Oroamerica Inc – ‘10-K405’ for 1/30/98

As of:  Thursday, 4/30/98   ·   For:  1/30/98   ·   Accession #:  950148-98-1078   ·   File #:  0-21862

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Annual Report — [x] Reg. S-K Item 405   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K405     Annual Report -- [x] Reg. S-K Item 405                49    270K 
 2: EX-21.1     Subsidiaries of the Registrant                         1      5K 
 3: EX-23.1     Consent of Experts or Counsel                          1      4K 
 4: EX-27.1     Financial Data Schedule                                1      8K 

10-K405   —   Annual Report — [x] Reg. S-K Item 405
Document Table of Contents

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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 30, 1998.                   

[  ]     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 24, 1998, computed by reference to the closing sales 
price as reported on The Nasdaq National Market on such date, was $25,164,447.  
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.                     

                                                                [Download Table]
                                                                             
Class                          Number of Shares Outstanding on April 24, 1998
-----                          ----------------------------------------------
Common Stock, $.001 par value                       6,255,378                

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 23, 1998.                  

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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 1998, sales were made to approximately 700 customers, with sales      
to the Company's ten largest customers accounting for approximately 54% 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 engaged in the design,         
manufacture, and distribution of 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 four     
other manufacturing plants, which the Company uses for the manufacture of rope  
chain and other karat gold jewelry products, in facilities located in South     
America, the Caribbean, and Southeast Asia. The Company believes that its       
manufacturing capabilities better enable it to respond to customer requests for 
customized products, provide 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 "OTHER BUSINESSES" below for additional information concerning       
OroAmerica's new consumer 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,       
representing 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                             

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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 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 1998,     
1997, and 1996.                                                                 

                                                                [Download Table]

                                   January 30,  January 31,  February 2,
                                      1998         1997         1996    
                                   ----------   ----------   --------   
                                                                        
14 karat gold chains                     50.7%        52.7%      56.6%  
14 karat gold non-chains products        22.9         21.5       17.1   
10 karat gold jewelry(1)                 19.0         20.2       21.2   
18 karat & 9 karat gold jewelry           1.0          0.2        0.1   
Sterling silver jewelry                   6.4          5.4        5.0   
                                   ----------   ----------   --------   
                                        100.0%       100.0%     100.0%  
                                   ==========   ==========   ========   

----------------------------------------------                                  
(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 simulated                   

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

        Together with the QVC Network, the Company markets and sells a specially
selected and packaged line of karat gold jewelry under the name Beverly Hills   
Gold(R). The Company believes there is strong recognition of the Beverly Hills  
Gold(R) trademark with viewers of the QVC Network and that this recognition has 
enhanced sales of these products. During fiscal 1997, the Company introduced its
Precious Precious(R) line of jewelry, which features 14 karat gold earrings,    
necklaces, bracelets, and rings interwoven with sterling silver or with sterling
silver accents.                                                                 

       The Company has expanded its line of karat gold jewelry products by its
acquisition of Jerry Prince, Inc. ("JPI"), a San Diego-based jewelry company.   
JPI specializes in the design and distribution of fine gold jewelry, including  
necklaces, bracelets, pendants, charms, and other specialty precious metal      
jewelry items. See "Other Business Developments" below.                         

        The Company also generally applies for copyrights covering the design of
its charms and other selected products. During fiscal 1998, sales of products   
manufactured or marketed pursuant to the Silk Rope(R) and SupremeValue(R) Rope  
patents, license agreements, copyrights or the Beverly Hills Gold(R) and        
Precious Precious(R) trademarks accounted for approximately 24.4% 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 three quarters 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.                       

        The Company recognizes that providing exceptional customer service is an
essential element of its 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 in a prompt and          
reliable fashion.                                                               

        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                               

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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 1998, approximately 62% 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 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 jewelry       
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, and the Company     
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 a 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                                               

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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 (transactions in 
which 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 the Company's returns, see 
"Management's Discussion and Analysis of Financial Condition and Results of     
Operations - General."                                                          

     While the Company sold its products to approximately 700 customers in
fiscal 1998, sales to the Company's ten largest customers accounted for         
approximately 54% of net sales, and sales to the Company's 50 largest customers 
accounted for approximately 84% of net sales. During fiscal 1998, sales to      
Wal-Mart accounted for approximately 16.4% 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.                            

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 1998, the Company manufactured approximately      
85% of its products from semi-finished materials and from gold bullion and      
other raw materials and purchased approximately 15% 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 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,   

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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 four facilities     
operated by the Company in South America, the Caribbean and Southeast Asia. In  
fiscal 1998, production from these facilities accounted for approximately 70%   
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 and 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.                                                        

        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 1998, the Company purchased gold products from over 190
suppliers. The largest supplier accounted for approximately 5% of the           
Company's total purchases, and the ten largest suppliers accounted for          
approximately 31%. 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                                                             

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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."                                                      

      In addition to gold acquired through the consignment arrangements, the
Company purchases gold from financial institutions in the form of gold bullion  
and from its manufacturers and vendors in the form of semi-finished materials   
and finished goods. During fiscal 1998, the Company satisfied approximately     
81% of its gold requirements through purchases under the consignment program    
and purchased the remaining 19% 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 27,     
1998,                                                                           

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the Company currently is able to hold an aggregate of approximately             
285,000 ounces of gold under consignment; the actual amount of gold held by     
the Company under consignment on that date was approximately 149,900 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 9, 1997 and April 15, 1998, was $5.5 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.                                                                  

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                                     

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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                                                    

      ACQUISITION OF JERRY PRINCE, INC. In October 1997, OroAmerica acquired
the business of Jerry Prince, Inc. ("JPI"), a San Diego based jewelry company   
specializing in the distribution of fine gold jewelry, including necklaces,     
bracelets, pendants, charms and other specialty precious metal jewelry items. In
the acquisition, the Company acquired substantially all of JPI's assets, and    
assumed certain of its liabilities, for an aggregate purchase price of $4.9     
million, net of adjustments. The Company believes that the acquisition of JPI,  
which now operates as a division of the Company, may offer it increased         
opportunities for market penetration and added volume, and may enhance the      
Company's distribution capabilities and relationships with certain of its major 
customers.                                                                      

      PURCHASE OF CERTAIN ASSETS FROM RAVEL INC. In August 1997, the Company
purchased certain assets from Ravel Inc., a former manufacturer of karat gold   
jewelry based in Clearwater, Florida. In the acquisition, the Company acquired  
all of Ravel's in-house inventory and all of its consignment accounts other than
Barry's Jewelers, Inc. and Montgomery Ward. The Barry's Jewelers, Inc. account  
was subsequently purchased by the Company in January 1998. The Company did not  
assume any of Ravel's liabilities in connection with the acquisition.           

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).                  

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 covering       

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

EMPLOYEES                                                                       

 At March 31, 1998, the Company employed 314 persons in the United
States, of whom 182 were engaged in manufacturing and distribution operations,  
81 were engaged in marketing, customer service, and merchandising, and 51 were  
engaged in management and administration. At that date, the Company also        
employed 1,028 persons at its manufacturing facilities in South America, the    
Caribbean, and Southeast Asia. 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, health and safety, and the costs incurred 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.    

OTHER BUSINESSES                                                                

In April 1997, the Company officially launched its premium cigar
business through its wholly-owned subsidiary, CigarAmerica, Inc. For the time   
being, the Company has decided to focus on the manufacture, distribution, and   
sale of two core brands of cigars, including a line of premium cigars expected  
to retail at a price between $3.00 and $10.00 per cigar and a line of           
super-premium cigars expected to retail at prices of $10.00 and up per cigar.   
Both cigar brands are intended for sale to the mass                             

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market through wholesale distributors, tobacconists, and upscale stores,      
including the Company's flagship store to be located on Rodeo Drive in Beverly  
Hills, California.                                                              

        The Company is seeking to capitalize on the recent growth in the premium
cigar market by establishing its own house cigar brands and by relying on its   
many years of experience and success in manufacturing and supervising the       
manufacture of karat gold jewelry in foreign countries. The Company's strategies
for its cigar business include the following:                                   

      QUALITY PRODUCT LINES. The Company has commenced commercial production
and begun 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 of Indonesian wrapper, Jember binder, and East Javan filler. The    
Company also anticipates using Brazilian Maduro wrapper for its Fuego del ReyTM 
cigars. After rolling, the Fuego del ReyTM cigars are shrink wrapped and        
packaged at the Company's 26,000 square foot Indonesian facility, where the     
Company also reclassifies tobacco leafs. Initial sales of Fuego del ReyTM cigars
began in the first quarter of fiscal 1999.                                      

 The Company is also currently developing a brand of super premium
handmade cigars, which it expects to distribute through appointed dealers,      
certain retail shops and its Rodeo Drive flagship store during fiscal 1999.     
These cigars will be made by hand from Connecticut Shade, genuine Cameroon,     
and/or Brazilian Maduro wrapper, while the filler and binder will be 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, which commenced commercial production in January 1998.                

