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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

          For the quarterly period ended April 30, 2003

or

          For the transition period from                                      to                                     

Commission File Number 0-24026

MAXWELL SHOE COMPANY INC.

(Exact name of registrant as specified in its charter)

(617) 364-5090

(Registrant’s telephone number, including area code)

None

(Former name, former address and former fiscal year, if changed since last report.)

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  þ  No  ¨

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).  Yes  þ  No  ¨

APPLICABLE ONLY TO CORPORATE ISSUERS:

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

Shares of common stock outstanding at June 10, 2003:

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MAXWELL SHOE COMPANY INC.

CONSOLIDATED BALANCE SHEETS

(Unaudited In Thousands—except per share amounts)

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MAXWELL SHOE COMPANY INC.

STATEMENTS OF INCOME

(Unaudited–In Thousands Except Per Share Amounts)

2

MAXWELL SHOE COMPANY INC.

STATEMENTS OF CASH FLOW

(Unaudited–In Thousands)

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MAXWELL SHOE COMPANY INC.

NOTES TO FINANCIAL STATEMENTS

(Unaudited)

April 30, 2003

The accompanying unaudited financial statements of Maxwell Shoe Company Inc. (the “Company”) have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair presentation have been included. The results of the interim periods presented herein are not necessarily indicative of the results to be expected for any other interim period or the full year. These financial statements should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended October 31, 2002.

Basic income per share is computed based on the weighted average number of common shares outstanding during the period. Diluted income per share includes the effects of applying the treasury stock method to outstanding stock options.

On April 18, 2002, the Board of Directors approved a 3 for 2 stock split of the Class A Common Stock of Maxwell Shoe Company Inc. Additional stock certificates were mailed on May 17, 2002 to stockholders of record at the close of business on May 3, 2002. Cash was paid in lieu of fractional shares. All per share and outstanding share data presented in this Quarterly Report has been adjusted to take into account the 3 for 2 stock split.

The presentation of share data and the computations of basic and diluted earnings per share have been adjusted retroactively for all periods presented.

During December 2002, the FASB issued Statement of Financial Accounting Standards No. 148 (“SFAS 148”), “Accounting for Stock-Based Compensation—Transition and Disclosure an Amendment of FASB Statement No.123”. SFAS 148 amends SFAS 123 to provide alternative methods of transition or a voluntary change to the fair value-based method of accounting for stock-based employee compensation. In addition, SFAS 148 amends the disclosure requirements of SFAS 123 to require more prominent disclosures in both annual and interim financial statements regarding the method of accounting for stock-based employee compensation and the effect of the method used on reported results. We adopted the disclosure provision of SFAS 148 and will continue to follow APB 25 in accounting for our employee stock options. The adoption of SFAS 148 did not have any impact on our operating results or financial position.

We account for stock-based awards to employees and directors using the intrinsic value method of accounting in accordance with Accounting Principles Board Opinion No. 25 (“APB 25”), “Accounting for Stock Issued to Employees”. Under the intrinsic value method, when the exercise price of employee stock options equals the market price of the underlying stock on the date of grant, no compensation expense is recognized in the consolidated statements of operations. Restricted stock and discounted stock option awards, which are granted at less than fair market value, result in the recognition of deferred compensation. Deferred compensation is shown as a reduction of shareholders’ equity and is amortized to operating expenses over the vesting period of the stock award. We amortize deferred compensation for each vesting layer of a stock award using the straight-line method.

Based on the additional disclosure requirements under SFAS 148 the following table is a reconciliation of net earnings and earnings per share had we adopted the fair value recognition provisions of SFAS 123.

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The fair value of this stock compensation used to calculate the pro forma net income and earnings per share amounts above was estimated using the Black-Scholes options pricing model.

Item 2.     Management’s Discussion and Analysis of Financial

             Condition and Results of Operations

Results of Operations

The following table sets forth net sales by product line or category of business:

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Three Months Ended April 30, 2003 Compared to Three Months Ended April 30, 2002

Net sales were $57.8 million for the three months ended April 30, 2003 compared to $54.3 million for the same period in the prior year, an increase of 6.5%. The net sales increase was due to a 10.7% increase in net sales of AK Anne Klein footwear, a 12.9% increase in net sales of Sam & Libby, a 17.1% increase in net sales of Mootsies Tootsies, a 27% increase in net sales of Dockers Footwear for Women, a 19.0% increase in net sales of Joan & David and was offset by a decrease in private label net sales of 46.4%.

