~~UNITED~~United States ~~STATES~~Securities ~~SECURITIES~~and ~~AND~~Exchange ~~EXCHANGE COMMISSION~~Commission

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

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

For the Quarterly Period Ended September 30, 2005

OR

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

~~ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF~~ THE ~~SECURITIES~~BOYDS ~~EXCHANGE~~COLLECTION, ~~ACT OF 1934~~LTD.

~~For~~(Exact ~~the~~Name ~~Quarterly~~of ~~Period~~Registrant as ~~Ended~~Specified ~~March~~in ~~31,~~its ~~2005~~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)

~~oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15~~(d717) ~~OF THE SECURITIES EXCHANGE ACT OF 1934.~~ 633-9898

~~For~~(Registrant’s ~~the~~Telephone Number, ~~Transition~~Including ~~period~~Area ~~from to~~Code)

~~Commission~~Indicate by check ~~File~~mark ~~Number:~~whether ~~001-14843~~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 o No x

~~THE~~Indicate ~~BOYDS~~by ~~COLLECTION~~check mark whether the Registrant is a large accelerated filer, ~~LTD~~an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer” in Rule 12b-2 of the Exchange Act.

~~(Exact~~Large ~~Name of~~accelerated ~~Registrant~~filer o Accelerated filer o Non-accelerated ~~as Specified in its Charter)~~filer x

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)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes o No x

~~(717)~~Indicate the ~~633-9898~~number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date:

(Registrant’s Telephone Number, Including Area Code)

Common Stock, par value $.0001 per share	59,008,133
(Class)	(Outstanding as of October 12, 2005)

~~Indicate~~THE ~~by check~~BOYDS 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)COLLECTION, ~~and (2) has been subject to such filing requirements for the past 90 days~~LTD. ~~Yes ý No o~~

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

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


PART I.	FINANCIAL INFORMATION

Item 1.	Financial Statements:

	Condensed Consolidated Balance Sheets as of December 31,
	2004 and September 30, 2005

	Condensed Consolidated Statements of Operations for the Three and Nine
	Months Ended September 30, 2004 and 2005

	Condensed Consolidated Statement of Stockholders’ Deficit
	for the Nine Months Ended September 30, 2005

	Condensed Consolidated Statements of Cash Flows for the
	Nine Months Ended September 30, 2004 and 2005

	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.	Disclosure Controls and Procedures

PART II.	OTHER INFORMATION

Item 1.	Legal Proceedings

Item 1A.	Risk Factors Which May Affect Future Performance

Item 2.	Unregistered Sales of Equity 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

	Signatures

	Index to Exhibits

Common Stock, par value $.0001 per share		59,008,133
(Class)		(Outstanding as of April 26, 2005)

PART I
FINANCIAL INFORMATION

~~THE~~Item ~~BOYDS~~1. ~~COLLECTION,~~Financial ~~LTD~~Statements.

~~TABLE~~THE OFBOYDS COLLECTION, ~~CONTENTS~~LTD. CONDENSED CONSOLIDATED BALANCE SHEETS As of December 31, 2004 and September 30, 2005 (Unaudited)

PART I.	FINANCIAL INFORMATION
		December 31, 2004			September 30, 2005
Item 1.	Financial Statements:
		(in thousands)
	Condensed Consolidated Balance Sheets as of December 31, 2004 and March 31, 2005
ASSETS
	Condensed Consolidated Statements of Income for the Three Months Ended March 31, 2004 and 2005
CURRENT ASSETS:
	Condensed Consolidated Statement of Stockholders’ Equity for the Three Months Ended March 31, 2005
Cash and cash equivalents		$	354		$	3,909
	Condensed Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2004 and 2005
Accounts receivable, less allowances of $2,390 at December 31, 2004, and $1,355 at September 30, 2005		8,581			13,833
	Notes to Condensed Consolidated Financial Statements
Inventory—primarily finished goods, less allowance for obsolete inventory of $2,719 at December 31, 2004, and $5,312 at September 30, 2005		13,462			14,052
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Inventory in transit		2,666			695
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Other current assets		854			850
Item 4.	Disclosure Controls and Procedures
Deferred income taxes (Note 10)		19,485			—
PART II.	OTHER INFORMATION
Total current assets		45,402			33,339
Item 1.	Legal Proceedings
PROPERTY AND EQUIPMENT - NET (Note 4)		35,081			32,466
Item 2.	Changes in Securities and Use of Proceeds
OTHER ASSETS:
Item 3.	Defaults Upon Senior Securities
Deferred debt issuance costs		645			3,525
Item 4.	Submission of Matters to a Vote of Security Holders
Deferred tax asset (Note 10)		145,435			—
Item 5.	Other Information
Other assets		2,997			435
Item 6.	Exhibits
Total other assets		149,077			3,960
	Signatures
TOTAL ASSETS		$	229,560		$	69,765
	Index to Exhibits
LIABILITIES AND STOCKHOLDERS’ EQUITY/(DEFICIT)
CURRENT LIABILITIES:
Accounts payable		$	4,420		$	5,417
Debt obligations (Note 7)		—			90,892
Accrued expenses		5,708			4,159
Income taxes payable		474			303
Interest payable		570			2,306
Total current liabilities		11,172			103,077
DEBT OBLIGATIONS (Note 7)		75,142			—
STOCKHOLDERS’ EQUITY/(DEFICIT):
Common stock (61,838 shares issued at December 31, 2004, and		(41,221		)	(41,254		)
September 30, 2005, respectively) and paid-in capital in excess of par
Accumulated other comprehensive loss		(407		)	139
Retained earnings		212,312			35,190
Less: Treasury shares at cost (2,834 at December 31, 2004, and
2,830 at September 30, 2005)		(27,438		)	(27,387		)
Total stockholders’ equity/(deficit)		143,246			(33,312		)
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY/(DEFICIT)		$	229,560		$	69,765

2See notes to condensed consolidated financial statements.

~~PART I~~3

~~FINANCIAL~~THE ~~INFORMATION~~BOYDS COLLECTION, LTD. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS For the Three and Nine Months Ended September 30, 2004 and 2005 (Unaudited)

Item 1. Financial Statements.

	Three Months Ended September 30,					Nine Months Ended September 30,
	2004		2005			2004		2005
	(in thousands, except per share amounts)

NET SALES	$	32,835	$	26,528		$	81,798	$	62,172
COST OF GOODS SOLD	12,960		11,794			32,144		31,118
GROSS PROFIT	19,875		14,734			49,654		31,054
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	11,556		9,828			33,247		30,615
IMPAIRMENT OF ASSETS (Note 4)	—		1,740			—		1,740
IMPAIRMENT OF GOODWILL (Note 5)	—		—			—		2,600
INCOME/(LOSS) FROM OPERATIONS	8,319		3,166			16,407		(3,901		)
OTHER INCOME (Note 6)	131		1,602			35		997

INTEREST EXPENSE:
Interest expense	1,071		2,957			3,093		7,929
Amortization of deferred debt issuance costs	76		367			241		922
TOTAL INTEREST EXPENSE	1,147		3,324			3,334		8,851
INCOME/(LOSS) BEFORE PROVISION FOR INCOME TAXES	7,303		1,444			13,108		(11,755		)
PROVISION FOR INCOME TAXES (Note 9)	2,836		(82		)	5,322		165,367
NET INCOME/(LOSS)	$	4,467	$	1,526		$	7,786	$	(177,122	)

EARNINGS/(LOSS) PER SHARE:
Basic Earnings Per Share—Net Income/(Loss)	$	0.08	$	0.03		$	0.13	$	(3.00	)
Diluted Earnings Per Share—Net Income/(Loss)	$	0.08	$	0.03		$	0.13	$	(3.00	)

~~THE~~See notes ~~BOYDS~~to ~~COLLECTION,~~condensed ~~LTD~~consolidated financial statements.

~~CONDENSED CONSOLIDATED BALANCE SHEETS~~4

AsTHE ofBOYDS COLLECTION, ~~December~~LTD. CONDENSED ~~31,~~CONSOLIDATED ~~2004~~STATEMENT ~~and~~OF ~~March~~STOCKHOLDERS’ 31EQUITY/(DEFICIT) For the Nine Months Ended September 30, 2005 (Unaudited)

Unaudtied

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

BALANCE, JANUARY 1, 2005	61,838	2,834		$	(41,221	)	$	(407	)	$	212,312		$	(27,438	)	$	143,246
Issuance of common stock		(4	)	(33		)							51			18
Other comprehensive income:
Foreign currency translation	—	—		—			546			—			—			546			$	546
Net loss	—	—		—			—			(177,122		)	—			(177,122		)	(177,122		)
Comprehensive loss	—	—		—			—			—			—			—			$	(176,576	)

BALANCE, September 30, 2005	61,838	2,830		$	(41,254	)	$	139		$	35,190		(27,387		)	$	(33,312	)

	December 31,				March 31,
	2004				2005
	(in thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	354			$	3,157
Accounts receivable, less allowances of $2,390 at December 31, 2004, and $2,147 at March 31, 2005	8,581				9,587
Inventory - primarily finished goods, less allowance for obsolete inventory of $2,719 at December 31, 2004, and $4,084 at March 31, 2005	13,462				15,325
Inventory in transit	2,666				320
Other current assets	854				828
Deferred income taxes	19,485				10,738
Total current assets	45,402				39,955
PROPERTY AND EQUIPMENT - NET (Note 4)	35,081				34,910
OTHER ASSETS:
Deferred debt issuance costs	645				4,068
Deferred tax asset	145,435				83,811
Other assets	2,997				416
Total other assets	149,077				88,295
TOTAL ASSETS	$		229,560		$	163,160
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$		4,420		$	2,518
Accrued expenses	5,708				4,669
Income taxes payable	474				103
Interest payable	570				2,026
Total current liabilities	11,172				9,316
LONG-TERM DEBT (Note 6)	75,142				87,592
COMMITMENTS AND CONTINGENCIES (Notes 2 and 10)
STOCKHOLDERS’ EQUITY:
Common stock (61,838 shares issued at December 31, 2004, and March 31, 2005, respectively) and paid-in capital in excess of par	(41,221			)	(41,254		)
Other comprehensive income:
Accumulated other comprehensive loss	(407			)	(127		)
Retained earnings	212,312				135,020
Less: Treasury shares at cost (2,834 at December 31, 2004, and 2,830 at March 31, 2005)	(27,438			)	(27,387		)
Total stockholders’ equity	143,246				66,252
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$		229,560		$	163,160

See notes to condensed consolidated financial statements.

~~See notes to condensed consolidated financial statements.~~5

3THE BOYDS COLLECTION, LTD. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS For the Nine Months Ended September 30, 2004 and 2005 (Unaudited)

THE BOYDS COLLECTION, LTD.

	Nine Months Ended September 30,
	2004			2005
	(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)	$	7,786		$	(177,122	)
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
Depreciation and amortization	1,397			1,902
Amortization and write off of deferred debt issuance costs	241			922
Bad debt expense	(216		)	302
Loss on sale of equipment	(3		)	—
Tax benefit from exercise of stock options	—			(33		)
Deferred taxes	5,159			164,920
Impairment of goodwill/assets	—			4,340
Changes in assets and liabilities:
Accounts receivable - net	(11,604		)	(5,554		)
Inventory - net	(3,635		)	(590		)
Inventory in transit	1,433			1,971
Other current assets	15			4
Other assets	(129		)	(90		)
Accounts payable	4,297			997
Accrued expenses	681			(1,549		)
Income tax payable	2,669			(171		)
Interest payable	768			1,736
Net cash provided by/ (used in) operating activities	8,859			(8,015		)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(12,025		)	(975		)
Net cash used in investing activities	(12,025		)	(975		)

CASH FLOWS FROM FINANCING ACTIVITIES:
Net Borrowings/(Payments) on credit agreement, “Revolver”	13,000			(12,750		)
Payment on credit agreement, “Term Loan”	(14,000		)	(28,000		)
Borrowings from credit agreement, “New Term Loan”	—			45,000
Net Borrowings from credit agreement, “New Revolver”	—			11,500
Deferred debt issuance costs	—			(3,802		)
Exercise of stock options	—			51
Net cash (used in)/ provided by financing activities	(1,000		)	11,999
Effect of exchange rate changes on cash	20			546

NET INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS	(4,146		)	3,555
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	4,173			354
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	27		$	3,909
CASH PAID DURING THE PERIOD FOR INTEREST	$	2,324		$	6,193
CASH PAID/(RECEIVED) DURING THE PERIOD FOR INCOME TAXES	$	(2,552	)	$	597

~~CONDENSED~~See notes ~~CONSOLIDATED~~to ~~STATEMENTS~~condensed OFconsolidated ~~INCOME~~financial statements.

~~For the Three Months Ended March 31, 2004 and 2005~~6

THE BOYDS COLLECTION, LTD. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS For the Nine Months Ended September 30, 2005 and 2006 (Amounts in thousands, except share and per share amounts) (Unaudited)

	Three Months Ended
	March 31,
	2004			2005
	(in thousands, except per share amounts)
NET SALES	$	26,337		$	18,533
COST OF GOODS SOLD	10,454			10,131
GROSS PROFIT	15,883			8,402
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES	9,926			10,701
IMPAIRMENT OF GOODWILL (Note 5)	—			2,600
INCOME/(LOSS) FROM OPERATIONS	5,957			(4,899		)
OTHER INCOME/(EXPENSE)	(78		)	(124		)
INTEREST EXPENSE:
Interest expense	1,014			1,980
Amortization of deferred debt issuance costs	80			204
TOTAL INTEREST EXPENSE	1,094			2,184
INCOME/(LOSS) BEFORE PROVISION FOR INCOME TAXES	4,785			(7,207		)
PROVISION FOR INCOME TAXES (Note 9)	1,990			70,085
NET INCOME/(LOSS)	$	2,795		$	(77,292	)
EARNINGS/(LOSS) PER SHARE:
Basic and Dilutive Earnings Per Share - Net Income/(Loss)	$	0.05		$	(1.31	)

1. INTERIM FINANCIAL STATEMENTS

~~See~~The Boyds Collection, ~~notes~~Ltd. (“Boyds” or the “Company”) operates in two segments, which consist of the Company’s wholesale gift/collectible business and the Company’s retail gift/entertainment business. In September 2002, Boyds Bear Countryä store opened in Gettysburg, Pennsylvania in November 2004, the Company opened its second retail store in Pigeon Forge, Tennessee. These retail stores are being used to ~~condensed~~generate ~~consolidated~~income ~~financial~~and ~~statements~~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.

4The condensed consolidated balance sheet as of September 30, 2005, the condensed consolidated statements of operations for the three and nine months ended September 30, 2004 and 2005, the condensed consolidated statement of stockholders’ equity for the nine months ended September 30, 2005 and the condensed consolidated statements of cash flows for the nine months ended September 30, 2004 and 2005 are unaudited. In the opinion of management, all adjustments, necessary for a fair presentation of such interim financial statements have been included. The results of operations for the nine months ended September 30, 2005 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 30, 2005.

~~THE~~Chapter ~~BOYDS~~11 ~~COLLECTION,~~Bankruptcy ~~LTD.~~Proceedings

~~CONDENSED~~On ~~CONSOLIDATED~~October 3, 2005, ~~STATEMENT~~in OFconnection ~~STOCKHOLDERS~~with potential defaults on our senior secured credit agreement, we entered into a waiver agreement with our lenders. This waiver agreement provided for, among other things, the lenders’ ~~EQUITY~~forbearance from exercising contractual remedies under our credit agreement on account of existing defaults through October 16, 2005.

~~For~~On October 16, 2005, we and certain of our subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the ~~Three~~United ~~Months~~States ~~Ended~~Bankruptcy ~~March~~Code 31(the “Bankruptcy Code”), ~~2005~~in the United States Bankruptcy Court for the District of Maryland (the “Court”) (Case Nos. 05-43793; 05-43805; 05-43802; 05-43833; 05-43838; 05-43863; 05-43816; 05-43848; and 05-43857). We have requested joint administration of the cases under the caption “The Boyds Collection, Ltd., Case No. 05-43793. We will continue to operate our businesses as “debtors in possession” (“DIP”) under the jurisdiction of the Court, under Court protection from creditors and claimants and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Court.

~~(Unaudited)~~Since the bankruptcy filing, all orders allowing us to conduct normal business activities, including the approval of our DIP financing, have been entered by the Court. While we are in bankruptcy

	Common Stock			Common Stock			Accumulated
	Shares			and Paid-in			Other									Total			Other
	Issued And	Treasury		Capital in			Comprehensive			Retained			Treasury			Stockholders’			Comprehensive
	Outstanding	Stock		Excess of Par			Income/(Loss)			Earnings			Stock			Equity			Income
	(in thousands)
BALANCE, JANUARY 1, 2005	61,838	2,834		$	(41,221	)	$	(407	)	$	212,312		$	(27,438	)	$	143,246
Issuance of common stock		(4	)	(33		)							51			18
Other comprehensive income:
Foreign currency translation	—	—		—			280			—			—			280			$	280
Net loss	—	—		—			—			(77,292		)	—			(77,292		)	(77,292		)
Comprehensive loss	—	—		—			—			—			—			—			$	(77,012	)
BALANCE, March 31, 2005	61,838	2,830		$	(41,254	)	$	(127	)	$	135,020		(27,387		)	$	66,252

~~See~~proceedings, all ~~notes~~transactions tonot ~~condensed~~in the ordinary course of our business require the prior ~~consolidated~~approval ~~financial~~of ~~statements~~the Court.

On October 16, 2005, pursuant to authorization from the Court, we entered into an $8 million DIP credit facility. This DIP facility consists of an $8 million revolver facility which includes access for $3.5 million worth of commercial letters of credit. The letters of credit are required to be fully cash collateralized. The DIP facility limits the amount of capital expenditures during its term to $250,000.

~~THE~~As ~~BOYDS~~a ~~COLLECTION~~consequence of our bankruptcy filing, ~~LTD~~pending litigation against us is generally stayed, and no party may take any action to collect its pre-petition claims except pursuant to order of the Court. February 14, 2006, was the deadline for claimants to file claims arising prior to our bankruptcy filing. Differences between claim amounts identified by us and claims filed by claimants will be investigated and resolved in connection with our claims resolution process, and only holders of claims that are ultimately allowed for purposes of our bankruptcy will be entitled to distributions. Since the settlement of terms of allowed claims are subject to a confirmed plan of reorganization, the ultimate distribution with respect to the allowed claims is not presently ascertainable.

~~CONDENSED~~On ~~CONSOLIDATED~~March 14, 2006, ~~STATEMENTS~~we OFfiled ~~CASH~~with ~~FLOWS~~the Court our Plan of Reorganization, which was subsequently amended (as amended, the “Plan”) and Disclosure Statement, which was subsequently amended (as amended, the “Disclosure Statement”). The Plan and the Disclosure Statement set forth the terms of the proposed settlement between Boyds, our secured creditors, the Official Committee of Unsecured Creditors, and our stockholders. The Disclosure Statement also includes a description of the events that led up to our bankruptcy filing and the actions we have taken to improve our financial situation while in bankruptcy.

~~For~~The Plan has been approved by the necessary constituencies and remains subject to ~~Three~~approval ~~Months~~by ~~Ended~~the ~~March~~Court. ~~31,~~We ~~2004~~cannot provide any assurance that any plan of reorganization ultimately confirmed by the Bankruptcy Court will be consistent with the terms of the Plan and ~~2005~~Disclosure Statement.

~~(Unaudited)~~If confirmed, the Plan will provide us with significant relief from pre-filing claims. The Plan details how the claims of each class of creditors and interest holders will be treated. The following is a summary of the Plan:

	Three Months Ended
	March 31,
	2004			2005
	(in thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income/(loss)	$	2,795		$	(77,292	)
Adjustments to reconcile net income/(loss) to net cash provided by/(used in) operating activities:
Depreciation and amortization	471			577
Amortization and write off of deferred debt issuance costs	80			204
Loss on sale of equipment	(3		)	—
Deferred taxes	4,432			70,371
Impairment of goodwill	—			2,600
Changes in assets and liabilities:
Accounts receivable - net	(3,024		)	(1,006		)
Inventory - net	(75		)	(1,863		)
Inventory in transit	2,178			2,346
Other current assets	26			11
Other assets	(1		)	(19		)
Accounts payable	8			(1,902		)
Accrued expenses	(705		)	(1,039		)
Accrued taxes/Income taxes receivable	(1,538		)	(371		)
Interest payable	772			1,456
Net cash provided by/ (used in) operating activities	5,416			(5,927		)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment	(1,890		)	(391		)
Net cash used in investing activities	(1,890		)	(391		)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments on credit agreement, “Revolver”	(3,500		)	(12,750		)
Payment on credit agreement, “Term Loan”	—			(28,000		)
Borrowings from credit agreement, “New Term Loan”	—			45,000
Net Borrowings from credit agreement, “New Revolver”	—			8,200
Deferred debt issuance costs	—			(3,627		)
Exercise of stock options	—			51
Tax benefit from exercise of stock options	—			(33		)
Net cash (used in)/ provided by financing activities	(3,500		)	8,841
Effect of exchange rate changes on cash	36			280
NET INCREASE IN CASH AND CASH EQUIVALENTS	62			2,803
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	4,173			354
CASH AND CASH EQUIVALENTS, END OF PERIOD	$	4,235		$	3,157
CASH PAID DURING THE PERIOD FOR INTEREST	$	242		$	524
CASH PAID/(RECEIVED) DURING THE PERIOD FOR INCOME TAXES	$	(934	)	$	35

· Holders of senior secured claims will receive (in exchange of approximately $57.7 million in claims): senior secured promissory notes in the aggregate principal amount of $30.0 million, to be due in five years following the effective date of the Plan, which we expect will occur in June 2006, and common stock representing approximately 48.5% of our common stock outstanding after the effective date of the Plan (the “New Common Stock”).

