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                      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    August 2, 1997

                                      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.)


        521 Fifth Avenue, New York, NY                10175
       --------------------------------------       ----------
      (Address of principal executive office)       (zip code)

                                  (212) 808-2060
                 --------------------------------------------
             (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 September 12, 1997, there were 7,569,478 shares of common stock, par value
$.01 per share, of the Registrant outstanding.



<PAGE>



                           FINLAY ENTERPRISES, INC.

                                   FORM 10-Q

                     QUARTERLY PERIOD ENDED AUGUST 2, 1997

                                     INDEX


                                                                       PAGE(S)
                                                                       -------

PART I - FINANCIAL INFORMATION

  Item 1. Consolidated Financial Statements (Unaudited)

          Consolidated Statements of Operations for the thirteen weeks and 
          twenty-six weeks ended August 3, 1996 and August 2, 1997............1

          Consolidated Balance Sheets as of February 1, 1997 and 
          August 2, 1997......................................................3

          Consolidated Statements of Changes in Stockholders' Equity for
          the year ended  February  1, 1997 and  twenty-six  weeks ended
          August 2, 1997......................................................4

          Consolidated Statements of Cash Flows for the thirteen weeks and 
          twenty-six weeks ended August 3, 1996 and August 2, 1997............5

          Notes to Consolidated Financial Statements..........................7

  Item 2. Management's Discussion and Analysis of
          Financial Condition and Results of Operations......................11


PART II - OTHER INFORMATION

  Item 6. Exhibits and Reports on Form 8-K...................................17


SIGNATURES ..................................................................19




<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
                                                      -------------------------
                                                        August 3,     August 2,
                                                          1996           1997
                                                      ----------     ----------

<S>                                                   <C>            <C>       
Sales............................................     $  137,188     $  148,060
Cost of sales....................................         65,845         72,112
                                                      ----------     ----------
  Gross margin...................................         71,343         75,948
Selling, general and administrative expenses.....         62,473         66,424
Depreciation and amortization....................          2,746          2,939
                                                      ----------     ----------
  Income (loss) from operations..................          6,124          6,585
Interest expense, net............................          7,961          8,449
                                                      ----------     ----------
  Income (loss) before income taxes..............         (1,837)        (1,864)
Provision (credit) for income taxes..............           (270)          (486)
                                                      ----------     ----------
  Net income (loss)..............................     $   (1,567)    $   (1,378)
                                                      ==========     ==========
Net income (loss) per share applicable to 
  common share...................................     $    (0.21)    $    (0.18)
                                                      ==========     ==========
Weighted average shares outstanding..............      7,486,456      7,501,786
                                                      ==========     ==========
</TABLE>












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

                                      1

<PAGE>




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

<TABLE>
<CAPTION>



                                                       Twenty-Six Weeks Ended
                                                      -------------------------
                                                        August 3,     August 2,
                                                          1996           1997
                                                      ----------     ----------

<S>                                                   <C>            <C>       
Sales............................................     $  267,907     $  282,652
Cost of sales....................................        129,883        137,834
                                                      ----------     ----------
    Gross margin.................................        138,024        144,818
Selling, general and administrative expenses.....        126,169        131,591
Depreciation and amortization....................          5,384          5,692
                                                      ----------     ----------
  Income (loss) from operations..................          6,471          7,535
Interest expense, net............................         15,245         16,148
                                                      ----------     ----------
  Income (loss) before income taxes..............         (8,774)        (8,613)
Provision (credit) for income taxes..............         (2,807)        (3,009)
                                                      ----------     ----------
  Net income (loss)..............................     $   (5,967)    $   (5,604)
                                                      ==========     ==========
Net income (loss) per share applicable to 
  common share...................................     $    (0.80)    $    (0.75)
                                                      ==========     ==========
Weighted average shares outstanding..............      7,481,027      7,497,210
                                                      ==========     ==========
</TABLE>












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

                                      2

<PAGE>



                           FINLAY ENTERPRISES, INC.
                          CONSOLIDATED BALANCE SHEETS
                (in thousands, except share and per share data)

<TABLE>
<CAPTION>
                                                                     (Unaudited)
                                                          February 1,  August 2,
                                                              1997       1997
                                                          ----------  ---------
                              ASSETS
      Current assets
<S>                                                       <C>         <C>      
  Cash and cash equivalents.............................. $  20,846   $   3,453
  Accounts receivable - department stores................    15,362      29,884
  Other receivables......................................     4,350       7,231
  Merchandise inventories................................   222,445     221,393
  Prepaid expenses and other.............................     1,437       2,079
                                                          ---------   ---------
    Total current assets.................................   264,440     264,040
                                                          ---------   ---------
Fixed assets
  Equipment, fixtures and leasehold improvements.........    73,223      81,235
  Less - accumulated depreciation and amortization.......    21,423      25,141
                                                          ---------   ---------
    Fixed assets, net....................................    51,800      56,094
                                                          ---------   ---------
Deferred charges and other assets........................     9,770      11,615
Goodwill.................................................    95,263      93,646
                                                          ---------   ---------
    Total assets......................................... $ 421,273   $ 425,395
                                                          =========   =========

          LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities
  Notes payable..........................................  $  -       $ 111,522
  Current portion of long-term debt......................         2           4
  Accounts payable - trade...............................   133,252      48,103
  Accrued liabilities:
     Accrued salaries and benefits.......................    15,061      12,242
     Accrued miscellaneous taxes.........................     4,148       5,110
     Accrued insurance...................................       762         941
     Accrued interest....................................     3,833       4,188
     Accrued management transition and consulting........     1,787       1,377
     Other...............................................    15,124       8,813
  Income taxes payable...................................    12,046       3,656
  Deferred income taxes..................................       809         494
                                                           --------   ---------
     Total current liabilities...........................   186,824     196,450
Long-term debt...........................................   211,427     216,084
Other non-current liabilities............................       517         507
                                                          ---------   ---------
     Total liabilities...................................   398,768     413,041
                                                          ---------   ---------
Stockholders' equity
  Common Stock,  par value  $.01 per share;  authorized  
    25,000,000 shares; issued and outstanding 7,558,838 
    and 7,569,478 shares, respectively...................        76          76
  Additional paid-in capital.............................    47,725      47,850
  Distributions to investor group in excess of carryover 
    basis................................................   (24,390)    (24,390)
  Note receivable from stock sale........................    (1,001)     (1,001)
  Retained earnings (deficit)............................     3,145      (2,459)
  Foreign currency translation adjustment................    (3,050)     (7,722)
                                                          ---------   ---------
                                                             22,505      12,354
                                                          ---------   ---------
     Total liabilities and stockholders' equity.......... $ 421,273   $ 425,395
                                                          =========   =========
</TABLE>


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


                                      3

<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 3, 1996........  7,524,356  $ 75   $ 47,459   $   (24,390)     $  (1,001)  $  (8,612)    $  (747)     $  12,784
  Net income (loss)..............     -         -        -             -               -        11,757         -           11,757
  Foreign currency translation
    adjustment...................     -         -        -             -               -          -         (2,303)        (2,303)
  Exercise of stock options......     34,482     1        266          -               -          -            -              267
                                   ---------  ------ ---------  ---------------  ----------- ----------  ------------  ------------
Balance, February 1, 1997........  7,558,838    76     47,725       (24,390)        (1,001)      3,145      (3,050)        22,505
  Net income (loss)..............     -         -        -             -               -        (5,604)        -           (5,604)
  Foreign currency translation
    adjustment...................     -         -        -             -               -          -          (4,672)       (4,672)
  Exercise of stock options......     10,640    -         125          -               -          -            -              125
                                   ---------  ------ ---------  ---------------  ----------- ----------  ------------  ------------
Balance, August 2, 1997(Unaudited) 7,569,478  $ 76   $ 47,850   $   (24,390)     $  (1,001)  $  (2,459)  $   (7,722)   $   12,354
                                   =========  ====== =========  ===============  =========== ==========  ============  ============
</TABLE>













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

                                      4

<PAGE>



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

<TABLE>
<CAPTION>


                                                           Thirteen Weeks Ended
                                                           ---------------------
                                                            August 3,  August 2,
                                                              1996        1997
                                                           ----------  ---------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                        <C>         <C>      
  Net income (loss)......................................  $  (1,567)  $ (1,378)
  Adjustments to reconcile net income (loss) to net 
     cash used in operating activities: 
  Depreciation and amortization..........................      3,057      3,254
  Imputed interest on debentures.........................      2,121      2,385
  Other, net.............................................        (93)      (597)
  Changes in operating assets and liabilities:
     (Increase) decrease in accounts and other 
        receivables......................................       (474)     1,505
     (Increase) decrease in merchandise inventories......     (3,763)    23,165
     Increase in prepaid expenses and other..............       (724)      (657)
     Decrease in accounts payable and accrued liabilities     (2,780)   (31,056)
                                                           ---------   --------
      NET CASH USED IN OPERATING ACTIVITIES..............     (4,223)    (3,379)
                                                           ---------   --------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of equipment, fixtures and leasehold 
     improvements........................................     (3,622)    (5,102)
  Other, net.............................................        (65)    (1,171)
                                                           ---------   --------
      NET CASH USED IN INVESTING ACTIVITIES..............     (3,687)    (6,273)
                                                           ---------   --------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from revolving credit facility................    106,788    117,722
  Principal payments on revolving credit facility........   (100,655)  (107,410)
  Other, net.............................................         (3)       112
                                                           ---------   --------
      NET CASH PROVIDED FROM FINANCING ACTIVITIES........      6,130     10,424
                                                           ---------   --------
      EFFECT OF EXCHANGE RATE CHANGES ON CASH............         20        (81)
                                                           ---------   --------
      INCREASE (DECREASE) IN CASH AND CASH
        EQUIVALENTS......................................     (1,760)       691
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD...........      3,491      2,762
                                                           ---------   --------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................  $   1,731   $  3,453
                                                           =========   ========
Supplemental disclosure of cash flow information:
  Interest paid..........................................  $   1,936   $  2,017
  Income taxes paid......................................      1,492      3,400
</TABLE>


