BOYDS COLLECTION LTD - 10-Q Quarterly Report

United States Securities and Exchange Commission

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the Quarterly Period Ended March 31, 2004

o	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: 001-14843

The Boyds Collection, Ltd.
(Exact Name of Registrant as Specified in its Charter)

Maryland		52-1418730
(State or Other Jurisdiction of Incorporation or Organization)		(I.R.S. Employer Identification No.)

350 South Street, McSherrystown,
Pennsylvania, Attn.: Joseph E. Macharsky		17344
(Address of Principal Executive Offices)		(Zip Code)

(717) 633-9898
(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 ý No o

Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act) Yes o No ý

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

Common Stock, par value $.0001 per share		59,004,202
(Class)		(Outstanding as of April 28, 2004)

THE BOYDS COLLECTION, LTD.

TABLE OF CONTENTS

PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements:

	Condensed Consolidated Balance Sheets as of December 31, 2003 and March 31, 2004

	Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2003 and 2004

	Condensed Consolidated Statement of Stockholders’ Equity for the Three Months Ended March 31, 2004

	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2003 and 2004

	Notes to Condensed Consolidated Financial Statements

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

Item 3.	Quantitative and Qualitative Disclosures About Market Risk

Item 4.	Controls and Procedures

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings

Item 2.	Changes in Securities and Use of Proceeds

Item 3.	Defaults Upon Senior Securities

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

Item 5.	Other Information

Item 6.	Exhibits and Reports on Form 8-K

	Signatures

	Index to Exhibits

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements.

THE BOYDS COLLECTION, LTD.

CONDENSED CONSOLIDATED BALANCE SHEETS

As of December 31, 2003 and March 31, 2004

(Unaudited)

	December 31, 2003			March 31, 2004
	(in thousands)
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	4,173		$	4,235
Accounts receivable, less allowances of $2,189 at December 31, 2003, and $1,650 at March 31, 2004	8,174			11,198
Inventory - primarily finished goods, less allowance for obsolete inventory of $2,855 at December 31, 2003, and $2,872 at March 31, 2004	9,404			9,479
Inventory in transit	3,653			1,475
Other current assets	932			906
Income taxes receivable	1,964			3,502
Deferred income taxes	21,047			21,047
Total current assets	49,347			51,842

PROPERTY AND EQUIPMENT - NET (Note 4)	21,726			23,177

OTHER ASSETS:
Deferred debt issuance costs	961			881
Deferred tax asset	147,997			143,565
Other assets	2,923			2,895
Total other assets	151,881			147,341
TOTAL ASSETS	$	222,954		$	222,360

LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:
Accounts payable	$	2,514		$	2,522
Accrued expenses	5,452			4,747
Interest payable	626			1,398
Current portion of long-term debt (Note 5)	14,000			10,500
Total current liabilities	22,592			19,167

LONG-TERM DEBT (Note 5)	62,392			62,392

COMMITMENTS AND CONTINGENCIES (Notes 2 and 9)

STOCKHOLDERS’ EQUITY:
Common stock (61,838 shares issued at December 31, 2003, and March 31, 2004, respectively) and paid-in capital in excess of par	(41,221		)	(41,221		)
Other comprehensive income:
Accumulated other comprehensive loss	(244		)	(208		)
Retained earnings	206,873			209,668
Less: Treasury shares at cost (2,834 at December 31, 2003, and at March 31, 2004, respectively)	(27,438		)	(27,438		)
Total stockholders’ equity	137,970			140,801

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	222,954		$	222,360

See notes to condensed consolidated financial statements.

THE BOYDS COLLECTION, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

For the Three Months Ended March 31, 2003 and 2004

(Unaudited)

	Three Months Ended March 31,
	2003		2004
	(in thousands, except per share amounts)

NET SALES	$	35,101	$	26,337
COST OF GOODS SOLD	12,748		10,454
GROSS PROFIT	22,353		15,883
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	8,250		9,926
INCOME FROM OPERATIONS	14,103		5,957
OTHER INCOME/(EXPENSE)	42		(78		)
INTEREST EXPENSE:
Interest expense	1,411		1,014
Amortization of deferred debt issuance costs	118		80
TOTAL INTEREST EXPENSE	1,529		1,094

INCOME BEFORE PROVISION FOR INCOME TAXES	12,616		4,785
PROVISION FOR INCOME TAXES (Note 8)	4,641		1,990
NET INCOME	$	7,975	$	2,795

EARNINGS PER SHARE:
Basic and Dilutive Earnings Per Share - Net Income	$	0.13	$	0.05

See notes to condensed consolidated financial statements.

THE BOYDS COLLECTION, LTD.

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY

For the Three Months Ended March 31, 2004

(Unaudited)

	Common Stock		Common Stock						Accumulated
	Shares		and Paid-in						Other					Other		Total
	Issued And	Treasury	Capital in			Treasury			Comprehensive			Retained		Comprehensive		Stockholders’
	Outstanding	Stock	Excess of Par			Stock			Income/(Loss)			Earnings		Income		Equity
	(in thousands)

BALANCE, JANUARY 1, 2004	61,838	2,834	$	(41,221	)	$	(27,438	)	$	(244	)	$	206,873			$	137,970
Other comprehensive income:
Foreign currency translation	—	—	—			—			36			—		$	36	36
Net income	—	—	—			—			—			2,795		2,795		2,795
Comprehensive income	—	—	—			—			—			—		$	2,831	—

BALANCE, March 31, 2004	61,838	2,834	$	(41,221	)	(27,438		)	$	(208	)	$	209,668			$	140,801

See notes to condensed consolidated financial statements.

