NEW YORK, Sept. 27 /PRNewswire-FirstCall/ -- Finlay Enterprises, Inc.
(Nasdaq: FNLY), a leading retailer of fine jewelry operating luxury
stand-alone specialty jewelry stores and licensed fine jewelry departments
in department stores throughout the United States, announced today that it
has executed an asset purchase agreement with Zale Corporation (NYSE: ZLC)
and its subsidiaries for the acquisition of the assets and business of its
Bailey Banks & Biddle division, a chain of 70 stand-alone retail stores
operating in 24 states with a focus on the luxury market, offering jewelry
and watches under high-end name brands.

    The purchase price is $200 million, plus an inventory adjustment at the
time of closing and the assumption of certain liabilities. The Company
expects to finance the transaction through a new $550 million five-year
revolving credit facility provided by GE Corporate Lending, which would
replace its existing facility. GE Capital Markets, Inc. will act as the
sole lead arranger for the financing.

    Management's preliminary assessment is that the acquisition should
contribute sales of approximately $280 million to $300 million in the
fiscal year ending January 31, 2009, which will be the first full year of
operation following the expected completion of the transaction. After
taking into account certain synergies of the transaction, and based on
estimated EBITDA in the range of $23 million to $27 million, management
expects the acquisition should generate earnings accretion in excess of
$0.20 per diluted share in fiscal 2008. The Company plans to provide
further financial details upon the closing of the transaction, which is
expected to occur by the end of October 2007.

    Arthur E. Reiner, Chairman and Chief Executive Officer of Finlay
Enterprises, Inc., commented, "The acquisition of Bailey Banks & Biddle
represents a landmark event for our Company. It fits extremely well into
our strategy to grow and further diversify our business through
acquisitions, and almost triples the number of stand-alone jewelry stores
we operate. This transaction expands our presence in the luxury market and
builds upon our Carlyle acquisition in 2005 and our Congress acquisition in
2006, increasing our luxury and better specialty business, including
Bloomingdales and Lord & Taylor, to over $550 million."

    Mr. Reiner continued "We believe the high-end market, which has
performed very well in recent years, will continue to be one of the most
attractive segments of the jewelry business. Bailey Banks & Biddle is a
premier brand and represents a significant expansion for Finlay in this
luxury market. We have gained confidence and experience through our
previous acquisitions. Further, we believe Finlay can achieve synergies and
optimize Bailey Banks & Biddle's overhead infrastructure by leveraging our
merchandising talent, operational expertise and strong vendor
relationships."

    The asset purchase agreement is subject to various customary closing
conditions and obtaining certain consents. There can be no assurances that
these conditions will be satisfied, or that consummation of this
transaction will occur.

    Lehman Brothers acted as exclusive financial advisor to Finlay
Enterprises, Inc. for this transaction.

    Finlay Enterprises, Inc. will host a conference call and webcast today,
September 27, 2007, at 9:00 a.m. EDT to discuss the transaction. To access
the call, please dial 973-582-2710. The webcast will be available on the
Company's web site at http://www.finlayenterprises.com. A replay of the call will
be available through October 4, 2007 and can be accessed approximately one
hour after the end of the call by dialing 973-341-3080; pass code 9293420.
A replay of the webcast will be available at http://www.finlayenterprises.com.

    Finlay Enterprises, Inc., through its wholly-owned subsidiary, Finlay
Fine Jewelry Corporation, is one of the leading retailers of fine jewelry
operating luxury stand-alone specialty jewelry stores primarily located in
the southeastern United States and licensed fine jewelry departments in
department stores throughout the United States and achieved sales of $761.8
million in fiscal 2006. The number of locations at the end of the second
quarter of fiscal 2007 totaled 725, including 33 Carlyle and five Congress
specialty jewelry stores.