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

                                      5

<PAGE>



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


<TABLE>
<CAPTION>

                                                         Twenty-Six Weeks Ended
                                                         -----------------------
                                                            August 3,  August 2,
                                                              1996        1997
                                                           ----------  ---------
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                        <C>         <C>      
  Net income (loss)......................................  $  (5,967)  $ (5,604)
  Adjustments to reconcile net income (loss) to net 
     cash used in operating activities: 
  Depreciation and amortization..........................      5,995      6,315
  Imputed interest on debentures.........................      4,122      4,634
  Other, net.............................................       (516)      (951)
  Changes in operating assets and liabilities:
     Increase in accounts and other receivables..........    (15,522)   (18,267)
     Increase in merchandise inventories.................    (12,965)    (2,146)
     Increase in prepaid expenses and other..............     (1,642)      (675)
     Decrease in accounts payable and accrued liabilities    (68,393)  (101,653)
                                                           ---------   --------
        NET CASH USED IN OPERATING ACTIVITIES............    (94,888)  (118,347)
                                                           ---------   --------
CASH FLOWS FROM INVESTING ACTIVITIES
  Purchases of equipment, fixtures and leasehold 
     improvements........................................     (7,224)    (8,477)
  Other, net.............................................        (99)    (1,718)
                                                           ---------   --------
        NET CASH USED IN INVESTING ACTIVITIES............     (7,323)   (10,195)
                                                           ---------   --------
CASH FLOWS FROM FINANCING ACTIVITIES
  Proceeds from revolving credit facility................    260,421    297,109
  Principal payments on revolving credit facility........   (182,476)  (185,587)
  Other, net.............................................          4        126
                                                           ---------   --------
        NET CASH PROVIDED FROM FINANCING ACTIVITIES......     77,949    111,648
                                                           ---------   --------
        EFFECT OF EXCHANGE RATE CHANGES ON CASH..........        (21)      (499)
                                                           ---------   --------
        DECREASE IN CASH AND CASH EQUIVALENTS............    (24,283)   (17,393)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD...........     26,014     20,846
                                                           ---------   --------
CASH AND CASH EQUIVALENTS, END OF PERIOD.................  $   1,731   $  3,453
                                                           =========   ========
Supplemental disclosure of cash flow information:
  Interest paid..........................................  $  10,473   $ 10,548
  Income taxes paid......................................      6,325      8,013
</TABLE>


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


                                      6

<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,  Finlay Jewelry and all predecessor businesses.
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 August 2, 1997,  and the results of operations and
cash flows for the thirteen weeks and twenty-six  weeks ended August 3, 1996 and
August 2, 1997. 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 February 1, 1997 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 ("SEC").

    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 February 1, 1997
("Form 10-K") previously filed with the SEC.

    Finlay's fiscal year ends on the Saturday closest to January 31.  References
to 1994,  1995, 1996 and 1997 relate to the fiscal years ended or ending January
28, 1995, February 3, 1996, February 1, 1997 and January 31, 1998, respectively.
Each of the fiscal years includes  fifty-two  weeks except 1995,  which includes
fifty-three weeks.

    In February 1997, the Financial  Accounting Standards Board issued Statement
of Financial  Accounting Standards ("SFAS") No. 128, "Earnings per Share." Under
SFAS No. 128, the  presentation of both basic and diluted  earnings per share is
required on the  statements of operations  for periods ending after December 15,
1997, at which time  restatement  for prior  periods will be necessary.  Had the
provisions  of SFAS No. 128 been in effect  during 1997,  the Company would have
reported  basic net  income  (loss)  per share of $(0.21)  and  $(0.19)  for the
thirteen  weeks  ended  August 3, 1996 and  August 2,  1997,  respectively,  and
$(0.81) and $(0.76) for the  twenty-six  week periods then ended,  respectively.
Under SFAS No.  128,  diluted  net  income  (loss) per share is equal to the net
income (loss) per share currently disclosed by the Company.

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.  Finlay also operates leased fine jewelry  departments in the
United  Kingdom and  Germany.  A  significant  portion of Finlay's  revenues are
generated in the fourth quarter due to the  seasonality of the retail  industry.
Approximately  70% of Finlay's  sales in 1996 were from  operations in two major
department  store  groups  of  which  48%  represents  Finlay's  sales  from one
department store group.