     BEVERLY HILLS FLAGSHIP STORE. In order to promote the Company's super
premium cigars, the Company has leased a 1,300 square foot store on Rodeo Drive 
in Beverly Hills, California, where the Company intends to operate a flagship   
cigar store. Expected to open during the second quarter of fiscal 1999, the     
Company's flagship cigar store will offer for sale the Company's own brand of   
super premium cigars, as well as cigars manufactured by other companies, and    
will include a mezzanine level cigar lounge and private humidors.               

    As of the end of fiscal 1998, the Company had invested approximately
$2.8 million in inventory, $200,000 in real property lease expenditures and     
$700,000 in miscellaneous expenditures related to its cigar business.           

   The Company historically has been a manufacturer and distributor of
karat gold jewelry and has not engaged in the manufacture or distribution of    
cigars or other tobacco products until this past year. There can be no assurance
that the Company will be able to successfully introduce its premium and super   
premium brands of cigars, successfully open and operate any retail cigar shops  
or otherwise successfully compete in the premium cigar market.                  

     The foregoing discussion contains "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        

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management in the forward-looking statements included herein, as well as risks  
and uncertainties generally applicable to the cigar business. Among these       
important factors, risks and uncertainties are (a) risks associated with the    
commencement of a new business operation and the introduction of a new product  
line, including the risk of lack of market acceptance for the Company's premium 
cigars and risks associated with the manufacture and distribution of product    
lines unrelated to the Company's existing business, (b) delays that may be      
encountered in opening the Company's manufacturing facilities and retail store, 
(c) the Company's ability to attract, hire and retain master-cigar makers and   
other skilled craftsmen and laborers, (d) the Company's ability to obtain, on an
ongoing basis, sufficient supplies of properly aged tobacco for its proposed    
operations, (e) whether the recent upward trend in unit sales of premium cigars 
will continue, (f) extensive and increasing federal, state and local regulation 
of tobacco products, (g) tobacco industry litigation, (h) the competitive       
environment in the premium cigar market, (i) effects of any increases in excise 
taxes that may occur in the future, and (j) social, political and economic risks
associated with foreign operations and international trade. For further         
information regarding these and other factors, risks and uncertainties affecting
the Company's entry into the premium cigar business, reference is made to the   
Company's Current Report on Form 8-K dated February 27, 1997, which is          
incorporated herein by reference.                                               

Perfume Business                                                                

     This past fiscal year, the Company decided to postpone its efforts to
launch its perfume products in order to concentrate its efforts on its core     
jewelry business and the start up of its cigar business. The Company does not   
expect sales of its perfume products to be material in fiscal 1999.             

       The Company historically has operated as a manufacturer and distributor
of karat gold jewelry and has not engaged in the manufacture or distribution of 
perfumes or colognes. There can be no assurance that the Company will be able to
successfully introduce its line of perfumes and colognes or otherwise           
successfully compete in the perfume and cologne market.                         

OTHER MATTERS                                                                   

        The Company currently uses software and related computerized information
systems that will be affected by the date change in the year 2000. The year 2000
issue exists because many computer systems and applications currently utilize   
two-digit date fields, rather than four-digit date fields, to define the        
applicable year. When the millenium date change occurs, date-sensitive systems  
will 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 systems failure or cause
systems to process critical financial and operational information incorrectly.  

        Based on ongoing assessments, the Company has determined that it will be
required to modify or upgrade portions of its computer software so that its     
computer systems will properly use and recognize dates beyond December 31, 1999.
Based on preliminary information compiled by the Company, costs of addressing   
the year 2000 issue may be between approximately $250,000 and approximately     
$850,000, depending primarily on whether the Company decides to modify its      
existing software or upgrade to new software. Other factors that may affect the 
Company's costs in addressing the year 2000 issue include, but are not limited  
to, the availability and cost of personnel trained in this                      

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area, the ability to locate and correct all relevant computer codes, and similar
uncertainties. The Company expects to complete all year 2000 programming changes
by June 1, 1999. The estimated costs of and time frame related to this project  
are based on estimates of the Company's management, and there can be no         
assurance that actual costs will not differ materially from the current         
expectations. In addition, the Company's ability to interface with its          
customers, particularly with respect to EDI programs, may be impacted by the    
failure of its customers to make the appropriate upgrades or modifications to   
their programs to address the year 2000 issue. Nevertheless, the Company does   
not expect that the costs of addressing potential problems relating to the year 
2000 issue will have a material adverse impact on the Company's financial       
position, results of operations or cash flows in future periods. Although, the  
Company plans to devote the necessary resources to resolve all significant year 
2000 issues in a timely manner, if such processing issues are not resolved in a 
timely manner, the year 2000 issue could have a material impact on the          
operations and financial conditions of the Company.                             

ITEM 2.  PROPERTIES                                                             

      The Company maintains manufacturing and administrative facilities in a
52,000 square foot building of modern construction owned by the Company and     
located 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 facility is  
encumbered by deeds of trust securing the repayment of indebtedness in the      
aggregate amount of $1.7 million at January 30, 1998, which was incurred in     
connection with the acquisition and expansion of the facility. 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 as sales offices and approximately 7,000 square feet as       
administrative facilities. The facility is encumbered by deeds of trust securing
the repayment of indebtedness in the aggregate amount of $789,000 at January 30,
1998, which was incurred in connection with the acquisition and expansion of the
facility.                                                                       

 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 in the Jewelry Mart area of  
Los Angeles, pursuant to a lease which expires in August 1998, and a purchasing 
office in the Jewelry Mart area of Los Angeles pursuant to a lease which expires
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 1998. The Company 
also leases a third manufacturing facility in the Caribbean pursuant to a lease 
which expires in August 1998.                                                   

       In connection with its premium cigar business, the Company is leasing a
9,600 square foot manufacturing facility in the Dominican Republic, pursuant to 
a lease which expires in January 2000, and a 26,000 square foot manufacturing   
facility in Indonesia, pursuant to a lease which expires in April 1999. In      
addition, the Company is leasing a 3,100 office facility in                     

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Burbank, California which is intended to eventually serve as the principal      
headquarters for the Company's premium cigar business. This lease is due to     
expire in March 1999. 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.                                                                       

       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.            

SUPPLEMENTAL ITEM: EXECUTIVE OFFICERS                                           

The executive officers of the Company are as follows:                           

                                                                [Download Table]

NAME                           AGE      POSITION                        
----                           ---      --------                        
                                                                        
Guy Benhamou                    46      Chairman of the Board, President
                                        and Chief                       
                                        Executive Officer               
Shiu Shao                       46      Chief Financial Officer, Vice   
                                        President and Director          
Sophia Chalermsopone            45      Vice President - Sales          
Claudia Hollingsworth           38      Vice President - Sales          
David Wu                        49      Vice President - Manufacturing  
Betty Sou                       41      Controller and Secretary        
Colm Plunkett                   36      Treasurer                       

       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.                                 

    SOPHIA CHALERMSOPONE has been employed by the Company since 1978 and
served in the capacity of Sales Manager from 1981 to 1984. Ms. Chalermsopone has
served as Vice President - Sales since 1984 and is responsible for marketing to 
wholesale accounts.                                                             

      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.                                           

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  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.                                                                  

      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.                                                        

    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.                                                       

 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 24, 1998, there were 26 holders of record of the Common Stock. 

                                                                [Download Table]


YEAR ENDED JANUARY 30, 1998                                       
                                                                  
                                               HIGH           LOW 
                                               -----         -----
        First quarter                          $5.12         $4.50
        Second quarter                         $5.88         $4.25
        Third quarter                          $6.00         $4.25
        Fourth quarter                         $5.94         $4.50
YEAR ENDED JANUARY 31, 1997                                       
        First quarter                          $4.88         $4.25
        Second quarter                         $6.50         $4.75
        Third quarter                          $6.50         $5.00
        Fourth                                 $6.50         $4.63

  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 30, 1998 are derived from  
the audited consolidated financial statements of the Company.                   

