization expense for fiscal 1999
approximated $39,000. Accumulated amortization at January 29, 1999 was $39,000.

Patents

The Company owns patents for several of its jewelry products and amortizes its
patents over their economic useful lives, estimated between fifteen and
seventeen years. Amortization expense was approximately $489,000 for each of the
three fiscal years in 1999, 1998, and 1997. Accumulated amortization at January
29, 1999 and January 30, 1998, was $2,830,000 and $2,340,000, respectively.

Impairment of Long-Lived Assets

Long-lived assets and certain identifiable intangibles to be held and used or
disposed of by the Company are reviewed for impairment whenever events or
changes in circumstances indicate that the carrying value of an asset may not be
recoverable. An impairment loss is recognized when the estimate of undiscounted
future cash flows expected to be generated by the asset is less than its
carrying amount. An impairment loss is measured as the amount by which the
carrying amount of the asset exceeds its fair value. No impairment losses have
been recognized in each of the three years in the period ended January 29, 1999.

Income Taxes

The provision for income taxes includes amounts related to current taxable
income and deferred income taxes. A deferred income tax asset or liability is
determined by applying currently enacted tax laws and rates to the expected
reversals of cumulative temporary differences between the carrying value of
assets and liabilities for financial statement and income tax purposes.
Additionally, a valuation allowance is established to reduce a deferred tax
asset if it is more likely than not that all, or some portion, of such deferred
tax asset will not be realized. The deferred income tax provision is measured by
the change in the net deferred income tax asset or liability during the year.

Stock Compensation

The Company accounts for employee stock-based compensation in accordance with
Accounting Principles Board Opinion No. 25, "Accounting For Stock Issued To
Employees." In February 1996, the Company adopted the disclosure requirements of
Statement of Financial Accounting Standards No. 123 ("SFAS No. 123"),
"Accounting For Stock-Based Compensation" (See Note 13).




                                     F - 9
<PAGE>   38

Net Income Per Share

Basic net income per share is computed by dividing net income by the
weighted-average number of common shares outstanding. Diluted earnings per share
reflects the potential dilution that would occur if securities or other
contracts to issue common stock were exercised or converted into common stock.
Diluted net income per share includes the dilutive effect of stock options.

New Accounting Standards

In fiscal 1999, the Company adopted Statement of Financial Accounting Standards
No. 131, "Disclosures About Segments of an Enterprise and Related Information",
("SFAS 131"). SFAS 131 requires that certain financial information regarding
operating segments be publicly reported on the same basis as used internally by
management to evaluate segment performance. The adoption of SFAS 131 had no
impact on the Company's consolidated results of operations, financial position
or cash flows. (See Note 16).

In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivatives and Hedging
Activities" ("SFAS 133"), which the Company is required to adopt effective
January 29, 2000. SFAS 133 requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. Additionally, SFAS 133 defines the accounting
for changes in the fair value of the derivatives depending on the intended use
of the derivative. The impact of SFAS 133 on the Company's financial statements
will depend on a variety of factors, including the extent of the Company's
hedging activities, the types of hedging instruments used and the effectiveness
of such instruments. The Company has not yet determined what the effect of
adoption of SFAS 133 will be on the earnings and financial position of the
Company.



                                     F - 10
<PAGE>   39

NOTE 2 - INVENTORIES:

Inventories consist of the following (in thousands except per ounce data):

<TABLE>
<CAPTION>
                                      January 29,        January 30,
                                         1999               1998
                                      -----------        -----------
<S>                                   <C>                <C>     
Gold and other raw materials           $  2,401           $  4,093
Manufacturing costs and other            10,304              7,975
                                       --------           --------
Jewelry inventories                      12,705             12,068
Tobacco inventories                       2,541              2,801
Other inventories                           116                310
                                       --------           --------
                                         15,362             15,179
LIFO cost less than FIFO cost              (988)            (1,727)
Allowance for vendor advances              (680)              (680)
                                       --------           --------
Inventories                            $ 13,694           $ 12,772
                                       ========           ========

Gold price per ounce:                  $ 285.40           $ 304.85
                                       ========           ========
</TABLE>


The Company values its jewelry inventories using the last-in, first-out (LIFO)
method. The Company values its tobacco and other inventories using the first-in,
first-out (FIFO) method.

The Company has several consignment agreements with gold consignors, providing
for a maximum aggregate consignment of 290,000 fine troy ounces. In accordance
with the consignment agreements, title remains with the gold consignors until
purchased by the Company.