                                      7

<PAGE>



                           FINLAY ENTERPRISES, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 - MERCHANDISE INVENTORIES

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

                                                                   (Unaudited)
                                                    February 1,     August 2,
                                                       1997           1997
                                                    ----------     ----------
                                                          (in thousands)
 Jewelry goods - rings, watches and other fine
<S>                                                 <C>            <C>       
   jewelry(specific identification basis)........   $ 231,298      $  230,246
 Less:  Excess of specific identification cost 
   over LIFO inventory value.....................       8,853           8,853
                                                    ---------      ----------
                                                    $ 222,445      $  221,393
                                                    =========      ==========
</TABLE>

    The LIFO method had the effect of  decreasing  income  (loss)  before income
taxes for the thirteen  weeks ended  August 3, 1996 by $200,000  and  increasing
income (loss) before income taxes for the thirteen weeks ended August 2, 1997 by
$191,000.  The effect of applying the LIFO method for the twenty-six weeks ended
August 3, 1996 was to decrease  income  (loss)  before income taxes by $391,000.
The LIFO  method  had no effect on income  (loss)  before  income  taxes for the
twenty-six  weeks ended August 2, 1997.  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  is
approximately  $22,000,000 lower than that for financial  reporting  purposes at
February 1, 1997.

    Approximately  $194,276,000  and $205,466,000 at February 1, 1997 and August
2, 1997, respectively,  of merchandise received on consignment has been excluded
from  Merchandise  inventories and Accounts  payable- trade in the  accompanying
Consolidated Balance Sheets.

    The cost to Finlay of gold merchandise sold on consignment,  which typically
varies  with the price of gold,  is not fixed  until the sale is reported to the
vendor  following the sale of the  merchandise.  Finlay  frequently  enters into
futures  contracts,  based upon the anticipated  sales of gold product,  such as
options or  forwards,  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 August 3, 1996 and
August 2, 1997, the gain/loss on open futures contracts was not material.

    In August 1995, Finlay Jewelry consummated a gold consignment agreement (the
"Gold  Consignment  Agreement")  with Rhode Island  Hospital Trust National Bank
("RIHT"),  which expires on February 28, 1998.  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, the consignor
and title to the gold  content of the  merchandise  changes  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) $25,000,000 worth of gold,  subject to a formula
as  prescribed by the Gold  Consignment  Agreement.  At August 2, 1997,  amounts
outstanding  under  the Gold  Consignment  Agreement  totaled  38,007  fine troy
ounces, valued at approximately $12.4 million. For financial statement purposes,
the consigned gold is not included in  Merchandise  inventories on the Company's
consolidated balance sheet and therefore no related liability has been recorded.


                                      8

<PAGE>



                           FINLAY ENTERPRISES, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

    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         Twenty-Six Weeks Ended
                         ----------------------        ------------------------
                          August 3,   August 2,         August 3,    August 2,
                             1996        1997             1996         1997
                         ----------  ----------        ----------   -----------
                             (in thousands)                (in thousands)
<S>                      <C>         <C>               <C>          <C>       
Minimum fees............ $   1,265   $   1,968         $   2,437    $    3,810
Contingent fees.........    20,808      21,814            40,442        41,705
                         ----------  ----------        ----------   -----------
    Total............... $  22,073   $  23,782         $  42,879    $   45,515
                         ==========  ==========        ==========   ===========
</TABLE>


NOTE 5 - STOCKHOLDERS' EQUITY

    On March 5, 1997, a senior officer of the Company received options under the
Company's  Long Term  Incentive  Plan (the  "Incentive  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 ("1997  Plan"),  which was approved by the  Company's
stockholders  in June  1997.  The 1997 Plan,  which is similar to the  Incentive
Plan, is intended as a successor to the Incentive  Plan and will provide for the
grant of the same types of awards as are currently available under the Incentive
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 312,815
shares are  subject  to  options  granted  to  certain  senior  management,  key
employees and a director.  The exercise price of such options range from $13.875
per share to $14.875 per share.


                                      9

<PAGE>



NOTE 6 - OTHER TRANSACTIONS

    On September 11, 1997,  Finlay  amended its  $135,000,000  Revolving  Credit
Facility by (i)  increasing the line of credit to  $175,000,000,  (ii) including
eligible  international  assets in the borrowing  base formula,  (iii)  reducing
interest  rates,  (iv)  permitting  higher  balances  during the annual  balance
reduction period and (v) extending the maturity date from May 1998 to March 2003
(the "Revolving Credit Facility").

    On September 3, 1997,  Finlay  entered into an agreement to acquire  certain
assets of the Diamond Park Fine Jewelers division of Zale Corporation  ("Diamond
Park"), a leading operator of departments,  for  approximately  $66 million.  By
acquiring  Diamond Park, Finlay will add 139 departments that had total sales of
approximately  $93 million for the twelve months ended February 1, 1997 and will
also add new host store  relationships with Mercantile Stores,  Marshall Field's
and Parisian.  The  completion of the  acquisition of Diamond Park (the "Diamond
Park Acquisition") is subject to satisfaction of certain conditions. Pursuant to
an amendment to the Revolving  Credit  Facility,  dated  September 11, 1997, and
concurrent  with the  completion  of the Diamond Park  Acquisition,  the line of
credit will be further  increased to $225,000,000 and permitted  balances during
the annual balance reduction period will be increased. Finlay intends to finance
the  Diamond  Park  Acquisition  with  borrowings  under  the  Revolving  Credit
Facility.