~~See~~· Each ~~notes~~qualifying noteholder (a holder of our Senior Subordinated Notes that has continuously held beneficial interests therein for more than 18 months immediately prior to ~~condensed~~our ~~consolidated~~bankruptcy ~~financial~~filing ~~statements~~through the effective date of the Plan) shall receive cash in the amount of 22.0% of the allowed amount of its note claim, to be paid, if at all, on the date of a Future Transaction; plus its pro rata share of 5.0% of the New Common Stock, plus its pro rata share of 50.0% of the reallocated shares which are the shares of our common stock representing the difference between: (i) 5% of the New Common Stock; and (ii) the aggregate pro rata share of New Common Stock allocable to qualifying noteholders. A “Future Transaction” is a transaction in which we, subject to certain exceptions, (a) merge or consolidate with another person or entity or (b) acquire any assets, properties, rights or equity interests, in each case occurring within 36 months of the effective date of the Plan so long as the transaction is not a acquisition (i) of assets, properties or rights or assumption of liabilities in the ordinary course of our business (i.e., accounts payable, receivables, inventory, product, store leases, store equipment and any other similar acquisitions or assumptions of liabilities); (ii) an acquisition that has aggregate consideration of $10

~~THE~~million or ~~BOYDS~~less ~~COLLECTION,~~that ~~LTD. NOTES~~is TOnot ~~CONDENSED CONSOLIDATED~~an ~~FINANCIAL~~acquisition ~~STATEMENTS~~ of a toy collectible business; or (~~Amounts~~iii) an acquisition inthat ~~thousands,~~does ~~except~~not ~~share~~meet ~~and~~certain ~~per~~revenue ~~share~~or ~~amounts) (Unaudited)~~EBITDA thresholds.

1· Each non-qualifying holder (those holders of our Senior Subordinated Notes that are not qualifying noteholders) shall receive cash in the amount of 24. ~~INTERIM~~0% of the ~~FINANCIAL~~allowed ~~STATEMENTS~~amount of its claim to be paid, if at all, on the date upon which a Future Transaction is consummated.

~~The~~· If ~~Boyds Collection, Ltd. (“Boyds” or~~ the ~~“Company”)~~non-qualifying ~~operates~~holders vote ~~in two segments,~~to ~~which~~reject ~~consist of~~ the ~~Company’s~~Plan, ~~wholesale~~then ~~gift/collectible~~each ~~business~~such ~~and the~~holder ~~Company’s~~shall ~~retail~~receive ~~gift/entertainment~~cash ~~business.~~in Inthe ~~September~~amount ~~2002,~~of ~~Boyds Bear Countryä store opened in Gettysburg, Pennsylvania~~2.0% Inof ~~November 2004,~~ the ~~Company~~allowed ~~opened~~amount ~~its~~of ~~second retail store in~~their ~~Pigeon Forge~~notes, ~~Tennessee. These retail stores are being used~~ to ~~generate~~be ~~income and~~paid, ~~expand~~if ~~the~~at ~~brand awareness and image of Boyds. Substantially~~ all, ofon the ~~Company’s~~ ~~products~~date ~~are~~upon ~~sourced~~which ~~from~~a ~~foreign~~Future ~~manufacturers~~Transaction ~~in China through~~is ~~buying agencies~~consummated.

~~The condensed~~· Each ~~consolidated~~holder ~~balance sheet as~~ of ~~March~~an ~~31,~~allowed ~~2005,~~general ~~the~~unsecured ~~condensed~~claim ~~consolidated statements~~or ofclaims ~~income~~will ~~for~~receive ~~the~~cash ~~three months ended March 31, 2004 and 2005, the~~equal ~~condensed~~to ~~consolidated~~28% ~~statement~~ of ~~stockholders’~~its ~~equity~~allowed ~~for~~claim ~~the~~or ~~three months ended March 31~~claims, ~~2005~~if ~~and~~ the ~~condensed~~class ~~consolidated statements~~ of ~~cash flows for the three months ended March 31, 2004 and 2005 are unaudited. In the opinion of management, all adjustments, necessary for a fair presentation of~~ such ~~interim~~holders ~~financial~~accepts ~~statements have been included. The results of operations for~~ the ~~three months ended March 31, 2005 are not necessarily indicative of the~~ ~~results to be expected for the full year~~Plan. 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 30, 2005.

In· If ~~December of 2004,~~ the ~~Financial~~class ~~Accounting Standards Board (“FASB”) issued Statement~~ of ~~Financial~~holders ~~Accounting Standards (“SFAS”) No. 123R, Share-Based Payment (“SFAS 123R”). SFAS 123R addresses the accounting for share-based payments to employees, including grants~~ of ~~employee stock~~general ~~options.~~unsecured ~~Under~~claims ~~the~~vote ~~new standard, companies will no longer be able~~ to ~~account~~ ~~for~~reject ~~share-based compensation transactions using~~ the ~~intrinsic method in accordance with APB Opinion No. 25~~Plan, ~~Accounting for Stock~~then ~~Issued~~each ~~to Employees. Instead, companies will be required to account for~~ such ~~transactions~~holder ~~using~~shall areceive ~~fair-value~~cash ~~method and recognize the related expense associated with share-based payments~~ in the ~~consolidated~~amount ~~statement~~ of ~~operations.~~ In4% ~~April~~of ~~2005,~~ the ~~Securities~~allowed ~~and Exchange Commission delayed the~~amount ~~effective date for SFAS No. 123R until the first quarter~~ of ~~fiscal~~such ~~2006,~~claim ~~and allows,~~to ~~but~~be ~~does~~paid ~~not~~on ~~require, companies to restate~~ the ~~full~~earlier ~~fiscal year~~ of ~~2005~~: ~~or retroactive restatement to earlier periods to reflect~~ (a) the ~~impact~~date ~~of expensing~~upon ~~share-based payments under SFAS 123R. The Company has not yet determined~~ which ~~fair-value~~a ~~method~~Future ~~and~~Transaction ~~transitional provision it will follow. The Company~~ is ~~currently~~consummated; ~~assessing~~or (b) the first ~~impact~~business day that ~~SFAS~~is ~~123R~~at ~~will~~least ~~have~~18 onmonths after the ~~financial~~ ~~position,~~effective ~~results~~date of ~~operations and cash flows of Boyds~~the Plan.

In· Secured ~~March~~claims ~~2005,~~other ~~the~~than ~~Securities~~senior ~~and~~secured ~~Exchange~~claims will ~~Commission~~be ~~(“SEC”)~~treated ~~issued~~either ~~Staff Accounting~~as ~~Bulletin~~agreed ~~No.~~by ~~(“SAB”)~~the ~~107~~parties ~~regarding~~or ~~the~~in ~~Staff’s~~a ~~interpretation~~manner ofthat ~~Share-Based~~reinstates ~~Payments.~~the ~~This~~secured ~~interpretation~~claim or provides for payment to the ~~Staff~~creditor equal to the value of such creditor’s ~~view~~collateral. ~~regarding~~Each holder of an allowed priority ~~interactions~~claim ~~between~~(other ~~SFAS~~than ~~No.~~a ~~123R~~tax ~~and~~priority ~~certain~~claim) ~~SEC~~shall ~~rules~~receive, ~~and~~on ~~regulations~~account of and in ~~provides~~full ~~interpretations~~and complete settlement, release and discharge of such allowed priority claim, (a) cash equal to the ~~valuation~~amount of ~~share-based~~such ~~payments~~claim ~~for~~or ~~public~~(b) such other ~~companies.~~treatment ~~The~~as ~~interpretive~~to ~~guidance~~which isthe ~~intended~~we and tosuch holder ~~assist~~shall ~~companies~~have agreed upon in writing in an amount sufficient to render such ~~applying~~claim not ~~the~~“impaired” ~~provisions~~under section 1124 of ~~SFAS~~the ~~No.~~Bankruptcy ~~123R~~Code, ~~and~~to ~~investors~~be ~~and~~paid ~~users~~on the latest of (a) the effective date ~~financial~~of ~~statements~~the inPlan ~~analyzing~~(or ~~the~~as ~~information~~soon ~~provided.~~thereafter ~~The~~as ~~Company~~is ~~will~~reasonably practicable), (b) five ~~adopt~~business ~~SAB~~days ~~107~~after inthe ~~connection~~final ~~with~~allowance of ~~its~~such ~~adoption~~claim, or (c) the date on which the we and the holder of such ~~SFAS~~claim otherwise Noagree. ~~123R.~~

7· Allowed priority tax claims will either be paid, at our sole option , (a) on the latter of (i) the effective date of the Plan (or as soon thereafter as is reasonably practicable), (ii) five business days after the allowance thereof; (b) beginning the first anniversary following the effective date of the Plan, cash payments to be made in equal annual installments, with the final installment being payable no later than the sixth anniversary of the date of the assessment of such allowed priority tax claim, in an aggregate amount equal to such claim, together with interest on the unpaid balance of such claim calculated from the effective date of the Plan through the date of payment; or (c) such other treatment agreed to by us and the holder of such claim.

~~In November of 2004,~~· Each ~~the~~holder ~~FASB issued SFAS No. 151, Inventory Costs-an Amendment~~ of ~~ARB~~200 ~~No.~~or ~~43.~~more ~~This~~shares ~~Statement amends the guidance in Accounting Research Bulletin (“ARB”) No 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts~~ of ~~idle facility~~our ~~expense,~~common ~~freight,~~stock ~~handling~~will ~~costs,~~receive ~~and~~its ~~wasted~~pro ~~material (spoilage). This~~rata ~~Statement~~share ~~requires that these items be recognized as current-period charges regardless~~ of ~~whether they meet the criterion of “so abnormal~~46.”5% ~~In addition, this Statement requires that allocation~~ of ~~fixed~~our ~~production~~post ~~overhead~~bankruptcy ~~to the costs of conversion be based on the normal capacity of production facilities~~equity. The provisions of this Statement are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption of this Statement is not expected to have a material impact on the financial position, results of operations or cash flow of Boyds.

In· Each ~~December~~holder ~~2004, the FASB issued SFAS No. 153, Exchange~~ of ~~Nonmonetary~~ ~~Assets~~less —than An200 ~~Amendment~~shares of ~~APB~~our ~~Opinion~~common ~~No.~~stock ~~29,~~will ~~Accounting~~receive ~~for Nonmonetary Transactions~~$0. SFAS No. 153 eliminates the exception from fair value measurement from nonmonetary exchanges of similar productive assets in paragraph 21(b) of APB Opinion No. 29 and replaces it with an exception for exchanges that do not have commericial substance. SFAS No. 153 is effective for periods beginning after June 15, ~~2005.~~per ~~The adoption of this Statement is not expected to have a material impact on the financial position, results of operations or cash flow of Boyds~~share.

2We are also negotiating with one of our senior lenders to provide a new $11. ~~FINANCIAL~~0 million ~~INSTRUMENTS~~revolver ~~WITH~~with ~~OFF~~a $4.0 million seasonal over-~~BALANCE~~advance ~~SHEET~~option ~~RISK~~that supports letters of credit and would provide us with access to additional capital to fund post-reorganization operations. There can be no assurance that these negotiations will be successful.

~~At December~~There ~~31,~~can ~~2004~~be ~~and~~no atassurance that ~~March~~the 31Plan, ~~2005,~~or ~~Boyds~~any ~~had~~other ~~letters~~plan of ~~credit outstanding under its credit agreement amounting to $4.6 million and $1.8 million~~reorganization, ~~respectively.~~will ~~These~~be ~~letters~~confirmed ofby ~~credit~~the ~~represent Boyds’ commitment to~~Court ~~purchase inventory which is to be produced and/~~or ~~shipped~~implemented successfully.

3Following the effective date of our plan of reorganization, we expect to have fewer than 300 holders of record of our common stock. ~~RELATED~~ Consequently, we intend to apply for ~~PARTY~~termination ~~TRANSACTIONS~~of the

Kohlberg, Kravis Roberts & Co. L.P. and its affiliates (collectively, “KKR”) is a 59% shareholder of Boyds. For the first quarter ended March 31, 2004 Boyds paid to KKR approximately $0.1 million for management fees and related expenses. KKR has waived all management fees for 2005. Any related expenses incurred by KKR in 2005 will be paid by Boyds.9

8registration of our common stock under the Exchange Act of 1934, as amended, which would substantially reduce the information required to be furnished by us to our stockholders and we would be no longer required and do not intend to file reports with the SEC. Certain provisions of the Exchange Act would no longer be applicable to us such as the short-swing profit recovery provisions of Section 16(b) of the Exchange Act, the requirement of furnishing a proxy statement in connection with stockholders’ meetings, and the related requirement of an annual report to stockholders.

4On January 17, 2006, the Company filed for bankruptcy in the Dutch court for its Dutch subsidiary. ~~PROPERTY~~ ~~AND~~The ~~EQUIPMENT~~court approved the filing and appointed a Trustee to close down the operations.

~~The~~Going ~~components of property and equipment at December 31, 2004 and March 31, 2005 were, as follows:~~Concern

	December 31,			March 31,
	2004			2005
Land	$	3,570		$	3,570
Building	28,346			28,439
Construction in progress	1,449			1,690
Equipment	5,407			5,453
Software development costs	2,479			2,479
Leasehold improvements	1,944			1,949
Furniture and fixtures	1,076			1,082
Total	44,271			44,662
Less: accumulated depreciation and amortization	(9,190		)	(9,752		)
Total	$	35,081		$	34,910

Boyds is currently operating under Chapter 11 of the U.S. Bankruptcy Code and continuation of Boyds as a going concern is contingent upon, among other things, Boyds ability to (i) comply with the terms and conditions of its DIP financing; (ii) obtain confirmation of a plan of reorganization under the U.S. Bankruptcy Code; (iii) return to profitability; (iv) generate sufficient cash flows from operations; and (v) obtain financing sources to meet Boyds future obligations. These matters create substantial doubt about Boyds ability to continue as a going concern. The condensed quarterly financial statements do not reflect any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classifications of liabilities that might result from the outcome of these uncertainties. Additionally, a plan of reorganization could materially change amounts reported in the condensed consolidated financial statements, which do no give effect to all adjustments of the carrying value of assets and liabilities that are necessary as a consequence of reorganization under Chapter 11 bankruptcy.

~~5. GOODWILL~~Recently Issued ~~ASSETS~~Accounting Standards

In ~~July 2001~~December 2004, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 123R, ~~142~~Share-Based Payment (“SFAS 123R”). SFAS 123R addresses the accounting for share-based payments to employees, ~~Goodwill~~including ~~and~~grants ~~Other~~of employee stock options. ~~Intangible~~Under ~~Assets~~the new standard, ~~which~~companies ~~was~~will ~~effective~~no ~~January~~longer 1be able to account for share-based compensation transactions using the intrinsic method in accordance with APB Opinion No. 25, ~~2002~~Accounting for Stock Issued to Employees. ~~SFAS~~Instead, Nocompanies will be required to account for such transactions using a fair-value method and recognize the related expense associated with share-based payments in the consolidated statement of operations.~~142~~ SFAS 123R will be effective for periods beginning after June 15, ~~requires~~2005 and allows, ~~among~~but ~~other~~does ~~things~~not require, companies to restate the ~~discontinuance~~full fiscal year of ~~goodwill~~2005 ~~amortization.~~or ~~The Company~~retroactive ~~stopped~~restatement ~~amortizing~~to ~~its~~earlier ~~goodwill~~periods asto reflect the impact of ~~January~~expensing share-based payments under SFAS 123R. On January 1, ~~2002.~~2006, ~~The~~the Company adopted ~~tested~~SFAS ~~for~~No. 123(R) which ~~impairment~~requires bycompanies ~~comparing~~to expense the fair value of employee ~~the~~stock ~~reporting~~options ~~unit~~and ~~with~~other forms of stock-based employee compensation in the ~~carrying~~financial ~~value~~statements ofover ~~that~~the ~~unit.~~period ~~Fair~~that ~~value~~an ~~was~~employee ~~determined~~provides ~~based~~service ~~on the~~in ~~discounted~~exchange ~~cash~~for ~~flow~~the ~~method~~award. AsUnder aSFAS ~~result~~123(R), of the Company’s ~~impairment~~measures ~~test~~compensation ~~completed~~cost inrelated to stock options based on the ~~first~~grant-date ~~quarter~~fair value of ~~2005,~~the award using the ~~Company~~Black-Scholes ~~recorded~~option-pricing anmodel ~~impairment~~and ~~loss~~recognizes it ratably, less estimated forfeitures, over the vesting term of $2the award.6 The ~~million~~Company tobelieves ~~reduce~~that the ~~carrying~~impact ~~value~~ of ~~goodwill~~this SFAS ~~to zero~~No. 123(R) will ~~The~~have ~~impairment was~~an ~~due~~immaterial toimpact on the ~~wholesale~~financial results ~~segment’s~~of ~~operating~~the ~~performance~~Company.

9In March 2005, the SEC issued Staff Accounting Bulletin No. (“SAB”) 107 regarding the Staff’s interpretation of Share-Based Payments. This interpretation provides the Staff’s view regarding interactions between SFAS No. 123R and certain SEC rules and regulations and provides interpretations of the valuation of share-based payments for public companies. The interpretive guidance is intended to assist companies in applying the provisions of SFAS No. 123R and investors and users of the financial statements in analyzing the information provided. The Company will adopt SAB 107 in connection with its adoption of SFAS No. 123R.

~~6. LONG-TERM DEBT~~10

~~Long~~In November of 2004, the FASB issued SFAS No. 151, Inventory Costs-~~term~~an ~~debt~~Amendment isof ~~summarized~~ARB No. 43 . SFAS No. 151 amends the guidance in Accounting Research Bulletin (“ARB”) No 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). SFAS No. 151 requires that these items be recognized as ~~follows:~~current-period charges regardless of whether they meet the criterion of “so abnormal.” In addition, SFAS No. 151 requires that allocation of fixed production overhead to the costs of conversion be based on the normal capacity of production facilities. The provisions of SFAS No. 151 are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption of SFAS No. 151 is not expected to have a material impact on the financial position, results of operations or cash flow of Boyds.

	December 31,		March 31,
	2004		2005
9% Senior Subordinated Notes due May 15, 2008	$	34,392	$	34,392
Credit Agreement:
Secured Tranche A Term Loan due April 2005 (the “Term Loan”)
Interest based on LIBOR or base rate as defined	28,000		—
Secured revolving credit facility due April 2005 (the “Revolver”)
Interest based on LIBOR or base rate as defined	12,750		—
New Credit Agreement:
Secured Term Loan due February 2008 (the “New Term Loan”)
Interest based on LIBOR or base rate as defined	—		45,000
Secured revolving credit facility due February 2008 (the “New Revolver”)
Interest based on LIBOR or base rate as defined	—		8,200
	$	75,142	$	87,592

In December 2004, the FASB issued SFAS No. 153, Exchange of Nonmonetary Assets — An Amendment of APB Opinion No. 29, Accounting for Nonmonetary Transactions. SFAS No. 153 eliminates the exception from fair value measurement from nonmonetary exchanges of similar productive assets in paragraph 21(b) of APB Opinion No. 29 and replaces it with an exception for exchanges that do not have commercial substance. SFAS No. 153 is effective for periods beginning after June 15, 2005. The adoption of this Statement is not expected to have a material impact on the financial position, results of operations or cash flow of Boyds.

~~The~~In ~~Senior~~May 2005, the FASB issued SFAS No. 154, Accounting ~~Subordinated~~Changes ~~Notes~~and ~~have~~Error anCorrections ~~optional~~- a replacement ~~redemption~~of ~~feature~~APB ~~exercisable~~Opinion byNo. 20 ~~Boyds~~and ~~any~~FASB Statement No. 3. SFAS No. 154 ~~time~~requires onretrospective application to prior periods financial statements for changes in accounting principle, unless it is impracticable to determine either the period-specific effects or ~~after~~the ~~May~~cumulative effect of the change. SFAS No. ~~15,~~154 also ~~2004~~requires atthat ~~103%~~retrospective application of ~~face~~a ~~value~~change in accounting principle be limited to the direct effects of the change. ~~Each~~Indirect ~~year~~effects ~~thereafter,~~of a change in accounting principle should be recognized in the ~~rate~~period ~~decreases~~of bythe accounting 1change.5% SFAS No. 154 ~~Interest~~further onrequires ~~the~~a ~~Notes~~change isin ~~payable~~depreciation, amortization ~~semiannually~~or ondepletion method for long-live, non-financial assets to be ~~May~~accounted for as a change in accounting estimate effected by a change in accounting principle. SFAS No. 15154 is effective for accounting changes and corrections ~~November~~of errors made in fiscal years beginning after December 15, 2005. The adoption of this Statement is not expected to have a material impact on the financial position, results of operations or cash flow of Boyds.

~~On February~~2. FINANCIAL ~~23,~~INSTRUMENTS ~~2005,~~WITH ~~the~~OFF-BALANCE ~~Company~~SHEET entered into a new $45 million credit agreement, the “New Credit Agreement” and used the proceeds to extinguish the Credit Agreement including the Term Loan of $28 million and the outstanding Revolver of $12.75 million.RISK

~~The New~~At ~~Credit~~December 31, ~~Agreement contains a revolving credit facility “the New Revolver” with~~2004 ~~capacity of up to $20 million~~ and aat ~~New~~September 30, ~~Term Loan of $45 million. The New Credit Agreement has an interest rate of either a base rate~~2005, ~~which~~Boyds ishad ~~the higher~~letters of ~~the~~credit ~~prime~~outstanding ~~lending rate or 0.50% above the federal funds effective rate,~~under ~~plus~~its ~~9.50%~~credit oragreement ~~LIBOR~~amounting ~~plus~~to 11$4.~~00%.~~6 ~~The~~million ~~Company~~and ~~incurred approximately~~ $31.6 2 million, ~~of deferred financing costs associated with this transaction~~respectively. ~~The New~~These ~~Credit~~letters ~~Agreement~~of ~~requires~~credit norepresent ~~scheduled~~Boyds’ ~~principal~~commitment ~~payments~~to ~~until~~purchase ~~the~~inventory ~~entire outstanding~~which ~~amount of debt~~ is ~~required~~ to be ~~repaid~~produced ~~at maturity in February, 2008. There are certain prepayment penalties for amounts paid on the New Term Loan~~ and/or ~~New Revolver prior to maturity~~shipped.