THE BOYDS COLLECTION, LTD.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Three Months Ended March 31, 2003 and 2004

(Unaudited)

	Three Months Ended March 31,
	2003			2004
	(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	7,975		$	2,795
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	535			471
Amortization and write off of deferred debt issuance costs	118			80
Gain/(loss) on sale of equipment	—			(3		)
Deferred taxes	4,431			4,432
Changes in assets and liabilities:
Accounts receivable - net	(4,667		)	(3,024		)
Inventory - net	(574		)	(75		)
Inventory in transit	2,552			2,178
Other current assets	218			26
Other assets	(18		)	(1		)
Accounts payable	(1,169		)	8
Income taxes receivable	1,513			(1,538		)
Accrued expenses	(76		)	(705		)
Interest payable	1,066			772
Other liabilities	(92		)	—
Net cash provided by operating activities	11,812			5,416

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(485		)	(1,890		)
Net cash used in investing activities	(485		)	(1,890		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of debt	(6,000		)	(3,500		)
Net cash used in financing activities	(6,000		)	(3,500		)

Effect of exchange rate changes on cash	18			36

NET INCREASE IN CASH AND CASH EQUIVALENTS	5,345			62
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	5,875			4,173
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	11,220		$	4,235
CASH PAID DURING THE PERIOD FOR INTEREST	$	344		$	242
CASH RECEIVED DURING THE PERIOD FOR INCOME TAXES	$	(1,304	)	$	(934	)

See notes to condensed consolidated financial statements.

THE BOYDS COLLECTION, LTD.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands, except share and per share amounts)

(Unaudited)

1. INTERIM FINANCIAL STATEMENTS

The Boyds Collection, Ltd. (“Boyds” or the “Company”) operates in two segments which consist of the Company’s wholesale gift business and the Company’s retail gift/entertainment business. In September 2002, Boyds Bear Countryä store opened in Gettysburg, Pennsylvania. The Company expects to open its second retail store in Pigeon Forge, Tennessee in December of 2004. These retail stores are being used to generate income and expand the brand awareness and image of Boyds. Substantially all of the Company’s products are sourced from foreign manufacturers in China through buying agencies.

The condensed consolidated balance sheet as of March 31, 2004, the condensed consolidated statements of income for the three months ended March 31, 2003 and 2004, the condensed consolidated statement of stockholders’ equity for the three months ended March 31, 2004 and the condensed consolidated statements of cash flows for the three months ended March 31, 2003 and 2004 are unaudited. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of such interim financial statements have been included. The results of operations for the three months ended March 31, 2004 are not necessarily indicative of the results to be expected for the full year. These financial statements should be read in conjunction with the financial statements and notes included in Boyds’ Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 29, 2004.

In November 2002, the FASB issued Interpretation No. 45, “Guarantors Accounting and Disclosure Requirements for Guarantees.” The disclosure requirements are effective for financial statements issued after December 15, 2002, and the recognition/measurement requirements are effective on a prospective basis for guarantees issued or modified after December 31, 2003. The adoption of this statement did not have a material impact on the financial position, results of operations or cash flow of Boyds.

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities.” The Interpretation clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements” to certain entities in which the equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The Interpretation applies immediately to variable interest entities created after January 31, 2003, or in which the Company obtains an interest after that date. The interpretation is effective July 1, 2003 to variable interest entities in which the Company has assessed the impact of adopting this Interpretation. The adoption of this standard did not have a material impact on the financial position, results of operations or cash flow of Boyds.

In December 2002, the FASB issued SFAS No. 148, “Accounting for Stock-Based Compensation – Transition and Disclosure.” This statement amends SFAS No. 123 “Accounting for Stock-Based Compensation,” to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation. In addition, this statement amends the disclosure requirements of SFAS No. 123 to require prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based compensation and the effect of the method used on reporting results. The disclosure provisions of this standard are effective for fiscal years ended after December 15, 2002 and have been incorporated into these condensed consolidated financial statements and accompanying notes (see Note 7).

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” This statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” In general, this statement is effective for contracts entered into or modified after September 30, 2003, and for hedging relationships designated after September 30, 2003. The adoption of this statement did not have a material impact on the financial position, results of operations or cash flow of Boyds.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This statement establishes standards for the classification and measurement in an issuer’s statement of financial position of certain financial instruments that embody obligations for the issuer that are required to be classified as liabilities. This statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise shall be effective at the beginning of the first interim period beginning after June 15, 2003. The provisions of the statement did not have a material impact on the financial position, results of operations or cash flow of Boyds.

2. FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

At December 31, 2003 and at March 31, 2004, Boyds had letters of credit outstanding under its bank credit agreement amounting to $3.1 million and $1.7 million, respectively. These letters of credit represent Boyds’ commitment to purchase inventory which is to be produced and/or shipped.

3. RELATED PARTY TRANSACTIONS

Kohlberg, Kravis Roberts & Co., L.P. (“KKR”) is a 59% shareholder of Boyds. For the first quarter ended March 31, 2003 and March 31, 2004, Boyds paid to KKR approximately $0.1 million for management fees and related expenses.

4. PROPERTY AND EQUIPMENT

The components of property and equipment at December 31, 2003 and March 31, 2004 were, as follows:

	December 31, 2003			March 31, 2004

Land and building	$	18,713		$	18,859
Construction in progress	1,050			2,685
Equipment	4,673			4,735
Software development costs	2,372			2,408
Leasehold improvements	1,924			1,924
Furniture and fixtures	398			399
Total	29,130			31,010
Less: accumulated depreciation and amortization	(7,404		)	(7,833		)
Total	$	21,726		$	23,177

5. LONG-TERM DEBT

Long-term debt is summarized as follows:

	December 31, 2003			March 31, 2004

9% Senior Subordinated Notes due May 15, 2008	$	34,392		$	34,392

Credit Agreement:
Secured Tranche A Term Loans due April 2005.
Interest based on LIBOR or base rate as defined	42,000			38,500

Sub-Total	76,392			72,892

Less: Current portion of long-term debt	(14,000		)	(10,500		)
	$	62,392		$	62,392

The Senior Subordinated Notes have an optional redemption feature exercisable by Boyds any time on or after May 15, 2003 at 104.5% of face value. Each year thereafter, the rate decreases by 1.5% until 2006. Interest on the Notes is payable semi-annually on May 15 and November 15.