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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.                                                                         

OROAMERICA, INC.
 SELECTED FINANCIAL DATA

                                                        [Enlarge/Download Table]

For the fiscal years ended                                                                               
(Dollars in thousands, except per      January 30,   January 31,   February 2,  January 27,   January 28,
share and other data)                      1998         1997         1996         1995          1994     
------------------------------------------------------------------------------------------------------   
                                                                                                         
Net sales                                $159,720     $177,065     $213,417     $219,415     $203,361    
Cost of goods sold                        123,800      144,398      178,865      183,188      163,219    
------------------------------------------------------------------------------------------------------   
Gross profit                               35,920       32,667       34,552       36,227       40,142    
Selling, general and administrative,                                                                     
and other expenses (2)                     23,079       25,907       30,229       25,862       20,357    
------------------------------------------------------------------------------------------------------   
Operating income                           12,841        6,760        4,323       10,365       19,785    
Interest expense                            1,894        2,885        3,423        3,170        5,021    
------------------------------------------------------------------------------------------------------   
Income before income                                                                                     
     taxes and extraordinary item          10,947        3,875          900        7,195       14,764    
Provision for income taxes                  4,269        1,685          554        3,030        6,003    
------------------------------------------------------------------------------------------------------   
Income before extraordinary item            6,678        2,190          346        4,165        8,761    
Loss on early extinguishment of debt                                                                     
     less applicable income taxes of $343       -            -            -            -        (564)    
------------------------------------------------------------------------------------------------------   
Net income                                 $6,678       $2,190         $346       $4,165       $8,197    
======================================================================================================   
Net income per share:                                                                                    
Income before extraordinary                                                                              
    item - basic                            $1.07        $0.35        $0.06        $0.67        $1.74    
Income before extraordinary                                                                              
    Item - diluted                          $1.06        $0.35        $0.06        $0.67        $1.78    
Extraordinary item - basic                      -            -            -            -       ($0.12)   
Extraordinary item - diluted                    -            -            -            -       ($0.11)   
Basic net income per share                  $1.07        $0.35        $0.06        $0.67        $1.68    
Diluted net income per share                $1.06        $0.35        $0.06        $0.67        $1.66    
======================================================================================================   
Weighted average shares outstanding     6,254,212    6,250,711    6,248,378    6,236,674    4,868,227    
------------------------------------------------------------------------------------------------------   
Weighted average shares outstanding                                                                      
    assuming dilution                   6,270,761    6,256,075    6,248,378    6,257,023    4,931,213    
------------------------------------------------------------------------------------------------------   
Other Data:                                                                                              
Amount of gold sold by weight                                                                            
(in ounces of fine gold)                  309,900      306,763      337,855      379,223      376,010    
Average daily gold price per ounce (1)  $     325     $    384    $     386    $     384   $      364    
------------------------------------------------------------------------------------------------------   
Balance Sheet Data:                                                                                      
Working Capital                         $  48,211     $ 40,663    $  39,022    $  37,572   $   39,204    
Total Assets                               86,665       75,261       73,544       76,371       81,686    
Long-term debt, including current                                                                        
    portion                                 2,688        3,199        4,537        2,806        4,797    
Total stockholders' equity                 66,197       59,510       57,301       56,574       52,196    
------------------------------------------------------------------------------------------------------   

(1)  Based on the Second London Gold Fixing.                                    

(2)  For fiscal 1998, selling, general and administrative expense has been      
     reduced by other income of $6.6 million, including $4.7 million of proceeds
 from the settlement of litigation involving the insurers for two former
gold jewelry manufacturers.                                           

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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 13.0% of   
gross sales in fiscal 1998, 14.3% of gross sales in fiscal 1997 and 14.5% of    
gross sales in fiscal 1996. 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
could be affected by significant 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 30, 1998 and 
January 31, 1997, the Company held 155,400 ounces and 147,500 ounces,           
respectively, under the consignment arrangements. At January 30, 1998 and       
January 31, 1997, the Company owned approximately 10,500 ounces and 6,500       
ounces, respectively.                                                           

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

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Outside Manufacturers                                                           

       In fiscal 1998, the Company purchased approximately 66% of its products
as finished goods and completed the manufacture of approximately 34% of its     
products from semi-finished materials partially fabricated by outside           
manufacturers. Of the total amount of products purchased from outside           
manufacturers in fiscal 1998, approximately 68% were purchased from foreign     
manufacturers and approximately 32% were purchased from domestic manufacturers. 
The Company's use of domestic and foreign outside manufacturers minimizes the   
capital invested in 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. 

     Both finished and semi-finished materials frequently are manufactured
under an arrangement whereby the Company supplies all necessary gold (or, in    
some instances, 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 utilize the services of qualified manufacturers who    
might be unable to finance the acquisition of the gold required in the          
production process. The Company typically advances gold to its manufacturers    
sufficient 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 utilizes 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 of credit evaluation documentation. 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 27, 1998, $4.8 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 $540,000. At March 27, 1998, the Company's    
reserve for uncollectible vendor advances was $680,000.                         

        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.                                             

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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 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 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.      

OTHER BUSINESS                                                                  

      During fiscal 1998, the Company incurred approximately $1.1 million in
expenses in connection with the start-up of its premium cigar business, and the 
Company anticipates incurring substantial additional expenses during fiscal     
1999 as it begins commercial production of its cigars and opens its flagship    
retail store. While initial sales of the Company's Fuego del Rey(TM) cigars     
began in the first quarter of fiscal 1999, there can be no assurance that the   
Company will be able to successfully introduce its premium brands of cigars or  
otherwise successfully compete in the premium cigar market.                     

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.                                              

                                                                [Download Table]

                                           As a Percentage of Net Sales       
                                                     Year Ended               
                                      ----------------------------------------
                                       January 30,   January 31,   February 2,
                                          1998          1997          1996    
                                       -----------   -----------   -----------
                                                                              
Net Sales                                  100.0%        100.0%        100.0% 
Cost of Sales                               77.5          81.6          83.8  
                                       ---------     ---------     ---------  
Gross Profit                                22.5          18.4          16.2  
Selling, general and administrative,                                          
    and other expenses                      14.4          14.6          14.2  
                                       ---------     ---------     ---------  
Operating income                             8.1           3.8           2.0  
Interest expense                             1.2           1.6           1.6  
                                       ---------     ---------     ---------  
Income before taxes                          6.9%          2.2%          0.4% 
                                       =========     =========     =========  

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, LIFO and vendor reserve adjustments on cost of goods sold, 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                        

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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 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.                                          

       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.                        

FISCAL 1997 COMPARED TO FISCAL 1996                                             

    Net sales for fiscal 1997 decreased by $36.4 million, or 17.0%, from
fiscal 1996, primarily due to a 9% decrease in the amount of gold jewelry (by   
weight) sold by the Company. The Company attributes this decrease to inventory  
reductions by certain retail customers and to the bankruptcy filing of one of   
the Company's major customers, Best Products.                                   

     Gross profit for fiscal 1997 decreased by $1.9 million, or 5.5%, from
fiscal 1996. As a percentage of net sales, gross profit increased to 18.4% in   
fiscal 1997, from 16.2% in fiscal 1996. Excluding the effects of gold price     
fluctuations and LIFO and vendor reserve adjustments on cost of goods sold, the 
gross profit margins for fiscal 1997 and fiscal 1996 would have been 18.1% and  
16.4%, respectively. The increase in gross profit margin in fiscal 1997 is      
primarily due to changes in the Company's product mix. The gold prices used to  
value inventory at year ends for fiscal 1997 and 1996 were $345.50 and          
$414.50 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 1997 decreased by $4.3
million, or 14.3%, from the prior year. As a percentage of net sales, these     
expenses increased to 14.6% in fiscal 1997, from 14.2% in fiscal 1996. The      
decrease in the dollar amount of selling, general and administrative expenses is
primarily attributable to (i) a $1.0 million decrease in personnel costs due to 
a reduction in the head count, (ii) a $1.4 million decrease in the provision for
bad debts due to a greater write-off of accounts receivable in fiscal 1996 as   
compared to fiscal 1997, (iii) a $2.2 million decrease in selling expenses due  
to a reduction in cooperative advertising with certain customers, and (iv) a    
$600,000 increase in other income as a result of the investment of excess cash. 
Offsetting these amounts was a $1.3 million increase in professional, consulting
and outside services fees. Consulting and outside services fees increased due to
a higher utilization by the Company of computer consultants and temporary       
personnel, while professional fees reflected legal fees related to various      
litigation in which the Company was involved and to the Company's merger        
discussions with another jewelry manufacturer. Such merger discussions were     
terminated in the fourth quarter of fiscal 1997.                                