At January 29,1999 and January 30, 1998, the Company held 191,100 and 155,400
fine troy ounces of gold under consignment agreements, respectively. Consigned
gold is not included in inventory and there is no related liability recorded at
year-end. The purchase price per ounce is based on the daily Second London Gold
Fixing. Manufacturing costs included in inventory represent costs incurred to
process consigned and Company owned gold into finished jewelry products.

The gold consignors and the Company's revolving credit lender (Note 5) have a
security interest in substantially all the assets of the Company. The Company
pays to the gold consignors a consignment fee based on the dollar equivalent of
ounces outstanding, computed based on the Second London Gold Fixing, as defined
in the agreements. Each consignment agreement is terminable on 30 days notice by
the Company or the consignor.

The gold consignment agreements require the Company to comply with certain
covenants with respect to its working capital, current ratio and tangible net
worth and to maintain the aggregate of its accounts receivable and inventory of
gold at specified minimums. Additional provisions of the agreements:(a) prohibit
the payment of dividends, (b) limit capital expenditures, (c) limit the amount
of debt the Company may incur, (d) prohibit the Company from engaging in mergers
and acquisitions without prior approval, (e) require the Company to maintain and
assign as additional collateral key man life insurance on its chief executive
officer in the amount of $5.0 million, (f) 




                                     F - 11
<PAGE>   40

prohibit termination of the chief executive officer's employment for any reason
other than death or disability and prohibit any material amendment to his
employment contract and (g) require notice if the Company's principal
stockholder (who is also its chief executive officer) ceases to own at least 40%
of the Company's outstanding common stock. At January 29, 1999, the Company had
breached two covenants of its consignment and revolving credit agreements by 
advancing money to the Company's Chief Operating Officer in excess of 
authorized amounts and by repurchasing treasury stock (See Note 15). In 
February 1999, the Company violated a third debt covenant by purchasing stock 
of a competitor in excess of authorized amounts. To cure these defaults, the 
Company, the gold consignors and the revolving credit lender amended the terms 
of the consignment and revolving credit agreements to accommodate the 
repurchase of treasury stock for up to $5,000,000 through October 31, 1999, and 
to provide for loans to employees for the purchase of the Company's stock in 
amounts not to exceed $500,000, as defined. Additionally, the Company obtained 
an indefinite waiver for the covenant violation related to the purchase of a 
competitor's stock in excess of authorized amounts. 

In fiscal 1999, 1998 and 1997, the Company reduced jewelry inventory levels,
which resulted in liquidations of LIFO inventory layers carried at lower costs
in prior years. The effect of the liquidations for 1999, 1998 and 1997 was to
decrease cost of sales by approximately $739,000, $153,000 and $535,000,
respectively, and to increase net income by $466,000 ($.07 per basic and
dilutive net income per share), $93,000 ($.01 per basic and dilutive net income
per share), and $305,000 ($.05 per basic and dilutive net income per share),
respectively.




                                     F - 12
<PAGE>   41

NOTE 3 - PROPERTY AND EQUIPMENT:

Property and equipment consist of the following (in thousands):

<TABLE>
<CAPTION>
                                               January 29,        January 30,
                                                    1999               1998
                                               -----------        -----------
<S>                                             <C>                <C>     
Land                                            $  3,396           $  3,396
Buildings, leaseholds and improvements             8,373              7,394
Construction in progress                             190                714
Automobiles                                          494                559
Office furniture and equipment                     8,186              6,786
Manufacturing equipment                            4,265              3,791
                                                --------           --------
                                                  24,904             22,640
Less:  Accumulated depreciation                  (13,562)           (12,234)
                                                --------           --------
                                                $ 11,342           $ 10,406
                                                ========           ========
</TABLE>


NOTE 4 - NON-CURRENT ACCOUNT RECEIVABLE:

In July 1997, Montgomery Ward, a customer owing $698,000, filed for protection
from creditors under Chapter 11 of the United States Bankruptcy Code. At January
28, 1998, the Company had discounted the face value of its receivable to its
estimated recoverable value of $279,000. During fiscal 1999, this receivable was
written off as it became apparent that collection was not assured.


