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



                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    Form 10-Q


              X  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
             --  THE SECURITIES EXCHANGE ACT OF 1934

                 For the Quarterly Period Ended May 2, 1998
                                                  -----------
                                       or

                 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                 THE SECURITIES EXCHANGE ACT OF 1934

                 For the Transition Period from _______ to ______

                               Commission File Number: 0-25716



                            FINLAY ENTERPRISES, INC.
             (Exact name of registrant as specified in its charter)

          Delaware                                           13-3492802     
          --------                                      -------------------     
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization)                          Identification No.)


           529 Fifth Avenue, New York, NY                 10017
    ------------------------------------------         -----------
     (Address of principal executive offices)           (zip code)

                                   (212) 808-2800
                 -----------------------------------------------
              (Registrant's telephone number, including area code)

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

As of June 12, 1998,  there were  10,393,053  shares of common stock,  par value
$.01 per share, of the Registrant outstanding.



<PAGE>

                            FINLAY ENTERPRISES, INC.

                                    FORM 10-Q

                       QUARTERLY PERIOD ENDED MAY 2, 1998

                                      INDEX


                                                                      PAGE(S)
                                                                      -------
PART I - FINANCIAL INFORMATION

 Item 1.  Consolidated Financial Statements (Unaudited)

          Consolidated Statements of Operations for the thirteen 
          weeks ended May 3, 1997 and May 2, 1998.............................1

          Consolidated Balance Sheets as of January 31, 1998 and 
          May 2, 1998.........................................................2

          Consolidated Statements of Changes in Stockholders' Equity for the 
          year ended January 31, 1998 and thirteen weeks ended May 2, 1998....3

          Consolidated Statements of Cash Flows for the thirteen 
          weeks ended May 3, 1997 and May 2, 1998.............................4

          Notes to Consolidated Financial Statements..........................5

 Item 2.  Management's Discussion and Analysis of
          Financial Condition and Results of Operations......................10


PART II - OTHER INFORMATION

 Item 6.  Exhibits and Reports on Form 8-K...................................16


SIGNATURES ..................................................................18

 

<PAGE>

PART I - FINANCIAL INFORMATION
  Item 1.  Consolidated Financial Statements



                            FINLAY ENTERPRISES, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                 (in thousands, except share and per share data)
                                   (unaudited)


<TABLE>
<CAPTION>



                                                                       Thirteen Weeks Ended
                                                                  -----------------------------
                                                                                     
                                                                      May 3,         May 2,
                                                                      1997           1998
                                                                  -------------  --------------

<S>                                                               <C>            <C>          
Sales........................................................     $    134,592   $     160,992
Cost of sales................................................           65,722          78,104
                                                                  -------------  --------------
   Gross margin..............................................           68,870          82,888
Selling, general and administrative expenses.................           65,167          76,948
Depreciation and amortization................................            2,753           3,794
                                                                  -------------  --------------
   Income (loss) from operations.............................              950           2,146
Interest expense, net........................................            7,699           9,006
                                                                  -------------  --------------
   Income (loss) before income taxes.........................           (6,749)         (6,860)
Provision (credit) for income taxes..........................           (2,523)         (2,658)
                                                                  -------------  --------------
   Net income (loss).........................................     $     (4,226)  $      (4,202)
                                                                  =============  ==============
Net income (loss) per share applicable to common shares:                      
   Basic net income (loss) per share.........................     $      (0.57)  $       (0.43)
                                                                  =============  ==============
   Diluted net income (loss) per share.......................     $      (0.56)  $       (0.43)
                                                                  =============  ==============
Weighted average shares and share equivalents outstanding....        7,492,792       9,720,979
                                                                  =============  ==============
</TABLE>

 










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

                                        1

<PAGE>

                            FINLAY ENTERPRISES, INC.
                           CONSOLIDATED BALANCE SHEETS
                 (in thousands, except share and per share data)
<TABLE>
<CAPTION>
                                                       
                                                                                  (unaudited)
                                                                   January 31,       May 2,
                                                                      1998            1998
                                                                  -------------  -------------
                                                                                   
                                              ASSETS
 Current assets
<S>                                                               <C>            <C>         
   Cash and cash equivalents.................................     $     13,588   $     80,395
   Accounts receivable - department stores...................           20,772         38,150
   Other receivables.........................................            6,862         14,448
   Merchandise inventories...................................          279,766        300,484
   Prepaid expenses and other................................            1,781          4,446
                                                                  -------------  -------------
      Total current assets...................................          322,769        437,923
                                                                  -------------  -------------
 Fixed assets
   Equipment, fixtures and leasehold improvements............           95,257         98,657
   Less - accumulated depreciation and amortization..........           28,249         30,825
                                                                  -------------  -------------
      Fixed assets, net......................................           67,008         67,832
                                                                  -------------  -------------
 Deferred charges and other assets...........................           14,188         15,610
 Goodwill....................................................          104,271        103,332
                                                                  -------------  -------------
      Total assets...........................................     $    508,236   $    624,697
                                                                  =============  =============

                      LIABILITIES AND STOCKHOLDERS' EQUITY

 Current liabilities
   Notes payable.............................................     $      -       $       -
   Current portion of long-term debt.........................            -             184,540
   Accounts payable - trade..................................          160,434          87,918
   Accrued liabilities:
       Accrued salaries and benefits.........................           12,694          12,447
       Accrued miscellaneous taxes...........................            5,014           3,416
       Accrued insurance.....................................              215           1,201
       Accrued interest......................................            3,902             501
       Accrued management transition and consulting..........            1,092             886
       Other.................................................           15,558          13,085
   Income taxes payable......................................           14,246           -
   Deferred income taxes.....................................            1,219           1,857
                                                                  -------------  --------------
       Total current liabilities.............................          214,374         305,851
Long-term debt...............................................          221,026         225,000
Other non-current liabilities................................              497           8,869
                                                                  -------------  --------------
       Total liabilities.....................................          435,897         539,720
                                                                  -------------  --------------
Stockholders' equity
   Common Stock, par value $.01 per share; authorized 
     25,000,000 shares; issued and outstanding 9,779,050 
     and 10,374,053 shares, respectively.....................               98             104
   Additional paid-in capital................................           86,135         101,023
   Distributions to investor group in excess of 
     carryover basis.........................................          (24,390)        (24,390)
   Note receivable from stock sale...........................           (1,001)          -
   Retained earnings (deficit)...............................           18,340          14,138
   Foreign currency translation adjustment...................           (6,843)         (5,898)
                                                                  -------------  --------------
       Total stockholders' equity............................           72,339          84,977
                                                                  -------------  --------------
       Total liabilities and stockholders' equity............     $    508,236   $     624,697
                                                                  =============  ==============
</TABLE>