At March 31, 2003 and 2004, the weighted average interest rates in effect for the Tranche A Term Loan were 2.125% and 1.747%, respectively. In addition, the Tranche A Term Loan has predetermined annual payments through April 2005.

The Credit Agreement contains certain covenants, including the requirement of a minimum interest coverage ratio as defined in the agreement and substantial restrictions as to dividends and distributions. Boyds is in compliance with all applicable covenants as of March 31, 2004. The Company believes that it will also be in compliance with all of its debt covenants based on its expected future earnings. The Credit Agreement also provides that the Term Loan and Senior secured revolving credit facility be collateralized by the capital stock of Boyds’ current and future subsidiaries. In addition, the Term Loan is subject to mandatory prepayment with the proceeds of certain asset sales and a portion of Boyds’ excess cash flow as defined in the Credit Agreement.

The scheduled maturities of the long-term debt, including current portion of $10.5 million due in April 2004, are as follows:

2004	$	10,500
2005	28,000
2006	—
2007	—
2008	34,392
	$	72,892

6. SEGMENTS OF THE COMPANY AND RELATED INFORMATION

The Company operates in two segments which consist of the Company’s wholesale gift business and the Company’s retail gift/entertainment business. These segments are evaluated regularly by the Company’s Chief Executive Officer in deciding how to assess performance and allocate resources. Prior to the retail operations becoming a significant portion of the Company’s performance, the Company had only one reportable segment. As a result, the Company has reclassified the prior year’s single segment information to be consistent with the current period’s presentation.

The Company’s wholesale business designs, imports, and distributes resin figurines and plush animals via a global network of independent retailers and distributors. The Company’s retail operation sells resin figurines, plush animals and a unique entertainment experience directly to the end consumer at its Gettysburg, Pennsylvania flagship location. A second retail store is expected to be opened in Pigeon Forge, Tennessee in December of 2004.

	For the Three Months Ended, March 31
	2003						2004
	Wholesale		Retail		Consolidated		Wholesale		Retail			Consolidated
Sales	$	32,916	$	2,185	$	35,101	$	24,268	$	2,069		$	26,337
Gross Profit	20,622		1,731		22,353		14,357		1,526			15,883
SG&A	6,781		1,469		8,250		8,066		1,860			9,926
Income from Operations	13,841		262		14,103		6,291		(334		)	5,957

Total Assets	$	225,568	15,507		$	241,075	$	202,111	20,249			$	222,360

7. STOCK-BASED COMPENSATION

At March 31, 2004, Boyds has various stock-based employee compensation plans. The Company accounts for those plans under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees”, and related Interpretations. Under this method, compensation cost is the excess, if any, of the quoted market price of the stock at the grant date or other measurement date over the amount an employee must pay to acquire the stock. No stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share if Boyds had applied the fair value recognition method of accounting provisions of FASB Statement No. 123, “Accounting for Stock-Based Compensation”, to stock-based employee compensation.

	Quarter Ended March 31
	2003		2004

Net income, as reported	$	7,975	$	2,795

Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects	572		557

Pro forma net income	$	7,403	$	2,238

Earnings per share:
Basic—as reported	$	0.13	$	0.05
Basic—pro forma	$	0.13	$	0.04

Diluted—as reported	$	0.13	$	0.05
Diluted—pro forma	$	0.13	$	0.04

8. PROVISION FOR INCOME TAXES

For federal income tax purposes, Boyds has elected to treat the Recapitalization and Stock Purchase that occurred in April 1998 as an asset acquisition by making an Internal Revenue Code Section 338 (h)(10) election. As a result, there is a difference between the financial reporting and tax basis of Boyds’ assets. The difference creates deductible goodwill for income tax purposes, and a deferred tax asset for financial reporting purposes. The deductible goodwill is amortized over a period of fifteen years. The Company will need to generate approximately $400 million of taxable income over the next 30 years to fully realize the federal net deferred tax assets. In addition, the Company will need to generate approximately $20 million of taxable income in each of the next 10 years to fully realize the state net deferred tax assets.

9. CONTINGENCIES

Boyds is involved in various legal proceedings, claims and governmental audits in the ordinary course of business. In the opinion of management, the ultimate disposition of these matters will not have a material adverse effect on the financial position, results of operations and cash flows of Boyds.

10. EARNINGS PER SHARE

The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the net income available to common stockholders:

	Three Months Ended March 31,
	2003		2004

Numerator for basic and diluted earnings per share:
Net income	$	7,975	$	2,795
Denominator:
Denominator for basic earnings per share - weighted average shares	59,111		59,004
Effect of dilutive securities:
Effect of shares issuable under stock option plans based on treasury stock method	59		—
Denominator for diluted earnings per share - weighted average shares	59,170		59,004

EPS - Basic	$	0.13	$	0.05

EPS - Diluted	$	0.13	$	0.05

11. SUBSEQUENT EVENTS

On April 7, 2004 the Company announced the retirement of the Company’s Chief Operating Officer. In the second quarter, the Company will incur a charge of approximately $0.4 million in relation to the retirement.

On April 21, 2004, the Company paid the remaining balance of $10.5 million on its scheduled bank debt payment. This payment was partially funded by using $9.0 million of the Company’s revolving credit facility, with the remainder of $1.5 million coming from excess cash provided from operating activities.

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

GENERAL

The Company operates in two segments which consist of the Company’s wholesale gift business and the Company’s retail gift/entertainment business. Boyds is a leading designer, importer and distributor of branded, high-quality, hand crafted collectibles and other specialty giftware products. Boyds sells its products through an extensive network of approximately 14,000 accounts comprised of independent gift and collectibles retailers, premier department stores, selected catalogue retailers and other electronic and retail channels. This network of retailers is being serviced by a national sales force that was created in 2002. In September 2002, the Boyds Bear Countryä store opened in Gettysburg, Pennsylvania. The Company has purchased land in Pigeon Forge, Tennessee to begin construction on its second retail location. This store is expected to open in December of 2004. The Company has entered into a Letter of Intent for a lease on land in Myrtle Beach, South Carolina for its third retail location. In the future, the Company plans to open two stores per year beginning in 2005.