At December 31, 2004 and March 31, 2005, the weighted average interest rates in effect for the Term Loan and New Term Loan were 1.75% and 15.25%, respectively. At December 31, 2004 and March 31, 2005, the weighted average interest rate in effect for the Revolver and New Revolver were 3.~~38%~~ RELATED ~~and~~PARTY ~~15.25%, respectively.~~TRANSACTIONS

~~The~~Kohlberg, ~~New~~Kravis ~~Credit Agreement contains financial~~Roberts & ~~covenants,~~Co. ~~tested~~L.P. ~~quarterly,~~and ofits ~~minimum~~affiliates ~~adjusted EBITDA~~ (ascollectively, ~~defined in the New Credit Agreement~~“KKR”), ~~maximum~~is ~~senior~~a ~~leverage~~59% ~~and~~shareholder ~~maximum total leverage relating~~of ~~to the last twelve months~~Boyds. AtFor the ~~end~~three ~~of the third~~ and ~~fourth~~nine ~~quarters~~months ofended ~~2005~~September 30, ~~Boyds~~ ~~must~~2004, ~~maintain~~Boyds apaid to ~~senior~~KKR ~~leverage~~approximately ~~ratio no greater than 2~~$0.~~5 to~~ 1.0 ormillion ~~a total~~and ~~leverage ratio greater than 4.5 to 1.~~$0.2 Atmillion, ~~the~~respectively, ~~end~~for management offees ~~the third~~ and ~~fourth~~ ~~quarters~~related ofexpenses. ~~2005,~~KKR ~~Boyds~~has ~~must~~waived ~~have~~all anmanagement ~~adjusted~~fees ~~minimum EBITDA of $17~~for ~~million~~2005. ~~The~~Any ~~New~~related ~~Credit~~expenses ~~Agreement~~incurred ~~also~~by ~~contains~~KKR ~~customary~~in ~~covenants,~~2005 ~~including covenants~~will ~~that~~be ~~restrict~~paid ~~the~~by ~~Company’s ability to incur additional indebtedness, make capital expenditures, pay dividends~~Boyds.

104. PROPERTY AND EQUIPMENT

onThe ~~and~~components ~~redeem~~of ~~capital~~property ~~stock,~~and ~~make~~equipment ~~other restricted~~at ~~payments~~December 31, 2004 ~~make~~and ~~investments~~September 30, ~~sell~~2005 ~~its assets and enter into consolidations~~were, ~~mergers~~as ~~and transfers of all or substantially all of its assets.~~follows:

~~The scheduled maturities of the Company’s long-term debt are as follows:~~11

2005			$	—
	December 31, 2004			September 30, 2005
2006			—
	(in thousands)
2007			—
Land	$	3,570		$	3,570
2008			87,592
Building	28,346			28,729
			$	87,592
Equipment	5,407			5,633
Software development costs	2,479			2,479
Leasehold improvements	1,944			1,957
Furniture and fixtures	1,076			1,097
Total	42,822			43,465
Less: accumulated depreciation and amortization	(9,190		)	(10,999		)
Construction in progress	1,449			—
Total	$	35,081		$	32,466

The Company recorded an asset impairment charge of $1.7 million for work completed on its proposed sites in Myrtle Beach, South Carolina and Branson, Missouri as a result of the Company’s decision in third quarter of 2005 not to move forward with these sites. ~~SEGMENTS~~ Managements decision was based on the fact that our Pigeon Forge retail OFstore ~~THE~~did ~~COMPANY~~not ~~AND~~meet ~~RELATED~~its ~~INFORMATION~~budget and the lack of available cash to fund these two additional properties.

~~The Company operates in two segments which consist of the Company’s wholesale gift/collectible business and the Company’s retail gift/entertainment business~~5. 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. GOODWILL

~~The~~ In July 2001, ~~Company’s~~the ~~wholesale~~FASB ~~business~~issued ~~designs,~~SFAS ~~imports~~No. 142, Goodwill and ~~distributes~~Other ~~resin~~Intangible ~~figurines~~Assets, which was effective January 1, ~~plush~~2002 ~~animals~~(SFAS No. 142). SFAS No.142 requires, ~~and~~among other ~~specialty~~things, ~~giftware~~the discontinuance ~~products~~of ~~via~~goodwill amortization. The aCompany ~~global~~stopped ~~network~~amortizing ofits ~~independent~~goodwill ~~retailers~~as ~~and~~of ~~distributors~~January 1, 2002. The Company’s ~~retail~~tests ~~operation~~for ~~sells~~impairment ~~resin~~by comparing ~~figurines,~~the ~~plush~~fair ~~animals,~~value ~~specialty giftware~~of ~~products~~the ~~and~~reporting ~~provides~~unit awith ~~unique~~the ~~entertainment~~carrying ~~experience~~value ~~directly~~of tothat ~~the~~unit. ~~end~~Fair ~~consumer~~value atwas ~~its~~determined ~~Gettysburg,~~based ~~Pennsylvania~~on ~~flagship~~the ~~location~~discounted ~~and~~cash ~~Pigeon Forge,~~flow ~~Tennessee location~~method. ~~Additional~~The impairment ~~retail~~was ~~stores~~caused ~~are~~by ~~planned~~a continued decline in ~~Myrtle~~wholesale sales and results. Goodwill ~~Beach,~~is ~~South~~included ~~Carolina~~within ~~and~~other ~~Branson~~assets as of December 31, ~~Missouri~~2004.

	For the Three Months Ended, March 31,
	2004										2005
	Wholesale			Retail				Consolidated			Wholesale			Retail			Consolidated
Sales	$	24,268		$	2,069			$	26,337		$	15,274		$	3,259		$	18,533
Gross Profit	14,357			1,526				15,883			6,133			2,269			8,402
SG&A	8,066			1,860				9,926			7,535			3,166			10,701
Impairment of Goodwill	—			—				—			2,600			—			2,600
Income/(Loss) from Operations	$		6,291	$		(334	)	$		5,957	$	(4,002	)	$	(897	)	$	(4,899	)
Total Assets	$		202,111	$		20,249		$		222,360	$	125,290		$	37,120		$	162,410
Capital Expenditures	118			1,772				1,890			57			334			391
Depreciation & Amortization	267			204				471			211			366			577

6. OTHER INCOME

11In July 2005, the Company received a $1.5 million settlement for a copyright infringement case.

~~8. STOCK-BASED COMPENSATION~~12

~~At March 31, 2005, Boyds had various stock-based employee compensation plans~~7. ~~The Company measures~~ DEBT compensation expense for its stock-based employee compensation plans using the intrinsic value method. Boyds has adopted the disclosure only provision of SFAS No. 148 “Accounting for Stock-Based Compensation — Transition and Disclosure,” (“SFAS No. 148”) an amendment of SFAS No. 123; therefore no compensation expense was recognized for the Company’s stock option plans. Had compensation expense for the Company’s stock option plans been determined based on the fair value at the grant date for awards under the Company’s stock plan, consistent with the methodology prescribed under SFAS No. 148, the Company’s net income/(loss) and net income/(loss) per common share would have approximated the pro forma amounts indicated below:OBLIGATIONS

	Three Months Ended
	March 31,
	2004		2005
Net income/(loss), as reported	$	2,795	$	(77,292	)
Deduct: Total stock-based employee compensation expense determined under fair value based method for all awards, net of related tax effects	557		407
Pro forma net income/(loss)	$	2,238	$	(77,699	)
Earnings per share:
Basic—as reported	$	0.05	$	(1.31	)
Basic—pro forma	$	0.04	$	(1.31	)
Diluted—as reported	$	0.05	$	(1.31	)
Diluted—pro forma	$	0.04	$	(1.31	)

Debt Obligations is summarized as follows:

9. PROVISION FOR INCOME TAXES

	December 31,		September 30
	2004		2005
	(in thousands)
9% Senior Subordinated Notes due May 15, 2008	34,392		34,392

Credit Agreement:
Secured Tranche A Term Loan due April 2005 (the “Term Loan”)
Interest based on LIBOR or base rate as defined	$	28,000	$	—
Secured revolving credit facility due April 2005 (the “Revolver”)
Interest based on LIBOR or base rate as defined	12,750		—

New Credit Agreement:
Secured Term Loan due February 2008 (the “New Term Loan”)
Interest based on LIBOR or base rate as defined	—		45,000
Secured revolving credit facility due February 2008 (the “New Revolver”)
Interest based on LIBOR or base rate as defined	—		11,500

	$	75,142	$	90,892

AsThe ofSenior ~~March~~Subordinated ~~31,~~Notes ~~2005,~~ (the ~~Company has~~“Notes”) ~~net deferred tax assets of approximately $94.5 million or approximately 58%~~have ofan ~~total~~optional ~~assets,~~redemption ~~consisting~~feature ofexercisable ~~tax~~by ~~carryforwards~~Boyds ~~that~~any ~~will~~time ~~begin~~on toor ~~expire~~after inMay 15, ~~2023~~2005 ~~until~~at ~~the end of 2033~~101.5% ~~The recovery~~ of ~~the~~face ~~deferred income tax assets is contingent upon applicable tax laws and realization of these deferred tax assets~~value. InEach ~~the~~year ~~first quarter of 2005~~thereafter, the ~~Company~~rate ~~recorded~~decreases ~~tax~~by ~~expense of $70 million as a result of recording a $71~~1.~~6 additional valuation allowance against its deferred tax assets~~5%. ~~This valuation allowance results from reduced~~ ~~estimates~~Interest byon ~~management of future taxable income in each of~~ the ~~federal,~~Notes ~~state, and~~is ~~foreign~~payable ~~tax~~semiannually ~~jurisdictions~~on ~~during~~May 15 ~~the carry forward period~~ and ~~the conclusion by management that it is no longer more likely than not that this amount of deferred tax assets will be realized under the criteria of SFAS No~~November 15. 109, Accounting for Income Taxes. The Company will continue to evaluate the need for further valuation allowances under this criteria; such further adjustments could be significant. The Company will need to generate approximately $240 million of taxable income over the next 30 years to fully realize the federal net deferred tax assets.

On February 23, 2005, the Company entered into a new $45 million credit agreement, the “New Credit Agreement” and used the proceeds to extinguish the Credit Agreement including the Term Loan of $28 million and the outstanding Revolver of $12.75 million.

10The New Credit Agreement contains a revolving credit facility “the New Revolver” with capacity of up to $20 million and a New Term Loan of $45 million. ~~CONTINGENCIES~~ The New Credit Agreement has an interest rate of either a base rate, which is the higher of the prime lending rate or 0.50% above the federal funds effective rate, plus 9.50% or LIBOR plus 11.00%. The Company incurred approximately $3.8 million of deferred financing costs associated with this transaction. The New Credit Agreement requires no scheduled principal payments until the entire outstanding amount of debt is required to be repaid at maturity in February, 2008. There are certain prepayment penalties for amounts paid on the New Term Loan and New Revolver prior to maturity.

~~Boyds~~At December 31, is2004 ~~involved~~and inSeptember 30, ~~various legal proceedings~~2005, ~~claims~~the ~~and~~weighted ~~governmental~~average ~~audits~~interest rates in ~~the~~effect ~~ordinary~~for ~~course~~the ofTerm ~~business.~~Loan Inand ~~the~~New ~~opinion~~Term ofLoan ~~management~~were 1.75% and 14.79%, ~~the~~respectively. ~~ultimate~~At December 31, ~~disposition~~2004 ofand ~~these~~September 30, ~~matters~~2005, ~~will~~the ~~not~~weighted ~~have~~average ainterest ~~material~~rate ~~adverse~~in effect for on the ~~financial~~ ~~position,~~Revolver ~~results~~and ofNew ~~operations~~Revolver orwere ~~cash~~3.38% ~~flows~~and of15.96%, ~~Boyds~~respectively.

11The New Credit Agreement contained financial covenants, tested quarterly, of minimum consolidated adjusted EBITDA (as defined in the New Credit Agreement), maximum senior leverage and maximum total leverage. ~~EARNINGS~~ As of October 16, 2005, the Company was in default with one or ~~PER~~more ~~SHARE~~of the financial covenants contained in the New Credit Agreement. In accordance with the New Credit Agreement as described above, the amounts outstanding became payable upon demand. Amounts

~~The following is a reconciliation of the numerators and denominators of the basic and diluted earnings per share computations for the net income/(loss) available to common stockholders:~~13

	Three Months Ended
	March 31,
	2004		2005
Numerator for basic and diluted earnings per share:
Net income/(loss)	$	2,795	$	(77,292	)
Denominator:
Denominator for basic earnings per share - weighted average shares	59,004		59,006
Effect of dilutive securities:
Effect of shares issuable under stock option plans based on treasury stock method	—		81
Denominator for diluted earnings per share - weighted average shares	59,004		59,087
EPS - Basic	$	0.05	$	(1.31	)
EPS - Diluted	$	0.05	$	(1.31	)

outstanding at September 30, 2005 have been reclassified into current liabilities on the consolidated balance sheet.

13On October 16, 2005, pursuant to authorization from the bankruptcy court, Boyds entered into a $8 million DIP credit facility. This DIP facility consists of a $8 million revolver facility which includes access for $3.5 million worth of commercial letters of credit. The letters of credit are required to be fully cash collateralized. The Company had to borrow any money against the DIP credit facility.

~~Item 2~~8. ~~Management’s~~ SEGMENTS ~~Discussion~~OF ~~and~~THE ~~Analysis~~COMPANY ofAND ~~Financial~~RELATED ~~Condition and Results of Operations~~INFORMATION

The ~~following~~Company ~~discussion~~operates ~~should~~in betwo ~~read~~segments inwhich ~~conjunction~~consist ~~with~~of the ~~financial~~Company’s ~~information~~wholesale gift/collectible business and ~~related~~the ~~notes~~Company’s retail gift/entertainment business. These segments are ~~included~~evaluated ~~elsewhere~~regularly by the Company’s Chief Executive Officer in ~~this~~deciding ~~report~~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.

~~GENERAL~~The Company’s wholesale business designs, imports, and distributes resin figurines, plush animals, and other specialty giftware products via a global network of independent and national retailers and distributors. The Company’s retail operation sells resin figurines, plush animals, specialty giftware products and provides a unique interactive entertainment experience directly to the end consumer at its Gettysburg, Pennsylvania flagship location and its Pigeon Forge, Tennessee location.

Boyds is a leading domestic designer, importer and distributor of branded, high-quality, handcrafted collectibles and other specialty giftware products. Boyds sells its products primarily 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. Boyds also sells its products directly to consumers through its two retail stores Boyds Bear Countryä - Gettysburg and Boyds Bear Countryä - Pigeon Forge. The Company has signed options for leases on additional locations in Myrtle Beach, South Carolina and Branson, Missouri.

Boyds’ sales consist of plush animals, resin figurines, and other products. Other products include collectors club sales, home décor, stationary and accessories. Collectors club sales are generated from annual dues collected directly from members of Boyds’ collectors club, The Loyal Order of Friends of Boyds, which began in July 1996 and currently has approximately 20,000 paying members, as well as from the sale of related accessories.

	For the Three Months Ended, September 30,
	2004						2005
	Wholesale		Retail		Consolidated		Wholesale		Retail			Consolidated
Sales	$	28,736	$	4,099	$	32,835	$	19,151	$	7,377		$	26,528
Gross Profit	16,764		3,111		19,875		9,663		5,071			14,734
SG&A	9,101		2,455		11,556		6,197		3,631			9,828
Impairment of Assets	—		—		—		—		1,740			1,740
Income/(Loss)
from Operations	$	7,663	$	656	$	8,319	$	3,466	$	(300	)	$	3,166

Boyds also has several licensing agreements for its branded product. The more significant agreements would include NASCAR and M&M’S ® Brand Characters. Boyds expects to begin delivering M&M Boyds products to stores in late 2005.

	For the Nine Months Ended, September 30,
	2004						2005
	Wholesale		Retail		Consolidated		Wholesale			Retail			Consolidated
Sales	$	72,048	$	9,750	$	81,798	$	46,066		$	16,106		$	62,172
Gross Profit	42,291		7,363		49,654		19,838			11,216			31,054
SG&A	26,850		6,397		33,247		20,474			10,141			30,615
Impairment of Assets	—		—		—		—			1,740			1,740
Impairment of Goodwill	—		—		—		2,600			—			2,600
Income/(Loss)
from Operations	$	15,441	$	966	$	16,407	$	(3,236	)	$	(665	)	$	(3,901	)

Total Assets	$	203,341	$	27,804	$	236,211	$	36,392		$	33,373		$	69,765
Capital Expenditures	126		11,899		12,025		276			699			975
Depreciation and amortization	785		612		1,397		666			1,236			1,902

~~Boyds licenses its product designs to other companies for products including home textiles, infant clothing and wallpaper~~9. STOCK-BASED ~~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.~~COMPENSATION

At September 30, 2005, Boyds ~~exhibits~~had ~~its~~various ~~products~~stock-based atemployee ~~select~~compensation plans, ~~national~~which ~~and~~are ~~regional~~described ~~tradeshows~~more ~~where~~fully ~~orders~~in ~~are~~Note ~~taken~~14. The Company measures compensation expense for its stock-based employee compensation plans using the intrinsic value method as prescribed by ~~Boyds’~~Accounting ~~employees~~Principles Board “APB” opinion 25, “Accounting for Stock Issued to Employees”. Boyds ~~operates~~has ~~almost~~adopted ~~exclusively~~the disclosure ~~out~~only provision of aSFAS ~~leased~~No. 148 ~~office/distribution~~“Accounting ~~facility,~~for ~~owns~~Stock-Based Compensation ~~one~~— ~~retail~~Transition ~~store~~and inDisclosure,” ~~the~~(“SFAS ~~general~~No. 148”) ~~vicinity~~an amendment of ~~Gettysburg,~~SFAS ~~Pennsylvania,~~No. 123; ~~and~~therefore ~~owns~~no acompensation ~~second~~expense ~~retail~~was ~~store~~recognized infor ~~Pigeon~~the Company’s ~~Forge,~~stock ~~Tennessee~~option plans. ~~Boyds~~Had ~~also~~compensation ~~leases~~expense ~~warehouse~~for ~~space~~the inCompany’s ~~Dunkeswell~~stock option plans been determined based on the fair value at the grant date for awards under the Company’s stock plan, ~~United~~consistent ~~Kingdom~~with the methodology prescribed under SFAS No. 148, the Company’s net income and ~~Dordrecht,~~net ~~The~~income ~~Netherlands.~~per common share would have approximated the pro forma amounts indicated below:

~~SEGMENTS~~15

The Company operates in two segments which consist of the Company’s wholesale gift/collectible 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.

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2004		2005		2004		2005

Net income/(loss), as reported	$	4,467	$	1,526	$	7,786	$	(177,122	)

Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related tax effects	379		414		1,347		1,331

Pro forma net income/(loss)	$	4,088	$	1,112	$	6,439	$	(178,453	)

Earnings per share:
Basic—as reported	$	0.08	$	0.03	$	0.13	$	(3.00	)
Basic—pro forma	$	0.07	$	0.02	$	0.11	$	(3.02	)

Diluted—as reported	$	0.08	$	0.03	$	0.13	$	(3.00	)
Diluted—pro forma	$	0.07	$	0.02	$	0.11	$	(3.02	)

~~The~~Stock ~~Company’s wholesale~~Option ~~business~~Plan—Boyds ~~designs,~~has ~~imports,~~granted ~~and~~stock ~~distributes~~options ~~resin~~under ~~figurines,~~various ~~plush~~incentive ~~animals~~stock ~~and~~option ~~other~~plans ~~specialty~~(the ~~giftware~~“Plans”) ~~products~~which ~~via~~provide afor ~~global~~the ~~network~~granting ofto certain ~~independent~~employees ~~retailers~~ and ~~distributors.~~directors ~~The~~of ~~Company’s~~options ~~retail~~to ~~operation~~acquire ~~sells resin~~Boyds’ ~~figurines,~~common ~~plush~~stock. ~~animals,~~The ~~other~~option prices ~~specialty~~of ~~giftware~~stock ~~products~~which ~~and~~may ~~provides a~~be ~~unique~~purchased ~~entertainment~~under ~~experience, directly to~~ the ~~end~~Plans ~~consumer~~are ~~currently~~not ~~at its~~less ~~Gettysburg,~~than ~~Pennsylvania flagship location and Pigeon Forge, Tennessee~~the ~~location.~~fair ~~The~~value ~~Company~~of ~~has~~common ~~signed~~stock ~~options for leases~~ on ~~additional~~the ~~locations~~dates ~~in Myrtle~~of ~~Beach,~~the ~~South Carolina and Branson, Missouri~~grants.

14Outstanding options issued to employees vest and become exercisable over a five-year period from the date of grant. The outstanding options expire ten years from the date of grant or upon an employee’s retirement or termination from Boyds, and are contingent upon continued employment during the applicable five-year period.

~~CRITICAL~~Boyds has ~~ACCOUNTING~~reserved a total of 7,075,102 shares for issuance under the Plans, of which ~~POLICIES~~1,495,678 shares remain reserved at September 30, 2005 for future issuances. In the first nine months of 2005, the Company granted 2,196,250 as part of its ongoing annual key employee option grant program. The following table summarizes information about fixed stock options at September 30, 2005:

Preparing the Company’s 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.16

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.

			Options Outstanding
	Options				Exercise Price Per Share
	Available		Number of				Weighted
	for Grant		Shares		Range		Average

January 1, 2004	1,650,939		3,709,100		$	4.45 - $18.00	$	6.43

Shares reserved	1,500,000
Options granted	(501,144	)	501,144		$	2.49 - $4.22	$	2.85
Options exercised
Options forfeited	195,361		(195,361	)	$	4.31 - $10.60	$	7.11

December 31, 2004	2,845,156		4,014,883		$	2.49 - $18.00	$	5.95

Shares reserved	500,000
Options granted	(2,196,250	)	2,196,250		$	1.73 - $2.50	$	2.07
Options exercised	3,931		(3,931	)	$	4.45	$	4.45
Options forfeited	342,841		(342,841	)	$	2.06 - $9.31	$	3.58

September 30, 2005	1,495,678		5,864,361		$	1.73 - $18.00	$	4.64

• For the wholesale business, Boyds records sales when persuasive evidence of an arrangement exists, the price is fixed or determinable, items are shipped and the collectibility of the resulting receivable is reasonable assured. For the retail business, Boyds recognizes sales upon customer receipt of the merchandise. The ~~most significant financial statement~~ ~~line~~following ~~item,~~table ~~net~~summarizes ~~sales,~~information ~~represents~~about ~~transactions~~stock ~~consistent~~options ~~with~~outstanding ~~Boyds’~~at ~~primary business focus and meets the criteria of Staff Accounting Bulletin No. 101~~September 30, ~~including the transfer of title, probable collectibility, identified customer and no resource.~~2005:

• As of March 31, 2005, the Company has net deferred tax assets of approximately $94.5 million or approximately 58% of total assets, consisting of tax carryforwards that will begin to expire in 2023 until the end of 2033. The recovery of the deferred income tax assets is contingent upon applicable tax laws and realization of these deferred tax assets. In the first quarter of 2005, the Company recorded tax expense of $70 million as a result of recording a $71.6 additional valuation allowance against its deferred tax assets. This valuation allowance results from reduced estimates by management of future taxable income in each of the federal, state, and foreign tax jurisdictions during the carry forward period and the conclusion by management that it is no longer more likely than not that this amount of deferred tax assets will be realized under the criteria of SFAS No. 109, Accounting for Income Taxes. The Company will continue to evaluate the need for further valuation allowances under this criteria; such further adjustments could be significant. The Company will need to generate approximately $240 million of taxable income over the next 30 years to fully realize the federal net deferred tax assets.