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

                                        2
<PAGE>

                            FINLAY ENTERPRISES, INC.
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                        (in thousands, except share data)


<TABLE>
<CAPTION>



                            
                                      Common Stock               Distribution to    Note                   Foreign     
                                    ----------------- Additional  investor group  Receivable   Retained     Currency       Total 
                                      Number           Paid-in     in excess of      from      Earnings   Translation  Stockholders'
                                    of shares  Amount  Capital   carryover basis  Stock Sale   (Deficit)   Adjustment     Equiity
                                    ---------- ------ ---------- --------------- -----------  ----------  ------------ -------------
<S>               <C>                <C>        <C>   <C>          <C>            <C>         <C>          <C>          <C>       
Balance, February 1, 1997........    7,558,838  $ 76  $   47,725   $   (24,390)   $  (1,001)  $   3,145    $   (3,050)  $   22,505
  Net income (loss)..............        -        -        -             -            -          15,195         -           15,195
  Foreign currency translation                                                                                                     
      adjustment.................        -        -        -             -            -           -            (3,793)      (3,793)
  Issuance of Common Stock.......    2,196,971    22      38,102         -            -           -             -           38,124
  Exercise of stock options......       23,241    -          308         -            -           -             -              308
                                     --------- ------ ---------- --------------- -----------  ----------  ------------ -------------
Balance, January 31, 1998........    9,779,050    98      86,135       (24,390)      (1,001)     18,340        (6,843)      72,339
  Net income (loss)..............        -        -      -               -            -          (4,202)        -           (4,202)
  Foreign currency translation
      adjustment.................        -        -      -               -            -           -               945          945
  Issuance of Common Stock.......      567,310     6      13,753         -            -           -             -           13,759
  Note Receivable repayment......        -        -      -               -            1,001       -             -            1,001
  Exercise of stock options......       27,693    -        1,135         -            -           -             -            1,135
                                    ---------- ------ ---------- --------------- -----------  ----------  ------------ -------------
Balance, May 2, 1998.............   10,374,053  $ 104  $ 101,023   $   (24,390)   $   -       $  14,138    $   (5,898)  $   84,977
                                    ========== ====== ========== =============== ===========  ==========  ============ =============


</TABLE>










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

                                        3
<PAGE>

                            FINLAY ENTERPRISES, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                     
                                                                       Thirteen Weeks Ended
                                                                  ----------------------------
                                                                      May 3,         May 2,            
                                                                       1997           1998             
                                                                  -------------  -------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                               <C>            <C>          
   Net income (loss).........................................     $     (4,226)  $     (4,202)
   Adjustments to reconcile net income (loss) to net 
     cash used in operating activities:                                                                              
   Depreciation and amortization.............................            3,061          4,122
   Imputed interest on debentures............................            2,249          2,527
   Other, net................................................             (354)            44
   Changes in operating assets and liabilities:
       Increase in accounts and other receivables............          (19,772)       (24,811)
       Increase in merchandise inventories...................          (25,311)       (20,023)
       Increase in prepaid expenses and other................              (18)        (2,638)
       Decrease in accounts payable and accrued 
        liabilities..........................................          (70,597)       (80,068)
                                                                  -------------  -------------
         NET CASH USED IN OPERATING ACTIVITIES...............         (114,968)      (125,049)
                                                                  -------------  -------------
CASH FLOWS FROM INVESTING ACTIVITIES
   Purchases of equipment, fixtures and leasehold 
    improvements.............................................           (3,375)        (3,457)
   Other, net................................................             (547)          (769)
                                                                  -------------  -------------
         NET CASH USED IN INVESTING ACTIVITIES...............           (3,922)        (4,226)
                                                                  -------------  -------------
CASH FLOWS FROM FINANCING ACTIVITIES
   Proceeds from revolving credit facility...................          179,387        208,417
   Principal payments on revolving credit facility...........          (78,177)      (208,417)
   Prepayment of debentures..................................           -             (39,027)
   Net proceeds from public offering of Common Stock.........           -              13,759
   Proceeds from senior note offering........................           -             150,000
   Proceeds from senior debenture offering...................           -              75,000
   Proceeds from repayment of note receivable................           -               1,001
   Capitalized financing costs...............................           -              (5,808)
   Other, net................................................               14          1,135
                                                                  -------------  -------------
         NET CASH PROVIDED FROM FINANCING ACTIVITIES.........          101,224       196,060
                                                                  -------------  -------------
         EFFECT OF EXCHANGE RATE CHANGES ON CASH.............             (418)            22
                                                                  -------------  -------------
         INCREASE (DECREASE) IN CASH AND CASH                                                             
            EQUIVALENTS......................................          (18,084)        66,807       
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD...............           20,846         13,588
                                                                  -------------  -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD.....................     $      2,762   $     80,395
                                                                  =============  =============
Supplemental disclosure of cash flow information:
   Interest paid.............................................     $      8,531   $      9,568
   Income taxes paid.........................................            4,613            914

</TABLE>


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

                                        4
<PAGE>

                            FINLAY ENTERPRISES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION

     The  accompanying  unaudited  consolidated  financial  statements of Finlay
Enterprises,  Inc.  (the  "Company" or the  "Registrant"),  and its wholly owned
subsidiary,  Finlay Fine Jewelry  Corporation and its wholly owned  subsidiaries
("Finlay  Jewelry"),  have been prepared in accordance  with generally  accepted
accounting principles for interim financial information.  References to "Finlay"
mean collectively, the Company and Finlay Jewelry. In the opinion of management,
the  accompanying   unaudited  consolidated  financial  statements  contain  all
adjustments necessary to present fairly the financial position of the Company as
of May 2, 1998,  and the results of  operations  and cash flows for the thirteen
weeks  ended  May 3, 1997 and May 2,  1998.  Due to the  seasonal  nature of the
business,  results for interim periods are not indicative of annual results. The
unaudited  consolidated  financial  statements  have  been  prepared  on a basis
consistent  with that of the audited  consolidated  financial  statements  as of
January 31, 1998 referred to below. Certain information and footnote disclosures
normally included in financial  statements prepared in accordance with generally
accepted  accounting  principles have been condensed or omitted  pursuant to the
rules  and   regulations  of  the  Securities  and  Exchange   Commission   (the
"Commission").