Boyds’ sales consist of plush animals, resin figurines, and other products. Other products include home décor, stationary, accessories and collectors club sales, which are generated from annual dues collected directly from consumers who become members of Boyds’ collectors club, The Loyal Order of Friends of Boyds, which began in July 1996 and currently has approximately 35,000 paying members, and related accessories.

Boyds licenses its product designs to other companies for products including home textiles, infant clothing and wallpaper. Boyds believes such licensing, in addition to providing royalty income, helps to increase consumer awareness of Boyds’ designs and brand image. Boyds reports royalty income in net sales.

Boyds exhibits its products at selected national and regional tradeshows where orders are taken by Boyds’ employees. Boyds operates almost exclusively out of a leased office/distribution facility and owned retail store in the general vicinity of Gettysburg, Pennsylvania. Boyds also leases warehouse space in Dunkeswell, United Kingdom, and Dordrecht, The Netherlands.

SEGMENTS

figurines, plush animals and a unique entertainment experience directly to the end consumer currently at its Gettysburg, Pennsylvania flagship location. The Company plans for one store to be added in 2004 and then two additional stores per year beginning in 2005.

CRITICAL ACCOUNTING POLICIES

Preparing the financial statements in conformity with accounting principles generally accepted in the United States of America requires that management make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Predicting future events is inherently an imprecise activity and as such requires the use of judgment. Actual results may vary from estimates in amounts that may be material to the financial statements. Management believes that the estimates and assumptions used in connection with the amounts reported in Boyds’ financial statements and related disclosures are reasonable and made in good faith.

The most significant accounting estimates inherent in the preparation of Boyds’ financial statements include estimates related to the valuation of the deferred tax assets, determining the ultimate collectability of accounts receivable and the realizable value of inventory. The process of determining estimates is based on several factors, including historical experience, current and anticipated economic conditions and customer profiles. Boyds continually reevaluates these key factors and makes adjustments to estimates where appropriate. The following are Boyds’ critical accounting policies, some of which require the application of significant estimates and assumptions.

• Sales revenue, net of returns and discounts, is recognized upon shipment of the items, when title passes to the customer, or completion of a retail sale. The most significant financial statement line item, net sales, represents transactions consistent with Boyds’ primary business focus and meets the criteria of Staff Accounting Bulletin No. 101, including the transfer of title, probable collectability, identified customer and no recourse.

• As of March 31, 2004, the Company has net deferred tax assets of approximately $164 million or approximately 75% of total assets. Deferred income taxes arise because of differences in the treatment of income and expense items for financial reporting and income tax purposes. The recovery of deferred income tax assets is contingent upon applicable tax laws and management’s assessment of future operating results. In situations which management believes the probability of benefiting from deferred tax assets is less likely than not, a valuation allowance is established for the amount that is less likely than not to be utilized. The Company will need to generate approximately $400 million of taxable income over the next 30 years to fully realize the federal net deferred tax assets. In addition, the Company will need to generate approximately $20 million of taxable income in each of the next 10 years to fully realize the state net deferred tax assets.

• Accounts receivable are presented at estimated net realizable value. Boyds uses estimates in determining the collectability of its accounts receivable and must rely on its evaluation of historical bad debts, customer credit ratings, current economic trends and changes in customer payment terms to arrive at appropriate reserves.

• Inventories are stated at the lower of cost or market. Cost is determined under the first-in, first-out method of accounting. Boyds records adjustments to the value of this inventory in situations where it appears that Boyds will not be able to recover the cost of the product. This lower of cost or market analysis is based on Boyds’ estimate of forecasted demand by customer by product. A decrease in product demand due to changing customer tastes, consumer buying patterns or loss of shelf space to competitors could significantly impact Boyds’ evaluation of its excess and obsolete inventories.

• Under the requirements of SFAS No.142, “Goodwill and Other Intangible Assets”, and SFAS No.144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, Boyds assesses the potential impairment of identifiable intangibles, long-lived assets and acquired goodwill whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In performing this evaluation, the Company evaluates current and future economic and business trends to develop business forecasts of future performance and related cash flows. Such estimates require the use of judgment and numerous subjective assumptions. Based on Boyds’ evaluation as of January 1, 2004, there was no impairment of goodwill, identifiable intangibles or long-lived assets.

• Boyds has various stock-based employee compensation plans. The Company accounts for those plans under the recognition and measurement principles of APB Opinion No. 25, “Accounting for Stock Issued to Employees”, and related Interpretations. Under this method, compensation cost is the excess, if any, of the quoted market price of the stock at the grant date or other measurement date over the amount an employee must pay to acquire the stock. No stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant.

FACTORS WHICH AFFECT BOYDS’ RESULTS OF OPERATIONS

Seasonality

Boyds receives orders throughout the year and generally ships merchandise out on a first-in, first-out basis. In anticipation of the holiday season, 60% of orders are placed between May and October. The remaining 40% of orders are placed between November and April. Boyds does not have the significant seasonal variation in its orders that it believes is experienced by many other giftware and collectibles companies. Boyds does not build a large receivables balance relative to sales because it typically does not offer its customers long payment terms or dating programs.

Foreign Exchange

The dollar value of Boyds’ assets located abroad is not significant. Boyds’ sales are primarily denominated in United States dollars and, as a result, are not subject to changes in exchange rates.

Boyds generally pays for its products in United States dollars. However, Boyds’ cost of such products fluctuates with the value of the Chinese renminbi because Boyds imports most of its products from manufacturers in China. Boyds’ costs could be adversely affected on a short-term basis if the Chinese renminbi appreciates significantly relative to the United States dollar. Conversely, its costs would be favorably affected on a short-term basis if the Chinese renminbi depreciates significantly relative to the United States dollar. While Boyds does not do so now, in the future, Boyds may, from time to time, enter into foreign exchange contracts or prepay inventory purchases as a partial hedge against currency fluctuations. Differences between the amounts of such contracts and costs of specific material purchases are included in inventory and cost of sales. Boyds intends to manage foreign exchange risks to the extent appropriate.