Gross profits in the second quarter of fiscal 2003 were $16.3 million compared to $15.4 million in the second quarter of fiscal 2002, or 28.2% of net sales as compared to 28.4% for the same quarter in 2002.

Selling, general and administrative expenses decreased $0.6 million during the second quarter of fiscal 2003 due to reduced advertising expenses during the quarter offset by volume related expenses. As a percent of net sales, selling, general and administrative expenses for the second quarter of fiscal 2003 were 16.8% compared to 19.1% in the same period in 2002.

The Company is recording an anticipated effective annual income tax rate of 40.0% for fiscal year 2003, compared to 34.25% for fiscal 2002 as of April 30. The lower rate used in fiscal 2002 was due to investment in tax free instruments and tax benefits realized from the exercise of stock options. Income tax expenses for the quarter ended April 30, 2002 were adjusted to reflect the annual rate.

Six Months Ended April 30, 2003 Compared to Six Months ended April 30, 2002

Net sales were $103.5 million for the six months ended April 30, 2003 compared to $92.9 million for the same period in the prior year, an increase of 11.4%. Net sales increased in the six months ended April 30, 2003 by 23.8% in the net sales of AK Anne Klein footwear, 9.6% in the net sales of Mootsies Tootsies, 34.4% in the net sales of Dockers Footwear for Women, 43.8% in net sales of Joan & David and were offset by net sales decreases of 4.5% of Sam & Libby and 12.1% of private label footwear.

Gross profits in the first six months of fiscal 2003 were $28.7 million as compared to $25.8 million in the first six months of fiscal 2003. The gross profit as a percentage of net sales was 27.7% of net sales for both the first six months of fiscal 2002 and 2003.

Selling, general and administrative expenses increased by $0.6 million during the first half of fiscal 2003 due to expenses attributable to volume related expenses in the current period. As a percent of net sales, selling, general and administrative expenses for the first six months of fiscal 2003 were 17.8% compared to 19.2% in the same period in 2002.

The Company is recording an anticipated effective annual income tax rate of 40.0% for fiscal year 2003, compared to 34.25% for fiscal 2002 as of April 30. The lower rate used in fiscal 2002 was due to investment in tax free instruments and tax benefits realized from the exercise of stock options.

At April 30, 2003 and 2002, the Company had unfilled customer orders (backlog) of $89.8 million and $87.4 million respectively, an increase of 2.7%. The backlog at a particular time is affected by a number of factors, including seasonality and the scheduling of manufacturing and shipment of products. Orders generally may be canceled by customers without financial penalty. Accordingly, a comparison of backlog from period to period is not necessarily meaningful and may not be indicative of eventual actual shipments to customers. The Company expects that substantially all of its backlog at April 30, 2003 will be shipped within six months from such date.

Liquidity and Capital Resources

The Company has relied upon internally generated cash flows from operations to finance its operations and expansion. Net cash provided by operating activities totaled approximately $8.3 million in the six month period ended April 30, 2003, as compared to net cash provided of $15.6 million for the same period in 2002. The decrease in cash provided by operations in the first six months of fiscal 2003 was caused by stabilized levels of inventory and accounts receivable as compared to the prior year. Working capital was $132.5 million at April 30, 2003 as compared to $124.1 million at October 31, 2002. The increase is due primarily to the increase in cash and cash equivalents. Working capital may vary from

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time to time as a result of seasonal requirements, the timing of early factory shipments and the Company’s in-stock position, which requires increased inventories, and the timing of accounts receivable collections.

The Company currently has in place with a financial institution a $40.0 million discretionary demand credit facility. A portion of the revolving credit facility can be utilized to issue letters of credit to guarantee payment of the Company’s purchases of footwear manufactured overseas. As of April 30, 2003, total outstanding letters of credit were $23.5 million, and $16.5 million was available for future borrowings.

The Company from time to time enters into forward exchange contracts in anticipation of future purchases of inventory denominated in foreign currency, principally the Euro. As of April 30, 2003 the Company had $2.5 million in forward exchange contracts outstanding for the period of May through November 2003.

On February 24, 2003, the Company announced the approval by its Board of Directors of the repurchase of up to $25 million of the Company’s Class A Common Stock. As of April 30, 2003, no shares have been repurchased by the Company.

The Company anticipates that it will be able to satisfy its cash requirements for the remainder of fiscal 2003, including its expected growth, primarily with existing cash balances and cash flow from operations.