     These consolidated  financial statements should be read in conjunction with
the audited consolidated  financial statements and notes thereto included in the
Company's  annual report on Form 10-K for the fiscal year ended January 31, 1998
("Form 10-K") previously filed with the Commission.

     Finlay's fiscal year ends on the Saturday closest to January 31. References
to 1995, 1996, 1997 and 1998 relate to the fiscal years ending February 3, 1996,
February 1, 1997, January 31, 1998 and January 30, 1999,  respectively.  Each of
the  fiscal  years  includes   fifty-two  weeks  except  1995,   which  includes
fifty-three weeks.

     Net  income  (loss)  per share has been  computed  in  accordance  with the
Statement of Financial  Accounting  Standards  ("SFAS') No. 128,  "Earnings  per
Share"  which was adopted by the  Company at the end of 1997.  Basic and diluted
net income (loss) per share were calculated using the weighted average number of
shares  outstanding  during each period,  with options to purchase  Common Stock
included  in diluted  net income  (loss) per  share,  using the  treasury  stock
method, to the extent that such options were dilutive. The per share amounts for
each period  presented  have been  restated to reflect the  adoption of SFAS No.
128. The following is an analysis of the  differences  between basic and diluted
net income (loss) per share:

<TABLE>
<CAPTION>

                                                                       Thirteen Weeks Ended
                                             ----------------------------------------------------------------------

                                                      May 3, 1997                                 May 2,1998
                                             --------------------------------      --------------------------------
                                                 No. of              Per                No. of            Per
                                                 Shares             Share               Shares           Share
                                             --------------   ---------------      --------------   ---------------
Weighted average shares
<S>                                             <C>            <C>                     <C>            <C>         
    outstanding....................             7,420,419      $      (0.57)           9,720,979      $     (0.43)
Dilutive stock options.............                72,373              0.01                -                  -
                                             --------------   ---------------      --------------   ---------------
Weighted average shares
    and share equivalents..........             7,492,792      $      (0.56)           9,720,979      $     (0.43)
                                             ==============   ===============      ==============   ===============
</TABLE>


                                        5
<PAGE>

                            FINLAY ENTERPRISES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 - BASIS OF PRESENTATION (continued)

     For each of the  periods  above,  there were no  adjustments  to Net income
(loss)  applicable  to common  shares  used to  calculate  basic and diluted net
income (loss) per share.

     During  the first  quarter  of 1998,  the  Company  adopted  SFAS No.  130,
"Reporting  Comprehensive  Income",  which  became  effective  for fiscal  years
beginning  after  December 15,  1997.  This  Statement  requires  disclosure  of
comprehensive income,  defined as the total of net income and all other nonowner
changes in equity,  which under generally accepted  accounting  principles,  are
recorded  directly  to the  stockholders'  equity  section  of the  consolidated
balance  sheet and,  therefore  bypass net income.  In Finlay's  case,  the only
nonowner  change  in  equity  relates  to  the  foreign   currency   translation
adjustment.

Comprehensive income (loss) is as follows (in thousands):

<TABLE>
<CAPTION>

                                                         Thirteen Weeks Ended
                                                   ----------------------------
                                                       May 3,         May 2,
                                                        1997           1998
                                                   ------------   -------------
<S>                                                <C>            <C>          
 Net income....................................    $    (4,226)   $     (4,202)
 Foreign currency translation adjustment.......         (2,232)            945
                                                   ------------   -------------
 Comprehensive income (loss)...................    $    (6,458)   $     (3,257)
                                                   ============   =============
</TABLE>

NOTE 2 - DESCRIPTION OF BUSINESS

     The Company conducts business through its wholly owned  subsidiary,  Finlay
Jewelry.  Finlay is a retailer of fine jewelry  products and primarily  operates
leased fine jewelry  departments  in  department  stores  throughout  the United
States and France. A significant  portion of Finlay's  revenues are generated in
the fourth quarter due to the seasonality of the retail industry.  Approximately
72% of  Finlay's  domestic  sales in 1997  were  from  operations  in two  major
department store groups,  of which 49% represents  Finlay's  domestic sales from
one department store group.

NOTE 3 - MERCHANDISE INVENTORIES

     Merchandise inventories consisted of the following:
<TABLE>
<CAPTION>

                                                                                    (unaudited)
                                                                  January 31,          May 2,
                                                                      1998              1998
                                                                  -------------    -------------
                                                                            (in thousands)
  Jewelry goods - rings, watches and other fine jewelry                                                
<S>                                                               <C>              <C>         
     (specific identification basis)...........................   $    286,289     $    307,100
  Less:  Excess of specific identification cost over LIFO                                              
     inventory value...........................................          6,523            6,616
                                                                  -------------    -------------
                                                                  $    279,766     $    300,484
                                                                  =============    =============
 

</TABLE>


                                        6
<PAGE>

                            FINLAY ENTERPRISES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - MERCHANDISE INVENTORIES (continued)

     The LIFO method had the effect of  decreasing  income  (loss) before income
taxes for the  thirteen  weeks ended May 3, 1997 and May 2, 1998 by $191,000 and
$93,000,  respectively.  Finlay determines its LIFO inventory value by utilizing
selected  producer price indices published for jewelry and watches by the Bureau
of Labor  Statistics.  Due to the  application of APB Opinion No. 16,  inventory
valued at LIFO for income tax reporting  purposes was approximately  $21,000,000
lower than that for financial reporting purposes at January 31, 1998.

     Approximately  $219,822,000 and $245,892,000 at January 31, 1998 and May 2,
1998,  respectively,  of merchandise  received on consignment  has been excluded
from  Merchandise  inventories and Accounts  payable-trade  in the  accompanying
Consolidated Balance Sheets.