NOTE 5 - BORROWINGS UNDER REVOLVING CREDIT AGREEMENT:

The Company has a $10 million revolving credit facility with Bank of America, NT
& SA which expires August 1, 2000. Available borrowings may not exceed the
lesser of $10 million or 80% of eligible accounts receivable minus a reserve
amount, as provided for under the credit facility. Advances under the credit
facility bear interest at the lender's prime rate minus 0.25%, or, at the
Company's option, at short-term fixed rates or rates determined by reference to
offshore interbank market rates plus 1.75%. The revolving credit facility also
provides for the issuance of banker's acceptances, and for the issuance of
letters of credit in an aggregate amount not to exceed $2.5 million at any one
time. Banker's acceptances bear an interest rate based on the bank's prevailing
discount rate at the time of issuance plus 1.75%. No banker's acceptances were
outstanding as of January 29, 1999 or January 30, 1998. No short-term advances
were outstanding at January 29, 1999 or January 30, 1998. Stand-by letters of
credit outstanding at January 29, 1999 or January 30, 1998, totaled $1,500,000
and $1,500,000, respectively. Amounts outstanding under the Bank of America
credit agreement are secured by substantially all of the Company's assets; the
Company's gold consignors also have security interests in these assets, and all
of the consignors and Bank of America are parties to a collateral sharing
agreement. The revolving credit agreement contains substantially the same
covenants and other requirements as are contained in the Company's gold
consignment agreements (Note 2). At January 29, 1999 the Company had breached 
two debt covenants and violated a third covenant in February 1999. Subsequent 
to year end, the Company cured these covenants by amending its consignment and 
revolving credit agreements and by obtaining an indefinite waiver for the 
February 1999 covenant violation.



                                     F - 13
<PAGE>   42

NOTE    6 LONG-TERM DEBT:


Long-term debt consists of the following (in thousands):

<TABLE>
<CAPTION>
                                                                                         January 29,     January 30,
                                                                                             1999            1998
                                                                                         -----------     -----------
<S>                                                                                      <C>             <C>    
Note with interest at the bank's prime rate (8.75% at January 30, 1998) plus 2%,
secured by commercial property, payable in monthly installments of $10,000 plus
interest. Paid in full June 1998                                                           $     --        $ 1,640

Note with interest at the bank's reference rate (8.75% at January 30, 1998) plus
1.5%, secured by real property, payable in monthly principal and interest
installments of $4,621. Paid in full June 1998                                                   --            487

Note with interest at the bank's reference rate (8.75% at January 30, 1998) plus
1.5%, secured by real property, payable in monthly principal and interest
installments of $6,772. Paid in full June 1998                                                   --            302

Note with interest at the bank's prime rate (8.75% at January 30, 1998) plus
1.5%, secured by real property, payable in monthly principal and interest
installments of $14,121. Paid in full June 1998                                                  --             14

Capital lease obligation due in February 1999, interest rate at 12.83%, payable
in monthly principal and interest installments of $14,674 
Paid in full December 1998                                                                       --            245
                                                                                           --------        -------
Total long-term debt                                                                             --          2,688
Less: Current portion                                                                            --           (347)
                                                                                           --------        -------
                                                                                           $     --        $ 2,341
                                                                                           ========        =======
</TABLE>

NOTE 7 - ACCRUED EXPENSES:

Accrued expenses consist of the following (in thousands):

<TABLE>
<CAPTION>
                                         January 29,   January 30,
                                             1999          1998
                                         -----------   -----------
<S>                                        <C>           <C>   
Advertising and customer promotions        $3,577        $3,083
Deferred liabilities                          736         1,908
Payroll and fringe benefits                 2,286         1,820
Professional fees                             213           286
Other miscellaneous                         1,009         1,814
                                           ------        ------
Total                                      $7,821        $8,911
                                           ======        ======
</TABLE>



                                     F - 14
<PAGE>   43

NOTE 8 - INCOME TAXES:

The provision for income taxes for the fiscal years 1999, 1998 and 1997 are
summarized as follows (in thousands):

<TABLE>
<CAPTION>
                             1999            1998            1997
                            -------         -------         -------
<S>                         <C>             <C>             <C>    
Current:
      Federal               $ 3,605         $ 3,763         $ 1,836
      State                     809             739             275
                            -------         -------         -------
                              4,414           4,502           2,111
                            -------         -------         -------
Deferred:
      Federal                  (481)           (198)           (325)
      State                    (143)            (35)           (101)
                            -------         -------         -------
                               (624)           (233)           (426)
                            -------         -------         -------
Income tax provision        $ 3,790         $ 4,269         $ 1,685
                            =======         =======         =======
</TABLE>

Deferred tax assets by jurisdiction are as follows:

<TABLE>
<CAPTION>
                              January 29,   January 30,
                                 1999          1998
                              -----------   -----------
<S>                           <C>           <C>   
Deferred taxes - Federal        $2,579        $2,098
Deferred taxes - State             705           562
                                ------        ------
                                $3,284        $2,660
                                ======        ======
</TABLE>