		Weighted			Weighted		Weighted
Exercise	Options	Average		Options	Average		Average
Price	Outstanding	Exercise Price		Exercisable	Exercise Price		Remaining Life

$1.73 to $2.06	1,962,500	$	2.06	105,000	$	2.06	9.7

$2.36 to $6.25	2,149,984	$	4.57	1,203,069	$	4.72	7.1

$6.50 to $18.00	1,758,000	$	7.60	1,377,000	$	7.75	5.8

~~• Accounts receivable are presented at estimated net realizable value~~10. ~~Boyds~~ PROVISION ~~uses~~FOR ~~estimates~~INCOME 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.TAXES

~~• Inventories~~As ~~are~~of ~~stated~~September 30, at2005, the ~~lower~~ ofCompany ~~cost~~has ora ~~market.~~full ~~Cost~~valuation allowance isagainst ~~determined~~its ~~under~~deferred ~~the~~tax ~~first-in~~assets, ~~first-out method~~consisting of ~~accounting. Boyds~~tax ~~records~~carryforwards ~~adjustments~~that will begin to ~~the~~expire ~~value~~in 2023. The recovery of ~~inventory~~the indeferred ~~situations~~income ~~where~~tax itassets is ~~appears~~contingent ~~that~~upon ~~Boyds~~future ~~will~~taxable ~~not~~income beand ~~able~~applicable totax ~~recover~~laws. For the ~~cost~~nine months ofended September 30, 2005, the ~~product.~~Company ~~This~~recorded tax expense of ~~lower~~$165.4 million as a result of ~~cost~~recording ora ~~market~~$170.7 ~~analysis~~million isadditional ~~based~~valuation allowance onagainst ~~Boyds’~~its ~~estimate~~deferred oftax ~~forecasted~~assets. This valuation allowance results ~~demand~~from estimates by ~~customer~~management byof ~~product.~~future Ataxable income in each of the federal, state, and foreign tax jurisdictions during the carry forward period and the conclusion by

1517

~~decrease~~management inthat it ~~product~~is ~~demand~~no ~~due~~longer tomore ~~changing~~likely ~~customer~~than ~~tastes,~~not ~~consumer~~that ~~buying~~this ~~patterns~~amount ~~or loss~~ of ~~shelf~~deferred ~~space~~tax toassets ~~competitors~~will be ~~could~~realized ~~significantly~~under ~~impact~~the ~~Boyds’~~criteria ~~evaluation~~ of ~~its~~SFAS ~~excess~~No. 109, ~~and~~Accounting ~~obsolete~~for ~~inventories~~Income Taxes.

~~• Under the requirements of SFAS No~~11.~~142,~~ COMMITMENTS & “Goodwill and Other Intangible Assets”, and SFAS No.144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, the Company tested for impairment by comparing the fair value of the reporting unit with the carrying value of that unit. Fair value was determined based on the discounted cash flow method. As a result of the Company’s impairment test completed in the first quarter of 2005, the Company recorded an impairment loss of $2.6 million to reduce the carrying value of goodwill to zero. The impairment was due to the wholesale segment’s operating performance.CONTINGENCIES

• Boyds ~~has~~is ~~various~~involved ~~stock-based employee compensation~~in ~~plans.~~various ~~The~~legal ~~Company~~proceedings, ~~accounts~~claims ~~for~~and ~~those~~governmental ~~plans~~audits ~~under~~in the ~~recognition and~~ordinary ~~measurement~~course ~~principles~~ of ~~APB Opinion No~~business. ~~25,~~In ~~“Accounting for Stock Issued to Employees”, and related Interpretations. Under this method, compensation cost is~~ the ~~excess,~~opinion ifof ~~any~~management, of the ~~quoted~~ultimate ~~market~~disposition ~~price~~ of ~~the stock at the grant~~ ~~date~~these ormatters ~~other~~will ~~measurement~~not ~~date~~have ~~over~~a ~~the~~material ~~amount~~adverse aneffect ~~employee~~on ~~must pay to acquire~~ the ~~stock. No stock-based employee compensation cost is reflected in net~~financial ~~income~~position, asresults ~~all options granted under those plans had an exercise price equal to the market value~~ of ~~the~~operations ~~underlying~~or ~~common~~cash ~~stock~~flows ~~on the date~~ of ~~grant~~Boyds.

~~FACTORS~~Boyds ~~WHICH~~also ~~AFFECT~~has ~~BOYDS~~significant licensing agreements with NASCAR, Coca-Cola, M&Ms, and Crayola. The Company’s ~~RESULTS~~NASCAR license includes the top OFten ~~OPERATIONS~~drivers. Pursuant to this arrangement, Boyds has the ability to use the NASCAR logo or driver names, likeness, and numbers. Boyds pays a royalty based on sales of these products to the various licensors.

~~Seasonality~~12. EARNINGS PER SHARE

~~Boyds~~The ~~recognizes~~following ~~revenues~~is ~~throughout the year and generally ships merchandise on~~ a ~~first-in, first-out basis. Approximately 45%~~ reconciliation of ~~revenues are recorded during~~ the ~~first~~numerators and ~~second~~denominators ~~quarters while approximately 55%~~ of ~~revenues are recorded during~~ the ~~third~~basic and ~~fourth quarters~~diluted inearnings ~~anticipation~~per ofshare ~~the~~computations ~~holiday~~for ~~season. Boyds does not have~~ the ~~significant seasonal~~net ~~variation~~income/(loss) inavailable ~~its~~to ~~revenues that it believes is experienced by many~~common ~~other giftware, collectibles or retail companies.~~stockholders:

Foreign Exchange

	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2004		2005		2004		2005

Numerator for basic and diluted earnings per share:
Net income/(loss)	$	4,467	$	1,526	$	7,786	$	(177,122	)
Denominator:
Denominator for basic earnings per share -
weighted average shares	59,004		59,008		59,004		59,007
Effect of dilutive securities:
Effect of shares issuable under stock option plans
based on treasury stock method	8		—		10		67
Denominator for diluted earnings per share -
weighted average shares	59,012		59,008		59,014		59,074

EPS - Basic	$	0.08	$	0.03	$	0.13	$	(3.00	)

EPS - Diluted	$	0.08	$	0.03	$	0.13	$	(3.00	)

~~The dollar value of Boyds’ assets abroad is not significant~~13. SUBSEQUENT ~~Boyds’ sales are primarily denominated in United States dollars and, as a result, are not subject to changes in exchange rates.~~EVENTS

~~Boyds~~On October 3, ~~imports~~2005, ~~most of its products from manufacturers~~ in ~~China.~~connection ~~Boyds’~~with ~~costs~~potential ~~could~~defaults ~~be adversely affected~~ on aits ~~short-term~~senior ~~basis~~secured ~~if the Chinese renminbi appreciates~~credit ~~significantly relative to the United States dollar. Conversely~~agreement, ~~its~~we ~~costs~~entered ~~would be~~into ~~favorably affected on~~ a ~~short-term~~waiver ~~basis~~agreement ifwith ~~the~~our ~~Chinese renminbi depreciates significantly relative to the United States dollar~~lenders. ~~Although~~This ~~Boyds generally~~waiver ~~pays~~agreement provided for, ~~its~~among ~~products~~other ~~in United States dollars~~things, the ~~cost~~lenders’ offorbearance ~~such products fluctuates with the value of the Chinese renminbi. In the future, Boyds may,~~ from ~~time to~~ ~~time,~~exercising ~~enter~~contractual ~~into~~remedies ~~foreign~~under ~~exchange~~our ~~contracts~~credit oragreement ~~prepay~~on ~~inventory~~account ~~purchases as a partial hedge against currency fluctuations. Differences between the amounts~~ of ~~such~~existing ~~contracts~~defaults ~~and~~through ~~costs~~October 16, ~~of specific material purchases are included in inventory and cost of sales~~2005. Boyds’ policy is to not capitalize any gains or losses associated with foreign currency transactions or foreign exchange contracts. Boyds intends to manage foreign exchange risks to the extent appropriate.

1618

~~Boyds~~On ~~has~~October 7, ~~growing~~2005, ~~sales~~The ~~operations~~Company ~~based in~~received ~~Europe~~notification ~~and~~from ~~Canada~~the New York Stock Exchange (“NYSE”) dated October 7, 2005, ~~but~~that atit ~~this~~determined ~~time~~that ~~Boyds~~trading ~~does~~of ~~not~~the ~~expect~~Company’s ~~any~~common ~~significant~~stock (ticker ~~impact~~symbol ~~due~~FOB) would be suspended prior to ~~fluctuations~~the opening on Monday, October 10, 2005. This decision was reached in view of the ~~Euro,~~fact that the ~~British~~Company ~~Pound~~was ornot in compliance with the ~~Canadian~~NYSE’s newly increased continued listing standards. The ~~dollar~~Company was considered “below criteria” by the NYSE because the Company’s average market capitalization was less than $75 million over a 30 trading-day period and its shareholders’ equity was less than $75 million and the average closing price of the security was less than $1.00 over a consecutive 30 trading-day period. In addition, the NYSE noted the Company’s abnormally low selling price, which closed at $0.45 on October 6, 2005.

~~RESULTS~~Boyd’s OFcommon ~~OPERATIONS~~stock is currently being quoted under the ticker symbol “BOYD.PK” on the Pink Sheets Electronic Quotation Service maintained by the Pink Sheets LLC and on the OTC Bulletin Board.

~~Net~~On ~~sales~~October 16, 2005, ~~consist~~we ofand ~~sales~~certain of our ~~products,~~subsidiaries ~~net~~filed ofvoluntary ~~sales~~petitions ~~discounts,~~for ~~product~~reorganization ~~returns~~under ~~and~~chapter ~~allowances~~11 of the United States Bankruptcy Code (the “Bankruptcy Code”), ~~retail~~in ~~sales~~the ~~from~~United States Bankruptcy Court for the ~~Boyds~~District ~~Bear~~of Maryland (the ~~CountryTM~~“Court”) ~~retail~~(Case ~~stores,~~Nos. ~~collectors~~05-43793; ~~club~~05-43805; ~~sales~~05-43802; ~~generated~~05-43833; ~~from~~05-43838; ~~members~~05-43863; of05-43816; ~~Boyds’~~05-43848; ~~collectors~~and ~~club~~05-43857). We ~~and~~have ~~royalty~~requested ~~income~~joint ~~from~~administration ~~licenses~~of ~~held~~the bycases under the caption “The Boyds Collection, Ltd., ~~Wholesale~~Case ~~sales~~No. 05-43793. We ~~are~~will ~~primarily~~continue ~~made~~will oncontinue ato ~~purchase~~operate our businesses ~~order~~as ~~basis.~~“debtors ~~Revenue~~in possession” ~~associated~~under ~~with~~the ~~sales~~jurisdiction isof ~~recognized~~the ~~when~~Court ~~products~~and ~~are~~in ~~shipped~~accordance towith the ~~customer~~applicable provisions orof ~~upon~~ the ~~completion~~Bankruptcy Code and orders of athe ~~retail~~Court (See ~~transaction~~Note 1 — Chapter 11 Bankruptcy Proceedings).

~~Boyds’~~On ~~gross profit margins may not be comparable to the gross profit margins of certain other entities due to the classification of certain costs. Boyds includes items such as purchasing and receiving costs~~January 17, ~~internal transfer costs~~2006, ~~and~~ the ~~costs~~Company offiled ~~its~~for ~~distribution~~bankruptcy ~~network~~ in ~~cost~~the ~~of goods~~Dutch ~~sold.~~court ~~Boyds~~for ~~includes~~ its ~~inspection~~Dutch subsidiary. ~~costs~~The incourt ~~selling,~~approved ~~general~~the filing and ~~administrative~~ ~~(“SG&A”)~~appointed ~~expenses.~~a ~~Other~~Trustee ~~entities~~to ~~may~~close ~~classify their~~down ~~expenses~~the ~~differently.~~operations,

In November of ~~accordance~~2005, ~~with~~Boyds ~~Emerging~~opened ~~Issues~~My ~~Task~~Boyds ~~Force~~Bear ~~(“EITF”)~~Shop in ~~No.~~FAO ~~00-10,~~Schwarz ~~“Accounting~~in ~~for Shipping~~New ~~and~~York ~~Handling~~City. ~~Fees~~This ~~and~~retail ~~Costs”,~~store ~~Boyds~~in ~~records~~being ~~amounts~~used ~~billed~~ to generate ~~customers~~income ~~related to shipping~~ and ~~handling~~expand asthe ~~revenue~~brand ~~and~~awareness ~~all expenses related to shipping~~ and ~~handling~~image ~~as cost~~ of ~~goods sold~~Boyds.

~~Other~~On May 25, 2006, the Company announced that Jan Murley, Chief ~~income~~Executive ~~consists~~Officer was leaving the Company effective on the earlier to occur of ~~interest~~(i) the effective ~~income~~date of the Company’s plan of reorganization and ~~exchange~~(ii) June 30, 2006. ~~rate~~The ~~gain/loss~~Company will incur approximately $0.5 million in expenses associated with this departure.

The ~~following~~Company ~~table~~also ~~sets~~announced ~~forth~~ the ~~components~~appointment of ~~net~~Robert ~~income~~Coccoluto as aChief Executive ~~percentage~~Officer, ofPeter ~~net~~Frost ~~sales~~as ~~for~~Chief ~~the~~Operating ~~period~~Officer and Michael A. Prager ~~indicated:~~as President.

	Three Months
	Ended
	March 31,
	2004		2005
Net sales	100.0	%	100.0	%
Gross profit	60.3	%	45.3	%
Selling, general and administrative expenses	37.7	%	57.7	%
Impairment of assets	0.0	%	14.0	%
Income/(loss) from operations	22.6	%	(26.4	)%
Other income (expenses), net	(0.2	)%	(0.7	)%
Interest expense	4.2	%	11.8	%
Provision for income taxes	7.6	%	378.2	%
Net income/(loss)	10.6	%	(417.1	)%

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

~~Executive~~The ~~Overview~~following discussion should be read in conjunction with the financial information and related notes included elsewhere in this report.

InChapter ~~the~~11 ~~first~~Bankruptcy quarter of 2005, the Company’s net sales decreased by 30%, which can primarily be attributed to the wholesale segment’s decrease of 37% partially offset by an increase of 58% in the retail segment. The primary driver to the decreased wholesale net sales was the sales forces restructuring in the fourth quarter of 2004. The disruption from this change significantly impacted the Company’s bookings (cancelable orders) in its several national accounts and smaller accounts for the first quarter which were down 22%, compared to the bookings for the same period in 2004. Retail net sales were positively impacted by the addition of the Company’s second store in Pigeon Forge, Tennessee.Proceedings

17On October 3, 2005, in connection with potential defaults on our senior secured credit agreement, we entered into a waiver agreement with our lenders. This waiver agreement provided for, among other things, the lenders’ forbearance from exercising contractual remedies under our credit agreement on account of existing defaults through October 16, 2005.

~~The~~On ~~Company’s~~October 16, ~~net~~2005, ~~profit~~we ~~for~~and ~~the~~certain ~~first quarter decreased by $80.0 million to a loss~~ of ~~$77.2~~our subsidiaries ~~million~~filed asvoluntary ~~compared~~petitions tofor ~~the~~reorganization ~~same~~under ~~period~~Chapter in11 ~~2004. This decrease can be attributed to a significant increase in~~ of the ~~Company’s~~United ~~allowance~~States ~~for~~Bankruptcy ~~its~~Code ~~deferred tax asset,~~ (the ~~write~~“Bankruptcy ~~off of its goodwill~~Code”), ~~lower sales, and an increase~~ in the ~~inventory obsolescence reserve.~~

Cash used in operations in the first quarter of 2005 was $5.9 million compared to $5.4 million in the same period in 2004. In the first quarter of 2005, the Company had a net increase of approximately $12.5 million of debt and invested approximately $0.4 million of cash in property and equipment. In the three months of 2004, the Company repaid approximately $3.5 million of debt and invested approximately $1.9 of cash, of which $1.6 million related to the building of Boyds Bear CountryTM - Pigeon Forge.19

~~Three~~United ~~Months~~States ~~Ended~~Bankruptcy ~~March~~Court 31for the District of Maryland (the “Court”) (Case Nos. 05-43793; 05-43805; 05-43802; 05-43833; 05-43838; 05-43863; 05-43816; 05-43848; and 05-43857). We have requested joint administration of the cases under the caption “The Boyds Collection, Ltd., ~~2005~~Case vsNo. 05-43793. We will ~~Three~~continue ~~Months~~to ~~Ended~~operate ~~March~~our 31businesses as “debtors in possession” (“DIP”) under the jurisdiction of the Court, ~~2004~~under Court protection from creditors and claimants and in accordance with the applicable provisions of the Bankruptcy Code and orders of the Court.

~~Net~~Since ~~Sales—~~the ~~Net~~bankruptcy ~~sales decreased $7.8 million~~filing, toall ~~$18.5~~orders ~~million~~allowing inus ~~the first~~to ~~quarter~~conduct ofnormal ~~2005~~business ~~from~~activities, ~~$26.3~~including ~~million for~~ the ~~same~~approval ~~quarter in 2004. Sales~~ of ~~Boyds’ plush~~our ~~products decreased $3.7 million~~DIP financing, orhave ~~26%,~~been ~~resin~~entered ~~product~~by ~~sales~~the ~~decreased $3~~Court.3 ~~million,~~While orwe ~~40%,~~are ~~and~~in ~~other product sales decreased $0.8 million~~bankruptcy proceedings, orall ~~23%.~~transactions ~~As a~~not ~~percentage~~in ~~of net sales for~~ the ~~first~~ordinary ~~quarter,~~course ~~plush~~of ~~represented~~our ~~57%, resin~~business ~~products~~require ~~represented~~the ~~27%,~~prior ~~and~~approval ~~other~~of ~~products~~the ~~represented 16%~~Court.

~~Wholesale net~~On ~~sales~~October 16, ~~in the first quarter of~~ 2005 ~~declined $9.0 million~~, orpursuant ~~37%,~~ to ~~$15.2~~authorization ~~million~~ from ~~$24.2 million for~~ the ~~same~~Court, ~~quarter~~we inentered ~~2004.~~into ~~The~~an ~~decline~~$8 ~~can~~million ~~be primarily~~DIP ~~attributed~~credit tofacility. ~~lower~~This ~~bookings~~DIP facility inconsists ~~the fourth quarter~~ of ~~2004,~~an ~~which were~~$8 ~~44%~~million ~~lower~~revolver ~~than~~facility ~~booking~~which ~~for~~includes ~~the~~access ~~same period in 2003~~for $3.5 ~~The~~million ~~restructuring~~worth of ~~the~~ ~~Sales~~commercial ~~Force~~letters ~~in late October~~ of ~~2004~~credit. ~~and~~The ~~slowness~~letters inof acredit ~~select number of~~are ~~national~~required ~~accounts were the contributors~~ to ~~these~~be ~~reduced~~fully ~~bookings.~~cash ~~At the end of the first quarter, bookings (cancelable orders), were down 22% compared to last year’s bookings~~collateralized. ~~This~~The ~~decline~~DIP infacility ~~bookings~~limits ~~can be attributed to selected national accounts and~~ the ~~Company’s~~amount ~~smaller field accounts, which were~~of ~~partially~~capital ~~offset~~expenditures byduring ~~growth~~its interm ~~our medium~~ to ~~large field accounts~~$250,000.

~~Retail net~~As ~~sales~~a ~~increased~~consequence ~~$1.2~~of ~~million~~our bankruptcy filing, orpending litigation ~~58%~~against us is generally stayed, toand ~~$3.3~~no ~~million~~party inmay ~~the~~take ~~first~~any ~~quarter~~action to ofcollect ~~2005~~its ~~from~~pre-petition $2claims except pursuant to order of the Court.1 February 14, ~~million~~2006, inwas the ~~first~~deadline ~~quarter~~for ofclaimants ~~2004~~to file claims arising prior to our bankruptcy filing. ~~Same~~Differences ~~store~~between ~~retail~~claim ~~net sales~~amounts ~~decreased~~identified by us ~~$0.2~~and ~~million,~~claims orfiled ~~10%,~~by toclaimants ~~$1.8~~will ~~million~~be ininvestigated ~~the~~and ~~first~~resolved ~~quarter~~in ~~from~~connection ~~$2.0~~with ~~million~~our ~~from~~claims ~~the~~resolution ~~first~~process, ~~quarter~~and only holders of ~~2004.~~claims ~~This~~that are ~~decline~~ultimately ~~can~~allowed for purposes of our bankruptcy will be ~~attributed~~ entitled to distributions. Since the ~~reduced~~settlement ~~tourist~~of ~~traffic~~terms ~~and~~of ~~poor~~allowed ~~weather~~claims inare subject to a confirmed plan of reorganization, the ~~Gettysburg~~ultimate distribution with respect to the ~~area~~allowed claims is not presently ascertainable.

~~Gross~~On ~~profit - Gross profit decreased $7.5 million~~March 14, ~~or 47%~~2006, towe ~~$8.4~~filed ~~million~~with in the ~~first~~ ~~quarter~~Court our Plan of ~~2005~~Reorganization, ~~from~~which ~~$15.9~~was ~~million~~subsequently ~~for~~amended ~~the~~(as ~~first~~amended, ~~quarter~~the ~~of 2004. Gross~~“Plan”) ~~profit~~and asDisclosure aStatement, ~~percentage~~which ofwas ~~net~~subsequently ~~sales~~amended ~~decreased~~(as toamended, ~~45.3% for~~ the ~~first quarter of~~“Disclosure ~~2005 as compared to 60~~Statement”).3% ~~for 2004.~~ The ~~dollar~~Plan ~~decline~~and ~~was~~the ~~primarily attributable~~Disclosure toStatement ~~reduced~~set ~~sales,~~forth athe ~~incremental~~terms ~~charge~~ of ~~$1.4 million increase in~~ the proposed ~~Company’s~~settlement ~~inventory~~between ~~obsolescence allowance~~Boyds, ~~and~~our ansecured ~~increased~~creditors, ~~product~~the ~~mix~~Official ~~shift~~Committee toof ~~lower~~Unsecured ~~margin product. Wholesale gross profit decreased by $8.3 million~~Creditors, orand ~~58%,~~our ~~to $6~~stockholders.1 ~~million~~The ~~in the first quarter of 2005 from $14.4~~Disclosure ~~million~~Statement inalso ~~the~~includes ~~first~~a ~~quarter~~description of ~~2004.~~the ~~Retail~~events ~~gross~~that ~~profit~~led ~~increased~~up ~~by $0.8 million,~~ to ~~$2.3~~our ~~million~~bankruptcy filing inand the ~~first~~actions ~~quarter~~we ofhave ~~2005~~taken ~~from~~to ~~$1.5~~improve ~~million~~our infinancial ~~the~~situation while ~~first~~in ~~quarter of 2004~~bankruptcy.