     Finlay  Jewelry  is  party  to a  gold  consignment  agreement  (the  "Gold
Consignment Agreement') with Rhode Island Hospital Trust National Bank ('RIHT"),
which  expires on December  31, 2001.  The Gold  Consignment  Agreement  enables
Finlay  Jewelry to receive  merchandise by providing  gold, or otherwise  making
payment,  to certain  vendors who currently  supply Finlay with  merchandise  on
consignment. While the merchandise involved remains consigned, title to the gold
content of the merchandise transfers from the vendors to RIHT. As a result, such
vendors have reduced their working capital requirements and associated financing
costs. Consequently,  Finlay has negotiated more favorable prices and terms with
the  participating  vendors.  Finlay  Jewelry can  obtain,  pursuant to the Gold
Consignment  Agreement,  up to the lesser of (i) 85,000 fine troy ounces or (ii)
$32,000,000  worth of gold,  subject  to a  formula  as  prescribed  by the Gold
Consignment  Agreement.  At May 2,  1998,  amounts  outstanding  under  the Gold
Consignment  Agreement totaled 44,592 fine troy ounces,  valued at approximately
$13.9  million.  For financial  statement  purposes,  the consigned  gold is not
included in Merchandise inventories on the Company's Consolidated Balance Sheets
and, therefore, no related liability has been recorded.

     The cost to Finlay of gold merchandise sold on consignment in some cases is
not  fixed  until  the sale is  reported  to the  vendor  or RIHT in the case of
merchandise  sold pursuant to the Gold  Consignment  Agreement.  Finlay at times
enters  into  futures  contracts,  such as options or  forwards,  based upon the
anticipated sales of gold product,  to hedge against the risk arising from those
payment  arrangements.  Changes in the market  value of  futures  contracts  are
accounted for as an addition to or reduction from the inventory  cost. At May 3,
1997 and May 2, 1998, the gain/loss on open futures  contracts was not material.
The Company did not have any open  positions  in futures  contracts  for gold at
January 31, 1998 or May 2, 1998.

NOTE 4 - LEASE AGREEMENTS

     Finlay conducts  substantially all of its operations as leased  departments
in department  stores.  All of these leases, as well as rentals for office space
and equipment,  are accounted for as operating  leases. A substantial  number of
such  operating  leases expire on various dates  through  2008.  All  references
herein to leased  departments refer to departments  operated pursuant to license
agreements or other arrangements with host department stores.



                                        7
<PAGE>

                            FINLAY ENTERPRISES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 4 - LEASE AGREEMENTS (continued)

     Substantially  all of the department store leases provide that the title to
certain fixed assets of Finlay  transfers upon  termination  of the leases,  and
that Finlay will receive the  undepreciated  value of such fixed assets from the
host store in the event such  transfers  occur.  The values of such fixed assets
are recorded at the inception of the lease  arrangement and are reflected in the
accompanying Consolidated Balance Sheets.

     In many cases,  Finlay is subject to limitations under its lease agreements
with host department stores which prohibit Finlay from operating departments for
other store groups within a certain geographical radius of the host store.

     The store leases  provide for the payment of fees based on sales,  plus, in
some instances,  installment payments for fixed assets. Lease expense,  included
in Selling, general and administrative expenses, is as follows (unaudited):
<TABLE>
<CAPTION>

                                           Thirteen Weeks Ended
                                        --------------------------
                                           May 3,         May 2,
                                            1997           1998
                                        -----------    -----------
                                               (in thousands)
<S>                                     <C>            <C>       
Minimum fees.......................     $    1,842     $    4,568
Contingent fees....................         19,891         21,398
                                        -----------    -----------
     Total.........................     $   21,733     $   25,966
                                        ===========    ===========
</TABLE>
 
NOTE 5 - STOCKHOLDERS' EQUITY

     On March 5, 1997,  an  executive  officer of the Company  received  options
under the Company's  Long Term  Incentive  Plan (the "1993 Plan") to purchase an
aggregate of 139,719  shares of Common Stock at an exercise  price of $14.00 per
share. Such options vest and become exercisable on January 2, 2001.

     On March 6, 1997,  the Board of Directors  of the Company  adopted the 1997
Long Term Incentive Plan (the "1997 Plan"),  which was approved by the Company's
stockholders in June 1997. The 1997 Plan,  which is similar to the 1993 Plan, is
intended as a successor  to the 1993 Plan and provides for the grant of the same
types of awards as are currently  available under the 1993 Plan. An aggregate of
350,000  shares of the  Company's  Common Stock have been  reserved for issuance
pursuant  to the 1997 Plan,  of which a total of 349,448  shares are  subject to
options granted to certain senior management,  key employees and a director. The
exercise  prices of such  options  range from  $13.875  per share to $23.188 per
share.  The Board of  Directors  has  adopted,  subject to the  approval  of the
Company's stockholders,  an amendment of the 1997 Plan pursuant to which options
available for issuance under the 1997 Plan shall be increased to 850,000.

     Upon the  commencement  of his  employment,  an  executive  officer  of the
Company purchased 138,525 shares of Common Stock (the "Purchased Shares"),  at a
price of $7.23 per share. The aggregate  purchase price of these shares was paid
in the  form of a note  issued  to the  Company  in the  amount  of  $1,001,538.
Pursuant to the terms of the note, the amount of the note has historically  been
reflected as a reduction to equity and reflected in the  Company's  Consolidated
Balance Sheets as Note receivable from stock sale. On


                                        8
<PAGE>

                            FINLAY ENTERPRISES, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 - STOCKHOLDERS' EQUITY (continued)

April 24, 1998, the executive  officer sold 100,000 of the Purchased  Shares and
repaid the outstanding balance of the note ("Note Receivable  Repayment") in the
amount of $1.3 million.

NOTE 6 - OTHER TRANSACTIONS

     On April 24,  1998,  the Company  completed a public  offering of 1,800,000
shares  of its  Common  Stock  at a price  of  $27.50  per  share  (the  "Equity
Offering"),  of which  567,310  shares were sold by the  Company  and  1,232,690
shares were sold by certain selling  stockholders.  Concurrently with the Equity
Offering,  the Company and Finlay Jewelry completed the public offering of $75.0
million aggregate  principal amount of 9% Senior Debentures due May 1, 2008 (the
"Senior  Debentures")  and $150.0 million  aggregate  principal  amount of 83/8%
Senior Notes due May 1, 2008 (the "Senior Notes"), respectively. In addition, on
April 24, 1998, the existing  revolving credit agreement (the "Revolving  Credit
Agreement")  was amended to  increase  the line of credit  thereunder  to $275.0
million and to make certain other changes.