                                     F - 15
<PAGE>   44

Deferred tax assets (liabilities) are comprised of the following:

<TABLE>
<CAPTION>
                                                   January 29,     January 30,
                                                        1999            1998
                                                   -----------     -----------
<S>                                                  <C>             <C>     
Deferred tax liabilities
        Inventory                                    $(2,023)        $(2,114)
        Fixed and intangible assets                      (95)           (143)
        Prepaid box supplies                             (82)            (94)
                                                     -------         -------
               Total deferred tax liabilities         (2,200)         (2,351)
                                                     -------         -------
Deferred tax assets
        Reserve for returns                            3,982           3,665
        Bad debt reserve                                 710             638
        Compensation accruals                            320             214
        Net operating loss carryforwards                 177             198
        Other                                            295             296
                                                     -------         -------
        Total deferred tax assets                      5,484           5,011
                                                     -------         -------
Net deferred tax assets                              $ 3,284         $ 2,660
                                                     =======         =======
</TABLE>

At January 29, 1999, the Company has federal net operating loss carryforwards
("NOLs") of $934,000. These NOLs are subject to the limitations under Internal
Revenue Code Section 382, which limit their usage to $58,000 in any given year.
The federal NOLs expire in fiscal 2000 through fiscal 2009.

The following is a reconciliation for the U.S. federal statutory rate and the
effective tax rate:


Fiscal year ended


<TABLE>
<CAPTION>
                                       January 29,      January 30,       January 31,
                                          1999              1998              1997
                                       -----------      -----------       -----------
<S>                                    <C>              <C>               <C>  
Federal statutory rate                     34.0%             34.0%             34.0%
State and local income taxes,
    net of federal tax benefits             4.3               4.2               3.0
Goodwill amortization                       1.0               0.9               2.6
Effect of foreign operations               (6.3)             (4.4)             (5.0)
Other, net                                  4.0               4.3               8.9
                                         ------            ------            ------
Effective income tax rate                  37.0%             39.0%             43.5%
                                         ======            ======            ======
</TABLE>

The Company has not provided for U.S. federal income and foreign withholding
taxes on $4.5 million of foreign subsidiaries' undistributed earnings as of
January 29, 1999, because such earnings are intended to be reinvested
indefinitely.



                                     F - 16
<PAGE>   45

NOTE 9 - RELATED PARTY TRANSACTIONS:

The Company accounts for its investments in less than majority-owned entities
using the equity method. The results of operations and the financial positions
of the affiliates are immaterial to the Company.

At January 31, 1997, the Company owned a 45 percent interest in Sicor, an
Italian corporation which manufactures gold chain, jewelry and similar items.
The Company purchased finished product from Sicor at prices which management
believed represented Sicor's cost. Purchases from Sicor during fiscal years
1998, 1997 and 1996 were approximately $0, $234,000 and $196,000, respectively.
In December 1997, the Company sold its investment in Sicor for approximately
$1.4 million, resulting in a gain of $852,000, which is included in other
income.

During fiscal 1993, the Company made an initial capital contribution of $6,000
to a new partnership (OroIndo) whose purpose was to develop rope chain
manufacturing. At January 30, 1998, the Company owned a 50 percent interest in
OroIndo and accounted for this entity using the equity method. In fiscal 1999,
this partnership was dissolved. The purchases from OroIndo during fiscal year
1999, 1998 and 1997 were approximately $7.6 million, $2.2 million and $1.0
million, respectively. No material gain or loss was recognized from the 
dissolution of this partnership.

NOTE 10 - ACQUISITIONS

In June 1998, the Company acquired Eclipse Design, Inc. ("Eclipse"), a
privately-held company engaged in the design, manufacture and sale of gold
earrings. Under the terms of the purchase agreement, the Company acquired all of
the operating assets of Eclipse for approximately $300,000. In September 1998,
the Company acquired the Jene karat gold jewelry business ("Jene"). Under the
terms of the purchase agreement, the Company acquired primarily inventory and
customer lists for approximately $2 million. The Company financed a portion of
the inventory acquired under its consignment agreements. Both acquisitions were
accounted for using the purchase method of accounting; results of operations are
included in the accompanying financial statements from the date of acquisition.
The pro forma combined results of operations of the Company and the acquired
companies as if the acquisitions had taken place at the beginning of the year
are immaterial and are not presented.