Boyds has growing sales operations based in Europe and Canada, but at this time Boyds does not expect any significant impact due to fluctuations in the Euro , the British Pound or the Canadian dollar.

RESULTS OF OPERATIONS

Net sales consist of wholesale and retail sales of our products, net of sales discounts, product returns and allowances, collectors club sales generated from Boyds’ collectors club and royalty income from licenses held by Boyds. Wholesale sales are primarily made on a purchase order basis. Revenue associated with sales is recognized when title transfers to the customer, or upon completion of a retail transaction.

Cost of goods sold consists of product costs, freight and warehousing costs. Selling, general and administrative expenses include overhead, selling and marketing costs, administration and professional fees.

The following table sets forth the components of net income as a percentage of net sales for the periods indicated:

	Quarter Ended March 31,
	2003		2004

Net sales	100.0	%	100.0	%
Gross profit	63.7	%	60.3	%
Selling, general and administrative expenses	23.5	%	37.7	%
Income from operations	40.2	%	22.6	%
Other income/(expenses), net	0.0	%	-0.2	%
Interest expense	4.3	%	4.2	%
Provision for income taxes	13.2	%	7.6	%
Net income	22.7	%	10.6	%

Executive Summary

In the first quarter of 2004, the Company’s net sales decline was primarily attributed to the wholesale segment, and was consistent with the trend that was experienced in 2003. The Company believes that results associated with several of its product and sales interventions in the wholesale business that were implemented during the first quarter of 2004 will begin to translate into sales during the second and third quarters. As an initial indication of the success of these interventions the Company’s bookings (cancelable orders) have seen a dramatic slowing in the negative trend from a negative 25% to a negative 3-5%. The efforts that have driven this improvement include our focus on giftability, such as our new Razz-bearies^TM and Bears & Friends^TM lines, as well as the early success of our NASCAR licensed plush collection, which ships to stores in May. We are also working to focus our sales efforts on higher-traffic channels, and have made key progress to this end. The Company’s retail store experienced a decline in net sales of 5% due to a decline in customer traffic associated with the Company’s choice to move promotional events to months with higher traffic and to inclement weather. The first quarter amounts to only 13% of annual retail sales and it is anticipated that this shortfall will be overcome by the end of the year.

During the quarter the Company’s net income decreased by $5.2 million to $2.8 million. This decrease was caused by the reduction in sales, increased SG&A costs surrounding the national sales force and management overhead costs in the retail segment. In addition to the sales initiatives that the Company put into place in the fourth quarter of 2003, the Company is working to find additional efficiencies in its SG&A operating model that would result in additional cost savings.

Three Months Ended March 31, 2004 vs. Three Months Ended March 31, 2003

Net sales decreased $8.8 million, or 25%, to $26.3 million in the first quarter of 2004 from $35.1 million for the first quarter of 2003. Sales of Boyds’ plush products decreased $7.6 million, or 35%, resin product sales decreased $1.2 million, or 13%, and other product sales increased $0.1 million, or 2%. As a percentage

of net sales for the quarter, plush products represented 54%, resin products represented 31%, and other products represented 15%.

Wholesale net sales declined $8.7 million in the quarter, or 26%, to $24.2 million in 2004 from $32.9 million in 2003. Retail net sales declined $0.1 million to $2.1 million in 2004 from $2.2 million in 2003. Wholesale revenues continued to decline at the same trend experienced in late 2003. A significant portion of this decline can be attributed to the slowing sales in the Company’s core fashion family plush product line. Sales in this product line are suffering from the overall declining sales in collectible stores and the slowness with which the Company was able to attract new collectors.

Gross profit decreased $6.5 million, or 29%, to $15.9 million in the first quarter of 2004 from $22.4 million for the first quarter of 2003. Gross profit as a percentage of net sales decreased to 60% for the quarter from 64% for the same period in 2003. The dollar and the percentage decrease can be attributed to the decrease in sales, an increase in the charge for capitalization of inventory, and an increase in the transportation costs of shipments. Wholesale gross profit decreased by $6.3 million, or 30%, to $14.4 million in 2004 from $20.7 million in 2003. Retail gross profit decreased by $0.2 million, or 12%, to $1.5 million in 2004 from $1.7 million in 2003.

SG&A expense increased $1.6 million, or 19%, to $9.9 million in the first quarter of 2004 from $8.3 million for the first quarter of 2003. SG&A as a percent of net sales increased to 38% for the quarter from 24% for the same period in 2003. The dollar and percentage increases in SG&A expenses were primarily a result of fully staffing the national sales force, a reduction in the benefit received from the reversal of bad debt expense, and management overhead costs in the retail segment.

Income from operations declined $8.1 million, or 58%, to $6.0 million in the first quarter of 2004 from $14.1 million for the first quarter of 2003. Income from operations as a percentage of net sales declined to 23% for the quarter from 40% for the same period in 2003. The dollar decline and the decline in the percentage of net sales were primarily attributable to the decline in sales, operational costs of the national sales force and management overhead costs in the retail segment.

Total interest expense declined $0.4 million, or 27%, to $1.1 million in the first quarter of 2004 from $1.5 million for the first quarter of 2003. Total interest expense as a percentage of net sales remained flat at 4% for the quarter as compared to the same period in 2003. The dollar decline was due to the reduction of debt from the use of excess cash.

Provision for income taxes decreased $2.6 million, or 57%, to $2.0 million in the first quarter of 2004 from $4.6 million for the first quarter of 2003. The dollar decline was due to decreased sales and increased operational costs associated with the national sales force and management overhead costs in the retail segment. These were partially offset by a settlement notice from the State of Pennsylvania received in the first quarter of 2003 regarding a franchise tax benefit of approximately $0.9 million relating to the tax year 2000. The effective tax rate for the quarters ended March 31, 2003 and 2004 was 39.6% and 41.0%, respectively.