     On May 1, 1998,  the Company  prepaid all of the $39.0  million of accreted
interest on the Company's existing 12% Senior Discount  Debentures due 2005 (the
"Old Debentures") as of such date, in accordance with the indenture  relating to
the Debentures (the "Old Debenture Indenture"). The Company exercised its option
to prepay all such accreted interest to reduce  outstanding  indebtedness and to
take advantage of the resulting tax benefits  relating to the  deductibility  of
such prepayment in 1998.

     On May 26, 1998, the net proceeds to the Company from the Equity  Offering,
the  sale of the  Senior  Debentures,  the  Note  Receivable  Repayment  and the
repayment of approximately  $2.0 million of an intercompany  liability by Finlay
Jewelry (the  "Intercompany  Repayment")  were used to redeem the  Company's Old
Debentures, including associated premiums. Also, on May 26, 1998, Finlay Jewelry
used the net  proceeds  from  the sale of the  Senior  Notes  to  redeem  Finlay
Jewelry's 105/8% Senior Notes due 2003 (the "Old Notes"),  including  associated
premiums,  and to make  the  Intercompany  Repayment.  The  above  transactions,
excluding the Equity Offering, are referred to herein as the "Refinancing".  The
Company expects to record, in the second quarter, a pre-tax  nonrecurring charge
of approximately  $12.2 million,  including $7.1 million for redemption premiums
and  approximately  $3.9 million to write off deferred  financing costs and debt
discount associated with the Old Debentures and the Old Notes.

     On October 6, 1997,  Finlay  completed the acquisition of certain assets of
the Diamond Park Fine Jewelers division of Zale Corporation  ("Diamond Park"), a
leading operator of departments,  for approximately  $63.0 million. By acquiring
Diamond Park (the "Diamond Park Acquisition"), Finlay added 139 departments that
had total sales of  approximately  $103.0  million for the twelve  months  ended
January 31,  1998 and also added new host store  relationships  with  Mercantile
Stores,  Marshall  Field's  and  Parisian.  Finlay  financed  the  Diamond  Park
Acquisition with borrowings under the Revolving Credit Agreement.

 



                                        9
<PAGE>

PART I - FINANCIAL INFORMATION
  Item 2.  Management's Discussion and Analysis of
             Financial Condition and Results of Operations


Results of Operations

The following  table sets forth  operating  results as a percentage of sales for
the periods indicated:

Statement of Operations Data
(unaudited)

<TABLE>
<CAPTION>

                                                                      Thirteen Weeks Ended
                                                                  -----------------------------
                                                                      May 3,          May 2,
                                                                       1997            1998
                                                                  -------------   -------------
<S>                                                                     <C>             <C>   
Sales.......................................................            100.0%          100.0%
Cost of sales...............................................             48.8            48.5
                                                                  -------------   -------------
    Gross margin............................................             51.2            51.5
Selling, general and administrative expenses................             48.4            47.8
Depreciation and amortization...............................              2.1             2.4
                                                                  -------------   -------------
    Income (loss) from operations...........................              0.7             1.3
Interest expense, net.......................................              5.7             5.6
                                                                  -------------   -------------
    Income (loss) before income taxes.......................             (5.0)           (4.3)
Provision (credit) for income taxes.........................             (1.9)           (1.7)
                                                                  -------------   -------------
    Net income (loss).......................................             (3.1)%          (2.6)%
                                                                  =============   =============
</TABLE>

Thirteen Weeks Ended May 2, 1998 Compared with Thirteen Weeks Ended May 3, 1997

     Sales.  Sales for the  thirteen  weeks  ended May 2, 1998  increased  $26.4
million,  or 19.6%,  over the comparable period in 1997.  Comparable  department
sales (departments open for the same months during comparable periods) increased
3.4%.  Management attributes this increase in comparable department sales to the
following Company  initiatives:  (i) emphasizing its "Key Item" and "Best Value"
merchandising  programs,  which  provide  a  targeted  assortment  of  items  at
competitive prices; (ii) increasing focus on holiday and event-driven promotions
as well as host  store  marketing  programs;  (iii)  positioning  the  Company's
departments as a "destination  location" for fine jewelry;  and (iv)  continuing
project PRISM (Promptly Reduce  Inefficiencies  and Sales  Multiply),  a program
designed to allow  Finlay's  sales  associates  more time for customer sales and
service.  Sales  from the  operation  of net new  departments  (departments  not
included in  comparable  department  sales)  contributed  $21.8  million,  which
included  $21.0 million from the Diamond Park  departments.  During the thirteen
weeks ended May 2, 1998, Finlay opened 14 departments and closed 22 departments.
The openings were all within  existing store groups.  The closings  included all
five departments in Dillard's and all seven  departments in Debenhams,  with the
remaining 10 departments closed within existing store groups.






                                       10
<PAGE>

     Gross  margin.  Gross  margin for the period  increased  by $14.0  million,
primarily as a result of the sales increase and, as a percentage of sales, gross
margin increased by 0.3%.

     Selling,  general  and  administrative   expenses.   Selling,  general  and
administrative   expenses  ("SG&A")  increased  $11.8  million,  or  18.1%,  due
primarily to payroll  expense and lease fees associated with the increase in the
Company's  sales.  In addition,  through  increased  vendor  participation,  net
advertising  expenditures  were comparable with the 1997 period. As a percentage
of  sales,  SG&A  decreased  by 0.6%,  as a result  of the  leveraging  of these
expenses.

     Depreciation and amortization.  Depreciation and amortization  increased by
$1.0 million, reflecting an increase in capital expenditures for the most recent
twelve  months,   offset  by  the  effect  of  certain  assets   becoming  fully
depreciated.  The  increase  in  fixed  assets  was due to the  addition  of new
departments,  including  the Diamond  Park  departments  and the  renovation  of
existing departments.

     Interest   expense,   net.  Interest  expense  increased  by  $1.3  million
reflecting an increase in average  borrowings  ($330.0 million for the period in
1998 compared to $294.0 million for the comparable  period in 1997) primarily as
a  result  of  additional  indebtedness   outstanding  relating  to  the  Senior
Debentures  and the Senior Notes and an increase in the  outstanding  balance of
the Company's Old Debentures  due to the accretion of interest.  The increase in
average  borrowings  was  partially  offset  by the  repayment  of  indebtedness
outstanding  under the Revolving  Credit Agreement using the net proceeds to the
Company from the Equity  Offering and the sale of the Senior  Debentures and the
Senior Notes and by a lower weighted  average  interest rate (10.1% for the 1998
period  compared  to 10.3% for the  comparable  period in  1997).  In  addition,
interest  expense,  net was reduced by $0.3 for interest  income relating to the
Note Receivable Repayment.