        Interest expense decreased by $538,000, or 15.7%, from fiscal 1996. This
decrease results primarily from reduced borrowings under the Company's line of  
credit and gold consignment agreements. See "Liquidity and Capital Resources".  

       The provision for income taxes in fiscal 1997 increased by $1.1 million
as compared to fiscal 1996 due to the increase in taxable income between years. 
The effective tax rates for fiscal 1997 and fiscal 1996 were 43.5% and 61.6%,   
respectively. See Note 8 - Income Taxes.                                        

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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 1998, the Company satisfied approximately 81% of its gold         
requirements through purchases under the consignment program and purchased the  
remaining 19% 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 285,000 ounces at   
January 30, 1998 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 30, 1998, the Company held approximately 
155,400 ounces of gold under consignment. During fiscal 1998, 1997 and 1996, the
largest amount of gold held under consignment was 182,300 ounces, 220,400 ounces
and 258,600 ounces, respectively, and the average amount of gold held under     
consignment was 141,600 ounces, 168,000 ounces, and 214,400 ounces,             
respectively. Use of the consignment arrangements tends to be highest during the
third quarter.                                                                  

       The Company has a revolving credit facility with Bank of America NT&SA,
which facility provides for borrowings which vary seasonally from $20.0 million 
to $35.0 million. The facility is limited to the lesser of the credit line, as  
seasonally adjusted, 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 30, 1998, January 31, 1997 or    
February 2, 1996. During fiscal 1998, 1997 and 1996, the Company's highest      
outstanding balances under its revolving credit facilities were $300,000, $1.4  
million and $21.7 million, respectively, and the average amounts outstanding    
were $3,000, $100,000 and $3.1 million, 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.                                     

       Cash and cash equivalents increased $8.0 million, from $22.4 million in
fiscal 1997 to $30.4 million in fiscal 1998. This increase resulted from $13.8  
million of cash generated from operations, including $4.7 million received from 
settlement of litigation and $1.4 million in proceeds received from the sale of 
the Company's investment in an affiliated company. These cash increases were    
offset by $1.9 million in capital expenditures, $886,000 in debt repayment and  
$4.9 million for the Jerry Prince, Inc. acquisition.                            

     Net accounts receivable increased $1.8 million, from $17.8 million at
January 31, 1997 to $19.6 million at January 30, 1998. This increase results    
primarily from the increase in the amount of sales in the fourth quarter of     
fiscal 1998, primarily due to the acquisition of Jerry Prince, Inc., as compared
to the same period in fiscal 1997.                                              

       Inventories increased to $12.8 million in fiscal 1998 from $9.4 million
in fiscal 1997. The increase in inventory levels is primarily attributable to a 
$2.8 million increase in tobacco inventories and a $310,000 increase in perfume 
inventories, neither of which existed at fiscal 1997.                           

       The Company incurred capital expenditures of approximately $1.9 million
in fiscal 1998, principally related to improvements of its retail, manufacturing
and distribution facilities and for the purchase of manufacturing and           

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computer equipment. The Company expects to incur capital expenditures related to
its jewelry business of approximately $1.0 million in fiscal 1999, principally  
for the acquisition of manufacturing and computer equipment. The Company        
believes that funds generated from 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.                                                                         

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOUSRES ABOUT MARKET RISK             

OroAmerica is not required to provide the information required  
under this item for the fiscal year ended January 30, 1998.                     

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:                                                            

                                                        [Enlarge/Download Table]
                                                                                       
Report of Independent Accountants                                                   F-1
Consolidated Financial Statements                                                      
    Consolidated Balance Sheets as of January 30, 1998 and                             
        January 31, 1997                                                            F-2
    Consolidated Statements of Income for the years ended January 30, 1998,            
        January 31, 1997 and February 2, 1996                                       F-3
    Consolidated Statements of Changes in Stockholders' Equity for the years ended     
        January 30, 1998, January 31, 1997 and February 2, 1996                     F-4
    Consolidated Statements of Cash Flows for the years ended                          
        January 30, 1998, January 31, 1997 and February 2, 1996                     F-5
    Notes to Consolidated Financial Statements                                      F-6

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 23, 1998.                                          

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 23, 1998.                                                    

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 23, 1998.                                                    

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 23, 1998.                                                    

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               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:                                                                         

                                                                [Download Table]

                                                                           Page
                                                                           ----
                                                                               
Report of Independent Accountants                                           F-1
Consolidated Financial Statements:                                             
    Consolidated Balance Sheets as of January 30, 1998 and                     
        January 31, 1997                                                    F-2
    Consolidated Statements of Income for the years ended                      
        January 30, 1998, January 31, 1997 and February 2, 1996             F-3
    Consolidated Statements of Changes in Stockholders' Equity                 
        for the years ended January 30, 1998, January 31, 1997                 
        and February 2, 1996                                                F-4
    Consolidated Statements of Cash Flows for the years ended                  
        January 30, 1998, January 31, 1997 and February 2,1996              F-5
    Notes to Consolidated Financial Statements                              F-6

(a) 2. FINANCIAL STATEMENT SCHEDULES                                            

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

                                                                [Download Table]

                                                                     Page
                                                                     ----
                                                                         
Schedule II - Valuation and Qualifying Accounts                       S-1

  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                                                     

On November 12, 1997, the registrant filed a Report on Form 8-K 
disclosing, under Item 2, that the Company had entered into an Asset            
Purchase-Sale Agreement with Jerry Prince, Inc.                                 

   On January 12, 1998, the registrant filed an amended Report on Form
8-K/A in connection with the Jerry Prince acquisition noted above, providing    
under Item 7, audited financial statements of Jerry Prince, Inc. for the two    
years ended October 31, 1997. Additionally, the registrant disclosed the        
required pro-forma information regarding the unaudited combined results of      
operations of OroAmerica, Inc. and Jerry Prince, Inc.                           

(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)                               

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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)                            

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)                                              

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)                          

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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)                           

21.1    Subsidiaries of the registrant.                                         

23.1    Consent of Price Waterhouse 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 February 2, 1996 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 31, 1997 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.                                               

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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 28, 1998             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.                    

                                                                [Download Table]
                                                                                
Date:  April 28, 1998             /s/ Guy Benhamou                              
                                  ----------------------------------------------
                                  Guy Benhamou, Chairman of the Board, President
                                  and Chief Executive Officer                   

Date:  April 28, 1998             /s/ Shiu Shao                                 
                                  ----------------------------------------------
                                  Shiu Shao, Chief Financial Officer,           
                                  Vice President and Director                   

Date:  April 28, 1998             /s/ Betty Sou                                 
                                  ----------------------------------------------
                                  Betty Sou, Controller (Principal              
                                  Accounting Officer)                           

Date:  April 28, 1998             /s/ Bertram K. Massing                        
                                  ----------------------------------------------
                                  Bertram K. Massing, Director                  

Date:  April 28, 1998             /s/ Ronald A. Katz                            
                                  ----------------------------------------------
                                  Ronald A. Katz, Director                      

Date:  April 28, 1998             /s/ David Rousso                              
                                  ----------------------------------------------
                                  David Rousso, Director                        


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 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 24 present fairly, in all material
respects, the financial position of OroAmerica, Inc. and its subsidiaries at    
January 30, 1998 and January 31, 1997, and the results of their operations and  
their cash flows for each of the three fiscal years in the period ended January 
30, 1998, 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.                                                                          

Price Waterhouse LLP                                                            
Los Angeles, California                                                         
April 6, 1998                                                                   

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OROAMERICA, INC.
 CONSOLIDATED BALANCE SHEETS

                                                        [Enlarge/Download Table]

                                                                      January 30,  January 31,
                                                                          1998       1997     
                                                                         -------    -------   
                                                                                              