~~Selling,~~The ~~General &~~Plan ~~Administrative~~has ~~Expenses~~been ~~(“SG&A”)-~~approved ~~SG&A~~by ~~expenses~~the necessary ~~increased~~constituencies ~~$0.8~~and ~~million,~~remains orsubject ~~8%,~~ to ~~$10.7~~approval ~~million~~by in the ~~first~~Court. ~~quarter~~We ofcannot ~~2005~~provide ~~from~~any ~~$9.9~~assurance ~~million~~that ~~for~~any ~~the~~plan ~~first quarter~~ of ~~2004.~~reorganization ~~SG&A~~ultimately asconfirmed aby ~~percent of net~~the ~~sales~~Bankruptcy ~~increased~~Court towill ~~58%~~be ~~for~~consistent ~~the~~with ~~first quarter from 38% for~~ the ~~same~~terms ~~period in 2004. The dollar increase in SG&A expenses was a result~~ of ~~$1.4~~the ~~million~~Plan ~~relating to operating expenses in our new Boyds Bear Countryä location in Pigeon Forge, Tennessee, which opened in November 2004,~~ and ~~$0.5 in call center expenses, which were partially offset by~~Disclosure $0Statement.~~8 million in lower wage costs stemming from our cost saving initiatives.~~

18If confirmed, the Plan will provide us with significant relief from pre-filing claims. The Plan details how the claims of each class of creditors and interest holders will be treated. The following is a summary of the Plan:

~~Impairment~~· Holders of ~~Goodwill~~senior ~~Assets~~secured —claims will ~~The~~receive ~~Company~~(in ~~recorded~~exchange aof ~~goodwill~~approximately ~~impairment~~$57.7 ~~charge~~million in claims): senior secured promissory notes in the aggregate principal amount of $230.60 million, ~~for~~to ~~the~~be ~~first~~due ~~quarter~~in offive ~~2005.~~years ~~The~~following ~~charge~~the iseffective ~~attributed~~date toof the ~~goodwill~~Plan, ~~impairment testing~~which aswe ~~prescribed~~expect will byoccur ~~SFAS~~in ~~142~~June 2006, ~~Goodwill~~ and ~~Other~~common ~~Intangibles~~stock ~~due~~representing toapproximately 48.5% of our common stock outstanding after the ~~wholesale~~effective ~~segment’s~~date ~~operating~~of ~~performance~~the Plan (the “New Common Stock”).

~~Income~~· Each ~~from~~qualifying ~~operations~~noteholder -(a holder ~~Income~~of ~~from~~our ~~operations~~Senior ~~declined~~Subordinated ~~$10.9~~Notes ~~million~~that tohas acontinuously ~~loss~~held ofbeneficial interests ~~$4.9~~therein for more than 18 months immediately prior to our bankruptcy ~~million~~filing inthrough the ~~first~~effective ~~quarter~~date of ~~2005~~the ~~from~~Plan) anshall ~~income~~receive cash in the amount of $622.0% ~~million~~of in the ~~first~~ ~~quarter~~allowed amount of ~~2004.~~its ~~Income~~note ~~from~~claim, ~~operations~~to asbe apaid, ~~percentage~~if ofat ~~net~~all, ~~sales~~on the ~~declined~~date toof a ~~negative~~Future ~~26%~~Transaction; inplus ~~the~~its ~~first~~pro ~~quarter~~rata share of ~~2005 from 23~~5.0% inof the ~~first~~New Common ~~quarter~~Stock, plus its pro rata share of ~~2004~~50.0% of the reallocated shares which are the

Total interest expense - Total interest expense increased to $2.2 million for the first quarter of 2005 as compared to $1.1 million for the first quarter of 2004. Interest expense on outstanding debt increased for the first quarter of 2005 by $1.0 million. This increase is due to a higher interest rate on the Company’s outstanding debt. Additionally, the amortization expense associated with the deferred financing costs have increased by $0.1 million as a result of costs associated with the new credit agreement.20

~~Income~~shares ~~taxes~~of -our ~~Income~~common ~~taxes~~stock ~~increased~~representing ~~$68.1~~the ~~million~~difference between: to(i) 5% ~~$70.1~~of ~~million~~the inNew Common Stock; and (ii) the ~~first~~aggregate pro ~~quarter~~rata share of ~~2005~~New asCommon ~~compared~~Stock allocable to $2qualifying noteholders.0 ~~million~~A ~~for~~“Future Transaction” ~~the~~is ~~first~~a ~~quarter~~transaction ofin ~~2004.~~which ~~The provision~~we, ~~was~~subject ~~impacted~~to bycertain ~~the~~exceptions, ~~recording~~ (a) merge or ~~$71.6~~consolidate ~~million~~with ~~valuation~~another ~~allowance against~~person ~~its~~or ~~deferred~~entity ~~tax~~or (b) acquire any assets., ~~The~~properties, ~~valuation~~rights ~~allowance~~or ~~reserves~~equity ainterests, ~~portion~~in ~~of the~~each ~~deferred~~case ~~tax~~occurring ~~assets~~within 36 ~~that~~months ~~may~~of ~~not~~the beeffective ~~realized~~date byof ~~estimated~~the ~~future~~Plan ~~taxable income.~~so ~~The~~long ~~valuation allowance~~as ~~was~~the ~~recorded~~transaction inis ~~the~~not ~~first~~a acquisition ~~quarter~~ (i) of ~~2005~~assets, ~~due~~properties toor ~~the~~rights ~~continuation~~or assumption of ~~the~~liabilities ~~poor~~in ~~economic~~the ~~climate~~ordinary ~~and~~course ~~the~~of ~~results~~our inbusiness ~~the~~(i.e., ~~first~~accounts ~~quarter~~payable, receivables, ofinventory, ~~2005.~~product, ~~The~~store ~~amount~~leases, ofstore ~~the~~equipment ~~deferred~~and ~~tax~~any ~~asset~~other similar ~~considered~~acquisitions ~~realizable~~or ~~could~~assumptions ~~be reduced~~of inliabilities); ~~the~~(ii) an ~~near~~acquisition that ~~term~~has ifaggregate ~~estimates~~consideration of ~~future~~$10 ~~taxable~~million ~~income~~or inless ~~each~~that ofis ~~the~~not an ~~federal,~~acquisition ~~state,~~of ~~and~~a ~~foreign~~toy ~~jurisdictions,~~collectible ~~during~~business; ~~the~~or ~~carryforward~~(iii) an ~~period~~acquisition ~~are~~that ~~further~~does ~~reduced.~~not ~~Such~~meet ~~further~~certain ~~adjustments~~revenue ~~could~~or beEBITDA ~~significant~~thresholds.

~~Net~~· Each ~~Loss—~~non-qualifying ~~Net~~holder ~~profit~~(those holders ~~decreased~~of ~~$80.1~~our ~~million~~Senior toSubordinated aNotes ~~loss~~that ofare ~~$77.3~~not ~~million~~qualifying ~~in the~~noteholders) ~~first~~shall ~~quarter~~receive ofcash ~~2005~~in ~~from a $2.8 million income for~~ the ~~first~~amount ~~quarter~~ of ~~2004~~24. ~~Excluding~~0% ~~the impact~~ of the ~~two~~allowed ~~non-cash~~amount ~~charges consisting~~ of ~~the~~its ~~impairment~~claim to ofbe ~~goodwill~~paid, ~~and~~if ~~the~~at ~~increase~~all, inon the ~~deferred~~date ~~tax~~upon ~~asset~~which ~~valuation,~~a ~~described above,~~Future ~~net~~Transaction ~~loss~~is ~~would have been $3~~consummated.~~1 million.~~

~~Liquidity~~· If the non-qualifying holders vote to reject the Plan, then each such ~~and~~holder shall ~~Capital~~receive ~~Resources~~cash in the amount of 2.0% of the allowed amount of their notes, to be paid, if at all, on the date upon which a Future Transaction is consummated.

~~Boyds’~~· Each ~~primary~~holder ~~sources~~ of ~~liquidity~~ ~~are~~an ~~cash~~allowed ~~flow from operations and borrowings under its credit~~general ~~agreement,~~unsecured ~~which~~claim ~~includes~~or aclaims ~~revolving~~will ~~credit~~receive ~~facility. Boyds’ primary uses of~~ cash ~~are~~equal to ~~fund~~28% ~~working~~of ~~capital~~its ~~requirements~~allowed ~~to service debt. Cash balances~~claim ~~increased~~or toclaims, ~~$3.2~~if ~~million in~~ the ~~first~~class ~~three months~~ of ~~2005~~such asholders ~~compared~~accepts to the ~~balances~~ ~~at December 2004~~Plan.

~~Operating~~· If ~~Activities~~the class of holders of general unsecured claims vote to reject the Plan, then each such holder shall receive cash in the amount of 4% of the allowed amount of such claim to be paid on the earlier of: (a) the date upon which a Future Transaction is consummated; or (b) the first business day that is at least 18 months after the effective date of the Plan.

~~Cash~~· Secured ~~provided~~claims byother ~~operating~~than ~~activities~~senior ~~decreased~~secured ~~$11.3~~claims will ~~million,~~be totreated aeither ~~negative~~as agreed ~~$5.9~~by ~~million~~the parties or in a manner that reinstates the ~~first~~secured ~~three~~claim ~~months~~or provides for payment to the creditor equal to the value of ~~2004~~such ~~from~~creditor’s $5collateral.4 Each ~~million~~holder ~~for~~of ~~the~~an ~~first~~allowed ~~three~~priority ~~months~~claim (other than a tax priority claim) shall receive, on account of ~~2004.~~and ~~The~~in full and complete settlement, release and discharge of such allowed priority claim, (a) cash ~~flow~~equal to the amount of ~~decrease~~such ~~was~~claim ~~primarily~~or ~~attributable~~(b) such other treatment as to which the ~~decrease~~we and insuch ~~sales,~~holder ~~increases~~shall have agreed upon in ~~inventory~~writing ~~levels,~~in ~~decrease~~an inamount ~~payables~~sufficient ~~and~~to ~~accrued~~render ~~expenses~~such ~~offset~~claim not by“impaired” under section 1124 of the Bankruptcy Code, to be paid on the latest of (a) the effective date of the ~~decrease~~Plan in(or ~~inventory~~as insoon ~~transit~~thereafter as is reasonably practicable), (b) five business days after the final allowance of such claim, or (c) the date on which the we and the holder of such claim otherwise agree.

~~Investing~~· Allowed ~~Activities~~priority tax claims will either be paid, at our sole option , (a) on the latter of (i) the effective date of the Plan (or as soon thereafter as is reasonably practicable), (ii) five business days after the allowance thereof; (b) beginning the first anniversary following the effective date of the Plan, cash payments to be made in equal annual installments, with the final installment being payable no later than the sixth anniversary of the date of the assessment of such allowed priority tax claim, in an aggregate amount equal to such claim, together with interest on the unpaid balance of such claim calculated from the effective date of the Plan through the date of payment; or (c) such other treatment agreed to by us and the holder of such claim.

~~Capital~~· Each ~~and~~holder ~~investment~~of ~~expenditures~~200 ~~totaled~~or ~~$0.4 million~~more ~~in the first three months~~ shares of ~~2005~~our ascommon ~~compared~~stock towill ~~$1.9~~receive ~~million~~its inpro ~~the first~~rata ~~three~~share ~~months~~ of ~~2004~~46.5% ~~This decrease in expenditures was the result~~ of ~~no major~~our ~~additional construction costs relating to the Boyds Bear~~post ~~CountryTM~~bankruptcy ~~— Pigeon Forge, Tennessee and Myrtle Beach, South Carolina locations~~equity.

19· Each holder of less than 200 shares of our common stock will receive $0.15 per share.

~~Financing Activities~~21

InWe ~~connection~~are also negotiating with ~~the recapitalization~~one inof ~~1998,~~our ~~Boyds~~senior ~~entered~~lenders to ~~into~~provide a ~~credit~~new ~~agreement providing for a~~ $~~325~~11.0 million ~~senior~~revolver ~~secured~~with ~~term loan, consisting of tranche A and tranche B, and~~ a ~~senior secured revolving credit facility providing for borrowings up to~~ $404.0 million. ~~During the first~~seasonal ~~quarter,~~over-advance ~~the~~option ~~company~~that ~~had~~supports ~~additional~~letters ~~borrowings~~ of ~~$10.0 million on the revolving~~ credit ~~facility.~~and Onwould ~~February~~provide ~~23,~~us ~~2005, the Company entered into a new credit~~with ~~agreement~~access ~~and~~to ~~used~~additional ~~the~~capital ~~proceeds~~ to ~~extinguish~~fund ~~the~~post-reorganization ~~outstanding~~operations. ~~tranche~~There ~~A (the “term~~can ~~loan”)~~be ~~and~~no ~~revolving~~assurance ~~credit~~that ~~facility~~these ~~(the~~negotiations ~~“revolver”)~~will inbe ~~the amounts of $28~~successful.~~0 million and $22.8 million, respectively.~~

~~The~~There ~~New~~can ~~Credit~~be ~~Agreement~~no ~~contains~~assurance athat ~~revolving credit facility with capacity of up to $20 million and a new term loan of $45 million. During~~ the ~~first three months of 2005~~Plan, ~~the~~or ~~Company~~any ~~utilized $8.2~~other ~~million~~plan of ~~this revolving facility. Borrowings under the credit agreement bear interest at a rate per annum~~reorganization, ~~equal~~will tobe aconfirmed ~~margin~~by ~~over either a base rate, which is~~ the ~~higher~~Court ~~of the prime lending rate~~ or ~~0.50% above the federal funds~~implemented ~~effective rate, plus 9~~successfully.~~50% or LIBOR plus 11.00%.~~

~~The~~Following ~~New~~the ~~Credit~~effective ~~Agreement~~date ~~contains~~of ~~financial~~our plan of ~~covenants~~reorganization, ~~tested~~we ~~quarterly,~~expect ofto ~~minimum~~have ~~adjusted~~fewer ~~EBITDA,~~than ~~(as~~300 ~~defined~~holders inof ~~the~~record ~~New~~of our ~~Credit~~common ~~Agreement)~~stock. Consequently, ~~maximum~~we ~~senior~~intend ~~leverage~~to ~~and~~apply ~~maximum~~for ~~total~~termination ~~leverage~~of ~~relating~~the toregistration ~~the~~of ~~last~~our ~~twelve~~common ~~months.~~stock Atunder the ~~end~~Exchange Act of ~~the~~1934, ~~third~~as ~~and fourth quarters of 2005~~amended, ~~Boyds~~which ~~may~~would ~~not~~substantially ~~have~~reduce athe ~~senior~~information ~~leverage~~required ~~ratio~~to ~~greater~~be ~~than~~furnished ~~2.5~~by us to ~~1.0~~our orstockholders aand ~~total leverage~~we ~~ratio~~would ~~greater~~be ~~than~~no ~~4.5~~longer torequired ~~1.0.~~and Atdo ~~the~~not ~~end~~intend ofto file ~~the~~reports ~~third~~with ~~and~~the ~~fourth~~SEC. Certain ~~quarters~~provisions of ~~2005,~~the ~~Boyds~~Exchange ~~must~~Act ~~have~~would anno ~~adjusted~~longer ~~minimum~~be ~~EBITDA~~applicable ofto ~~$17~~us ~~million.~~such ~~Additionally,~~ as the short-swing ~~New~~profit ~~Credit~~recovery ~~Agreement~~provisions ~~has~~of ~~covenants~~Section 16(b) of ~~that restrict~~ the ~~Company’s ability to~~ ~~incur~~Exchange ~~additional indebtedness~~Act, ~~make~~the ~~capital~~requirement ~~expenditures,~~of ~~pay~~furnishing ~~dividends~~a onproxy ~~and redeem~~statement ~~capital~~in ~~stock,~~connection with ~~make~~stockholders’ ~~other restricted payments~~meetings, ~~make investments, sell its assets~~ and ~~enter~~the ~~into~~related ~~consolidations,~~requirement ~~mergers and transfers~~ of ~~all~~an ~~or substantially~~annual ~~all~~report ~~of its assets~~to stockholders.

On ~~February~~ January 17, ~~2000~~2006, ~~Boyds announced that its Board of Directors had approved~~ the ~~repurchase of 3.0 million shares of the~~ Company~~’s common~~ ~~stock.~~filed ~~As of March 31, 2005, Boyds had repurchased 344,730 shares of~~for ~~common~~bankruptcy ~~stock~~in ~~pursuant to~~ the ~~stock~~Dutch ~~repurchase~~court ~~program~~ for anits ~~aggregate~~Dutch ~~amount of approximately $1 million~~subsidiary. ~~These~~The ~~repurchases~~court ~~were~~approved ~~financed out of operating~~the ~~cash~~filing ~~flow.~~and ~~Any~~appointed ~~future~~a ~~repurchases~~Trustee ~~under~~to ~~this~~close ~~program~~down ~~are limited by~~ the ~~New Credit Agreement to an aggregate amount not to exceed $1~~operations.~~0 million.~~

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, 2005, Boyds had repurchased $52.3 million of its notes pursuant to this note repurchase program. These repurchases were financed out of operating cash flow and the revolving credit facility. Any future repurchases under this program are expected to be financed similarly. Boyds may make such purchases from time to time in the open market or in private transactions.GENERAL

~~Management~~Boyds ~~believes~~is ~~that~~a ~~cash flow~~domestic ~~from~~designer, ~~operations~~importer and distributor ~~availability~~of ~~under~~branded, ~~the~~high-quality, ~~new~~handcrafted ~~credit~~collectibles ~~agreement~~and ~~revolving~~other ~~credit~~specialty ~~facility~~giftware ~~will~~products. ~~provide~~Boyds ~~adequate~~sells ~~funds~~its ~~for~~products ~~Boyds’~~primarily ~~foreseeable~~through ~~working~~an ~~capital~~extensive ~~needs,~~network ~~planned~~of ~~capital~~approximately ~~expenditures~~11,000 ~~debt~~store ~~service~~locations ~~obligations,~~comprised ~~the~~of independent ~~Stock~~gift ~~Repurchase Program~~ and ~~the~~collectibles ~~Bond Repurchase~~retailers, ~~Program.~~premier ~~Any~~department ~~future acquisitions~~stores, selected ~~joint~~catalogue ~~ventures~~retailers orand other ~~similar~~ ~~transactions~~electronic ~~may require additional capital~~ and ~~there~~retail ~~can~~channels. ~~be no assurance that any such capital will be available to~~ Boyds ~~on acceptable terms,~~ oralso atsells ~~all. Boyds’ ability to fund~~ its ~~working~~products ~~capital~~directly ~~needs, planned capital expenditures and scheduled debt payments,~~ to ~~refinance~~consumers ~~indebtedness~~through ~~and to comply with all of the financial covenants under~~ its ~~debt~~two ~~agreements~~retail ~~depends~~stores ~~on its~~Boyds ~~future~~Bear ~~operating~~Countryä ~~performance~~- ~~and~~Gettysburg ~~cash flow, which in turn are subject to prevailing economic conditions~~ and toBoyds ~~financial,~~Bear ~~business~~Countryä ~~and~~- ~~other~~Pigeon ~~factors, some of which are beyond Boyds’ control~~Forge.

Boyds’ sales consist of plush animals, resin figurines, and other products. Other products include collectors club sales, home décor, stationary, accessories, retail food operations and its interactive concepts. Collectors club sales are generated from annual dues collected directly from members of Boyds’ collectors club, The Loyal Order of Friends of Boyds, which began in July 1996 and currently has approximately 20,000 paying members, as well as from the sale of related accessories.

~~RISK~~Boyds ~~FACTORS~~also ~~WHICH~~has ~~MAY~~several licensing agreements for its ~~AFFECT~~branded ~~FUTURE~~product. ~~PERFORMANCE~~The more significant agreements would include NASCAR ®, Coke ®, M&M’S ® Brand Characters, and Crayola ®. Boyds expects to begin delivering Coke ®, M&M’S ®, and Crayola ® Boyds products to stores in late 2005.

~~Changing~~Boyds ~~distribution~~licenses ~~channels. The Company’s historic distribution channels,~~its ~~mainly~~product ~~independent~~designs ~~retailers,~~to ~~have~~other ~~seen~~companies ~~significant declines in traffic~~ for ~~several~~ ~~years. Consumers~~products ~~have~~including ~~migrated~~home ~~to larger~~textiles, ~~more convenient~~infant ~~retailers,~~clothing ~~which~~and ~~provide~~wallpaper. ~~for~~Boyds abelieves ~~full~~such ~~array~~licensing, ofin ~~products~~addition ~~and~~to ~~services. If~~providing ~~the~~royalty ~~Company~~income, ishelps ~~unable~~ to ~~migrate~~increase itconsumer ~~sales~~awareness ~~distribution~~of toBoyds’ ~~channels which~~designs and ~~mirror~~brand ~~consumers~~image. ~~buying~~Boyds ~~tendencies,~~reports ~~then its~~royalty ~~revenues~~income ~~could~~in benet ~~significantly impacted~~sales.