On October 29, 1997, the Company consummated an Asset Purchase-Sale Agreement
with Jerry Prince, Inc. ("JPI"), a jewelry manufacturer and distributor located
in San Diego, California, to purchase substantially all of JPI's assets
(principally accounts receivable and inventories) and assume certain liabilities
incurred by JPI. The purchase price for these net assets approximated $4.9
million and was funded from existing cash. The acquisition was accounted for
using the purchase method of accounting, and accordingly, the results of
operations of JPI from October 29, 1997 are included in the accompanying
consolidated financial statements from the date of acquisition. The purchase
price has been allocated to assets acquired and liabilities assumed based on
fair market value at the date of acquisition.

The following table reflects the unaudited pro forma combined results of
operations of the Company and JPI as if the acquisition had taken place at the
beginning of fiscal 1998 and 1997.



                                     F - 17
<PAGE>   46

<TABLE>
<CAPTION>
(in thousands, except per share amounts)              1998                 1997
----------------------------------------          -----------          -----------
<S>                                               <C>                  <C>        
Revenues                                          $   168,519          $   199,468
Net income                                              6,462                3,620
Basic net income per share                               1.05                 0.58
Diluted net income per share                             1.05                 0.58
</TABLE>

These unaudited pro forma results have been prepared for comparative purposes
only and include certain adjustments, such as amortization of goodwill,
additional royalty expense, loss of investment income, reduced selling, general
and administrative expenses for non-recurring items and the related income tax
effects. They do not purport to be indicative of the results of operations which
actually would have resulted had the combination been effective at the beginning
of fiscal 1997.

NOTE 11 - SALARY DEFERRAL AND PROFIT SHARING PLAN:

The Company has a Salary Deferral and Profit Sharing Plan covering substantially
all eligible employees. Under the plan, employees may elect to defer a
percentage of their salary. The Company may, at its discretion, make
contributions to the plan. The Company contributed approximately $140,000,
$125,000, and $80,000 to the plan during the fiscal years ended January 29,
1999, January 30, 1998 and January 31, 1997, respectively.

NOTE 12 - COMMITMENTS AND CONTINGENCIES:

The Company leases office space, retail space and manufacturing facilities.
These leases are classified as operating leases and have original,
noncancellable terms of one to five years. Certain operating leases provide for
minimum annual rentals, subject to annual escalations generally based on the
Consumer Price Index plus executory costs. Rent expense for fiscal years 1999,
1998 and 1997 was approximately $602,000, $541,000 and $277,000, respectively.

Future minimum annual commitments under the operating leases with initial or
remaining terms of one year or more consist of the following at January 29, 1999
(in thousands):

<TABLE>
<CAPTION>
                                                       Operating
                  Fiscal Year                            Leases
                  -------------                       -----------
<S>                                                   <C>
                  2000                                       360
                  2001                                       297
                  2002                                        86
                                                        --------
Total minimum lease payments                            $    743
                                                        ========
</TABLE>

In fiscal 1998 and 1997, the Company leased computer equipment under agreements
classified as capital leases. In fiscal 1999, these capital leases were paid
off. In fiscal 1998, property and equipment accounts included the following
amounts for computer equipment that were recorded under capital leases (in
thousands):




                                     F - 18
<PAGE>   47

<TABLE>
<CAPTION>
                                      January 30,
                                         1998
                                      -----------
<S>                                   <C>  
Office furniture and equipment          $ 631
Less: Accumulated depreciation           (487)
                                        -----
                                        $ 144
                                        =====
</TABLE>

In the normal course of business, the Company is a defendant in various
lawsuits. The Company's management believes that there will be no material
adverse impact on the financial condition or results of operations of the
Company as a result of the ultimate resolution of these matters.

NOTE 13 - STOCK OPTION PLANS:

The Company has an Incentive Stock Option Plan under which options to purchase
shares of the Company's common stock may be granted to key employees of the
Company. The total number of shares issuable under the Incentive Stock Option
Plan is 500,000 shares. Options granted under the Incentive Stock Option Plan
become exercisable in annual increments determined by the Compensation
Committee. Incentive stock options expire 10 years from the date of grant.