(Dollars in thousands except per share amounts)                                               
ASSETS                                                                                        
Current assets:                                                                               
   Cash and cash equivalents                                             $30,351    $22,381   
   Accounts receivable less allowance for returns                                             
           and doubtful accounts of $10,802 and $10,222                   19,627     17,837   
   Other accounts and notes receivable                                       235        521   
   Inventories (Note 2)                                                   12,772      9,411   
   Deferred income taxes (Note 8)                                          2,611      2,712   
   Prepaid items and other current assets                                    742        582   
                                                                         -------    -------   
       Total current assets                                               66,338     53,444   

Property and equipment, net (Notes 3, 6 and 12)                           10,406     10,219   
Excess of purchase price over net assets                                                      
    acquired, net (Notes 1 and 10)                                         4,302      4,395   
Patents, net (Note 1)                                                      5,177      5,666   
Other assets (Notes 4 and 8)                                                 442      1,537   
                                                                         -------    -------   
                                                                         $86,665    $75,261   
                                                                         =======    =======   
LIABILITIES AND STOCKHOLDERS' EQUITY                                                          
Current liabilities:                                                                          
   Current portion of long-term debt (Notes 6 and 12)                    $   347    $   514   
   Notes payable (Note 5)                                                     --         --   
   Accounts payable                                                        7,426      6,094   
   Income taxes payable (Note 8)                                           1,443        443   
   Accrued expenses (Note 7)                                               8,911      5,730   
                                                                         -------    -------   
       Total current liabilities                                          18,127     12,781   

Deferred income taxes payable (Note 8)                                        --        285   
Long-term debt, less current portion (Notes 6 and 12)                      2,341      2,685   
                                                                         -------    -------   
       Total liabilities                                                  20,468     15,751   
                                                                         -------    -------   

Commitments and contingencies (Notes 2 and 12)                                --         --   
Stockholders' equity:                                                                         
   Preferred stock, 500,000 shares authorized, $.001 par value;                               
       none issued and outstanding (Note 15)                                  --         --   
   Common stock, 10,000,000 shares authorized, $.001 par value;                               
       6,254,378 and 6,252,378 shares issued and outstanding at                               
       January 30, 1998 and January 31, 1997, respectively (Note 15)           6          6   
   Paid-in capital                                                        42,979     42,970   
   Retained earnings                                                      23,212     16,534   
                                                                         -------    -------   
        Total stockholders' equity                                        66,197     59,510   
                                                                         -------    -------   
                                                                         $86,665    $75,261   
                                                                         =======    =======   

See accompanying notes to consolidated financial statements.                    

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              OROAMERICA, INC.
             CONSOLIDATED STATEMENTS OF INCOME

                                                        [Enlarge/Download Table]

For the fiscal years ended                             January 30,   January 31,   February 2, 
(Dollars in thousands, except per share amounts)          1998           1997          1996    
                                                       -----------   -----------   ----------- 
                                                                                               
Net sales                                              $   159,720   $   177,065   $   213,417 
Cost of goods sold, exclusive of                                                               
  depreciation                                             123,800       144,398       178,865 
                                                       -----------   -----------   ----------- 
      Gross profit                                          35,920        32,667        34,552 
                                                       -----------   -----------   ----------- 
Selling, general and administrative                                                            
  expenses                                                  26,421        23,577        25,857 
Bad debt expense                                               763           517         1,898 
Depreciation and amortization                                2,502         2,453         2,520 
Interest expense                                             1,894         2,885         3,423 
Other (income) expense (Notes 9 and 14)                     (6,607)         (640)          (46)
                                                       -----------   -----------   ----------- 
      Total expenses                                        24,973        28,792        33,652 
                                                       -----------   -----------   ----------- 
Income before income taxes                                  10,947         3,875           900 
Provision for income taxes (Note 8)                          4,269         1,685           554 
                                                       -----------   -----------   ----------- 
Net income                                             $     6,678   $     2,190   $       346 
                                                       ===========   ===========   =========== 

Basic net income per share                             $      1.07   $      0.35   $      0.06 
                                                       ===========   ===========   =========== 
Diluted net income per share                           $      1.06   $      0.35   $      0.06 
                                                       ===========   ===========   =========== 

Weighted average shares outstanding                      6,254,212     6,250,711     6,248,378 
Dilutive effect of stock options                            16,549         5,364            -- 
                                                       -----------   -----------   ----------- 
Weighted average shares outstanding assuming dilution    6,270,761     6,256,075     6,248,378 
                                                       ===========   ===========   =========== 


See accompanying notes to consolidated financial statements.                    

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

                                                        [Enlarge/Download Table]

For the fiscal years ended                                                                    
February 2, 1996, January 31, 1997     Common Stock                                           
and January 30, 1998                ------------------  Paid-in   Retained  Loss on           
(Dollars in thousands)                Number   Amount   Capital   Earnings  Securities  Total 
                                    ---------  ------   --------  --------  ---------- -------
                                                                                              
Balance at January 27, 1995         6,248,378    $6     $ 42,951  $ 13,998    $(381)   $56,574
Change in unrealized losses                                                     381        381
Net income                                                             346                 346
                                    ---------  ----     --------  --------    -----    -------
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
                                    =========  ====     ========  ========    =====    =======

See accompanying notes to consolidated financial statements.                    

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OROAMERICA, INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS

                                                        [Enlarge/Download Table]

                                                             For Fiscal Years Ended          
                                                   ----------------------------------------- 
Dollars in thousands,                              January 30,    January 31,     February 2,
Increase (decrease) in cash                           1998            1997            1996   
                                                   ---------       ---------       --------- 
                                                                                             
Cash flows from operating activities:                                                        
Net income                                         $   6,678       $   2,190       $     346 
Adjustments to reconcile net income to net                                                   
  cash provided by operating activities:                                                     
    Depreciation and amortization                      2,502           2,453           2,520 
    Provision for losses on accounts receivable          763             517           1,898 
    Provision for estimated returns                      160             140           2,700 
    Provision for uncollectible vendor advances           50            (228)             -- 
    Gain on sale of property                              --             (20)             -- 
    Gain on sale of marketable securities                 --              --             (34)
    Gain on sale of investment in affiliate             (852)             --              -- 
Changes in assets and liabilities, net of effects                                            
  from acquisition of business:                                                              
    Accounts receivable                               (1,145)          5,073           6,818 
    Other accounts and notes receivable                  342             226            (130)
    Inventories                                          142           1,824           3,358 
    Deferred income taxes                               (233)           (426)           (934)
    Prepaid income taxes and income taxes payable      1,000             585             230 
    Prepaid items and other assets, net                  311            (612)             13 
    Accounts payable, accrued expenses and                                                   
      deferred liabilities                             4,095             501             (93)
                                                   ---------       ---------       --------- 
        Net cash provided by operating activities     13,813          12,223          16,692 
                                                   ---------       ---------       --------- 

Cash flows from investing activities:                                                        
    Capital expenditures                              (1,889)           (865)         (3,067)
    Acquisition of a business, net of cash                                                   
        acquired (Note 10)                            (4,506)             --              -- 
    Proceeds from sale of investment in affiliate      1,429              --              -- 
    Proceeds from sale of marketable securities           --              --           1,565 
    Proceeds from sale of property                        --              32              -- 
                                                   ---------       ---------       --------- 
        Net cash used in investing activities         (4,966)           (833)         (1,502)
                                                   ---------       ---------       --------- 

Cash flows from financing activities:                                                        
    Gross borrowings under line-of-credit                                                    
        agreement                                        300           3,950         652,900 
    Repayment of borrowings under line-of-credit        (300)         (3,950)       (657,600)
    Borrowings under long-term debt agreements            --              --           1,910 
    Principal repayments of long-term debt              (886)         (1,338)           (766)
    Issuance of Common Stock                               9              19              -- 
                                                   ---------       ---------       --------- 
        Net cash used in financing activities           (877)         (1,319)         (3,556)
                                                   ---------       ---------       --------- 

Increase in cash and cash equivalents                  7,970          10,071          11,634 
Cash and cash equivalents at beginning of period      22,381          12,310             676 
                                                   ---------       ---------       --------- 
Cash and cash equivalents at end of period         $  30,351       $  22,381       $  12,310 
                                                   =========       =========       ========= 

See accompanying notes to consolidated financial statements.            