Changing consumerBoyds tastes. Theexhibits demandits forproducts Boyds’at productsselect maynational beand quickly affectedregional bytradeshows changingwhere consumerorders tastesare andtaken interests.by Boyds’ resultsemployees. of operationsBoyds dependoperates substantiallyalmost uponexclusively itsout abilityof toa continueleased tooffice/distribution conceivefacility, design, sourceowns andone marketretail newstore piecesin andthe upongeneral continuingvicinity market acceptance of its existingGettysburg, Pennsylvania, and futureowns producta lines.second Ifretail Boydsstore fails or is significantly delayed in introducingPigeon newForge, piecesTennessee. toBoyds itsalso existingleases productwarehouse linesspace orin creatingDunkeswell, new productUnited lineKingdom. conceptsThe orCompany ifhad itsalso newleased productsspace doin not meet with market acceptanceDordrecht, itsThe resultsNetherlands. ofThe operationslease maywas beterminated impaired.as Aa numberresult of companies who participate in the giftwarebankruptcy andfiling collectibleson industriesJanuary are part of large17, diversified companies2006 thatin havethe greaterDutch financial resources than Boyds and offer a wider range of products and may be less affected by changing consumer tastescourts.

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 affect 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. In 2004, the Company began contracting its plush buying with three additional buying groups in an effort to mitigate this risk.22

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 particular, 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.SEGMENTS

~~Potential adverse~~The ~~trade~~Company ~~regulations~~operates ~~and~~in ~~restrictions. Boyds~~two ~~does~~segments ~~not~~which ~~own~~consist ~~or operate any~~of ~~manufacturing~~the ~~facilities.~~Company’s ~~Instead,~~wholesale ~~Boyds~~gift/collectible ~~imports~~business ~~substantially~~and ~~all~~the ofCompany’s ~~its~~ retail gift/entertainment ~~products~~business. ~~from~~These ~~independent~~segments ~~foreign~~are ~~manufacturers,~~evaluated ~~primarily~~regularly inby ~~China. As~~the aCompany’s ~~result,~~Chief ~~substantially~~Executive ~~all~~Officer ofin ~~its~~deciding ~~products~~how ~~are subject~~ to ~~United~~assess ~~States Customs~~performance ~~Service duties~~ and ~~regulations. These regulations include requirements~~ ~~that~~allocate ~~Boyds disclose information regarding the country of origin on its products, such as “Handmade in China~~resources.” Prior ~~Within~~to ~~its discretion,~~ the ~~United States~~retail ~~Customs~~operations ~~Service~~becoming ~~may~~a ~~also~~significant ~~set~~portion ~~new~~of ~~regulations regarding~~ the ~~amount~~Company’s ~~of duty to be paid~~performance, the ~~value of merchandise to be reported or other customs regulations~~ ~~relating~~Company tohad ~~Boyds’~~only ~~imported~~one ~~products.~~reportable ~~Failure to comply with these regulations may result in the imposition of additional duties or penalties or forfeiture of merchandise~~segment.

21The Company’s wholesale business designs, imports, and distributes resin figurines, plush animals and other specialty giftware products via a global network of independent retailers and distributors. The Company’s retail operation sells resin figurines, plush animals, other specialty giftware products and provides a unique interactive entertainment experience, directly to the end consumer currently at its Gettysburg, Pennsylvania flagship location and Pigeon Forge, Tennessee location.

~~Potential foreign~~CRITICAL ~~restrictions~~ACCOUNTING or additional costs. 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. 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.POLICIES

~~Potential infringement~~Preparing ofthe ~~Boyds~~Company’s ~~intellectual~~financial ~~property. Boyds~~statements ~~believes that its trademarks and other~~in ~~proprietary~~conformity ~~rights~~with ~~are~~accounting ~~material~~principles togenerally ~~its~~accepted ~~success~~in ~~and~~the ~~competitive~~United ~~position.~~States ~~Accordingly,~~of ~~Boyds~~America ~~devotes~~requires ~~resources~~that tomanagement ~~the~~make ~~establishment~~estimates and ~~protection~~assumptions ofthat ~~its~~affect ~~intellectual~~the ~~property~~amounts onreported ain ~~worldwide~~the ~~basis.~~financial ~~The~~statements ~~actions~~and ~~Boyds~~accompanying ~~takes~~notes. toPredicting ~~establish~~future ~~and~~events ~~protect~~is ~~its~~inherently ~~trademarks~~an ~~and~~imprecise ~~other~~activity ~~proprietary~~and ~~rights~~as ~~may~~such ~~not~~requires ~~be adequate~~the ~~to protect its intellectual property or to prevent imitation~~ use of ~~its products by others~~judgment. ~~Moreover,~~Actual ~~while~~results ~~Boyds~~may ~~has~~vary ~~not~~from ~~experienced~~estimates ~~any~~in ~~proprietary license~~amounts ~~infringements or legal actions~~ that ~~have~~may ~~had a~~ be material ~~impact~~to onthe ~~its~~ financial ~~condition~~statements. orManagement ~~results~~believes ofthat ~~operations,~~the ~~other~~estimates and ~~persons~~assumptions ~~have~~used ~~and~~in ~~will likely~~connection inwith the ~~future~~amounts ~~assert~~reported ~~rights~~ in, ~~or ownership of, its trademarks and other proprietary rights.~~ Boyds ~~may not be able to successfully resolve such~~’ ~~conflicts.~~financial Instatements ~~addition,~~and ~~the~~related ~~laws~~disclosures ofare ~~foreign~~reasonable ~~countries~~and ~~may~~made ~~not~~in ~~always protect~~good ~~intellectual property to the same extent as do the laws of the United States~~faith.

~~Retail Capital~~The ~~Expenditures. When~~most ~~the~~significant ~~Company~~accounting ~~progresses~~estimates ~~with~~inherent ~~its retail~~in ~~expansion~~the ~~plans,~~preparation itof ~~may~~Boyds’ ~~need~~financial tostatements ~~make~~include ~~significant~~estimates ~~capital~~related ~~expenditures.~~to In the ~~event~~valuation ~~that~~of the ~~format~~deferred ~~that~~tax assets, determining the ~~Company~~ultimate ~~has~~collectability of ~~designed~~accounts orreceivable and the ~~locations~~realizable ~~that~~value ~~the Company~~of ~~has~~inventory. The ~~selected,~~process ~~and~~of ~~will~~determining ~~select~~estimates inis ~~the~~based on ~~future~~several factors, ~~become~~including ~~unprofitable~~historical experience, ~~the Company~~current ~~will~~and ~~have~~anticipated economic toconditions ~~write~~and ~~down~~customer ~~the~~profiles. ~~investments~~Boyds ~~made~~continually inreevaluates these key ~~properties~~factors and makes adjustments to estimates where appropriate. InThe following ~~addition,~~are ifBoyds’ ~~these~~critical ~~properties~~accounting ~~become underperforming~~policies, ~~the~~some ~~Company~~of ~~may~~which ~~have difficulty~~require inthe ~~making~~application of ~~any~~significant ~~future~~estimates ~~debt~~and ~~obligation payments~~assumptions.

~~Retail~~· For the ~~Property~~wholesale ~~Leases. The~~business, ~~Company~~Boyds ~~has~~records ~~entered~~sales ~~into~~when ~~property~~persuasive ~~leases~~evidence ~~associated~~of ~~with future~~an ~~development~~arrangement ~~sites~~exists, inthe ~~Myrtle~~price ~~Beach,~~is ~~South~~fixed ~~Carolina~~or ~~and Branson~~determinable, ~~Missouri.~~items Inare ~~the event~~shipped ~~that~~ and the ~~Company~~collectibility ~~does~~of ~~not~~the ~~build~~resulting ~~its~~receivable ~~stores~~is onreasonably ~~these~~assured. ~~locations,~~For the ~~Company~~retail ~~will~~business, beBoyds ~~required~~recognizes tosales ~~expense~~upon customer receipt of the merchandise. ~~development~~The ~~costs~~most ~~that~~significant itfinancial ~~has~~statement ~~incurred~~line item, net sales, torepresents ~~date~~transactions onconsistent ~~each~~with ~~site.~~Boyds’ ~~The~~primary ~~expenditures~~business asfocus ofand ~~March~~meets the ~~31,~~criteria ~~2005~~of ~~are~~Staff ~~$1.6~~Accounting ~~million and~~Bulletin $0No.1 104, ~~million~~including ~~for~~the ~~Myrtle~~transfer of ~~Beach~~title, ~~and~~reasonable ~~Branson~~collectibility, ~~respectively~~and identified customer.

~~EFFECTS~~· As of June 30, OF2005, ~~RECENTLY~~the ~~ISSUED~~Company ~~ACCOUNTING~~set ~~STANDARDS~~up a valuation allowance for the remaining amount of its deferred tax assets, consisting of tax carryforwards that will begin to expire in 2023. For the nine months ended September 30, 2005, the Company recorded tax expense of $165.4 million as a result of recording a $170.7 million additional valuation allowance against its deferred tax assets. This valuation allowance results from estimates by management of future taxable income in each of the federal, state, and foreign tax jurisdictions during the carry forward period and the conclusion by management that it is no longer more likely than not that this amount of deferred tax assets will be realized under the criteria of SFAS No. 109, “Accounting for Income Taxes”.

In December of 2004, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 123R, Share-Based Payment (“SFAS 123R”). SFAS 123R addresses the accounting for share-based payments to employees, including grants of employee stock options. Under the new standard, companies will no longer be able to account for share-based compensation transactions using the intrinsic method in accordance with APB Opinion No. 25, Accounting for Stock Issued to Employees. Instead, companies will be required to account for such transactions using a fair-value method and recognize the related expense associated with share-based payments in the consolidated statement of operations. In April 2005, the Securities and Exchange Commission delayed the effective date for SFAS No. 123R until the first quarter of fiscal 2006, and allows, but does not require, companies to restate the full fiscal year of 2005 or retroactive restatement to earlier periods to reflect the impact of expensing share-based payments under SFAS 123R. The Company has not yet determined which fair-value method and transitional provision it will follow. The Company is currently assessing the impact that SFAS 123R will have on the financial position, results of operations and cash flows of Boyds.23

In· Accounts receivable ~~March~~are ~~2005,~~presented ~~the~~at ~~Securities~~estimated ~~and~~net ~~Exchange~~realizable ~~Commission~~value. ~~(“SEC”)~~Boyds ~~issued~~uses ~~Staff~~estimates in ~~Accounting~~determining ~~Bulletin~~the ~~No.~~collectability ~~(“SAB”)~~of ~~107~~its ~~regarding~~accounts ~~the~~receivable ~~Staff’s~~and ~~interpretation~~must ofrely on its ~~Share-Based~~evaluation ~~Payments.~~of ~~This~~historical ~~interpretation~~bad ~~provides~~debts, ~~the~~customer ~~Staff’s~~credit ~~view~~ratings, ~~regarding~~current economic ~~interactions~~trends ~~between~~and ~~SFAS~~changes ~~No.~~in ~~123R~~customer ~~and~~payment ~~certain~~terms ~~SEC~~to ~~rules~~arrive ~~and~~at ~~regulations~~appropriate ~~and provides~~reserves.

22· 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 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.

~~interpretations~~· Under the requirements of Statement of Financial Accounting Standards (“SFAS”) Nos.142 “Goodwill and Other Intangible Assets”, and 144 “Accounting for the Impairment ~~valuation~~and Disposal of ~~share~~Long-~~based~~Lived ~~payments~~Assets”, ~~fro~~Boyds ~~public~~assesses ~~companies.~~the ~~The~~potential ~~interpretive~~impairment ~~guidance~~of isidentifiable ~~intended~~intangibles toand ~~assist~~acquired ~~companies~~goodwill on an annual basis or whenever events or changes in ~~applying~~circumstances indicate that the ~~provisions~~carrying value may not be recoverable, and assesses potential impairment of ~~SFAS~~long Nolived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. In performing these evaluations, the Company ~~123R~~evaluates current and ~~investors~~future economic and ~~users~~business trends to develop business forecasts of future performance and related cash flows. Such estimates require the ~~financial~~use ~~statements~~of judgment and numerous subjective assumptions. As a result of the Company’s impairment test completed in ~~analyzing~~the first quarter of 2005, the Company recorded an impairment loss ~~information~~of ~~provided~~$2.6 million to reduce the carrying value of goodwill to zero. The impairment ~~Company~~was ~~will~~caused ~~adopt~~by ~~SAB~~a ~~107~~continued decline in ~~connection~~wholesale sales and results. In the third quarter of 2005, the Company decided to discontinue with its retail ~~adoption~~expansion and recorded as asset impairment charge of ~~SFAS~~$1.7 Nomillion. ~~123R~~The charge is attributed to the investment that the Company had made in two retail properties, Myrtle Beach, South Carolina and Branson, Missouri in anticipation of its retail expansion in each site.

~~In June~~FACTORS ~~2002, the FASB issued SFAS No. 146, Accounting~~WHICH ~~for~~AFFECT Costs Associated with Exit or Disposal Activities. This statement requires recording costs associated with exit or disposal activities at their fair values when a liability has been incurred. Under previous guidance, certain exit costs were accrued upon managementBOYDS’s ~~commitment~~RESULTS toOF an exit plan, which is generally before an actual liability has been incurred. Adoption of this statement was required at the beginning of fiscal year 2003. The Company adopted the provisions of this statement in the first quarter of 2003, which were incorporated in the consolidated financial statements. The adoption of this statement did not have a material impact on the financial position, results of operations or cash flow of Boyds.OPERATIONS

In November of 2004, the FASB issued SFAS No. 151, Inventory Costs-an Amendment of ARB No. 43. This Statement amends the guidance in Accounting Research Bulletin (“ARB”) No 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). This Statement requires that these items be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal.” In addition, this Statement requires that allocation of fixed production overhead to the costs of conversion be based on the normal capacity of production facilities. The provisions of this Statement are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption of this Statement is not expected to have a material impact on the financial position, results of operations or cash flow of Boyds.Seasonality

InBoyds ~~December~~recognizes ~~2004,~~revenues throughout the ~~FASB issued~~year ~~SFAS No. 153, Exchange of Nonmonetary~~and ~~Assets~~generally —ships Anmerchandise ~~Amendment~~on ofa ~~APB~~first-in, ~~Opinion~~first-out Nobasis. ~~29,~~Approximately ~~Accounting~~58% ~~for~~of ~~Nonmonetary~~revenues ~~Transactions.~~are ~~SFAS~~recorded ~~No.~~between ~~153~~May and ~~eliminates~~October while ~~the exception~~approximately ~~from~~42% ~~fair~~of ~~value~~revenues ~~measurement~~are ~~from~~recorded ~~nonmonetary~~between ~~exchanges~~November and ~~of similar productive~~April in ~~assets~~anticipation ~~in paragraph 21(b)~~ of ~~APB~~the ~~Opinion~~holiday season. 29Boyds ~~and~~does ~~replaces it with an exception for exchanges that do~~ not have ~~commericial~~the ~~substance. SFAS No. 153 is effective~~significant ~~for~~seasonal ~~periods~~variation ~~beginning~~in ~~after~~its ~~June~~wholesale ~~15,~~revenues ~~2005.~~that ~~The~~it ~~adoption~~believes ofis ~~this~~experienced ~~Statement is~~by ~~not~~many ~~expected~~other ~~to have a material impact on the financial position~~giftware, ~~results~~collectibles ~~of operations~~ or ~~cash~~retail ~~flow of Boyds~~companies.

~~RELATED~~Foreign ~~PARTY TRANSACTIONS~~Exchange

~~Kohlberg,~~The ~~Kravis~~dollar ~~Roberts~~value &of ~~Co.~~Boyds’ ~~L.P.~~assets ~~and~~abroad ~~its affiliates (collectively, “KKR”)~~ is ~~a 59% shareholder of Boyds~~not significant. ~~For the first quarter ended March 31, 2004,~~ Boyds’ ~~paid~~sales toare ~~KKR~~primarily ~~approximately~~denominated ~~$0.1~~in ~~million~~United ~~for management~~States ~~fees~~ dollars and, ~~related~~as ~~expenses.~~a ~~KKR~~result, ~~has~~are ~~waived~~not ~~all~~subject ~~management~~to ~~fees~~changes ~~for 2005. Any related expenses incurred by KKR~~ in ~~2005~~exchange ~~will be paid by Boyds~~rates.

~~FORWARD~~Boyds imports most of its products from manufacturers ~~LOOKING~~in ~~STATEMENTS~~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. Although Boyds generally pays for its products in United States dollars, the cost of such products fluctuates with the value of the Chinese

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.24

~~The~~renminbi. ~~forward-looking statements~~In inthe ~~this~~future, ~~report~~Boyds ~~are~~may, ~~based~~from ontime ato ~~number~~time, enter ofinto ~~assumptions~~foreign ~~and~~exchange ~~estimates,~~contracts or prepay inventory purchases as a ~~which~~partial ~~are~~hedge ~~inherently~~against ~~subject~~currency tofluctuations. ~~significant~~Differences ~~uncertainties~~between ~~and~~the ~~contingencies,~~amounts of ~~many~~such contracts and costs of ~~which~~specific material purchases are ~~beyond~~included ~~the~~in inventory ~~control~~and cost of sales. Boyds,’ ~~and~~policy ~~reflect~~is ~~future~~to ~~business~~not capitalize any gains or ~~decisions~~losses ~~that~~associated ~~are~~with ~~subject~~foreign tocurrency ~~change~~transactions or foreign exchange contracts. ABoyds ~~variety~~intends ofto ~~factors~~manage ~~could~~foreign exchange risks to the extent appropriate.

23Boyds has 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.

~~cause~~RESULTS ~~actual~~OF 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.OPERATIONS

~~Readers~~Net ~~are~~sales ~~cautioned~~consist ~~not~~of tosales ~~place~~of ~~undue~~our ~~reliance~~products, onnet of ~~these~~sales ~~forward-looking statements~~discounts, ~~which~~product ~~speak~~returns ~~only~~and asallowances, ofretail sales from the ~~date~~Boyds ofBear ~~such~~CountryTM retail ~~statements.~~stores, ~~Boyds~~collectors ~~undertakes~~club nosales ~~obligation~~generated tofrom ~~publicly~~members ~~release~~of ~~the~~Boyds’ ~~results~~collectors ofclub ~~any~~and ~~revisions~~royalty toincome ~~these~~from ~~forward-looking~~licenses ~~statements~~held ~~that~~by ~~may~~Boyds. beWholesale ~~made~~sales toare primarily ~~reflect~~made ~~events~~on ora ~~circumstances~~purchase ~~after~~order ~~the~~basis. ~~date~~Revenue ofassociated ~~this~~with ~~report,~~sales oris ~~the~~recognized when ~~date~~products ~~of such~~are ~~statements,~~shipped asto the ~~case~~customer ~~may be,~~ or toupon ~~reflect~~ the ~~occurrence~~completion of ~~unanticipated~~ ~~events~~a retail transaction.

~~Item~~Boyds’ 3gross profit margins may not be comparable to the gross profit margins of certain other entities due to the classification of certain costs. ~~Quantitative~~ Boyds includes items such as purchasing and ~~Qualitative~~receiving ~~Disclosures~~costs, internal ~~About~~transfer ~~Market~~costs, ~~Risk~~and the costs of its distribution network in cost of goods sold. Boyds includes its inspection costs in selling, general and administrative (“SG&A”) expenses. Other entities may classify their expenses differently.

~~Boyds~~In ~~faces~~accordance ~~minimal~~with ~~interest~~Emerging ~~rate~~Issues ~~risk~~Task ~~exposure~~Force in(“EITF”) ~~relation~~No. 00-10, to“Accounting ~~its~~for ~~outstanding~~Shipping ~~debt~~and ofHandling ~~$87.6~~Fees ~~million~~and ~~at March 31~~Costs”, ~~2005. Of this~~ ~~amount,~~Boyds ~~$53.2~~records ~~million~~amounts ~~under~~billed ~~the~~to ~~Credit~~customers ~~Agreement~~related isto ~~subject~~shipping toand ~~interest~~handling ~~rate~~as ~~fluctuations.~~revenue Aand ~~hypothetical~~all 1%expenses ~~change~~related ~~in interest rates, approximately $0.5 million, applied~~ to ~~the~~shipping ~~fair~~and ~~value~~handling ofas ~~debt~~cost ~~would have a material impact on earnings or cash flows~~ of ~~the Company~~goods sold.

~~Boyds~~Other ~~faces~~income ~~currency~~consists ~~risk exposure that arises from translating the results~~ of ~~its~~interest ~~European~~income and ~~Canadian operations that are~~exchange ~~denominated~~rate ~~in the local currency of the Euro, the British Pound and the Canadian dollar, to the U~~gain/loss.~~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~~The ~~also~~following ~~faces~~table ~~foreign~~sets ~~exchange~~forth ~~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~~components ~~Boyds~~of ~~may, from time to time,~~net ~~enter~~income ~~into foreign exchange contracts or prepay inventory purchases~~ as a ~~partial~~ ~~hedge~~percentage ~~against currency fluctuations. Differences between the amounts~~ of ~~such~~ ~~contracts~~net ~~and costs of specific material purchases are included in inventory and costs of~~ sales. ~~Boyds~~for ~~intends to manage foreign exchange risks to~~ the ~~extent~~period ~~appropriate.~~indicated:

Item 4. Disclosure Controls and Procedures

	Three Months				Nine Months
	Ended				Ended
	September 30,				September 30,
	2004		2005		2004		2005

Net sales	100.0	%	100.0	%	100.0	%	100.0	%
Gross profit	60.5	%	55.5	%	60.7	%	49.9	%
Selling, general and administrative expenses	35.2	%	37.0	%	40.6	%	49.2	%
Impairment of assets	0.0	%	6.6	%	0.0	%	7.0	%
Income/(loss) from operations	25.3	%	11.9	%	20.1	%	(6.3	)%
Other income (expenses), net	0.4	%	6.0	%	0.0	%	1.6	%
Interest expense	3.5	%	12.5	%	4.1	%	14.2	%
Provision for income taxes	8.6	%	(0.3	)%	6.5	%	266.0	%
Net income/(loss)	13.6	%	5.7	%	9.5	%	(284.9	)%

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 March 31, 2005, 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.Overview

~~There~~In ~~have~~the ~~been~~third noquarter ~~significant~~of ~~changes~~2005, inthe ~~Boyds~~Company’ ~~internal~~s ~~controls~~net orsales decreased inby ~~other~~19%, ~~factors~~which ~~that~~can ~~could~~primarily ~~significantly~~be ~~affect~~attributed ~~these controls, subsequent~~ to the ~~date~~wholesale ~~Boyds~~segment’ ~~Chief Executive and Chief Financial~~s ~~Officers~~decrease ~~completed~~of ~~their~~33% ~~evaluation,~~partially ~~including~~offset ~~any~~by ~~corrective~~an ~~actions~~increase ~~with regard~~of to80% ~~significant~~in ~~deficiencies~~the ~~and material weaknesses.~~

2425

~~PART~~retail IIsegment. The decrease in wholesale net sales was attributable to a 41% decline in wholesale bookings (cancelable orders) in the third quarter of the year compared to the same period in 2004. Weakness across the Specialty Gift Retail sector of the Company’s account base and reduced sales to a number of Boyds’ larger legacy accounts were the contributors to these reduced bookings. Retail net sales were positively impacted by the addition of the Company’s second store in Pigeon Forge, Tennessee which generated $3.2 million in sales. The Gettysburg store generated $4.2 milion in sales, up $0.1 million from $4.1 million as compared to the same period in 2004.