The Company has a Director's Stock Option Plan (the "Directors' Plan") under
which each non-employee director of the Company, on the date of his or her
election to the Board, is automatically granted an option to purchase 10,000
shares of common stock, at an exercise price equal to the fair market value of
the common stock on the date of grant. The total number of shares issuable under
the Director Stock Option Plan is 100,000. Options granted under the Director
Stock Option Plan become exercisable in cumulative annual increments of 20
percent, commencing on the anniversary of the date of grant. Director stock
options expire 10 years from the date of grant. In addition, the Board of
Directors granted an option to purchase 5,000 shares of common stock, at an
exercise price equal to the fair market value of the common stock on the date of
grant, to one non-employee director in fiscal 1997 and another non-employee
director in fiscal 1998. These grants were made outside of the Directors' Plan.
During fiscal 1999, the Company adopted a Supplemental Non-Employee Director
Stock Option Plan ("Supplemental Plan"), under which each non-employee director
of the Company serving on the Board on April 14, 1998 was granted an option to
purchase 1,000 shares of common stock. In addition, each non-employee director
will automatically be granted an option to purchase 1,000 shares of common stock
on the date of each annual meeting of stockholders at which such non-employee
director is re-elected to the Board, commencing with the annual meeting in 1999.
The total number of shares issuable under the Supplemental Plan is 25,000.
Supplemental Plan options will be granted at an exercise price equal to the fair
market value on the date of grant and will become exercisable in one-third
increments, commencing on the first anniversary of the date of grant.

The Incentive Stock Option Plan is administered by a Compensation Committee
appointed by and holding office at the pleasure of the Board of Directors; the
Directors' and Supplemental Plans are administered by the Board. Stock option
activity for employees and directors is shown below:




                                     F - 19
<PAGE>   48


<TABLE>
<CAPTION>
                                                             Weighted-
                                              Options          Average
                                          Outstanding         Exercise
                                               Number            Price
                                          -----------        ---------
<S>                                       <C>                <C>
Outstanding at February 2, 1996              316,250           $ 9.93
   Granted                                   107,500           $ 4.69
   Exercised                                  (4,000)          $ 4.69
   Cancelled                                 (20,250)          $ 5.23
                                            --------           ------
Outstanding at January 31, 1997              399,500           $ 8.81
   Granted                                    41,000           $ 4.94
   Exercised                                  (2,000)          $ 4.69
   Cancelled                                 (46,500)          $ 7.94
                                            --------           ------
Outstanding at January 30, 1998              392,000           $ 8.53
   Granted                                    38,000           $ 8.55
   Exercised                                (112,000)          $ 5.11
   Cancelled                                 (86,000)          $11.02
                                            --------           ------
Outstanding at January 29, 1999              232,000           $ 9.26
                                            ========           ======

Options exercisable at January 31, 1997      251,500           $ 9.51
                                            ========           ======

Options exercisable at January 30, 1998      287,200           $ 9.37
                                            ========           ======

Options exercisable at January 29, 1999      154,400           $10.66
                                            ========           ======
</TABLE>


The following table summarizes information about employee and director stock
options outstanding at January 29, 1999:

<TABLE>
<CAPTION>
                                      Options Outstanding                          Options Exercisable
                      --------------------------------------------------       ----------------------------
                                                Weighted-      Weighted-                          Weighted-
                                                  Average        Average                            Average
Range of                      Number            Remaining       Exercise             Number        Exercise
Exercise Prices          Outstanding     Contractual Life          Price        Exercisable           Price
---------------       --------------    -----------------     ----------       ------------    ------------
<S>                   <C>               <C>                   <C>              <C>             <C>
$ 4.13 to $ 4.94              79,000                 7.3           $4.67             34,400           $4.61
$ 7.00 to $ 9.94              38,000                 9.6           $8.55              7,000           $8.68
$12.25 to $14.25             115,000                 4.9          $12.65            113,000          $12.62
                      --------------                                           ------------
                             232,000                                                154,400
                      ==============                                           ============
</TABLE>


Pro-forma information regarding net income and earnings per share is required by
SFAS No. 123, and has been determined as if the Company had accounted for the
employee and non-employee 



                                     F - 20
<PAGE>   49

director stock options granted under the fair value method of that Statement.
The weighted-average estimated grant fair values, as defined by SFAS No. 123,
for options granted during fiscal years 1999, 1998 and 1997 were $4.70, $2.24
and $2.57, respectively. All options were granted at exercise prices equal to
market prices during fiscal years 1999, 1998 and 1997.

