SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 6, 1997
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Finlay Enterprises, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-25716 94-2691724
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(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
521 Fifth Avenue, New York, New York 10175
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(Address of principal executive offices) (zip code)
Registrant's Telephone Number, including Area Code: (212) 808-2060
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N/A
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
On October 6, 1997 (the "Closing Date"), Finlay Enterprises, Inc., a
Delaware corporation ("FEI"), and Finlay Fine Jewelry Corporation, a Delaware
corporation which is a wholly-owned subsidiary of FEI ("Buyer"), consummated the
acquisition (the "Acquisition") from Zale Delaware, Inc., a Delaware corporation
("Seller"), of certain assets used by Seller, through its Diamond Park Fine
Jewelers division, in connection with operating leased fine jewelry departments
(each, a "Department") in department stores owned by Marshall Field & Company
("Marshall Field's"), Parisian, Inc. ("Parisian"), Mercantile Stores Company,
Inc. ("Mercantile") and Dillard Department Stores, Inc. ("Dillard's"). The
Acquisition was consummated pursuant to the terms and provisions of an Asset
Purchase Agreement dated September 3, 1997 (the "Agreement") among FEI, Buyer,
Zale Corporation, a Delaware corporation which owns all of the outstanding
securities of Seller ("Zale"), and Seller.
Pursuant to the terms and provisions of the Agreement, on the Closing Date,
Buyer purchased from Seller the following assets owned by the Seller as of the
Closing Date (collectively, the "Division Assets"): (i) the license agreements
between the Seller and each of Marshall Field's, Parisian and Mercantile
relating to the operation of Departments located in department stores owned by
Marshall Field's, Parisian and Mercantile, respectively (collectively, the
"Acquired Departments"), (ii) certain other contracts, distribution
arrangements, equipment leases and vendor, sales, purchase, advertising and
other similar agreements used in connection with or relating to the operation of
the Acquired Departments or Division Assets (the "Acquired Business"), in each
case as more specifically described in the Agreement and subject to the
limitations described therein, (iii) all equipment, fixtures, furniture,
leasehold improvements and personal property owned by the Seller and related
exclusively to, used solely by or located in the Acquired Departments, (iv) to
the extent assignable, all permits, certifications, franchises, licenses,
approvals and other authorizations held by the Seller which related primarily to
the operation of the Acquired Business, (v) subject to the limitations and
exclusions described in the Agreement, all finished goods inventory which
related primarily to the operation of the Acquired Business and which were
located at the Seller's distribution center in Irving, Texas or in the Acquired
Departments (collectively, the "Inventories"), (vi) all supplies, spare and
replacement parts and other related items located in the Acquired Departments
and in the Seller's warehouse in Irving, Texas which were used primarily in
connection with the operation of the Acquired Business (collectively, the
"Supplies"), (vii) all of Seller's data, trade secrets and confidential
information exclusively related to the operation of the Acquired Business, if
any, (viii) all goodwill relating to the operation of the Acquired Business, if
any, (ix) all prepayments, prepaid expenses, refunds and deposits relating to
the operation of the Acquired Business, (x) petty cash on hand at the Acquired
Departments and (xi) certain other miscellaneous assets described in the
Agreement.
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In consideration for the Division Assets, the Buyer paid to the Seller on
the Closing Date (the "Division Assets Purchase Price"), which amount was equal
to the sum of the following amounts: (i) the Closing Inventory Price (as defined
in the Agreement) of the Inventories; (ii) the amortized/depreciated cost of all
fixed or capital assets located in the Acquired Departments; (iii) the aggregate
amount of petty cash at the Acquired Departments; (iv) the aggregate amount of
prepayments, prepaid expenses, refunds and deposits relating to the Acquired
Business; (v) the aggregate amount of the Supplies located in Seller's
warehouse; and (vi) $2,400,000.
In addition to the foregoing, the Agreement further provides that Buyer
shall purchase from Seller, on February 27, 1998 (or on such other date as shall
be agreed to by the Buyer and Seller), all finished goods inventories located at
the Departments in department stores owned by Dillard's as of January 31, 1998,
subject to the limitations and exclusions described in the Agreement (the
"Dillard's Inventories"). The purchase price to be paid by the Buyer for the
Dillard's Inventories (the "Dillard's Inventories Purchase Price" and, together
with the Division Assets Purchase Price, the "Purchase Price") shall be equal to
the Invoiced Cost thereof, such amount not to exceed $4,950,000 in the
aggregate; provided, however, that in the event the Dillard's Inventories
Purchase Price is determined to be in excess of $4,950,000, the Buyer shall have
the option of purchasing any such excess Dillard's Inventories by increasing the
Dillard's Inventories Purchase Price by an amount equal to the Invoiced Cost (as
defined in the Agreement) of such excess Dillard's Inventories.
The parties to the Agreement currently estimate that the Purchase Price to
be paid by the Buyer for the Division Assets and the Dillard's Inventories will
equal approximately $63 million.
Pursuant to the Agreement, Zale has agreed that, for a period of seven
years following the Closing Date, it shall not engage, either directly or
indirectly, in the department store leased fine jewelry business.
In connection with the Acquisition, FEI and Buyer refinanced their
revolving credit facility with General Electric Capital Corporation and certain
other lenders to increase the amount available thereunder to $225 million. The
additional borrowing capacity was used to finance the Acquisition and will also
be available to fund seasonal borrowing needs.
Item 7. Financial Statements and Exhibits.
(a) Financial statements of business acquired.
Not applicable.
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(b) Pro forma financial information.
Not applicable.
(c) Exhibits.
10.1 Asset Purchase Agreement dated September 3, 1997 among Finlay
Enterprises, Inc. ("FEI"), Finlay Fine Jewelry Corporation ("FFJC"), Zale
Corporation and Zale Delaware, Inc. (incorporated by reference to Exhibit
10.6 to FFJC's Quarterly Report on Form 10-Q for the period ended August 2,
1997, as filed with the Securities and Exchange Commission on September 16,
1997).
10.2 Amendment No. 2 dated October 6, 1997 to the Amended and Restated
Credit Agreement dated as of September 11, 1997 among General Electric
Capital Corporation, individually and in its capacity as agent, certain
other lenders and financial institutions, FEI and FFJC (incorporated by
reference to Exhibit 10.25(c) to FEI's Registration Statement on Form S-1
(Registration No. 333-34949)).
10.3 Amendment No. 4 and Limited Consent dated as of October 6, 1997
to the Gold Consignment Agreement dated as of June 15, 1995 between FFJC
and Rhode Island Hospital Trust National Bank (incorporated by reference to
Exhibit 10.29(e) to FEI's Registration Statement on Form S-1 (Registration
No. 333-34949)).
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SIGNATURE
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Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
FINLAY ENTERPRISES, INC.
(Registrant)
Dated: October 15, 1997 By:/s/Barry D. Scheckner
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Barry D. Scheckner
Senior Vice President and
Chief Financial Officer
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