Net income declined $5.2 million, or 65%, to $2.8 million in the first quarter of 2004 from $8.0 million for the first quarter of 2003. Net income as a percent of sales decreased to 11% for the quarter from 23% for the same period in 2003. The dollar decline and the decline in the percentage of net sales were due primarily to the decline in sales, the increased costs associated with the national sales force, and increased management overhead costs in the retail segment.

Liquidity and Capital Resources

Boyds’ primary sources of liquidity are cash flow from operations and borrowings under its credit agreement, which includes a revolving credit facility. Boyds’ primary uses of cash are to fund working capital

requirements and to service debt. Cash balances remained constant at $4.2 million in the first three months of 2004 as compared to the balances at December 31, 2003.

Operating Activities

Cash provided by operating activities decreased $6.4 million, or 54%, to $5.4 million in the first three months of 2004 from $11.8 million for the first three months of 2003. The cash flow decrease was primarily attributable to the decrease in sales and the additional costs associated with the national sales force.

Investing Activities

Capital and investment expenditures totaled $1.9 million in the first three months of 2004 as compared to $0.5 million in the first three months of 2003. This increase in expenditures was a result of construction costs of $1.6 million on the Boyds Bear Country^TM store in Pigeon Forge, Tennessee.

Financing Activities

In connection with the recapitalization in 1998, Boyds issued 9% Senior Subordinated Notes due 2008 in an amount of $165.0 million and entered into a credit agreement providing for a $325.0 million senior secured term loan, consisting of tranche A and tranche B, and a senior secured revolving credit facility providing for borrowings up to $40.0 million. As of March 31, 2004, Boyds has repaid $130.6 million of the notes, leaving a balance outstanding of $34.4 million. Boyds has repaid $286.5 million of the term loans under the credit agreement, leaving a balance outstanding of $38.5 million as of March 31, 2004. Boyds has reduced its total debt by $24.8 million in the past twelve months.

On April 21, 2004, the Company paid $10.5 million of the remaining balance of the Tranche A Term Loan. This payment was partially funded by using $9.0 million of the Company’s revolving credit facility, with the remainder of $1.5 million coming from excess cash provided from operating activities.

The revolving credit facility provides loans in an aggregate amount of up to $40.0 million. Boyds had no borrowings outstanding under the revolving credit facility as of March 31, 2004. The revolving credit facility will be available to fund the working capital needs of Boyds. Boyds utilized $9.0 million of the revolving credit facility to make its scheduled bank debt payment in April 2004. Borrowings under the credit agreement bear interest at a rate per annum equal to a margin over either a base rate or LIBOR, at Boyds’ option. The revolving credit facility commitment will terminate on April 21, 2005. Effective April 21, 2000, the tranche A term loan is being amortized over six years. The credit agreement contains customary covenants and events of default, including substantial restrictions on Boyds’ ability to declare dividends or make distributions. Boyds is in compliance with all applicable covenants as of March 31, 2004 and the Company believes that based on its future earnings it will also be in compliance with all of its debt covenants. The term loans are subject to mandatory prepayment with the proceeds of certain asset sales and a portion of Boyds’ excess cash flow, as defined in the credit agreement.

On February 17, 2000, Boyds announced that its Board of Directors had approved the repurchase of 3.0 million shares of the Company’s common stock. As of March 31, 2004, Boyds had repurchased 344,730 shares of common stock pursuant to the Stock Repurchase Program for an aggregate amount of approximately $2 million. These repurchases were financed out of operating cash flow. Any future repurchases under the Stock Repurchase Program are expected to be financed similarly or by utilizing borrowings under the revolving credit facility. Boyds plans to make such purchases from time to time in the open market or in private transactions.

On July 27, 2000, Boyds announced that its Board of Directors had approved a repurchase program for its outstanding 9% Series B Senior Subordinated Notes due 2008. As of March 31, 2004, Boyds had repurchased $64.6 million of its notes pursuant to the Bond Repurchase Program. These repurchases were

financed out of operating cash flow. Any future repurchases under the Bond Repurchase Program are expected to be financed similarly or by utilizing borrowings under the revolving credit facility. Boyds plans to make such purchases from time to time in the open market or in private transactions.

Management believes that cash flow from operations and availability under the revolving credit facility will provide adequate funds for Boyds’ foreseeable working capital needs, planned capital expenditures, debt service obligations, the Stock Repurchase Program and the Bond Repurchase Program. Any future acquisitions, joint ventures or other similar transactions may require additional capital and there can be no assurance that any such capital will be available to Boyds on acceptable terms, or at all. Boyds’ ability to fund its working capital needs, planned capital expenditures and scheduled debt payments, to refinance indebtedness and to comply with all of the financial covenants under its debt agreements depends on its future operating performance and cash flow, which in turn are subject to prevailing economic conditions and to financial, business and other factors, some of which are beyond Boyds’ control. The Company is actively working to refinance its existing debt and plans to have a new debt structure in place by December 31, 2004.

RISK FACTORS WHICH MAY AFFECT FUTURE PERFORMANCE

Dependence on two independent buying agencies. Substantially all of the products that Boyds sells are purchased through two independent buying agencies. One buying agency is located in Hong Kong, and the other buying agency is located in the United States. These two buying agencies, which contract with a total of 19 independent manufacturers, account for approximately 90% of Boyds’ total imports. These two buying agencies also perform a number of functions for Boyds, including collaborating in Boyds’ product design and development process. As a result, Boyds is substantially dependent on these buying agencies and the manufacturers with which they contract. Boyds does not have long-term contracts with either of its primary buying agencies. Boyds believes that the loss of either of its primary buying agencies would (1) have a material adverse effect on its financial condition and results of operations, (2) cause disruptions in its orders, (3) affect the quality of its products, and (4) possibly require it to select alternative manufacturers.