     Provision  (credit) for income taxes. The income tax provision for the 1998
and 1997 periods reflects effective tax rates of 40.5% and 41.5%, respectively.

     Net  income  (loss).  The net loss for the 1998 and 1997  periods  was $4.2
million as a result of the factors discussed above.

Liquidity and Capital Resources

     Finlay's  primary capital  requirements are for funding working capital for
new departments and for working capital growth of existing departments and, to a
lesser extent,  capital  expenditures for opening new departments and renovating
existing departments.  For the thirteen weeks ended May 3, 1997 and May 2, 1998,
capital  expenditures totaled $3.4 million and $3.5 million,  respectively.  For
1997, capital  expenditures totaled $19.3 million,  which included  construction
costs related to the Company's  distribution and warehouse facility, and in 1996
totaled $17.5 million.  Total capital  expenditures for 1998 are estimated to be
approximately  $15.0 million.  Although capital  expenditures are limited by the
terms  of the  Revolving  Credit  Agreement,  to date  this  limitation  has not
precluded the Company from satisfying its capital expenditure requirements.

     Finlay's  operations  substantially  preclude  customer  receivables and in
recent years, on average, approximately 50% of Finlay's domestic merchandise has
been carried on consignment.  Accordingly,  management  believes that relatively
modest  levels of working  capital  are  required  in  comparison  to many other
retailers.  The Company's  working  capital balance was $132.1 million at May 2,
1998, an increase of $23.7 million from January 31, 1998. The increase  resulted
primarily from the net proceeds to the Company

                                       11

<PAGE>

from the Equity  Offering and the sale of the Senior  Debentures  and the Senior
Notes,  partially  offset  by the use of such  proceeds  to  repay  indebtedness
outstanding under the Revolving Credit Agreement,  the  reclassification  of the
Old Debentures and Old Notes to Current portion of long-term debt as a result of
their  redemption on May 26, 1998,  the impact of the interim net loss exclusive
of depreciation and amortization and capital expenditures. Based on the seasonal
nature  of  Finlay's  business,   working  capital  requirements  and  therefore
borrowings  under the Revolving  Credit Agreement can be expected to increase on
an interim basis during the first three  quarters of any given fiscal year.  See
"-- Seasonality".

     The seasonality of Finlay's business causes working capital requirements to
reach their highest level in the months of October and November in  anticipation
of the year-end holiday season.  Accordingly,  Finlay experiences  seasonal cash
needs as inventory levels peak. The Revolving  Credit Agreement  provides Finlay
with a line of credit of up to $275.0 million to finance seasonal cash and other
working capital needs.  Amounts outstanding under the Revolving Credit Agreement
presently  bear interest at a rate equal to, at Finlay's  option,  (i) the Index
Rate (as defined in the Revolving  Credit  Agreement) plus 0.5% or (ii) adjusted
LIBOR  plus  1.5%.  Commencing  in late  1998,  amounts  outstanding  under  the
Revolving  Credit  Agreement  will bear interest at a rate equal to, at Finlay's
option,  (i) the  Index  Rate  plus a margin  ranging  from zero to 1.0% or (ii)
adjusted  LIBOR plus a margin  ranging from 1.0% to 2.0%, in each case depending
on the financial performance of the Company.

     In each year, Finlay is required to reduce the outstanding revolving credit
balance and letter of credit  balance  under the Revolving  Credit  Agreement to
$50.0  million  or less  and  $20.0  million  or  less,  respectively,  for a 30
consecutive day period (the "Balance Reduction  Requirement").  In addition, the
indenture relating to Finlay Jewelry's Notes and the Debenture Indenture require
Finlay to reduce the balance under the Revolving  Credit  Agreement in each year
to  $10.0  million  or less for a  specified  25  consecutive  day  period;  the
indentures  relating to the Senior Debentures and the Senior Notes,  however, do
not have a balance reduction requirement.  Borrowings under the Revolving Credit
Agreement  at May 2, 1998 and  January  31,  1998 were zero  compared  to $101.2
million at May 3, 1997.  The average  amounts  outstanding  under the  Revolving
Credit  Agreement  were $80.7 million and $90.3  million for the thirteen  weeks
ended May 3, 1997 and May 2, 1998, respectively.  The maximum amount outstanding
for the thirteen weeks ended May 2, 1998 was $122.7 million.

     Finlay does not expect that significant  additional working capital will be
required with respect to the operation of the Diamond Park  departments  because
Finlay  purchased  the  inventory  of those  Diamond Park  departments  which it
acquired.  On a going-forward  basis,  inventory  purchases for the Diamond Park
departments  will be  financed  in  part  by  trade  payables  combined  with an
increased  utilization  of  consignment  inventory  compared  to the  amount  of
consignment merchandise on hand at the time of the Diamond Park Acquisition.  As
such,  management  believes that future  working  capital  requirements  for the
Diamond  Park  departments  may be reduced as  compared to the amount of working
capital required at the time of the Diamond Park Acquisition.

     Finlay's  long-term needs for external financing will depend on its rate of
growth,  the level of  internally  generated  funds and the  ability to continue
obtaining  substantial amounts of merchandise on advantageous  terms,  including
consignment  arrangements  with its  vendors.  For 1997,  Finlay  had an average
balance of  consignment  merchandise  of $216.5 million from over 200 vendors as
compared  to an average  balance of $201.8  million in 1996.  As of May 2, 1998,
$245.9  million of  consignment  merchandise  was on hand as  compared to $219.8
million at January 31, 1998 and $220.2 million at May 3, 1997.