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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. Cigar operations during fiscal 1998 consisted primarily of securing   
tobacco inventories and establishing manufacturing facilities in the Dominican  
Republic and Indonesia.                                                         

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. The fiscal years     
ended January 30, 1998 and January 31, 1997 consist of fifty-two weeks. The     
fiscal year ended February 2, 1996 consists of fifty-three 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.                   

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

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                                                        [Enlarge/Download Table]

Fiscal Year (in thousands)                         1998          1997         1996    
----------------------------------------------  -----------   -----------  -----------
                                                                                      
Cash paid during the year for:                                                        
  Interest                                      $     1,878   $     3,046  $     3,408
  Income taxes                                  $     3,234   $     1,522  $     1,599
Non-cash investing and financing activities:                                          
  Capital lease obligation entered into         $         -   $         -  $       587
  Acquisition (Note 10):                                                              
      Fair value of assets acquired             $     5,832   $         -  $         -
      Liabilities assumed                              (942)            -            -
                                                -----------   -----------  -----------
      Cash paid                                 $     4,890   $         -  $         -
                                                ===========   ===========  ===========

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 54% of net sales in 1998, 51% of  
net sales in 1997 and 55% of net sales in 1996. One customer, Walmart, accounted
for 16.4%, 17.7% and 20.5% of the Company's net sales for the years ended       
January 30, 1998, January 31, 1997,and February 2, 1996, respectively. No other 
individual customer accounts for more than 10 percent of sales. At January 30,  
1998 and January 31, 1997, gross accounts receivable included balances totaling 
$15.6 million and $12.8 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:                                                         

                                                                [Download Table]

                                              January 30,           January 31,
                                                     1998                  1997
                                              -----------           -----------
                                                                               
Doubtful accounts                              $1,600,000            $1,582,000
Sales returns                                  $9,202,000            $8,640,000

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   

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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 $1.4     
million and $1.8 million at January 30, 1998 and January 31, 1997, respectively.
The forward contract outstanding at January 30, 1998 expired in February 1998.  
The carrying value of the forward purchase contract approximates its fair value 
because of the relatively short maturity of this contract.                      

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.                              

Excess of Purchase Price over the Fair Value of Net Assets Acquired             

The excess of the purchase price over the fair value of the net assets acquired 
in the amount of $5,793,000, which arose in connection with the acquisition of a
former stockholder's interests in the Company and its affiliates in 1987, is    
amortized over twenty-five years. In May 1994, the Company purchased the capital
stock of Jerry Madison Enterprises, a jewelry company which specializes in the  
production and distribution of diamond-accented and gemstone jewelry            
merchandise. This transaction was accounted for under the purchase method. The  
purchase price was paid by a combination of cash and the issuance of the        
Company's stock, totaling $1,098,000. The excess of the purchase price over the 
fair value of the net assets acquired in the amount of $1,098,000, is amortized 
over fifteen years. During fiscal 1996, goodwill related to the Jerry Madison   
acquisition was reduced by approximately $125,000 due to the elimination of     

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certain net liability accounts established at acquisition which no longer       
represented a future obligation. In fiscal 1998 the Company recorded $200,000 of
goodwill related to the Jerry Prince acquisition, which will be amortized over  
five years (Note 10).                                                           

Amortization expense for fiscal 1998, 1997 and 1996 was $293,000, $294,000, and 
$304,000, respectively. Accumulated amortization at January 30, 1998 and January
31, 1997 was $2,664,000 and $2,371,000, respectively.                           

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 for fiscal 1998, 1997 and 1996 was        
approximately $489,000, $489,000, and $490,000, respectively. Accumulated       
amortization at January 30, 1998 and January 31, 1997, was $2,340,000 and       
$1,851,000, respectively.                                                       

Impairment of Long-Lived Assets                                                 

In fiscal 1996, the Company adopted Statement of Financial Accounting Standards 
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived 
Assets to Be Disposed Of." This statement requires that long-lived assets and   
certain identifiable intangibles to be held and used or disposed of by an entity
be 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. Since adoption, no impairment losses have been recognized.          

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).                        

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Net Income Per Share                                                            

In fiscal 1998, the Company adopted Statement of Financial Accounting Standards 
No. 128 ("SFAS No. 128"), "Earnings per Share". Basic net income per share      
excludes all dilution and 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.     
Prior period net income per share amounts have been restated to conform to the  
new presentation.                                                               

New Accounting Standards                                                        

In 1997, the Financial Accounting Standards Board issued Statement of Financial 
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income," and SFAS 
No. 131, "Disclosures about Segments of an Enterprise and Related Information." 
These statements, which are effective for fiscal years beginning after December 
15, 1997, require disclosure of certain components of changes in equity and     
certain information about operating segments and geographic areas of operation. 
These statements will have no impact on the Company's consolidated financial    
position, results of operations or cash flows.                                  

NOTE 2 - INVENTORIES:                                                           

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

                                                                [Download Table]

                                 January 30,      January 31, 
                                        1998             1997 
                               -------------   -------------- 
                                                              
Gold and other raw materials   $       4,093   $        2,880 
Manufacturing costs and other          7,975            9,041 
                               -------------   -------------- 
Jewelry inventories                   12,068           11,921 
Tobacco inventories                    2,801                - 
Other inventories                        310                - 
                               -------------   -------------- 
                                      15,179           11,921 
LIFO cost less than FIFO cost         (1,727)          (1,880)
Allowance for vendor advances           (680)            (630)
                               -------------   -------------- 
Inventories                    $      12,772   $        9,411 
                               =============   ============== 

Gold price per ounce:          $      304.85   $       345.50 
                               =============   ============== 

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 acquired approximately $3.6      
million of gold jewelry inventory as a result of its acquisition of Jerry       
Prince, Inc. (See Note 10).                                                     

The Company has several consignment agreements with gold consignors, providing  
for a maximum aggregate consignment of 285,000 fine troy ounces. In accordance  
with the consignment agreements, title remains with the gold consignors until   
purchased by the Company.                                                       

At January 30,1998 and January 31, 1997, the Company held 155,400 and 147,500   
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 

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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 include:(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) 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 30, 1998, the Company was in compliance with all of the
requirements of its consignment agreements.                                     

In fiscal 1997 the Company reduced jewelry inventory levels, resulting in a     
liquidation of manufacturing cost LIFO inventory, carried at lower costs        
prevailing in prior years, the effect of which reduced costs of goods sold by   
approximately $535,000 and increased net income by approximately $305,000 or    
$.05 per basic and diluted net income per share. In fiscal 1998 the Company     
reduced jewelry manufacturing cost inventory levels, resulting in a liquidation 
of manufacturing cost LIFO inventory, carried at lower costs prevailing in prior
years, the effect of which reduced costs of goods sold by approximately $153,000
and increased net income by approximately $93,000 or $.01 per basic and dilutive
net income per share.                                                           

NOTE 3 - PROPERTY AND EQUIPMENT:                                                

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

                                                                [Download Table]

                                          January 30,    January 31,
                                                1998           1997 
                                         -----------     ---------- 
                                                                    
Land                                        $  3,396       $  3,364 
Buildings, leaseholds and improvements         7,394          7,318 
Construction in progress                         714             88 
Automobiles                                      559            221 
Office furniture and equipment                 6,786          6,314 
Manufacturing equipment                        3,791          3,446 
                                            --------       -------- 
                                              22,640         20,751 
Less:  Accumulated depreciation              (12,234)       (10,532)
                                            --------       -------- 
                                            $ 10,406       $ 10,219 
                                            ========       ======== 


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NOTE 4 - NON-CURRENT ACCOUNTS RECEIVABLE:                                       

In September 1996, Best Products Co., Inc. ("Best"), a customer owing           
$1,153,000, filed for protection from creditors under Chapter 11 of the United  
States Bankruptcy Code. At January 31, 1997, the Company discounted the face    
value of its receivable from Best to approximately $768,000, which represented  
what the Company anticipated it would recover from the liquidation of Best's    
assets. In calendar year 1997, Best's assets were liquidated, converted to cash 
and distributed to creditors in accordance with the priorities of the bankruptcy
code. To date the Company has recovered $876,000 from the liquidation of Best's 
assets.                                                                         

In July 1997, Montgomery Ward, a customer owing $698,000, filed for protection  
from creditors under Chapter 11 of the United States Bankruptcy Code. The       
Company has discounted the face value of its receivable to its estimated        
recoverable value of $279,000. Because the Company is unable to predict         
repayment prior to January 1999, the Company has classified the Montgomery Ward 
receivable as long-term at January 30, 1998.                                    