~~OTHER~~The Company’s net profit for the third quarter ~~INFORMATION~~decreased by $2.9 million to a profit of $1.5 million as compared to the same period in 2004. This decrease can be attributed to a significant decrease in sales, and an impairment of assets associated with the Company’s retail expansion plans, all of which were partially offset by a legal settlement payment received by the Company of $1.5 million classified as other income and ongoing cost savings initiatives.

~~Item~~Cash used for operating activities in the first nine months of 2005 was approximately $8.0 million compared to $8.9 million in cash provided by operations in the year-ago period. In the nine months of 2005, the Company had a net increase of approximately $15.8 million of debt and invested approximately $1.0 ~~Legal~~million ~~Proceedings~~of cash in property and equipment. In the nine months of 2004, the Company had net repayments of approximately $1.0 million of debt and invested approximately $12.0 million of cash, of which $10.5 million related to the building of Boyds Bear CountryTM-Pigeon Forge.

~~Boyds~~Three isMonths ~~involved in various~~Ended ~~legal proceedings~~September 30, ~~claims~~2005 ~~and governmental audits in the ordinary course of business~~vs. InThree ~~the~~Months ~~opinion~~Ended ~~of management~~September 30, ~~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.~~2004

~~Item~~Net Sales—Net 2sales decreased $6.3 million, to $26.5 ~~Changes~~million in ~~Securities~~the third quarter of 2005 from $32.8 million for the same quarter in 2004. Sales of Boyds’ plush products decreased $4.8 million, or 25%, resin product sales decreased $2.0 million, or 25%, and ~~Use~~other product sales increased $0.4 million, or 8%. As a percentage of ~~Proceeds—None~~net sales for the third quarter, plush represented 55%, resin products represented 22%, and other products represented 23%.

~~Item~~Wholesale 3net sales in the third quarter of 2005 declined $9.6 million, or 33%, to $19.1 million from $28.7 million for the same ~~Defaults~~quarter ~~Upon~~in ~~Senior~~2004. ~~Securities—None~~This decrease was attributable to a 41% decline in wholesale bookings (cancelable orders) in the third quarter of 2005 compared to the same period in 2004. Weakness across the Specialty Gift Retail sector of the Company’s account base and reduced sales to a number of Boyds’ larger legacy accounts were the contributors of these reduced bookings.

~~Item~~Retail net sales increased $3.3 million, or 80%, to $7.4 million in the third quarter of 2005 from $4.1 million in the third ~~Submission~~quarter of ~~Matters~~2004. Same store retail net sales increased by $0.1 million, or 3%, to a$4.2 ~~Vote~~million in the third quarter from $4.1 million for the third quarter of 2004. ~~Security~~This ~~Holders—None~~increase in overall retail sales can be attributed to the addition of the Company’s second retail store in Pigeon Forge, Tennessee while the comparable retails sales can be attributed to special event traffic at the Gettysburg store.

~~Item~~Gross profit— Gross profit decreased $5.1 ~~Other~~million, ~~Information~~or 26%, to $14.7 million in the third quarter of 2005 from $19.9 million for the third quarter of 2004. Gross profit as a percentage of net sales decreased to 55.5% for the third quarter of 2005 as compared to 60.5% for the same period in 2004. The dollar decline was primarily attributable to reduced sales, an increased product mix shift to lower margin product, $0.4 million relating to a reduced obsolete inventory allowance in 2004, these were partially offset by a $0.4 million relating to a 2005 credit to the Company’s inventory capitalization and additional gross profit generated by the Company’s new retail store in Pigeon Forge, Tennessee. Wholesale gross profit decreased by $7.1 million, or 43%, to $9.6 million in the third quarter of 2005 from $16.8 million in the third quarter of 2004. Retail gross profit increased by $2.0 million, to $5.1 million in the third quarter of 2005 from $3.1 million in the third quarter of 2004.

~~Item 6. Exhibits~~26

Selling, General & Administrative Expenses (a“SG&A”)- ~~Exhibits~~SG&A —expenses ~~See~~decreased $1.7 ~~Index~~million, or 15%, to ~~Exhibits~~$9.9 million in the third quarter of 2005 from $11.6 million for the third quarter of 2004. SG&A as a percent of net sales increased to 37% for the third quarter from 35% for the same period in 2004. The dollar decrease in SG&A expenses was a result of $0.8 million in lower wage costs stemming from our cost saving initiatives and $0.3 million in lower call center costs, $0.3 million in reduced bad debt expenses, $0.2 million in reduced employee recruitment expenses, and $0.2 million in reduced expenses relating to our home party program, these costs were partially offset by increases of $0.2 million in depreciation and $0.2 million in professional fees.

~~SIGNATURES~~Impairment of Assets—The Company recorded an asset impairment charge of $1.7 million for the three months of 2005. The charge is attributed to the investments that the Company had made in two retail properties, Myrtle Beach, South Carolina and Branson, Missouri in anticipation of its retail expansion in each site.

~~Pursuant~~Income from operations— Income from operations declined $5.2 million to ~~the~~a ~~requirements~~profit of $3.2 million in the ~~Securities~~third ~~Exchange~~quarter ~~Act~~of 2005 from an income of ~~1934,~~$8.3 million in the ~~registrant~~third ~~has~~quarter ~~duly~~of ~~caused~~2004. ~~this~~Income ~~report~~from operations as a percentage of net sales declined to bea ~~signed~~12% onin ~~its~~the ~~behalf~~third byquarter of 2005 from 25% in the ~~undersigned~~third ~~thereunto~~quarter ~~duly~~of ~~authorized~~2004.

~~Date: May~~Other Income—In 16July 2005, ~~2005~~the Company received a $1.5 million settlement for a copyright infringement case.

~~THE~~Total ~~BOYDS~~interest ~~COLLECTION~~expense— Total interest expense increased to $3.3 million for the third quarter of 2005 as compared to $1.1 million for the third quarter of 2004. Interest expense on outstanding debt increased for the third quarter of 2005 by $1.9 million. This increase is due to a higher interest rate on the Company’s outstanding debt. Additionally, ~~LTD~~the amortization expense associated with the deferred financing costs have increased by $0.3 million as a result of capitalized costs associated with the New Credit Agreement.

~~By:~~Income tax ~~/s/~~expense— ~~Jan~~Income L.tax ~~Murley~~expense ~~Name:~~decreased ~~Jan L~~$2.9 ~~Murley~~million to ~~Title:~~a ~~Chief~~credit ~~Executive~~of ~~Officer~~$0.1 ~~By:~~million ~~/s/~~in ~~Joseph~~the E.third ~~Macharsky~~quarter ~~Name:~~of ~~Joseph~~2005 Eas compared to $2.8 million ~~Macharsky~~for ~~Title:~~the ~~Chief~~third ~~Financial~~quarter ~~Officer~~of 2004.

25Net Profit—Net profit decreased $2.9 million to a profit of $1.5 million in the third quarter of 2005 from a $4.5 million income for the third quarter of 2004.

~~Index~~Nine toMonths ~~Exhibits~~Ended September 30, 2005 vs. Nine Months Ended September 30, 2004

Exhibit
No.		Description
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.)*

Net Sales—Net sales decreased $19.6 million, to $62.2 million in the first nine months of 2005 from $81.8 million for the same period in 2004. Sales of Boyds’ plush products decreased $8.9 million, or 21%, resin product sales decreased $7.0 million, or 33%, and other product sales decreased $3.7 million, or 21%. As a percentage of net sales for the first nine months of 2005, plush represented 52%, resin products represented 26%, and other products represented 22%.

* FiledWholesale ~~herewith~~net sales in the first nine months of 2005 declined $25.9 million, or 36%, to $46.1 million from $72.0 million for the same period in 2004. The decline can be primary attributable to a 49% decline in bookings (cancelable orders) in the first nine months of 2005 compared to the same period in 2004. Weakness across the Specialty Gift Retail sector of the Company’s account base and reduced sales to a number of Boyds’ larger legacy accounts were the contributors to these reduced bookings.

26Retail net sales increased $6.3 million, or 64%, to $16.1 million in the first nine months of 2005 from $9.8 million for the nine months of 2004. Same store retail net sales decreased by $0.6 million, or

~~Exhibit 31.1~~27

~~CERTIFICATION~~6%, ~~PURSUANT~~to $9.2 million in the first nine months from $9.8 TOmillion for the first nine months of 2004. The increase in retail sales can be attributed to the addition of the Company’s second retail store in Pigeon Forge, Tennessee while comparable retail sales decline can be attributed to the reduced tourist traffic in the Gettysburg area.

~~SECTION~~Gross profit— ~~302~~Gross OFprofit ~~THE~~decreased $18.6 million, or 37%, ~~SARBANES-OXLEY~~to ~~ACT~~$31.0 OFmillion ~~2002~~in the first nine months of 2005 from $49.7 million for the first nine months of 2004. Gross profit as a percentage of net sales decreased to 50% for the first nine months of 2005 as compared to 61% for the same period in 2004. The dollar decline was primarily attributable to reduced sales, an increased product mix shift to lower margin product, an increased charges of $3.1 million in the Company’s inventory obsolescence allowance due to slow moving product, these were offset by lower freight charges of $1.3 million due to lower sales and the incremental gross margin generated at the Company’s new store in Pigeon Forge. Wholesale gross profit decreased by $20.4 million, or 55%, to $24.9 million in the nine months of 2005 from $45.4 million in the first nine months of 2004. Retail gross profit increased by $3.8 million, or 52%, to $11.2 million in the first nine months of 2005 from $7.4 million in the first nine months of 2004.

ISelling, General & ~~Jan~~Administrative LExpenses (“SG&A”)—SG&A expenses decreased $2.7 ~~Murley~~million, or 8%, to $30.6 million in the first nine ~~certify~~months ~~that:~~of 2005 from $33.3 million for the first nine months in 2004. SG&A as a percent of net sales increased to 49% for the first nine months of 2005 from 41% for the same period in 2004. The dollar decrease in SG&A expenses was a result of $3.5 million in lower wage and incentive costs stemming from our cost saving initiatives and $0.5 million in lower bad debts allowance which were partially offset by $0.7 million in cell center expenses and $0.5 million in depreciation costs associated with the Company’s new store in Pigeon Forge.

1Impairment of Goodwill and other Assets—The Company recorded a goodwill impairment charge of $2. I6 ~~have~~million ~~reviewed~~and ~~this~~an ~~quarterly~~asset impairment of $1.7 ~~report~~million onfor ~~Form~~the ~~10-Q~~first nine months of 2005. The ~~Boyds~~charge ~~Collection~~is attributed to the goodwill impairment testing as prescribed by SFAS No. 142, ~~Ltd~~“Goodwill and Other Intangibles” caused by a continued decline in wholesale sales and results.; The asset impairment of $1.7 million related to construction costs for the Company’s proposed new retail stores in Myrtle Beach, South Carolina and Branson, Missouri which the Company has chosen not to move forward with.

~~2. Based~~Income from onoperations— myIncome ~~knowledge,~~from ~~this~~operations ~~report~~declined $20.3 ~~does~~million ~~not~~to ~~contain~~a ~~any~~loss ~~untrue~~of ~~statement~~$3.9 ofmillion ain ~~material~~the ~~fact~~first ornine ~~omit~~months toof ~~state~~2005 afrom an ~~material~~income ~~fact~~of ~~necessary~~$16.4 tomillion ~~make~~for the ~~statements~~same ~~made,~~period inof ~~light~~2004. ofIncome ~~the~~from operations as ~~circumstances~~a ~~under~~percentage ~~which~~of ~~such~~net ~~statements~~sales ~~were~~declined ~~made,~~to ~~not~~a ~~misleading~~negative ~~with respect~~6.3% toin the ~~period~~nine ~~covered~~months byof 2005 ~~this~~from ~~report;~~20% for the same period of 2004.

~~3. Based~~Other Income—In ~~on my knowledge~~July 2005, the ~~financial~~ ~~statements,~~Company ~~and~~received ~~other~~a ~~financial~~$1.5 million ~~information~~settlement ~~included~~for ina ~~this~~copyright ~~report, fairly~~infringement ~~present~~case. inThis ~~all~~amount ~~material~~is ~~respects~~offset by the ~~financial~~unrealized ~~condition,~~loss ~~results~~on ~~of operations~~exchange ~~and~~rate ~~cash flows~~ of ~~the~~$0.6 ~~registrant as of, and for, the periods presented in this report;~~million.

4Total interest expense— Total interest expense increased to $8. ~~The~~9 ~~registrant’s~~million ~~other~~for ~~certifying~~the first nine months of 2005 as compared to $3.3 million for ~~officer~~the ~~and~~same Iperiod ~~are~~of ~~responsible~~2004. Interest expense on outstanding debt increased for ~~establishing~~the first ~~and~~nine ~~maintaining~~months ~~disclosure~~of 2005 by $4.8 million. This increase is due to a higher ~~controls~~interest ~~and~~rate ~~procedures~~on ~~(as~~the ~~defined~~Company’s inoutstanding ~~Exchange~~debt. ~~Act~~Additionally, ~~Rules~~the ~~13a-15(e)~~amortization expense ~~and~~associated with the deferred financing costs has increased by $0.7 ~~15d-15(e))~~million ~~for~~as a result of costs associated with the ~~registrant~~New ~~and~~Credit ~~have:~~Agreement.

~~a) Designed~~Income tax ~~such~~expense—Income ~~disclosure~~tax ~~controls~~expense increased $160.1 ~~and~~million ~~procedures,~~to or$165.4 ~~caused~~million ~~such~~in ~~disclosure~~the ~~control~~first ~~and~~nine ~~procedures~~months toof be2005 ~~designed~~as compared to $5.3 ~~under~~million ~~our~~for ~~supervision,~~the tofirst ~~ensure~~nine ~~that~~months ~~material~~of ~~information~~2004. ~~relating~~The toprovision was impacted by the ~~registrant,~~recording ~~including~~of a $166.2 million additional valuation allowance against the remaining amount of its ~~consolidated~~deferred ~~subsidiaries,~~tax isassets. ~~made~~This ~~known~~valuation toallowance usresults from estimates by ~~others~~ ~~within~~management ~~those~~of ~~entities~~future taxable income in each of the federal, state, ~~particularly~~and foreign tax jurisdictions during the carry forward period inand ~~which~~the conclusion by management that it is no longer more likely than not that this ~~report~~amount isof ~~being~~deferred ~~prepared;~~tax assets will be realized under the criteria of SFAS No. 109, “Accounting for Income Taxes”.

b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation, and28

~~c) Disclosed~~Net inLoss—Net ~~this~~profit ~~report~~decreased ~~any~~$184.9 ~~change in~~million ~~the~~to ~~registrant’s~~a ~~internal~~loss ~~control~~of $177.1 ~~over~~million ~~financial~~in ~~reporting that occurred during~~ the ~~registrant’s~~first ~~most~~nine ~~recent~~months ~~fiscal~~of ~~quarter~~2005 ~~that~~from ~~has~~a ~~materially affected,~~$7.8 ormillion isincome ~~reasonably likely to materially affect,~~ for the ~~registrant’s internal~~same ~~control~~period ~~over~~of ~~financial reporting; and~~2004.

~~5. The~~Liquidity ~~registrant’s other certifying officer~~ and ~~I have disclosed, based on our most recent evaluation of internal~~ ~~control~~Capital ~~over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):~~Resources

~~a) All~~Boyds’ ~~significant~~primary ~~deficiencies~~source ~~and~~of liquidity is borrowings under ~~material~~its ~~weaknesses~~New inCredit Agreement, which includes the ~~design~~New orRevolver. ~~operation~~Boyds’ primary uses of ~~internal~~cash ~~control~~are ~~over financial~~to ~~reporting~~fund ~~which~~working ~~are~~capital ~~reasonably~~requirements. ~~likely~~Cash balances increased to $3.6 ~~adversely~~million ~~affect~~in the ~~registrant’s~~ ~~ability~~first tonine ~~record,~~months ~~process,~~of ~~summarize~~2005 ~~and~~as ~~report~~compared ~~financial~~to ~~information; and~~the balances at December 2004.

~~b) Any~~Operating ~~fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.~~Activities

~~/s/~~Cash ~~Jan~~provided Lby operating activities decreased $16.9 million, ~~Murley~~to a negative $8.0 million in the first nine months of 2005 from $8.9 million for the first nine months of 2004. The cash flow decrease was primarily attributable to the decreases in sales and accrued expenses which was partially offset by increases in inventory, accounts payable and interest payable. Due to the seasonality of our retail business, operating results for the nine months ended September 30, 2005 are not necessarily indicative of operating results for the entire year. There can be no assurance that the Company will have positive cash flows in the future.

~~Jan L. Murley~~Investing Activities

~~Chief~~Capital ~~Executive~~and ~~Officer~~investment expenditures totaled $1.0 million in the first nine months of 2005 as compared to $12.0 million in the first nine months of 2004. This decrease in expenditures was the result of no additional construction costs relating to the Boyds Bear CountryTM — Pigeon Forge, Tennessee and Myrtle Beach, South Carolina locations.

~~Date: May 16, 2005~~Financing Activities

~~Exhibit~~In 31connection with the recapitalization in 1998, Boyds entered into a credit agreement providing for a $325.20 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. During the first quarter, the Company had additional borrowings of $10.0 million on the revolving credit facility. On February 23, 2005, the Company entered into a New Credit Agreement and used the proceeds to extinguish the outstanding tranche A (the “term loan”) and revolving credit facility (the “revolver”) in the amounts of $28.0 million and $12.8 million, respectively.

~~CERTIFICATION~~The ~~PURSUANT~~New Credit Agreement contains a revolving credit TOfacility with capacity of up to $20.0 million and a new term loan of $45.0 million. During the first nine months of 2005, the Company utilized $11.5 million of this revolving facility. Borrowings under the New Credit Agreement bear interest at a rate per annum, equal to a margin over either a base rate, which is the higher of the prime lending rate or 0.50% above the federal funds effective rate, plus 9.50% or LIBOR plus 11.00%.

~~SECTION~~The ~~302~~New OFCredit ~~THE~~Agreement contains financial covenants, ~~SARBANES-OXLEY~~tested ~~ACT~~quarterly, OFof ~~2002~~minimum consolidated adjusted EBITDA (as defined in the New Credit Agreement), maximum senior leverage and maximum total leverage. At the end of the third and fourth quarters of 2005, Boyds must maintain (i) a consolidated senior leverage ratio of not greater than 2.5 to 1, (ii) a maximum leverage ratio of not greater than 4.5 to 1 and (iii) a minimum consolidated adjusted EBITDA of not less than $17.0 million. Additionally, the New Credit Agreement has covenants that restrict the Company’s ability to incur additional indebtedness, make capital expenditures, pay dividends on and redeem capital stock, make

~~I, Joseph E. Macharsky, certify that:~~29

~~1. I~~other ~~have~~restricted ~~reviewed~~payments, ~~this~~make ~~quarterly~~investments, sell its ~~report~~assets onand ~~Form~~enter ~~10-Q~~into consolidations, mergers and transfers of ~~The~~all ~~Boyds~~or substantially ~~Collection,~~all ~~Ltd~~of its assets.;

~~2. Based~~As onof myOctober 16, ~~knowledge~~2005, ~~this~~the ~~report does~~Company was not ~~contain~~in compliance ~~any~~with ~~untrue~~one ~~statement of a material fact~~ or ~~omit~~more toof ~~state a material fact necessary to make~~ the ~~statements~~financial ~~made,~~covenants contained in ~~light of~~ the New ~~circumstances~~Credit ~~under~~Agreement. ~~which~~Such ~~such~~noncompliance ~~statements~~constitutes ~~were~~an ~~made,~~“event ~~not~~of ~~misleading~~default” ~~with~~under ~~respect to~~ the ~~period~~New ~~covered~~Credit ~~by this report;~~Agreement.

~~3. Based~~On ~~on my knowledge~~August 22, ~~the financial statements~~2005, ~~and other financial information included in this report, fairly present in~~ all ~~material~~pre-existing ~~respects~~debt ~~the financial condition, results of~~was ~~operations~~assigned ~~and~~to ~~cash~~our ~~flows~~current oflenders ~~the~~D.E. ~~registrant~~Shaw asLaminar ofPortfolios, ~~and for, the periods presented in this report;~~L.L.C.

4On February 17, 2000, Boyds announced that its Board of Directors had approved the repurchase of 3. ~~The~~0 ~~registrant~~million shares of the Company’s ~~other~~common ~~certifying~~stock. As of September 30, 2005, Boyds had repurchased ~~officer~~344,730 ~~and~~shares Iof ~~are~~common ~~responsible~~stock pursuant to the stock repurchase program for ~~establishing~~an aggregate ~~and~~amount ~~maintaining~~of ~~disclosure~~approximately $1 million. These repurchases were financed ~~controls~~out ~~and~~of ~~procedures~~operating ~~(as~~cash ~~defined~~flow. inAny ~~Exchange~~future ~~Act~~repurchases ~~Rules~~under ~~13a-15(e)~~this ~~and~~program are ~~15d-15(e))~~limited ~~for~~by the ~~registrant~~New ~~and~~Credit weAgreement ~~have:~~to an aggregate amount not to exceed $1.0 million.

On July 27, 2000, Boyds announced that its Board of Directors had approved a~~) Designed~~ ~~such~~repurchase ~~disclosure~~program ~~controls~~for its outstanding 9% Series B ~~and~~Senior ~~procedures~~Subordinated Notes due 2008. As of September 30, or2005, ~~caused~~Boyds ~~such~~had repurchased ~~disclosure~~$52.3 ~~control~~million ~~and~~of ~~procedures~~its notes pursuant to bethis ~~designed~~note repurchase ~~under~~program. ~~our~~These ~~supervision,~~repurchases towere ~~ensure~~financed ~~that~~out ~~material~~of ~~information~~operating ~~relating~~cash toflow and the ~~registrant,~~revolving ~~including~~credit ~~its~~facility. ~~consolidated~~No ~~subsidiaries,~~repurchases iswere made ~~known~~during the quarter. Any future repurchases under this program are expected to usbe byfinanced similarly. Boyds ~~others~~may ~~within~~make ~~those~~such ~~entities,~~purchases ~~particularly~~from ~~during~~time ~~the~~to ~~period~~time in ~~which~~the ~~this~~open market or in private ~~report~~transactions. isNo ~~being~~repurchases ~~prepared;~~were made during the quarter.