                                       12
<PAGE>

     A substantial  amount of Finlay's operating cash flow has been used or will
be required to pay,  directly or  indirectly,  interest  with respect to the Old
Debentures  and the Old  Notes  and  amounts  due  under  the  Revolving  Credit
Agreement,  including the payments  required  pursuant to the Balance  Reduction
Requirement  and,  as a result of the  completion  of the  Equity  Offering  and
Refinancing,  the Senior  Debentures  and the Senior  Notes.  As of May 2, 1998,
Finlay's  outstanding  borrowings  were $409.5  million,  which included a $49.5
million  balance under the Old Debentures and a $135.0 million balance under the
Old Notes and, after giving effect to the  Refinancing,  a $75.0 million balance
under the Senior Debentures and a $150.0 million balance under the Senior Notes.
On May 1,  1998,  the  Company  prepaid  in  accordance  with the Old  Debenture
Indenture,  all of the $39.0 million of accreted  interest on the Old Debentures
as of such date.  The Company  exercised  its option to prepay all such accreted
interest  to  reduce  outstanding  indebtedness  and to  take  advantage  of the
resulting tax benefits relating to the deductibility of such prepayment in 1998.
In addition,  on May 26, 1998, the Company  redeemed the  outstanding  principal
amounts, including associated premiums, of the Old Debentures and the Old Notes.
Finlay funded the  prepayment  and the  redemptions  using the proceeds from the
sale of the Senior  Debentures,  the Equity  Offering and the sale of the Senior
Notes, together with other available funds. In connection with the redemption of
the Old  Debentures  and the Old Notes,  the Company  expects to record,  in the
second quarter, a pre-tax  non-recurring  charge of approximately $12.2 million,
including $7.1 million for redemption premiums and approximately $3.9 million to
write off deferred  financing and debt discount  costs  associated  with the Old
Debentures and the Old Notes.

     Finlay Jewelry is party to the Gold Consignment Agreement, which expires on
December 31, 2001.  The Gold  Consignment  Agreement  enables  Finlay Jewelry to
receive  merchandise by providing gold, or otherwise making payment,  to certain
vendors.  Finlay Jewelry can obtain, pursuant to the Gold Consignment Agreement,
up to the lesser of (i) 85,000 fine troy ounces or (ii) $32.0  million  worth of
gold, subject to a formula as prescribed by the Gold Consignment  Agreement.  At
May 2, 1998,  amounts  outstanding under the Gold Consignment  Agreement totaled
44,592 fine troy ounces,  valued at  approximately  $13.9  million.  The average
amount  outstanding  under the Gold  Consignment  Agreement was $14.3 million in
1997.

     Although Finlay implemented financial and distribution software during 1997
that is Year 2000 compliant, Finlay has not yet fully assessed the impact of the
Year 2000 issue on its other computer systems and its operations,  including the
development  of cost  estimates and the extent of computer  programming  changes
required to address this issue. Any disruption of its operations, whether caused
by the Company's computer systems or those of any of its host stores or vendors,
could have a material  adverse  effect on the  Company's  financial  position or
results of operations.  Although final cost estimates have yet to be determined,
it is  anticipated  that these Year 2000 costs  will  result in an  increase  in
Finlay's  expenses during 1998 and 1999. In addition,  there can be no assurance
that the Company  will not  experience  significant  cost  overruns or delays in
connection  with upgrading  software or the  programming of changes  required to
address this issue.

     Section 382 of the Internal  Revenue Code of 1986,  as amended (the "Code")
restricts  utilization  of net operating  loss  carryforwards  ("NOLs") after an
ownership  change  exceeding  50%.  As  a  result  of  certain  recapitalization
transactions  in 1993,  a change  in  ownership  of the  Company  exceeding  50%
occurred  within the  meaning of Section 382 of the Code.  Similar  restrictions
apply to other  carryforwards.  Consequently,  there is a material limitation on
the  Company's  annual  utilization  of its NOLs and other  carryforwards  which
requires  a  deferral  or  loss  of  the  utilization  of  such  NOLs  or  other
carryforwards.  The Company  had, at October  31, 1997 (the  Company's  tax year
end), a NOL for tax purposes of approximately  $12.0 million which is subject to
an annual limit of approximately $2.0 million per year. For financial  reporting
purposes,  no NOL  exists  as of  January  31,  1998.  An  additional  change in
ownership within the meaning of Section 382

                                       13
<PAGE>


of the Code has  occurred  as a result of the sale of shares of Common  Stock of
the Company in 1997.  However,  there are no  additional  restrictions  upon the
Company's ability to utilize its NOLs or other carryforwards as a result of such
ownership change.

     From time to time, Finlay enters into futures contracts, such as options or
forwards,  based upon the  anticipated  sales of gold  product in order to hedge
against the risk  arising from its payment  arrangements.  Changes in the market
value of futures contracts are accounted for as an addition to or reduction from
the inventory  cost.  For the year ended January 31, 1998 and the thirteen weeks
ended May 2, 1998, the gain or loss on open futures  contracts was not material.
The Company did not have any open  positions  in futures  contracts  for gold at
January 31, 1998.  There can be no assurance that these hedging  techniques will
be  successful  or that  hedging  transactions  will not  adversely  affect  the
Company's results of operations or financial position.

     On March 19, 1998,  Liberty  House,  one of the host stores in which Finlay
operates,  filed a voluntary petition in bankruptcy under Title 11 of the United
States Code (the "Bankruptcy  Code"). The Company is currently  receiving weekly
payments towards the outstanding  balance of approximately $2.0 million that was
due to the  Company  prior to the  filing  of the  bankruptcy  petition.  Finlay
believes that the  bankruptcy of Liberty House will not have a material  adverse
effect on Finlay's financial position or results of operations.

     Finlay believes that, based upon current  operations,  anticipated  growth,
and availability under the Revolving Credit Agreement,  Finlay Jewelry will, for
the foreseeable future, be able to meet its debt service and anticipated working
capital  obligations,  and to make  distributions  to the Company  sufficient to
permit the Company to meet its debt service obligations and to pay certain other
expenses  as they come due.  No  assurances,  however,  can be given that Finlay
Jewelry's  current  level of operating  results will continue or improve or that
Finlay Jewelry's income from operations will continue to be sufficient to permit
Finlay Jewelry and the Company to meet their debt service and other obligations.
Currently,  Finlay Jewelry's  principal financing  arrangements  restrict annual
distributions  from Finlay  Jewelry to the Company to 0.25% of Finlay  Jewelry's
net sales for the  preceding  fiscal year.  The amounts  required to satisfy the
aggregate  of  Finlay  Jewelry's  interest  expense  and  required  amortization
payments  totaled $8.6 million and $9.6 million for the thirteen weeks ended May
3, 1997 and May 2, 1998, respectively.