NOTE 5 - BORROWINGS UNDER REVOLVING CREDIT AGREEMENT:                           

The Company has a revolving credit facility with Bank of America, NT & SA which 
varies seasonally from $20.0 million to $35.0 million and may not exceed the    
lesser of the credit line, as seasonally adjusted, 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 30, 
1998 or January 31, 1997. No short-term advances were outstanding at January    
30, 1998 or January 31, 1997. Stand-by letters of credit outstanding at January 
30, 1998 or January 31, 1997, totaled $1,500,000 and $1,583,000, respectively.  
The revolving credit facility also provides for a separate $1 million           
reducing-revolving line of credit, whereby the amount of credit available       
decreases $200,000 annually every June 30th until June 30, 1999, when the then  
outstanding principal balance becomes payable in full. At January 30, 1998 or   
January 31, 1997, no amounts were outstanding under the reducing-revolving line 
of credit. The revolving credit agreement expires August 1, 1998. 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 
30, 1998, the Company was in compliance with all of the requirements of the     
revolving credit agreement.                                                     

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NOTE 6 LONG-TERM DEBT:                                                          
Long-term debt consists of the following (in thousands):                        

                                                        [Enlarge/Download Table]

                                                                          January 30,  January 31,
                                                                               1998          1997 
                                                                          -----------  -----------
                                                                                                  
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, unpaid balance due March 1999                      $ 1,640     $ 1,760  

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, unpaid balance due March 1999               487         492  

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, unpaid balance due March 1999               302         349  

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, unpaid balance due February 1998                14         173  

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 $9,782. Paid in full in March 1997                   --          46  

Capital lease obligation due in February 1999,                                                    
interest rate at 12.83%, payable in monthly                                                       
principal and interest installments of $14,674                                   245         379  
                                                                             -------     -------  
Total long-term debt                                                           2,688       3,199  
Less: Current portion                                                           (347)       (514) 
                                                                             -------     -------  
                                                                             $ 2,341     $ 2,685  
                                                                             =======     =======  

The interest rates on the Company's revolving credit agreement and long-term    
debt agreements are tied to market rates. Accordingly, the carrying values of   
the Company's short-term and long-term debt agreements approximate their fair   
values.                                                                         

The Company's long-term debt maturities for the two years subsequent to January 
30, 1998 are: $347,000 in fiscal 1999 and $2,341,000 in fiscal 2000.            

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NOTE 7 - ACCRUED EXPENSES:                                                      

Accrued expenses consist of the following (in thousands):                       

                                                                [Download Table]

                                        January 30,    January 31,
                                              1998           1997 
                                     -------------   ------------ 
                                                                  
Advertising and customer promotions  $       3,083   $      2,384 
Deferred liabilities                         1,908            408 
Payroll and fringe benefits                  1,820            912 
Professional fees                              286            749 
Other miscellaneous                          1,814          1,277 
                                     -------------   ------------ 
Total                                $       8,911   $      5,730 
                                     =============   ============ 

NOTE 8 - INCOME TAXES:                                                          

The provision for income taxes for the fiscal years 1998, 1997 and 1996 are     
summarized as follows (in thousands):                                           

                                                                [Download Table]

                                   1998          1997          1996 
                                -------       -------       ------- 
                                                                    
Current:                                                            
      Federal                   $ 3,763       $ 1,836       $ 1,010 
      State                         739           275           478 
                                -------       -------       ------- 
                                  4,502         2,111         1,488 
                                -------       -------       ------- 
Deferred:                                                           
      Federal                      (198)         (325)         (221)
      State                         (35)         (101)         (713)
                                -------       -------       ------- 
                                   (233)         (426)         (934)
                                -------       -------       ------- 
      Income tax provision      $ 4,269       $ 1,685       $   554 
                                =======       =======       ======= 

Deferred tax assets by jurisdiction are as follows:                             

                                                                [Download Table]

                             January 30,   January 31,
                                   1998          1997 
                          -------------   ----------- 
                                                      
Deferred taxes - Federal  $       2,098   $     1,900 
Deferred taxes - State              562           527 
                          -------------   ----------- 
                          $       2,660   $     2,427 
                          =============   =========== 

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

                                                                [Download Table]

                                                  January 30,   January 31,
                                                        1998          1997 
                                               -------------   ----------- 
                                                                           
Deferred tax liabilities                                                   
        Inventory                              $      (2,114)  $    (2,051)
        Fixed and intangible assets                     (143)         (604)
        Prepaid box supplies                             (94)         (114)
                                               -------------   ----------- 
               Total deferred tax liabilities         (2,351)       (2,769)
                                               -------------   ----------- 
Deferred tax assets                                                        
        Reserve for returns                            3,665         3,468 
        Bad debt reserve                                 638           890 
        Compensation accruals                            214           196 
        Net operating loss carryforwards                 198           352 
        Other                                            296           290 
                                               -------------   ----------- 
        Total deferred tax assets                      5,011         5,196 
                                               -------------   ----------- 
Net deferred tax assets                        $       2,660   $     2,427 
                                               =============   =========== 

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At January 30, 1998, the Company has federal and California net operating loss  
carryforwards ("NOLs') of $992,000 and $517,000, respectively. 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 1999
through fiscal 2009. The California NOLs expire in fiscal 1999.                 

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

                                                                [Download Table]

                                           Fiscal year ended                  
                                 ---------------------------------------------
                                  January 30,      January 31,     February 2,
                                      1998            1997            1996    
                                 -------------    ------------    ------------
                                                                              
Federal statutory rate                34.0%            34.0%           34.0%  
State and local income taxes,                                                 
    net of federal tax benefits        4.2              3.0            18.8   
Goodwill amortization                  0.9              2.6            11.5   
Effect of foreign operations          (4.4)            (5.0)           (8.8)  
Other, net                             4.3              8.9             6.1   
                                   -------         --------         -------   
Effective income tax rate             39.0%            43.5%           61.6%  
                                   =======         ========         =======   

The Company has not provided for U.S. federal income and foreign withholding    
taxes on $2.6 million of foreign subsidiaries' undistributed earnings as of     
January 30, 1998, because such earnings are intended to be reinvested           
indefinitely.                                                                   

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 purchases finished product from Sicor at prices which management    
believes represent 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 is to develop rope chain           
manufacturing. The Company owns a 50 percent interest in OroIndo and accounts   
for this entity using the equity method. The purchases from OroIndo during      
fiscal year 1998, 1997 and 1996 were approximately $2.2 million, $1.0 million   
and $1.1 million, respectively.                                                 

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NOTE 10 - ACQUISITION OF JERRY PRINCE, INC.                                     

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. The purchase price has been allocated to     
assets acquired and liabilities assumed based on fair market value at the date  
of acquisition as shown below:                                                  

                                                                [Download Table]

                                            (000's) 
                                            ------- 
                                                    
Cash                                           $384 
Accounts receivable,net                       1,592 
Inventory                                     3,553 
Other current assets                            103 
Goodwill                                        200 
Line of credit                                 (375)
Accounts payable                               (177)
Other current liabilities                      (390)
                                            ------- 
Cash paid                                    $4,890 
                                            ======= 

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.                                              

                                                                [Download Table]

(in thousands, except per share amounts)                  1998              1997
--------------------------------------------------------------------------------
                                                                                
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

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, or of future results of operations of the consolidated entities.

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 $125,000,      
$80,000, and $50,000 to the plan during the fiscal years ended January 30, 1998,
January 31, 1997 and February 2, 1996, respectively.                            

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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 1998,  
1997 and 1996 was approximately $541,000, $277,000 and $282,000, respectively.  