Potential economic and political risks of China. All of Boyds’ significant manufacturers are located in China. Although Boyds has identified alternate manufacturers which could meet its quality and reliability standards at similar costs in China and in other countries, the loss of any one or more of its manufacturers could have a material adverse effect on its business. Because Boyds relies primarily on Chinese manufacturers, it is subject to the following risks that could restrict its manufacturers’ ability to make its products or increase its manufacturing costs: (1) economic and political instability in China; (2) transportation

delays; (3) restrictive actions by the Chinese government; (4) the laws and policies of the United States affecting importation of goods, including duties, quotas and taxes; (5) Chinese trade and tax laws. In addition, Boyds’ business could be adversely affected if the Chinese renminbi appreciates significantly relative to the United States dollar due to the cost of its products fluctuating with the value of the Chinese renminbi.

Potential adverse trade regulations and restrictions. Boyds does not own or operate any manufacturing facilities. Instead, Boyds imports substantially all of its retail products from independent foreign manufacturers, primarily in China. As a result, substantially all of its products are subject to United States Customs Service duties and regulations. These regulations include requirements that Boyds disclose information regarding the country of origin on its products, such as “Handmade in China.” Within its discretion, the United States Customs Service may also set new regulations regarding the amount of duty to be paid, the value of merchandise to be reported or other customs regulations relating to Boyds’ imported products. Failure to comply with these regulations may result in the imposition of additional duties or penalties or forfeiture of merchandise.

The countries in which Boyds’ products are manufactured may impose new quotas, duties, tariffs or other charges or restrictions. This could adversely affect Boyds’ financial condition, results of operations or its ability to continue to import products at current or increased levels. In particular, Boyds’ costs could increase,

or the mix of countries from which Boyds imports its products may be changed, if the Generalized System of Preferences program is not renewed or extended each year. The Generalized System of Preferences program allows selected products of beneficiary countries to enter the United States duty free. In addition, if countries that are currently accorded “Most Favored Nation” status by the United States, such as China, cease to have such status, Boyds could be adversely affected because the cost of importing from such countries may increase. Boyds cannot predict what regulatory changes may occur or the type or amount of any financial impact these changes may have on it in the future.

Changing consumer tastes. The demand for Boyds’ products may be quickly affected by changing consumer tastes and interests. Boyds’ results of operations depend substantially upon its ability to continue to conceive, design, source and market new pieces and upon continuing market acceptance of its existing and future product lines. If Boyds fails or is significantly delayed in introducing new pieces to its existing product lines or creating new product line concepts or if its new products do not meet with market acceptance, its results of operations may be impaired. A number of companies who participate in the giftware and collectibles industries are part of large, diversified companies that have greater financial resources than Boyds, offer a wider range of products and may be less affected by changing consumer tastes.

Potential infringement of Boyds’ intellectual property. Boyds believes that its trademarks and other proprietary rights are material to its success and competitive position. Accordingly, Boyds devotes resources to the establishment and protection of its intellectual property on a worldwide basis. The actions Boyds takes to establish and protect its trademarks and other proprietary rights may not be adequate to protect its intellectual property or to prevent imitation of its products by others. Moreover, while Boyds has not experienced any proprietary license infringements or legal actions that have had a material impact on its financial condition or results of operations, other persons have, and will likely in the future, assert rights in, or ownership of, its trademarks and other proprietary rights. Boyds may not be able to successfully resolve such conflicts. In addition, the laws of foreign countries may not always protect intellectual property to the same extent as do the laws of the United States.

Required debt payments. Boyds has significant debt on its balance sheet. If the Company does not refinance its existing debt and/or does not generate sufficient cash flows, the Company may have difficulty making its required debt payments in the future.

EFFECTS OF RECENTLY ISSUED ACCOUNTING STANDARDS

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities.” The Interpretation clarifies the application of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” to certain entities in which the equity investors do not have the characteristics of a controlling financial interest or do not have sufficient equity at risk for the entity to finance its activities without additional subordinated financial support from other parties. The Interpretation applies immediately to variable interest entities created after January 31, 2003, or in which the Company obtains an interest after that date. The interpretation is effective July 1, 2003 to variable interest entities in which the Company has assessed the impact of adopting this Interpretation. The adoption of this standard did not have a material impact on the financial position, results of operations or cash flow of Boyds.

RELATED PARTY TRANSACTIONS

FORWARD LOOKING STATEMENTS

Some of the matters discussed in this report include forward-looking statements. Statements that are predictive in nature, that depend upon or refer to future events or conditions or that include words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates” and similar expressions are forward-looking statements.

The forward-looking statements in this report are based on a number of assumptions and estimates, which are inherently subject to significant uncertainties and contingencies, many of which are beyond the control of Boyds, and reflect future business decisions that are subject to change. A variety of factors could cause actual results to differ materially from those anticipated in Boyds’ forward-looking statements, including: the effects of economic conditions; the inability to grow Boyds’ business as planned; the loss of either of Boyds’ two independent buying agencies or any of its manufacturing sources; economic or political instability in the countries with which Boyds does business; changes to, or the imposition of, new regulations, duties, taxes or tariffs associated with the import or export of goods from or to the countries with which Boyds does business; and other risk factors that are discussed in this report and, from time to time, in other Securities and Exchange Commission reports and filings. One or more of the factors discussed above may cause actual results to differ materially from those expressed in or implied by the statements in this report.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of such statements. Boyds undertakes no obligation to publicly release the results of any revisions to these forward-looking statements that may be made to reflect events or circumstances after the date of this report, or the date of such statements, as the case may be, or to reflect the occurrence of unanticipated events.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Boyds faces minimal interest rate risk exposure in relation to its outstanding debt of $72.9 million at March 31, 2004. Of this amount, $38.5 million under the Credit Agreement is subject to interest rate fluctuations. A hypothetical 1% change in interest rates applied to the fair value of debt would not have a material impact on earnings or cash flows of the Company.

Boyds faces currency risk exposure that arises from translating the results of its European and Canadian operations that are denominated in the local currency of the Euro, the British Pound and the Canadian dollar, to the U.S. dollar. The currency risk exposure is not material as the operations of the European and Canadian subsidiaries do not have a material impact on the Company’s earnings.