~~b) Evaluated~~The ~~the~~Company ~~effectiveness~~relies ofon the New Credit Agreement to ~~registrant~~provide adequate funds for Boyds’s ~~disclosure~~foreseeable ~~controls~~working capital needs, planned capital expenditures, debt service obligations, the Stock Repurchase Program and ~~procedures~~the Bond Repurchase Program. Any future acquisitions, joint ventures or other similar transactions may require additional capital and ~~presented~~there incan ~~this~~be ~~report~~no assurance that any such capital ~~our~~will ~~conclusions~~be ~~about~~available ~~the~~to ~~effectiveness~~Boyds ofon ~~the~~acceptable ~~disclosure~~terms, ~~controls~~or at all. Boyds’ ability to fund its working capital needs, planned capital expenditures and scheduled debt ~~procedures~~payments, asto ofrefinance ~~the~~indebtedness ~~end~~and to comply with all of the ~~period~~financial covenants ~~covered~~under byits ~~this~~debt ~~report~~agreements ~~based~~depends on ~~such~~its future operating performance ~~evaluation~~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.

~~c) Disclosed~~EFFECTS inOF ~~this~~RECENTLY ~~report~~ISSUED ~~any~~ACCOUNTING change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; andSTANDARDS

5In December 2004, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. ~~The~~ 123R, ~~registrant’s~~Share-Based ~~other~~Payment ~~certifying~~(“SFAS ~~officer~~123R”). ~~and~~SFAS I123R ~~have~~addresses ~~disclosed~~the accounting for share-based payments to employees, including grants of employee stock options. Under the new standard, companies will no longer be able to account for share-based oncompensation transactions ~~our~~using ~~most~~the ~~recent~~intrinsic ~~evaluation~~method ofin ~~internal~~accordance with APB Opinion No. 25, ~~control~~Accounting ~~over~~for ~~financial~~Stock ~~reporting~~Issued to Employees. Instead, companies will be required to ~~the~~account ~~registrant’s~~for ~~auditors~~such transactions using a fair-value method and recognize the related ~~audit~~expense associated with share-based payments in the consolidated ~~committee~~statement of operations. SFAS 123R will be effective for periods beginning after June 15, 2005 and allows, but does not require, companies to restate the ~~registrant’s~~full ~~board~~fiscal year of ~~directors~~2005 (or ~~persons~~retroactive ~~performing~~restatement to earlier periods to reflect the impact of expensing share-based payments under SFAS 123R. On January 1, ~~equivalent~~2006, ~~functions~~the Company adopted SFAS No. 123(R): which requires companies to expense the fair value of employee stock options and other forms of stock-based employee compensation in the financial statements over the period that an employee provides service in exchange for the award. Under SFAS 123(R), the Company measures compensation cost

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and30

~~b) Any~~related ~~fraud,~~to ~~whether~~stock oroptions ~~not~~based ~~material,~~on the grant-date fair ~~that~~value ~~involves~~of ~~management~~the oraward ~~other~~using ~~employees~~the ~~who~~Black-Scholes ~~have~~option-pricing amodel ~~significant~~and ~~role~~recognizes it inratably, less estimated forfeitures, over the vesting term of the award. The Company believes that the impact of this ~~registrant’s~~SFAS ~~internal~~No. 123(R) ~~controls~~will ~~over~~have an immaterial impact on the financial ~~reporting~~results of the Company.

/In March 2005, the SEC issued Staff Accounting Bulletin No. (“SAB”) 107 regarding the Staff’s/ ~~Joseph~~interpretation Eof Share-Based Payments. ~~Macharsky~~This interpretation provides the Staff’s view regarding interactions between SFAS No. 123R and certain SEC rules and regulations and provides interpretations of the valuation of share-based payments for public companies. The interpretive guidance is intended to assist companies in applying the provisions of SFAS No. 123R and investors and users of the financial statements in analyzing the information provided. The Company will adopt SAB 107 in connection with its adoption of SFAS No. 123R.

~~Joseph~~In ENovember of 2004, the FASB issued SFAS No. 151, Inventory ~~Macharsky~~Costs-an Amendment of ARB No. 43. SFAS No. 151 amends the guidance in Accounting Research Bulletin (“ARB”) No 43, Chapter 4, Inventory Pricing, to clarify the accounting for abnormal amounts of idle facility expense, freight, handling costs, and wasted material (spoilage). SFAS No. 151 requires that these items be recognized as current-period charges regardless of whether they meet the criterion of “so abnormal.” In addition, SFAS No. 151 requires that allocation of fixed production overhead to the costs of conversion be based on the normal capacity of production facilities. The provisions of SFAS No. 151 are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. The adoption of SFAS No. 151 is not expected to have a material impact on the financial position, results of operations or cash flow of Boyds.

~~Chief~~In ~~Financial~~December 2004, ~~Officer~~the FASB issued SFAS No. 153, Exchange of Non-monetary Assets — An Amendment of APB Opinion No. 29, Accounting for Non-monetary Transactions. SFAS No. 153 eliminates the exception from fair value measurement from non-monetary exchanges of similar productive assets in paragraph 21(b) of APB Opinion No. 29 and replaces it with an exception for exchanges that do not have commercial substance. SFAS No. 153 is effective for periods beginning after June 15, 2005. The adoption of this statement is not expected to have a material impact on the financial position, results of operations or cash flow of Boyds.

~~Date:~~In May 2005, 16the FASB issued SFAS No. 154, Accounting Changes and Error Corrections - a replacement of APB Opinion No. 20 and FASB Statement No. 3. SFAS No. 154 requires retrospective application to prior periods financial statements for changes in accounting principle, unless it is impracticable to determine either the period-specific effects or the cumulative effect of the change. SFAS No. 154 also requires that retrospective application of a change in accounting principle be limited to the direct effects of the change. Indirect effects of a change in accounting principle should be recognized in the period of the accounting change. SFAS No. 154 further requires a change in depreciation, amortization or depletion method for long-live, non-financial assets to be accounted for as a change in accounting estimate effected by a change in accounting principle. SFAS No. 154 is effective for accounting changes and corrections of errors made in fiscal years beginning after December 15, 2005. The adoption of this SFAS No. 154 is not expected to have a material impact on the financial position, results of operations or cash flow of Boyds.

~~Exhibit~~RELATED ~~32.1~~PARTY TRANSACTIONS

~~CERTIFICATION~~Kohlberg, ~~PURSUANT~~Kravis TORoberts & Co. L.P. and its affiliates (collectively, “KKR”) is a 59% shareholder of Boyds. For the three and nine months ended September 30, 2004, Boyds paid to KKR approximately $0.1 million and $0.2 million, respectively, for management fees and related expenses. KKR has waived all management fees for 2005. Any related expenses incurred by KKR in 2005 will be paid by Boyds.

~~18 U.S.C. SECTION 1350,~~31

ASFORWARD ~~ADOPTED~~LOOKING ~~PURSUANT TO~~STATEMENTS

~~SECTION~~Some ~~906~~of OFthe ~~THE~~matters ~~SARBANES~~discussed in this report include forward-~~OXLEY~~looking ~~ACT~~statements. OFStatements ~~2002~~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.

InThe ~~connection~~forward-looking ~~with~~statements ~~the~~in ~~Quarterly~~this ~~Report~~report are based on a number of ~~The~~assumptions ~~Boyds~~and estimates, which are inherently ~~Collection~~subject to significant uncertainties and contingencies, ~~Ltd.~~many (of which are beyond the ~~“Company”)~~control onof ~~Form~~Boyds, ~~10-Q~~and ~~for~~reflect ~~the~~future ~~period~~business ~~ended~~decisions ~~March~~that 31are subject to change. A variety of factors could cause actual results to differ materially from those anticipated in Boyds’ forward-looking statements, ~~2005~~including: the asinability ~~filed~~to ~~with~~meet the financial ~~Securities~~covenant ~~and~~tests ~~Exchange~~under ~~Commission~~the onNew Credit Agreement; the ~~date~~inability ~~hereof~~to grow (Boyds’ business as planned; the ~~“Report”)~~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, Ior the imposition of, ~~Jan~~new L.regulations, ~~Murley~~duties, ~~Chief~~taxes ~~Executive~~or ~~Officer~~tariffs associated with the import or export of goods from or to the ~~Company,~~countries with which Boyds does business; and ~~certify~~other ~~pursuant~~risk factors that are discussed in this report and, from time to 18time, Uin other Securities and Exchange Commission reports and filings.~~S.C.~~ ~~Section~~One ~~1350,~~or asmore ~~adopted~~of the ~~pursuant~~factors discussed above may cause actual results to ~~Section~~differ ~~906~~materially from ofthose ~~the~~expressed ~~Sarbanes-Oxley~~in ~~Act~~or ofimplied ~~2002,~~by ~~that:~~the statements in this report.

~~1) The~~Readers ~~Report~~are ~~fully~~cautioned ~~complies~~not ~~with~~to place undue reliance on these forward-looking statements, which speak only as of the ~~requirements~~date of ~~section~~such 13statements. ~~(a)~~Boyds orundertakes 15no ~~(d)~~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 ~~Securities~~date ~~Exchange~~of ~~Act~~this report, or the date of such ~~1934;~~statements, ~~and~~as the case may be, or to reflect the occurrence of unanticipated events.

~~2) The~~Item ~~information contained in the Report fairly presents, in~~3. Quantitative ~~all material respects, the financial condition~~ and ~~results~~Qualitative ofDisclosures ~~operations~~About ofMarket ~~the Company~~Risk.

~~A signed~~While ~~original~~operating ofduring ~~this~~the ~~written~~Chapter ~~statement~~11 ~~required by Section 906, or other~~bankruptcy ~~document authenticating~~proceedings, ~~acknowledging,~~Boyds orfaces ~~otherwise~~no ~~adopting~~interest ~~the~~rate ~~signature that~~risk ~~appears~~exposure in ~~typed~~relation ~~form~~to ~~within~~its outstanding ~~the~~debt ~~electronic~~obligations ~~version~~ of ~~this~~$90.9 ~~written statement~~million. ~~required~~Boyds ~~by Section 906,~~ has ~~been~~also ~~provided~~ceased ~~to The Boyds Collection,~~recording ~~Ltd.~~interest ~~and~~on ~~will~~its bedebt ~~retained~~obligations byduring ~~The Boyds Collection, Ltd. and furnished to~~ the ~~Securities~~ ~~and~~Chapter ~~Exchange~~11 ~~Commission or its staff upon request~~proceedings.

~~/s/~~Boyds ~~Jan~~faces L.currency ~~Murley~~risk ~~Jan~~exposure L.that ~~Murley~~arises ~~Chief~~from translating ~~Executive~~the ~~Officer~~results ~~May~~of 16its European and Canadian operations that are denominated in the local currency of the Euro, ~~2005~~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.

~~Exhibit~~Boyds 32also faces foreign exchange risks that arise from paying in United States Dollars for products that are manufactured in China.2 Recently, the Chinese government revalued its currency, the renminbi, ending its link to the U.S. dollar. While this is a significant change for China, the anticipated near term impacts to the Company are believed to be minimal. 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.

~~CERTIFICATION PURSUANT TO~~32

~~18 U~~Item 4.~~S.C.~~ Disclosure Controls ~~SECTION~~and ~~1350,~~Procedures

ASBoyds ~~ADOPTED~~maintains ~~PURSUANT~~disclosure TOcontrols 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 September 30, 2005, 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.

~~SECTION~~There ~~906~~have OFbeen ~~THE~~no ~~SARBANES-OXLEY~~changes ~~ACT~~in OFBoyds’ ~~2002~~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.

In connection with the Quarterly Report of The Boyds Collection, Ltd. (the “Company”) on Form 10-Q for the period ended March 31, 2005 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Joseph E. Macharsky, Chief Financial Officer of the Company, certify pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:33

~~1) The Report fully complies with the requirements of section 13 (a) or 15 (d) of the Securities Exchange Act of 1934; and~~PART II

~~2) The~~OTHER ~~information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.~~INFORMATION

~~A signed~~Item original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement required by Section 906, has been provided to The Boyds Collection, Ltd1. ~~and~~Legal ~~will be retained by The Boyds Collection, Ltd~~Proceedings. ~~and furnished to the Securities and Exchange Commission or its staff upon request.~~

~~/s/~~On ~~Joseph~~October 16, E.2005, ~~Macharsky~~the ~~Joseph~~Company E.and ~~Macharsky~~certain ~~Chief~~of its ~~Financial~~subsidiaries ~~Officer~~(collectively, ~~May~~the 16“Debtors”) filed voluntary petitions for reorganization under chapter 11 of the Bankruptcy Code, ~~2005~~in the Bankruptcy Court. In connection with the bankruptcy filings, the Company entered into a six month DIP financing agreement with DE Shaw Laminar Partners and Bank of America LLC which provides for revolving loans in the amount of $8 million with $2 million in collateralized letters of credit.

Management has assessed the liquidity position of the Company and its subsidiaries as a result of the bankruptcy filing and available DIP financing and believes that the Company and its subsidiaries will be able to fund their post-petition obligations until a plan of reorganization is finalized or another transaction is effected.

The Company 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 the Company.

Item 1A. Risk Factors Which May Affect Future Performance

Prolonged continuation of the Chapter 11 case may harm the Debtors’ business. The prolonged continuation of the Chapter 11 Cases could adversely affect the Debtors’ businesses and operations. So long as the Chapter 11 Cases continue, senior management of the Debtors will be required to spend a significant amount of time and effort dealing with the Debtors’ reorganization instead of focusing exclusively on business operations. Prolonged continuation of the Chapter 11 Cases will also make it more difficult to attract and retain management and other key personnel necessary to the success and growth of the Debtors’ businesses. In addition, the longer the Chapter 11 Cases continue, the more likely it is that the Debtors’ customers, suppliers, distributors and agents will lose confidence in the Debtors’ ability to successfully reorganize their businesses and seek to establish alternative commercial relationships. Furthermore, so long as the Chapter 11 Cases continue, the Debtors will be required to incur substantial costs for professional fees and other expenses associated with the proceedings. The prolonged continuation of the Chapter 11 Cases may also require the Debtors to seek additional financing, either as part of the DIP credit facility or otherwise, in order to service their debt and other obligations. It may not be possible for the Debtors to obtain additional financing during the pendency of the Chapter 11 Cases on commercially favorable terms or at all. If the Debtors were to require additional financing during the Chapter 11 Cases and were unable to obtain the financing on favorable terms or at all, the Debtors’ chances of successfully reorganizing their businesses may be seriously jeopardized.

The Debtors may not be able to obtain confirmation of the plan. The Debtors may not receive the requisite acceptances to confirm the Plan. Even if the requisite acceptances of the Plan are received, the Bankruptcy Court may not confirm the Plan. A dissenting holder of a claim against or equity interest in Boyds may challenge the balloting procedures and results as not being in compliance with the Bankruptcy Code. Even if the Bankruptcy Court determined that the balloting procedures and results were appropriate, the Bankruptcy Court could still decline to confirm the Plan if it found that any of the statutory requirements for confirmation had not been met, including that the terms of the Plan are fair and equitable to non-accepting Classes. Section 1129 of the Bankruptcy Code sets forth the requirements for confirmation and requires, among other things, a finding by the Bankruptcy Court that

(i) the Plan “does not unfairly discriminate” and is “fair and equitable” with respect to any non-accepting Classes, (ii) confirmation of the Plan is not likely to be followed by a liquidation or a need for further financial reorganization and (iii) the value of distributions to non-accepting Holders of Claims within a particular Class under the Plan will not be less than the value of distributions such Holders would receive if the Debtors were liquidated under chapter 7 of the Bankruptcy Code. The Bankruptcy Court may determine that the Plan does not satisfy one or more of these requirements, in which case it would not be confirmable by the Bankruptcy Court.

If the Plan is not confirmed by the Bankruptcy Court, it is unclear whether the Debtors will be able to reorganize their businesses and what, if any, distributions holders of claims against or equity interests in Boyds ultimately would receive with respect to their claims or equity interests. If an alternative reorganization could not be agreed upon, it is possible that the Debtors would have to liquidate their assets, in which case it is likely that holders of claims would receive substantially less favorable treatment than they would receive under the Plan.

The Change of Control Produced by the Restructuring of the Debtors may Result in Limited use of Deferred Tax Assets.. As further discussed in the Disclosure Statement, the issuance under the Plan of common stock in a reorganized Boyds, along with the cancellation of existing equity interests through the Plan, is expected to cause an ownership change to occur with respect to the reorganized Debtors as of the effective date of the Plan. As a result, Section 382 of the Internal Revenue Code (“IRC”) may apply to limit reorganized Boyd’s use of its consolidated net operating losses after the effective date. Additionally, the reorganized Debtors’ ability to use any remaining capital loss carryforwards and tax credits may be limited. The annual limitation imposed by the particular provision of Section 382 of the IRC that reorganized Boyds expects to apply to its ownership change generally equals the product of (i) the fair market value of the net equity value of reorganized Boyd’s stock at the time of the ownership change, taking into account the increase in value of the corporation as a result of the surrender or cancellation of creditor’s claims in the transaction (rather than the value without taking into account such increases, as is the case under the general rule for non-bankruptcy ownership changes) multiplied by (ii) the long-term tax-exempt rate in effect for the month in which the ownership change occurs. The long-term tax-exempt rate is published monthly by the IRS and is intended to reflect current interest rates on long-term tax-exempt debt obligations. Accordingly, under this rule the Section 382 limitation would generally reflect the increase in the value of reorganized Boyd’s stock resulting from the conversion of debt to equity in the proceeding. Section 383 of the IRC applies a similar limitation to a capital loss carryforward and tax credits. Although it is impossible to predict with absolute certainty the net equity value of Reorganized Boyds immediately after the exchanges contemplated by the Plan, reorganized Boyd’s use of its net operating losses and other deferred assets is expected to be substantially limited after those exchanges.

Financial Condition and Liquidity. As discussed in Note 1 to the accompanying consolidated financial statements, Boyds is operating as a debtor-in-possession under Chapter 11 of the U.S. Bankruptcy Code. As a result of the uncertainty surrounding Boyds current circumstances, it is difficult to predict Boyds actual liquidity needs and sources at this time. However, based upon current and anticipated levels of operations during the continuation of the bankruptcy proceedings, Boyds believes that its liquidity and capital resources will be sufficient to maintain its normal operations at current levels. Boyds access to additional financing while in the Chapter 11 bankruptcy process may be limited.

Delisting from the New York Stock Exchange. On October 10, 2005, the Company’s common stock was delisted from the New York Stock Exchange. Our common stock is quoted on the New York Stock Exchange Over-the-Counter (OTC) bulletin board quotation service. This has reduced the market and liquidity of the Company’s common stock and consequently the ability of the Company’s stockholders and broker/dealers to purchase and sell our shares in an orderly manner or at all. The volume of trading in the Company’s stock has continued to decline since our bankruptcy filing. Trading in the Company’s common stock through market makers and quotation on the OTC Bulletin Board

entails other risks. Due in part to the decreased trading price of the Company’s common stock and reduced analyst coverage, the trading price of the Company’s common stock may change quickly, and market makers may not be able to execute trades as quickly as they could when the common stock was listed on the New York Stock Exchange. Although trading continues, the Company expects that trading in its common stock may cease once a plan of reorganization is approved and a record date for approval of the plan is established.

Our ability to continue as a “going concern” is uncertain. The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue to operate as a going concern which contemplates continuity of operations, timely payment for services by customers, control of operating costs and expenses and the realization of asset sales and liquidation of liabilities and commitments. The bankruptcy filing and related circumstances, including our default on all pre-petition debt, the losses from operations, as well as current economic conditions, raise substantial doubts about our ability to continue as a going concern. The appropriateness of reporting on a going concern basis is dependent upon, among other things, the availability of sufficient capital to meet expenses, confirmation of a plan of reorganization, future profitable operations, customer and employee retention and the ability to generate sufficient cash from operations and financing sources to meet the Company’s obligations as they become due. The Company has assumed all of the foregoing. Should some or all of the Company’s assumptions prove to be unfounded or prove to be untrue in the future, the Company’s results of operations and financial condition will be adversely affected and the Company’s ability to continue as a going concern will be doubtful.

Financial position impacted by changing distribution channels. The Company’s historic distribution channels, mainly independent retailers, have seen significant declines in traffic for several years. Consumers have migrated to larger, more convenient retailers, which provide for a full array of products and services. If the Company is unable to migrate it sales distribution to channels which mirror consumers buying tendencies, then its revenues could be significantly impacted.

Financial Position impacted by 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 and offer a wider range of products and may be less affected by changing consumer tastes.

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 affect 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. In 2004, the Company began contracting its plush buying with three additional buying groups in an effort to mitigate this risk.

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 particular, 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. Recently, the Chinese government revalued its currency, the renminbi, ending its link to the U.S. dollar. While this is a significant change for China, the anticipated near term impacts to the Company are believed to be minimal.

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.

Potential foreign restrictions or additional costs. 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. 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.

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.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds—None

Item 3. Defaults Upon Senior Securities

As of October 16, 2005, the Company was not in compliance with one or more of the financial covenants contained in the New Credit Agreement. Such noncompliance constitutes an “event of default” under the New Credit Agreement. The Company received a waiver of such events of default from the lenders under the New Credit Agreement through October 15, 2005. On October 16, 2005, Company and certain of its subsidiaries filed voluntary petitions for reorganization under Chapter 11 of the Bankruptcy Code, in the United States Bankruptcy Court for the District of Maryland.

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

Item 5. Other Information

Item 6. Exhibits

(a) Exhibits — See Index to Exhibits

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: June 8, 2006

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
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.)*
99.1		Debtors Second Amended Joint Plan of Reorganization*
99.2		Disclosure Statement for Debtors’ Second Amended Joint Plan of Reorganization*

*		Filed herewith

Filing Compare · BOYDS COLLECTION LTD