“Forward-looking statements,” within the meaning of the Private Securities Litigation Reform Act of 1995 (“the Act”), include certain written and oral statements made, or incorporated by reference, by the Company or its representatives in this report, other reports, filings with the Securities and Exchange Commission (“the S.E.C.”), press releases, conferences, or otherwise. Such forward-looking statements include, without limitation, any statement that may predict, forecast, indicate, or imply future results, performance, or achievements, and may contain the words “believe,” “anticipate,” “expect,” “estimate,” “intend,” “plan,” “project,” “will be,” “will continue,” “will likely result,” or any variations of such words with similar meaning. These statements are not guarantees of future performance and are subject to certain risks, uncertainties and assumptions that are difficult to predict; therefore, actual results may differ materially from those expressed or forecasted in any such forward-looking statements. Investors should carefully review the risk factors set forth in other reports or documents the Company files with the S.E.C., including Forms 10-Q, 10-K and 8-K.

Some of the other risks and uncertainties that should be considered include, but are not limited to, the following: international, national and local general economic and market conditions; the inability to source the Company’s products because of adverse political or economic factors or the imposition of trade or duty restrictions; changing consumer preferences; changing fashion trends; intense competition among other footwear brands; demographic changes; risk of the Company’s licensors of trademarks or other intellectual property rights filing bankruptcy and potentially rejecting license agreements to which the Company is a party; popularity of particular designs and products; seasonal and geographic demand for the Company’s products; fluctuations and difficulty in forecasting operating results, including, without limitation, the ability of the Company to continue, manage or forecast its growth and inventories; risk of unavailability or price increase in raw materials needed to make the Company’s products; new product development and commercialization; the ability to secure and protect trademarks; performance and reliability of products; customer service; adverse publicity; the loss of significant customers or suppliers; dependence on distributors, buying agents and independent contractors; increased cost of freight and transportation to meet delivery deadlines; changes in business strategy or development plans; potential disruption in supply chain or customer purchasing habits due to health concerns relating to severe acute respiratory syndrome or other related illnesses; general risks of doing business outside the United States, including without limitation, import duties, tariffs, quotas and political and economic instability; changes in government regulations; liability and other claims asserted against the Company; the ability to attract and retain qualified personnel; the risk of the Company’s customers filing bankruptcy and other factors referenced or incorporated by reference in this report and other reports.

The Company operates in a very competitive and rapidly changing environment. New risk factors can arise and it is not possible for management to predict all such risk factors, nor can it assess the impact of all such risk factors on the Company’s business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements.

Investors should also be aware that while the Company does, from time to time, communicate with securities analysts, it is against the Company’s policy to disclose to them any material non-public information or

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other confidential commercial information. Accordingly, investors should not assume that the Company agrees with any statement or report issued by any analyst irrespective of the content of the statement or report.

Furthermore, the Company has a policy against issuing or confirming financial forecasts or projections issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not the responsibility of the Company.

The Company undertakes no obligation to release publicly the results of any revisions to these forward looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

Item 3. Quantitative and Qualitative Disclosure About Market Risk

The Company does not believe that there is any material market risk exposure with respect to derivative or other financial instruments that would require disclosure under this item. The Company’s cash is held in checking accounts or highly liquid investments with original maturities of three months or less.

Item 4. Controls and Procedures

(a) Evaluation of Disclosure Controls and Procedures. The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”). Based on such evaluation, such officers have concluded that, as of the Evaluation Date, the Company’s disclosure controls and procedures are effective in alerting them on a timely basis to material information relating to the Company (including its consolidated subsidiaries) required to be included in the Company’s periodic filings under the Exchange Act.

(b) Changes in Internal Controls. Since the Evaluation Date, there have not been any significant changes in the Company’s internal controls or in other factors that could significantly affect such controls.

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PART II. OTHER INFORMATION

Item 1: Legal Proceedings.

None.

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.

Item 5: Other Information.

None.

Item 6: Exhibits and Reports on Form 8-K:

10.1    Employment Agreement dated as of August 31, 2003 between Maxwell Shoe Company Inc. and James J.                      Tinagero

99.1    Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

None

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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.

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CERTIFICATION

Certification of Chief Executive Officer

I, Mark J. Cocozza, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Maxwell Shoe Company Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

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CERTIFICATION

Certification of Chief Financial Officer

I, Richard J. Bakos, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Maxwell Shoe Company Inc.;

2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4. The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:

a) designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;

b) evaluated the effectiveness of the registrant’s disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the “Evaluation Date”); and

c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;

5. The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent function):

a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant’s ability to record, process, summarize and report financial data and have identified for the registrant’s auditors any material weaknesses in internal controls; and

b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls; and

6. The registrant’s other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.

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EXHIBIT INDEX

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