The fair values for options granted in fiscal 1999, 1998 and 1997 were estimated
as of the date of grant using a Black-Scholes option pricing model with the
following weighted-average assumptions:

<TABLE>
<CAPTION>
                                            1999             1998              1997
                                          -------           -------           -------
<S>                                       <C>               <C>               <C>    
Risk-free interest rate                     5.12%             6.78%             6.31%
Dividend yield                              0.00%             0.00%             0.00%
Volatility                                 50.73%            30.21%            48.16%
Weighted-average option life              6 years           6 years           6 years
</TABLE>

Compensation cost for stock options is measured as the excess, if any, of the
quoted market price of the Company's stock at the date of the grant over the
amount an employee or director must pay to acquire the stock. Had compensation
cost for these plans been determined using fair value, rather than the quoted
market price, the Company's net income and net income per share would have been
reduced to the following pro forma amounts (in thousands, except per share
data):

<TABLE>
<CAPTION>
                                      1999               1998               1997
                                   ---------          ---------          ---------
<S>                                <C>                <C>                <C>      
Net income:
    As reported                    $   6,454          $   6,678          $   2,190
    Pro forma                          6,389              6,608              2,158
Net income per share:
    As reported - basic            $    1.03          $    1.07          $    0.35
    As reported - diluted          $    1.02          $    1.06          $    0.35
    Pro forma - basic              $    1.02          $    1.06          $    0.35
    Pro forma - diluted            $    1.01          $    1.05          $    0.34
</TABLE>

NOTE 14 - LITIGATION SETTLEMENT AWARD

In September 1997, the Company recovered approximately $4.7 million, net of
attorney fees, from settlement of litigation with its insurer to recover losses
from two former gold jewelry manufacturers. This litigation award is included in
other income for fiscal 1998.

NOTE 15 - STOCKHOLDERS' EQUITY:

Capital Stock

Each holder of Common Stock is entitled to one vote for each share held of
record on each matter submitted to a vote of stockholders. Stockholders are not
entitled to cumulate votes in the election of directors and, therefore, holders
of a majority of the outstanding shares of Common Stock can elect all of the
directors. Subject to any preferences which may be granted to the holders of
Preferred Stock, each holder of Common Stock is entitled to receive ratably such
dividends as may be declared by the Board of Directors.



                                     F - 21
<PAGE>   50

The Board of Directors, without further action by the holders of Common Stock,
may issue shares of Preferred Stock in one or more series and may fix or alter
the rights, preferences, privileges and restrictions of any unissued series of
Preferred Stock, including the voting rights, redemption provisions (including
sinking fund provisions), dividend rights, dividend rates, liquidation
preferences and conversion rights. No shares of Preferred Stock are outstanding.

Stock Repurchase Program

In September 1998, the Company's Board of Directors approved a stock repurchase
program pursuant to which the Company is authorized to purchase up to 300,000
shares of its outstanding common stock in the open market at prevailing market
prices or off the market in negotiated transactions. During fiscal 1999, the
Company repurchased 95,000 shares for an aggregate price of approximately
$576,000.

Note Receivable from Stock Sale

The note receivable from stock sale results from the exercise of stock options
by the Company's Chief Operating Officer for a note. The note is a full recourse
promissory note bearing interest at 7.35% and is secured by the stock issued
upon exercise of the stock options. Interest is payable quarterly and principal
is due in full on August 14, 2001.

NOTE 16 - SEGMENT INFORMATION

The Company's operating structure includes two reportable operating segments:
Jewelry and Cigar. The segments were determined based upon the types of products
produced and markets served by each segment. The Jewelry segment manufactures
and distributes gold jewelry products to large retailers, including mass
merchandisers, department stores, and national jewelry chains. The Cigar segment
manufactures and distributes premium cigars to medium to small cigar retailers.
In addition, the Cigar segment operates a retail cigar store located in Beverly
Hills, California. Both segments sell their products to customers located in the
United States.

The Company evaluates segment performance based on income from operations before
taxes. The accounting policies of the reportable segments are the same as those
described in the summary of significant accounting policies. There are no
inter-company sales between segments.

Financial information regarding the Company's operating segments is shown below
(dollars in thousands):



                                     F - 22
<PAGE>   51

<TABLE>
<CAPTION>
                                            Jewelry        Cigar   Consolidated
                                           --------       ------   ------------
<S>                                        <C>            <C>      <C>     
Year Ended January 29, 1999
Net sales                                  $173,620         $871       $174,491
Operating income (loss)                      13,378       (1,602)        11,776
Interest expense                              1,530            2          1,532
Depreciation and amortization expense         2,263           99          2,362
Income (loss) before income taxes            11,848       (1,604)        10,244
Provision (benefit) for income taxes          4,383         (593)         3,790
Net income (loss)                             7,465       (1,011)         6,454
Identifiable operating assets                85,252        4,851         90,103

Year Ended January 30, 1998
Net Sales                                  $159,299         $421       $159,720
Operating income (loss)                      13,912       (1,071)        12,841
Interest expense                              1,894            -          1,894
Depreciation and amortization expense         2,501            1          2,502
Income (loss) before income taxes            12,018       (1,071)        10,947
Provision (benefit) for income taxes          4,687         (418)         4,269
Net income (loss)                             7,331         (653)         6,678
Identifiable operating assets                83,004        3,661         86,665
</TABLE>


The Company's cigar operations started in fiscal 1998. Since only one operating
segment (Jewelry) existed in fiscal 1997, segment financial information is not
presented for fiscal 1997.