    On September 4, 1997,  the Company filed a  registration  statement with the
SEC for a proposed public offering of 3,000,000  shares of its Common Stock (the
"Offering"), of which 2,046,971 shares are to be issued and sold by the Company.
Upon the completion of the Offering, the Company expects to use the net proceeds
to it therefrom for working capital,  repayment of indebtedness or other general
corporate purposes.








                                      10

<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     Twenty-Six Weeks Ended
                                                        ----------------------   ------------------------
                                                         August 3,   August 2,    August 3,     August 2,
                                                            1996       1997         1996          1997
                                                        ---------    ---------   ---------     ----------
<S>                                                        <C>          <C>         <C>            <C>   
Sales.............................................         100.0%       100.0%      100.0%         100.0%
Cost of sales.....................................          48.0         48.7        48.5           48.8
                                                        ---------    ---------   ---------     ----------
   Gross margin...................................          52.0         51.3        51.5           51.2
Selling, general and administrative expenses                45.5         44.9        47.1           46.5
Depreciation and amortization.....................           2.0          2.0         2.0            2.0
                                                        ---------    ---------   ---------     ----------
    Income (loss) from operations.................           4.5          4.4         2.4            2.7
Interest expense, net.............................           5.8          5.7         5.7            5.7
                                                        ---------    ---------   ---------     ----------
    Income (loss) before income taxes.............          (1.3)        (1.3)       (3.3)          (3.0)
Provision (credit) for income taxes...............          (0.2)        (0.4)       (1.1)          (1.0)
                                                        ---------    ---------   ---------     ----------
    Net income (loss).............................          (1.1)%       (0.9)%      (2.2)%         (2.0)%
                                                        =========    =========   =========     ==========
</TABLE>


Thirteen Weeks Ended August 2, 1997 Compared with Thirteen Weeks Ended August 3,
1996

      Sales.  Sales for the thirteen weeks ended August 2, 1997 increased  $10.9
million,  or 7.9%,  over the comparable  period in 1996.  Comparable  department
sales (departments open for the same months during comparable periods) increased
6.9%.  Management attributes this increase in comparable department sales to the
following Company  initiatives:  (i) introducing 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) implementing
project PRISM (Promptly Reduce Inefficiencies and Sales Multiply),  a management
initiative  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 $1.4 million.  During
the thirteen  weeks ended August 2, 1997,  Finlay opened eight  departments  and
closed two departments. The openings and closings were all within existing store
groups. The closings resulted from host store decisions to close the stores.

    Gross margin.  Gross margin for the period increased by $4.6 million but, as
a  percentage  of  sales,  gross  margin  decreased  by  0.7%  as  a  result  of
management's efforts to increase market penetration and market share through its
competitive pricing strategy.

    Selling,   general  and  administrative   expenses.   Selling,  general  and
administrative  expenses ("SG&A") increased $4.0 million, or 6.3%, due primarily
to payroll  expense and lease fees associated with the increase in the Company's
sales as well as an increase in net  advertising  expenditures  as compared with
the 1996 period. As a percentage of sales, SG&A decreased by 0.6% as a result of
the leveraging of these expenses.

                                      11

<PAGE>



    Depreciation and  amortization.  Depreciation and amortization  increased by
$0.2 million, reflecting an increase in capital expenditures for the most recent
twelve  months,   offset  by  the  effect  of  certain  assets   becoming  fully
depreciated.  This  increase  in fixed  assets  was due to the  addition  of new
departments and the renovation of existing departments.

    Interest expense, net. Interest expense increased by $0.5 million reflecting
an  increase  in  average  borrowings  ($327.9  million  for the  period in 1997
compared to $291.9  million for the  comparable  period in 1996)  primarily as a
result  of the  timing of  inventory  receipts  during  the 1997  period  and an
increase  in the  outstanding  balance  of the  Company's  12%  Senior  Discount
Debentures  due 2005 (the  "Debentures")  due to the accretion of interest.  The
increase in average  borrowings was partially offset by a lower weighted average
interest  rate (10.1% for the 1997 period  compared to 10.2% for the  comparable
period in 1996).

     Provision  (credit) for income taxes. The income tax provision for the 1997
and 1996 periods reflects an effective tax rate of 41.5%.

     Net income  (loss).  The net loss of $1.4  million  for the 1997 period was
$0.2 million lower than the net loss of $1.6 million for the  comparable  period
in 1996 as a result of the factors discussed above.