Seasonality

     Finlay's  business is highly  seasonal,  with a significant  portion of its
sales and income from  operations  generated  during the fourth  quarter of each
year, which includes the year-end holiday season.  The fourth quarter  accounted
for an average of 42% of Finlay's  sales and 82% of its income  from  operations
(excluding  nonrecurring  charges) for 1995, 1996 and 1997. Finlay has typically
experienced  net losses in the first three  quarters of its fiscal year.  During
these periods, working capital requirements have been funded by borrowings under
the Revolving Credit  Agreement.  Accordingly,  the results for any of the first
three quarters of any given fiscal year, taken individually or in the aggregate,
are not indicative of annual results.

Inflation

     The effect of  inflation  on Finlay's  results of  operations  has not been
material in the periods discussed.


                                       14
<PAGE>

Special Note Regarding Forward-Looking Statements

     This Quarterly  Report on Form 10-Q includes  "forward-looking  statements"
within the meaning of Section 27A of the  Securities Act of 1933 and Section 21E
of the Securites Exchange Act of 1934 (the "Exchange Act"). All statements other
than statements of historical  information  provided herein are  forward-looking
statements  and  may  contain  information  about  financial  results,  economic
conditions,  trends  and known  uncertainties.  The  forward-looking  statements
contained herein are subject to certain risks and uncertainties that could cause
actual results to differ materially from those reflected in the  forward-looking
statements.  Factors  that might cause such a  difference  include,  but are not
limited to,  those  discussed  under  "Management's  Discussion  and Analysis of
Financial Condition and Results of Operations", as well as trends in the general
economy,  competition in the retail  jewelry  business,  the  seasonality of the
retail jewelry business, the Company's ability to increase comparable department
sales and to open new  departments,  the  Company's  dependence  on certain host
store  relationships  due to the  concentration  of sales generated by such host
stores,  the  availability  to the Company of alternate  sources of  merchandise
supply in the case of an abrupt loss of any significant supplier,  the Company's
ability to continue to obtain substantial amounts of merchandise on consignment,
the Company's  dependence on key  officers,  the Company's  ability to integrate
Diamond  Park (and any future  acquisitions)  into its  existing  business,  the
Company's  high  degree of  leverage  and the  availability  to the  Company  of
financing and credit on favorable  terms and changes in regulatory  requirements
which are applicable to the Company's business.

     Readers  are  cautioned  not to rely on these  forward-looking  statements,
which reflect management's analysis,  judgment, belief or expectation only as of
the date hereof.  The Company  undertakes no obligation to publicly revise these
forward-looking  statements to reflect events or circumstances  that arise after
the date hereof. In addition to the disclosure contained herein,  readers should
carefully  review any disclosure of risks and  uncertainties  contained in other
documents the Company  files or has filed from time to time with the  Commission
pursuant to the Exchange Act.





                                       15
<PAGE>

PART II - OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K

   A.     Exhibits

     2    Not applicable.

     3    Not applicable.
 
     4.1  Indenture between Finlay Enterprises, Inc. and Marine Midland Bank, as
          Trustee,  dated as of April 24, 1998  (incorporated  by  reference  to
          Exhibit 4.1 to the  Company's  Current  Report on Form 8-K dated April
          24, 1998, as filed with the Commission on May 8, 1998).

     4.2  Indenture  between Finlay Fine Jewelry  Corporation and Marine Midland
          Bank,  as  Trustee,  dated  as of  April  24,  1998  (incorporated  by
          reference to Exhibit 4.2 to the Company's  Current  Report on Form 8-K
          dated April 24, 1998, as filed with the Commission on May 8, 1998).

     10.1 Amendment No. 3 dated as of April 24, 1998 to the Amended and Restated
          Credit  Agreement  dated as of September 11, 1997, as amended,  by and
          among General Electric Capital Corporation, individually and as agent,
          certain  other  lenders and financial  institutions  parties  thereto,
          Finlay  Fine  Jewelry   Corporation  and  Finlay   Enterprises,   Inc.
          (incorporated  by reference to Exhibit 10.1 to the  Company's  Current
          Report on Form 8-K dated April 24, 1998, as filed with the  Commission
          on May 8, 1998).

     10.2 Amendment  No.  6 dated  as of  April  24,  1998  to Gold  Consignment
          Agreement  dated as of June 15, 1995, as amended,  between Finlay Fine
          Jewelry  Corporation  and Rhode Island  Hospital  Trust  National Bank
          (incorporated  by reference to Exhibit 10.2 to the  Company's  Current
          Report on Form 8-K dated April 24, 1998, as filed with the  Commission
          on May 8, 1998).

     11   Statement re:  computation of earnings per share (not required because
          the  relevant  computation  can be clearly  determined  from  material
          contained in the financial statements).

     15   Not applicable.

     18   Not applicable.

     19   Not applicable.

     22   Not applicable.

     23   Not applicable.

     24   Not applicable.
     
                                  16
<PAGE>

     
     27   Financial Data Schedule.

     99   Not applicable.

   B.     Reports on Form 8-K

     On May 8,  1998,  the  Company  filed  with  the  Securities  and  Exchange
Commission  (the  "Commission")  a Current  Report on Form 8-K regarding (i) the
sale by the Company of $75.0 million aggregate principal amount of its 9% Senior
Debentures  due May 1, 2008;  (ii) the  concurrent  sale (a) by the  Company and
certain  stockholders  of the Company of an  aggregate  of  1,800,000  shares of
Common  Stock of the Company (of which  567,310  shares were sold by the Company
and 1,232,690  shares were sold by the selling  stockholders)  and (b) by Finlay
Jewelry of $150.0 million aggregate  principal amount of its 8-3/8% Senior Notes
due May 1, 2008;  (iii) the  amendment  of the  Revolving  Credit  Agreement  to
increase the line of credit thereunder from $225.0 million to $275.0 million and
to make certain other  changes;  and (iv) the amendment of the Gold  Consignment
Agreement to renew the  agreement  through  December  31, 2001,  to allow Finlay
Jewelry to obtain up to the lesser of (x) 85,000  fine troy  ounces or (y) $32.0
million worth of gold, and to make certain other modifications.
 

                                       17
<PAGE>

                                   SIGNATURES


     Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                    FINLAY ENTERPRISES, INC.



Date: June 12, 1998                 By: /s/ Barry D. Scheckner                
                                        ---------------------------------------
                                        Barry D. Scheckner, Senior Vice
                                        President and Chief Financial
                                        Officer
                                        (As both a duly authorized officer of
                                        Registrant and as principal financial
                                        officer of Registrant)

 



                                       18