QUARTERLY FINANCIAL DATA (UNAUDITED):
(Amounts in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                                   1999 Quarters
                                             -----------------------------------------------------
Quarter ended                                        1st           2nd          3rd            4th
------------------                           -----------    ----------- -----------    -----------
<S>                                              <C>            <C>         <C>            <C>    
Net sales                                        $42,477        $29,433     $54,561        $48,021
Gross margin                                       9,448          6,928      13,615         12,978
Net income                                         1,151              1       2,923          2,378
Per Share Data:
    Basic net income per share                      0.18           0.00        0.46           0.39
    Diluted net income per share                    0.18           0.00        0.46           0.38
</TABLE>


<TABLE>
<CAPTION>
                                                                   1998 Quarters
                                             -----------------------------------------------------
Quarter ended                                        1st           2nd          3rd            4th
------------------                           -----------    ----------- -----------    -----------
<S>                                              <C>            <C>         <C>            <C>    
Net sales                                        $32,650        $27,585     $46,373        $53,112
Gross margin                                       6,211          5,641      10,474         13,594
Net income (loss)                                    143           (466)      3,496          3,505
Per Share Data:
    Basic net income (loss) per share               0.02          (0.07)       0.56           0.56
    Diluted net income (loss) per share             0.02          (0.07)       0.56           0.55
</TABLE>



                                     F - 23
<PAGE>   52

                                OROAMERICA, INC.
                 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                         Additions
                                             ----------------------------------
                                                          Charged
                                             Balance at   to costs     Charged                        Balance
                                             beginning    and          to other                       at end
             Description                     of period    expenses     accounts       Deductions     of period
             -----------                     ---------    --------     --------       ----------     ---------
<S>                                           <C>          <C>         <C>            <C>            <C>    
For the year ended January 31, 1997:
   Allowance for doubtful accounts            $ 1,448      $   517      $    31(1)     $  (414)(2)     $ 1,582
   Reserve for estimated returns                8,500            0            0            140 (3)       8,640
   Allowance for uncollectible
       vendor advances                            858            0            0           (228)(4)         630
                                              -------      -------      -------        -------         -------

                Total                         $10,806      $   517      $    31        $  (502)        $10,852
                                              =======      =======      =======        =======         =======


For the year ended January 30, 1998:
   Allowance for doubtful accounts            $ 1,582      $   763      $   142(5)     $  (887)(2)     $ 1,600
   Reserve for estimated returns                8,640            0          402(6)         160 (3)       9,202
   Allowance for uncollectible
       vendor advances                            630           50            0              0             680
                                              -------      -------      -------        -------         -------

                Total                         $10,852      $   813      $   544        $  (727)        $11,482
                                              =======      =======      =======        =======         =======


For the year ended January 29, 1999:
   Allowance for doubtful accounts            $ 1,600      $   115      $   215(7)     $  (130)(2)     $ 1,800
   Reserve for estimated returns                9,202            0            0            795 (3)       9,997
   Allowance for uncollectible
       vendor advances                            680            0            0              0             680
                                              -------      -------      -------        -------         -------

                Total                         $11,482      $   115      $   215        $   665         $12,477
                                              =======      =======      =======        =======         =======
</TABLE>


(1)     Collection of trade accounts receivable previously written off.

(2)     Due to debtors' inability to pay, price disputes, shortages and other
        allowances.

(3)     The Company reduces gross sales by the amount of returns processed. 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.

(4)     Reduction in vendor reserve credited to cost of sales.

(5)     Includes $150,000 adjustment to miscellaneous accruals, $126,000
        write-off of long-term accounts receivable, $98,000 collection on trade
        receivables previously written-off and $20,000 allowance for doubtful
        accounts acquired with the Jerry Prince acquisition.

(6]     Estimated return reserve acquired from Jerry Prince transaction.

(7)     Includes $117,000 collection on trade receivables previously
        written-off, $100,000 adjustment to cost of sales and $1,000 write-off
        of other accounts receivable.



                                     S - 1