The Company leases computer equipment under agreements classified as capital    
leases, which expire in fiscal 2000.                                            

Future minimum annual commitments under the capital lease and operating leases  
with initial or remaining terms of one year or more consist of the following at 
January 30, 1998 (in thousands):                                                

                                                                [Download Table]

                                             Capital      Operating
Fiscal Year                                   Leases       Leases  
-----------                              -----------   ----------  
                                                                   
1999                                     $       176   $      500  
2000                                              91          326  
2001                                               -          264  
2002                                               -          255  
2003                                               -           87  
                                         -----------   ----------  
Total minimum lease payments                     267   $    1,432  
                                                       ==========  
Less: Amount representing interest               (22)              
                                         -----------               
Present value of minimum lease payments  $       245               
                                         ===========               

Property and equipment accounts include the following amounts for computer      
equipment that have been recorded under capital leases (in thousands):          

                                                                [Download Table]

                                   January 30,      January 31, 
                                          1998            1997  
                                --------------   -------------- 
                                                                
Office furniture and equipment  $          631   $          631 
Less: Accumulated depreciation            (487)            (329)
                                --------------   -------------- 
                                $          144   $          302 
                                ==============   ============== 

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 cumulative annual increments of 20 percent, commencing on 
the date of grant. 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,                                                                        

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commencing on the anniversary of the date of grant. Director stock options      
expire 10 years from the date of grant. During fiscal 1996, in accordance with  
the provisions of the Directors' Plan, an option to purchase 10,000 shares of   
common stock was automatically granted to a non-employee director upon his      
election to the Board. 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.                                

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' Plan is administered by the Board. Stock option activity for both    
plans is shown below:                                                           

                                                                [Download Table]

                                                          Weighted-
                                                Options    Average 
                                            Outstanding    Exercise
                                                 Number     Price  
                                         --------------     ------ 
                                                                   
Outstanding at January 27, 1995                 316,250     $10.25 
   Granted                                       10,000      $4.13 
   Exercised                                         --         -- 
   Cancelled                                    (10,000)    $14.25 
                                         --------------     ------ 
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 
                                         ==============     ====== 

Options exercisable at February 2, 1996         213,250      $9.01 
                                         ==============     ====== 

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

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

The following table summarizes information about employee and director stock    
options outstanding at January 30, 1998:                                        

                                                        [Enlarge/Download Table]

                                 Options Outstanding                  Options Exercisable    
                       -----------------------------------------   --------------------------
                                       Weighted-                                             
                                        Average      Weighted-                      Weighted-
                                       Remaining      Average                        Average 
      Range of            Number       Contractual   Exercise          Number       Exercise 
  Exercise Prices      Outstanding        Life        Price         Exercisable      Price   
-------------------------------------------------------------------------------------------- 
                                                                                             
  $ 4.13 to $ 5.23        207,000         5.4          $4.92          121,200        $5.05   
  $12.25 to $14.25        185,000         6.0         $12.57          166,000       $12.53   
                          -------                                     -------                
                          392,000                                     287,200                
                          =======                                     =======                

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 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 1998, 1997 and 
1996 were $2.24, $2.57 and $2.24, respectively. All options were granted at     
exercise prices equal to market prices during fiscal years 1998, 1997 and 1996. 

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The fair values for options granted in fiscal 1998, 1997 and 1996 were estimated
as of the date of grant using a Black-Scholes option pricing model with the     
following weighted-average assumptions:                                         

                                                                [Download Table]

                                1998       1997       1996   
                              ---------  ---------  ---------
                                                             
Risk-free interest rate           6.78%      6.31%      5.83%
Dividend yield                    0.00%      0.00%      0.00%
Volatility                       30.21%     48.16%     48.61%
Weighted-average option life    6 years    6 years    6 years

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):                                                                          

                                                                [Download Table]

                              1998       1997       1996  
                           ---------  ---------  ---------
                                                          
Net income:                                               
    As reported            $   6,678     $2,190  $     346
    Pro forma                  6,608      2,158        345
Net income per share:                                     
    As reported - basic    $    1.07  $    0.35  $    0.06
    As reported - diluted  $    1.06  $    0.35  $    0.06
    Pro forma - basic      $    1.06  $    0.35  $    0.06
    Pro forma - diluted    $    1.05  $    0.34  $    0.06

NOTE 14 - LITIGATION SETTLEMENT AWARD                                           

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

NOTE 15 - 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.                         

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.

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NOTE 16 - QUARTERLY FINANCIAL DATA (UNAUDITED):                                 
(Amounts in thousands, except per share amounts)                                

                                                        [Enlarge/Download Table]

                                                         1998 Quarters                        
                                        ------------------------------------------------------
Quarter ended                                   1st           2nd            3rd           4th
-------------                           -----------   -----------    -----------   -----------
                                                                                              
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
    Market Price - High                        5.12          5.88           6.00          5.94
    Market Price - Low                         4.50          4.25           4.25          4.50

                                                        [Enlarge/Download Table]

                                                         1997 Quarters                        
                                        ------------------------------------------------------
Quarter ended                                   1st           2nd            3rd           4th
-------------                           -----------   -----------    -----------   -----------
                                                                                              
Net sales                               $    44,915   $    29,747    $    55,649   $    46,754
Gross margin                                  8,246         5,056         10,749         8,616
Net income (loss)                               287          (645)         1,622           926
Per Share Data:                                                                               
    Basic net income (loss) per share          0.05         (0.10)          0.26          0.14
    Diluted net income (loss) per share        0.05         (0.10)          0.26          0.14
    Market Price - High                        4.88          6.50           6.50          6.50
    Market Price - Low                         4.25          4.75           5.00          4.63


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. On April 24, 1998, there were 26 holders of record of the Common      
Stock.                                                                          

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  
facilities and gold consignment agreements contain covenants which prohibit the 
payment of dividends on the Common Stock.                                       

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OroAmerica, Inc.
 Schedule II - Valuation and Qualifying Accounts
(In thousands)

                                                        [Enlarge/Download Table]

                                                        Additions                                       
                                        ----------------------------------------                        
                                                      Charged                                           
                                        Balance at    to costs      Charged                     Balance 
                                        beginning       and        to other                     at end  
             Description                of period     expenses      accounts       Deductions  of period
--------------------------------------- ----------   ----------    ---------      -----------  ---------
                                                                                                        
For the year ended February 2, 1996:                                                                    
   Allowance for doubtful accounts       $ 1,100        $1,898     $  (497) (4)   $(1,053)(2)  $ 1,448  
   Reserve for estimated returns           5,800             0           0          2,700 (3)    8,500  
   Allowance for uncollectible                                                                          
       vendor advances                       750             0         108  (5)         0          858  
                                         --------       ------     -------        -------      -------  

                Total                    $ 7,650        $1,898       ($389)       $ 1,647      $10,806  
                                         ========       ======     =======        =======      =======  

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)(6)      630  
                                         --------       ------     --------       -------      -------  

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

For the year ended January 30, 1998                                                                     
   Allowance for doubtful accounts       $ 1,582          $763         $142 (7)     ($887)(2)  $ 1,600  
   Reserve for estimated returns           8,640             0          402 (8)       160 (3)    9,202  
   Allowance for uncollectible                                                                          
       vendor advances                       630            50            0              0         680  
                                         --------     ---------    ---------      ---------    -------  

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


(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)     Includes $210,000 of payments determined to be "preferential" by a      
       bankruptcy court, $380,000 of memo and sample accounts written-off from
    inventory, and a $69,000 adjustment to goodwill originating from the
 Jerry Madison acquisition. These items were offset by $162,000 of
collections of trade accounts receivable previously written off.

(5)     Cash received on vendor advances previously written-off.                

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

(7)     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.            

(8)     Estimated return reserve acquired from Jerry Prince transaction.        

S-2 

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K405’ Filing		Date		First		Last			Other Filings
		12/31/99		13
		6/30/99		39
		6/1/99		14
		8/1/98		39
		6/23/98		1		23
Filed on:		4/30/98
		4/28/98		27
		4/24/98		1		47
		4/15/98		9
		4/6/98		28
		3/31/98		11
		3/27/98		8		19
For Period End:		1/30/98		1		48
		1/12/98		24					8-K/A
		12/15/97		37					10-Q
		11/12/97		24					8-K
		10/31/97		24					10-Q,  8-K/A
		10/29/97		26		43			8-K
		8/26/97		26					8-K
		4/9/97		9
		2/27/97		13					8-K
		1/31/97		16		48			10-K405,  4
		12/15/96		26
		11/1/96		24		26			10-Q
		9/11/96		26					10-Q
		8/8/96		26
		2/2/96		22		48
		10/27/95		26
		7/28/95		25		26
		7/3/95		24
		5/30/95		25
		3/9/95		25
		1/27/95		26
		12/2/94		25
		7/29/94		26
		7/22/94		24		25
		2/25/94		25
		1/28/94		26
		9/23/93		16		47
		9/10/93		25
		6/15/93		24
		6/10/93		25
		2/10/93		25
		5/1/92		25
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