     Twenty-Six  Weeks Ended August 2, 1997 Compared with Twenty-Six Weeks Ended
August 3, 1996

      Sales. Sales for the twenty-six weeks ended August 2, 1997 increased $14.7
million,  or 5.5%,  over the comparable  period in 1996.  Comparable  department
sales  increased  5.7%.   Management  attributes  this  increase  in  comparable
department  sales  primarily  to the "Key Item" and "Best  Value"  merchandising
programs  and to the  marketing  initiatives  discussed  above.  The increase in
comparable  department  sales was  offset by a $0.5  million  decrease  in sales
resulting  from the net effect and timing of  department  openings and closings.
During the twenty-six  weeks ended August 2, 1997,  Finlay opened 25 departments
and closed six  departments.  The openings and closings were all within existing
store  groups.  The  closings  resulted  from host store  decisions to close the
stores,  with  one of the  stores  reopening  at a new  location  with a  Finlay
operated department.

    Gross margin. Gross margin for the period increased by $6.8 million but , as
a  percentage  of  sales,  gross  margin  decreased  by  0.3%  as  a  result  of
management's efforts to increase market penetration and market share through its
competitive pricing strategy.

    Selling,  general and administrative  expenses. SG&A increased $5.4 million,
or 4.3%,  due primarily to payroll  expense and lease fees  associated  with the
increase  in the  Company's  sales  as well as an  increase  in net  advertising
expenditures  as compared with the 1996 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
$0.3 million, reflecting an increase in capital expenditures for the most recent
twelve  months,   offset  by  the  effect  of  certain  assets   becoming  fully
depreciated.  This  increase  in fixed  assets  was due to the  addition  of new
departments and the renovation of existing departments.

    Interest expense, net. Interest expense increased by $0.9 million reflecting
an  increase  in  average  borrowings  ($310.9  million  for the  period in 1997
compared to $276.3  million for the  comparable  period in 1996)  primarily as a
result  of the  timing of  inventory  receipts  during  the 1997  period  and an
increase in the  outstanding  balance of the  Debentures due to the accretion of
interest.  The increase in average  borrowings  was partially  offset by a lower
weighted  average interest rate (10.2% for the 1997 period compared to 10.3% for
the comparable period in 1996).



                                      12

<PAGE>



     Provision  (credit) for income taxes. The income tax provision for the 1997
and 1996 periods reflects an effective tax rate of 41.5%.

    Net income (loss). The net loss of $5.6 million for the 1997 period was $0.4
million  lower than the net loss of $6.0  million for the  comparable  period in
1996 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 twenty-six weeks ended August 3, 1996 and August
2,  1997,   capital   expenditures   totaled  $7.2  million  and  $8.5  million,
respectively.  For 1996,  capital  expenditures  totaled  $17.5  million,  which
included initial  construction costs relating to the Company's  distribution and
warehouse facility. Capital expenditures for 1997, in total, are estimated to be
approximately  $18.0 million.  Although capital  expenditures are limited by the
terms  of the  Revolving  Credit  Facility,  to  date  this  limitation  has not
precluded the Company from satisfying its capital expenditure requirements.

    Finlay's  operations  substantially  preclude  consumer  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 $67.6 million at August 2,
1997, a decrease of $10.0 million from February 1, 1997.  The decrease  resulted
from capital  expenditures  and the impact of the interim net loss  exclusive of
depreciation  and  amortization.  Based  on  the  seasonal  nature  of  Finlay's
business,  working  capital  requirements  and  therefore  borrowings  under the
Revolving Credit Facility 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 Facility  provides Finlay
with a line of credit of up to $175.0  million  which is  available  to  finance
seasonal cash and other working  capital needs.  The Revolving  Credit  Facility
initially bears interest at a rate equal to, at Finlay's  option,  (i) the Index
Rate (as defined in the Revolving  Credit  Facility)  plus 0.5% or (ii) adjusted
LIBOR plus 1.5%.  Commencing in 1998, the Revolving  Credit  Facility will bears
interest  at a rate  equal to, at  Finlay's  option,  (i) the Index  Rate plus a
margin  ranging from 0.25% to 1.00% or (ii) adjusted LIBOR plus a margin ranging
from 1.25% to 2.00%, in each case depending on the financial  performance of the
Company.  Pursuant to the indenture  relating to the Debentures  (the "Debenture
Indenture"), the Company has pledged all of the issued and outstanding shares of
capital  stock of Finlay  Jewelry  for the  benefit  of the  Debenture  holders.
Pursuant to the agreement  relating to Revolving Credit Facility (the "Revolving
Credit  Agreement"),  Finlay  Jewelry has pledged or caused to be pledged all of
the issued and outstanding capital stock (or other equity securities) of each of
its direct and indirect  subsidiaries  (including  Sonab Holdings,  Inc.,  Sonab
International,  Inc.  and  Sonab)  for the  benefit  of the  lenders  under  the
Revolving Credit Facility.