Boyds also faces foreign exchange risks that arise from paying in United States Dollars for products that are manufactured in China. While it does not do so now, in the future Boyds may, from time to time, enter into foreign exchange contracts or prepay inventory purchases as a partial hedge against currency fluctuations. Differences between the amounts of such contracts and costs of specific material purchases are included in inventory and costs of sales. Boyds intends to manage foreign exchange risks to the extent appropriate.

Item 4. Controls and Procedures

Boyds maintains disclosure controls and procedures designed to ensure that it is able to collect the information it is required to disclose in the reports it files with the Securities and Exchange Commission (“SEC”), and to process, summarize and disclose this information within the time periods specified in the rules of the SEC. Boyds carried out an evaluation of its disclosure controls and procedures, under the supervision and with the participation of the Chief Executive and Chief Financial Officers, as of a date within 90 days of the filing date of this report, and based on such evaluation, Boyds’ Chief Executive and Chief Financial Officers believe that these disclosure controls and procedures are effective to ensure that Boyds is able to collect, process and disclose the information it is required to disclose in the reports it files with the SEC within the required time periods.

There have been no significant changes in Boyds’ internal controls or in other factors that could significantly affect these controls, subsequent to the date Boyds’ Chief Executive and Chief Financial Officers completed their evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

Boyds is involved in various legal proceedings, claims and governmental audits in the ordinary course of business. In the opinion of management, the ultimate disposition of these proceedings, claims and audits will not have a material adverse effect on the financial position, results of operations, and cash flows of Boyds.

Item 2. Changes in Securities and Use of Proceeds—None

Item 3. Defaults Upon Senior Securities—None

Item 4. Submission of Matters to a Vote of Security Holders—None

Item 5. Other Information

Item 6. Exhibits and Reports on Form 8-K

(a) Exhibits – See Index to Exhibits

(b) Reports on Form 8-K – None

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.

Date: May 14, 2004

The Boyds Collection, Ltd.


	By:	/s/ Jan L. Murley
	Name:	Jan L. Murley
	Title:	Chief Executive Officer


	By:	/s/ Joseph E. Macharsky
	Name:	Joseph E. Macharsky
	Title:	Chief Financial Officer

Index to Exhibits

Exhibit No.		Description

3.1		Amended and Restated Articles of Incorporation of Boyds (incorporated by reference from Exhibit 3.1 of Amendment No. 1 to Boyds’ Registration Statement on Form S-1, filed on February 8, 1999, File No. 333-69535).
3.2		Amended and Restated Bylaws of Boyds (incorporated by reference from Exhibit 3.2 of Amendment No. 1 to Boyds’ Registration Statement on Form S-1, filed on February 8, 1999, File No. 333-69535)
4.1		Indenture, dated as of April 21, 1998 between Boyds and The Bank of New York, as trustee (incorporated by reference from Exhibit 4.3 of Amendment No. 1 to Boyds’ Registration Statement on Form S-1, filed on February 8, 1999, File No. 333-69535).
4.2		Form of 9% Senior Subordinated Note due 2008 (included in Exhibit 4.1)
4.3		Form of 9% Series B Senior Subordinated Note due 2008 (included in Exhibit 4.1)
10.1		Credit Agreement, dated as of April 21, 1998, among Boyds, the several lenders from time to time parties thereto, DLJ Capital Funding, Inc., The Fuji Bank, Limited, New York Branch, and Fleet National Bank (incorporated by reference from Exhibit 10.1 of Amendment No. 3 to Boyds’ Registration Statement on Form S-1, filed on February 23, 1999, File No. 333-69535).
10.2		Forms of Notes evidencing loans under the Credit Agreement (included in Exhibit 10.1).
10.3		1998 Option Plan for Key Employees of Boyds (incorporated by reference from Exhibit 10.3 of Amendment No. 1 to Boyds’ Registration Statement on Form S-1, filed on February 8, 1999, File No. 333-69535).
10.4		1999 Option Plan for Key Employees of Boyds (incorporated by reference from Exhibit 4.3 of Boyds’ Registration Statement on Form S-8, filed on January 18, 2002, File No. 333-77022).
10.5		2000 Option Plan for Key Employees of Boyds (incorporated by reference from Exhibit 4.4 of Boyds’ Registration Statement on Form S-8, filed on January 18, 2002, File No. 333-77022).
10.6		2001 Option Plan for Key Employees of Boyds (incorporated by reference from Exhibit 4.5 of Boyds’ Registration Statement on Form S-8, filed on January 18, 2002, File No. 333-77022).
10.7		Lease Agreement for Boyds’ McSherrystown, Pennsylvania facility (incorporated by reference from Exhibit 10.4 of Amendment No. 3 to Boyds’ Registration Statement on Form S-1, filed on February 23, 1999, File No. 333- 69535).
10.8		Employment Agreement dated January 28, 2000 between Jean-Andre Rougeot and Boyds (incorporated by reference from Exhibit 10.8 of Boyds’ Annual Report on Form 10-K, filed on March 28, 2002, File No. 001-14843).
10.9		Form of Employment Agreement dated October 21, 2003 between Jan L. Murley and Boyds (incorporated by reference from Exhibit 10.9 of Boyds’ Annual Report on Form 10-K, filed on March 29, 2004, File No. 001-14843).
31.1		Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) and 15d-14(a) *
31.2		Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) and 15d-14(a) *
32.1		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (This certification is being furnished in accordance with the Sarbanes-Oxley Act of 2002 and Commission Release No. 34-47551 and shall not be deemed “filed” with the Commission for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the

		Securities Act of the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.)*
32.2		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (This certification is being furnished in accordance with the Sarbanes-Oxley Act of 2002 and Commission Release No. 34-47551 and shall not be deemed “filed” with the Commission for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.)*

* Filed herewith

For the Quarterly Period Ended March 31, 2004

For the Transition period from to

Maryland

52-1418730

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SIGNATURES