     Pursuant to the Revolving  Credit  Agreement,  Finlay is required to reduce
the balance of the  Revolving  Credit  Facility in each year to $10.0 million or
less for a 30 consecutive day period (the "Balance Reduction  Requirement").  In
addition,  the  Debenture  Indenture and the  indenture  (the "Note  Indenture")
relating to Finlay Jewelry's 10 5/8% Senior Notes due 2003 (the "Notes") require
Finlay to reduce the balance of the  Revolving  Credit  Facility in each year to
$10.0  million or less for a specified  25  consecutive  day period.  Borrowings
under the  Revolving  Credit  Facility  at August 2, 1997 were  $111.5  million,
compared  to a  zero  balance  at  February  1,  1997  in  accordance  with  the
then-applicable  Balance  Reduction  Requirement  and $77.9 million at August 3,
1996. The average amounts  outstanding  were $70.5 million and $96.4 million for
the twenty-six weeks ended


                                      13

<PAGE>



August 3, 1996 and August 2, 1997, respectively.  The maximum amount outstanding
for the twenty-six  weeks ended August 2, 1997 was $121.0 million.  After giving
effect to increased  borrowings  under the Revolving  Credit Facility to finance
the Diamond Park Acquisition, the outstanding balance under the Revolving Credit
Facility at August 2, 1997 would have been $177.8 million.

    Pursuant to an amendment to the Revolving Credit  Facility,  dated September
11, 1997,  and concurrent  with the completion of the Diamond Park  Acquisition,
the line of credit will be increased to $225.0  million and  permitted  balances
during the annual balance reduction period will be increased.  Finlay intends to
finance the Diamond Park  Acquisition with borrowings under the Revolving Credit
Facility. In addition,  upon the completion of the Offering, the Company expects
to use the net  proceeds to it  therefrom  for  working  capital,  repayment  of
indebtedness or other general corporate  purposes.  The Debenture  Indenture and
Note Indenture  restrict the Company's  ability to use the net proceeds from the
Offering to repay indebtedness under the Revolving Credit Facility.

    Finlay  believes  that,  with the  increased  borrowing  capacity  under the
Revolving Credit Facility,  it has sufficient  liquidity to meet its anticipated
working  capital  requirements  for both its  domestic  and foreign  operations.
Finlay does not expect  that  significant  additional  working  capital  will be
required in the  near-term  with  respect to the  operation  of the Diamond Park
departments  because  Finlay will  purchase the  inventory of those Diamond Park
departments which it is acquiring. On a going-forward basis, Finlay expects that
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 expects to incur certain expenditures of approximately $1.0
million associated with the integration of Diamond Park's operations.

    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 1996,  Finlay  had an average
balance of  consignment  merchandise  of $201.8 million from over 200 vendors as
compared to an average  balance of $208.5 million in 1995. As of August 2, 1997,
$205.5  million of  consignment  merchandise  was on hand as  compared to $194.3
million at February 1, 1997 and $194.7 million at August 3, 1996.

    A substantial  amount of Finlay's operating cash flow is or will be required
to pay,  directly  or  indirectly,  interest  with  respect to the Notes and the
Debentures and amounts due under the Revolving  Credit  Facility,  including the
payments required pursuant to the Balance Reduction Requirement. As of August 2,
1997, the Company's outstanding borrowings were $327.6 million, which included a
$81.1 million balance under the  Debentures,  a $135.0 million balance under the
Notes and a $111.5 million balance under the Revolving Credit  Facility.  On May
1,  1998,  the  Company  will have a one-time  option,  in  accordance  with the
Debenture Indenture, to prepay all or a portion of the $39.0 million of accreted
interest  on the  Debentures  as of such  date.  It is the  Company's  intent to
prepay,  subject to satisfaction of certain  covenants and conditions,  all or a
portion of 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. The Company intends to fund this prepayment using borrowings
under the Revolving Credit Facility or other available funds including, upon the
completion of the Offering, the net proceeds to it therefrom.  The Debentures do
not pay cash interest until November 1, 1998.

    In August 1995, Finlay Jewelry  consummated the Gold Consignment  Agreement,
which  expires on February  28, 1998.  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)
$25,000,000 worth of gold, subject to a formula

                                      14

<PAGE>



as  prescribed by the Gold  Consignment  Agreement.  At August 2, 1997,  amounts
outstanding  under  the Gold  Consignment  Agreement  totaled  38,007  fine troy
ounces,  valued at approximately  $12.4 million.  The average amount outstanding
under the Gold Consignment Agreement was $11.9 million in 1996.

    Finlay is currently implementing financial and distribution software that is
Year 2000  compliant.  Finlay  has begun to assess  the  impact of the Year 2000
issue on its remaining  operations,  including the development of cost estimates
for and the  extent of  programming  changes  required  to address  this  issue.
Although final cost estimates have yet to be determined,  it is anticipated that
these Year 2000 costs will result in an increase  to  Finlay's  expenses  during
1998 and 1999 and are not  expected  to have a  material  impact on its  ongoing
results of operations.

    Finlay believes that, based upon current operations, anticipated growth, and
availability  under the Revolving Credit Facility,  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.
The Revolving  Credit  Facility,  the Note  Indenture  and the Gold  Consignment
Agreement restrict  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 $10.7 million and $10.6 million for the twenty-six
weeks ended August 3, 1996 and August 2, 1997, respectively.

    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, 1996 (the  Company's  tax year
end), a NOL for tax purposes of approximately  $14.0 million which is subject to
an annual limit of approximately $2.0 million per year. For financial  reporting
purposes,  no NOL  existed as of  February  1,  1997.  An  additional  change in
ownership within the meaning of Section 382 of the Code may occur as a result of
the  Offering.  However,  management  does not  believe  that there would be any
additional  restrictions upon the Company's ability to utilize its NOLs or other
carryforwards as a result of such ownership change.

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 86% of its income  from  operations
(excluding  nonrecurring  charges) for 1994, 1995 and 1996. Finlay has typically
experienced  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 Facility.  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.




                                      15

<PAGE>



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  Securities  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, trends in the general economy, competition in the retail
jewelry business,  the seasonality of the retail 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 the Diamond Park assets (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 place undue  reliance 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 SEC pursuant to the Exchange Act.

                                      16

<PAGE>



PART II - OTHER INFORMATION

Item 4.  Submission of Matters to a Vote of Security Holders

    The Annual Meeting of the  Stockholders  of the Company was held on June 19,
1997,  pursuant to notice,  at which Messrs.  David B.  Cornstein,  James Martin
Kaplan and Arthur E. Reiner were re-elected  directors of the Company to serve a
three-year  term in the class of  directors  whose term  expires  in 2000.  Such
members  have been  elected to serve until the  expiration  of their  respective
terms of office and until their  successors are duly elected and  qualified.  At
such meeting, votes were cast as follows:

Name                      Votes for       Votes Withheld
----                      ---------       --------------

David B. Cornstein        5,486,853          1,500
James Martin Kaplan       5,486,853          1,500
Arthur E. Reiner          5,486,853          1,500


     Messrs.  Rohit M. Desai,  Thomas H. Lee,  Norman S.  Matthews and Warren C.
Smith,  Jr.  continued to serve as members of the Board of  Directors  after the
meeting.

    In addition,  the proposal to approve and adopt the Company's 1997 Long Term
Incentive Plan was passed with 5,211,003  votes in favor,  277,300 votes against
and 50 votes abstaining.

Item 6.     Exhibits and Reports on Form 8-K

   A.       Exhibits

    2       Not applicable.

    4       Not applicable.

    10.1    Amendment  No. 3 dated as of January  31,  1997 to the  Amended  and
            Restated  Credit  Agreement dated as of March 28, 1995 among General
            Electric Capital Corporation ("G. E. Capital"),  individually and in
            its  capacity  as  agent,   certain   other  lenders  and  financial
            institutions, the Company and Finlay Jewelry.

    10.2    Amended and Restated Credit Agreement dated as of September 11, 1997
            among G. E.  Capital,  individually  and in its  capacity  as agent,
            certain other lenders and  financial  institutions,  the Company and
            Finlay Jewelry ("Amended Revolving Credit Agreement").

    10.3    Amendment  No.  1  dated  as  of  September  11, 1997 to the Amended
            Revolving Credit Agreement.

    10.4    Amendment  No. 2 and Limited  Consent dated as of September 10, 1997
            to the Gold  Consignment  Agreement  dated as of June 15,  1995 , as
            amended,  by and between  Finlay  Jewelry and Rhode Island  Hospital
            Trust National Bank.





                                      17

<PAGE>



    10.5    Amendment  No. 3 and Limited  Consent dated as of September 11, 1997
            to the Gold  Consignment  Agreement  dated as of June 15,  1995,  as
            amended,  by and between  Finlay  Jewelry and Rhode Island  Hospital
            Trust National Bank.

    10.6    Asset Purchase  Agreement  dated  September 3, 1997 by and among the
            Company, Finlay Jewelry, Zale Corporation and Zale Delaware, Inc.

    10.7    Form of Amendment to Employment Agreement between David B. Cornstein
            and Finlay Jewelry.


    11      Computation of earnings per share.

    15      Not applicable.

    18      Not applicable.

    19      Not applicable.

    22      Not applicable.

    23      Not applicable.

    24      Not applicable.

    27      Financial Data Schedule.

    99      Not applicable.

   B.       Reports on Form 8-K

          On  September  8, 1997,  the  Company  filed with the  Securities  and
Exchange  Commission  a  Current  Report  on Form 8-K  regarding  the  Company's
announcement that Finlay had entered into an agreement to acquire certain assets
of the Diamond Park Fine Jewelers division of Zale Corporation.



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<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: September 12, 1997               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)






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