<PAGE>

                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

 (MARK ONE)

     [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
          EXCHANGE ACT OF 1934.

                  For the Quarterly Period Ended June 30, 1999

                                       OR

     [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
          EXCHANGE ACT OF 1934.

                 For the Transition period from ______ to ______


                        Commission File Number: 001-14843



                           THE BOYDS COLLECTION, LTD.
             (Exact Name of Registrant as Specified in its Charter)

            Maryland                                             52-1418730
  (STATE OR OTHER JURISDICTION                                (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION)                            IDENTIFICATION NO.)


    350 South Street, McSherrystown,                               17344
  Pennsylvania, Attn.: Peter H. Frost
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                         (ZIP CODE)


                                 (717) 633-9898
              ----------------------------------------------------
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                         Yes     X        No
                             ---------       ---------

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

Common Stock, par value $.0001 per share                   61,101,246
               (CLASS)                         (OUTSTANDING AS OF JULY 29, 1999)

<PAGE>
                                                                               2

THE BOYDS COLLECTION, LTD.

TABLE OF CONTENTS
--------------------------------------------------------------------------------

<TABLE>
<CAPTION>
                                                                                           PAGE

<S>                                                                                        <C>
     PART I            FINANCIAL INFORMATION

     ITEM 1.  FINANCIAL STATEMENTS

              Condensed Consolidated Balance Sheets as of June
              30, 1999 and December 31, 1998................................................3

              Condensed Consolidated Statements of Income for the
              Three Months Ended June 30, 1999 and 1998.....................................4

              Condensed Consolidated Statements of Stockholders'
              Equity for the Three Months and the Six Months Ended June 30, 1999............5

              Condensed Consolidated Statements of Cash Flows for
              the Six Months Ended June 30, 1999 and 1998...................................6

              Notes to Condensed Consolidated Financial Statements..........................7

     ITEM 2.  MANAGEMENT's DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
              AND RESULTS OF OPERATIONS....................................................11

     ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK...................19

     PART II  OTHER INFORMATION

     ITEM 1.  LEGAL PROCEEDINGS............................................................20

     ITEM 2.  CHANGES IN SECURITIES AND USE OF PROCEEDS....................................20

     ITEM 3.  DEFAULTS UPON SENIOR SECURITIES..............................................20

     ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS..........................20

     ITEM 5.  OTHER INFORMATION............................................................20

     ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.............................................21

              SIGNATURES...................................................................22
</TABLE>

<PAGE>
                                                                               3

                                     PART I
                              FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS.

                           THE BOYDS COLLECTION, LTD.

 CONDENSED CONSOLIDATED BALANCE SHEETS AS OF JUNE 30, 1999 AND DECEMBER 31, 1998
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                         JUNE 30,        DECEMBER 31,
                                                                           1999             1998
                                                                              (IN THOUSANDS)
<S>                                                                      <C>             <C>
ASSETS
CURRENT ASSETS:
  Cash and cash equivalents                                              $   4,868       $  11,606
  Accounts receivable, less allowance for doubtful accounts of $180         25,170          24,355
    in 1999 and 1998, respectively
  Inventory-primarily finished goods                                         8,699           8,440
  Inventory in transit                                                         871           3,116
  Other current assets                                                         706             527
                                                                         ---------       ---------
    Total current assets                                                    40,314          48,044

PROPERTY AND EQUIPMENT:
  Property and equipment                                                     4,118           2,662
  LessCaccumulated depreciation                                             (1,353)         (1,143)
                                                                         ---------       ---------
    Total furniture and equipment                                            2,765           1,519

OTHER ASSETS:
  Deferred debt issuance costs                                               6,839          12,019
  Deferred tax asset                                                       226,206         234,403
  Other assets                                                               2,436           2,425
                                                                         ---------       ---------
    Total other assets                                                     235,481         248,847
                                                                         ---------       ---------
TOTAL ASSETS                                                             $ 278,560       $ 298,410
                                                                         =========       =========

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
  Short term debt                                                        $   4,000       $       0
  Accounts payable                                                             977           1,513
  Accrued taxes                                                                657           5,364
  Accrued expenses                                                             728           1,767
  Interest payable                                                           2,561           5,501
  Deferred income                                                              155              31
                                                                         ---------       ---------
    Total current liabilities                                                9,078          14,176

LONG-TERM DEBT                                                             261,000         443,000

COMMITMENTS AND CONTINGENCIES (Notes 7 and 8)

<PAGE>
                                                                               4


STOCKHOLDERS' EQUITY (DEFICIT):
  Capital stock (61,101 and 52,588 shares issued and outstanding at
    June 30, 1999 and December 31, 1998, respectively) and paid-in         (48,243)       (193,043)
    capital in excess of par
  Retained earnings                                                         56,725          34,277
                                                                         ---------       ---------
    Total stockholders' equity (deficit)                                     8,482        (158,766)
                                                                         ---------       ---------

TOTAL LIABILITIES AND STOCKHOLDERs' EQUITY (DEFICIT)                     $ 278,560       $ 298,410
                                                                         =========       =========
</TABLE>

            See notes to condensed consolidated financial statements.


<PAGE>
                                                                               5

                           THE BOYDS COLLECTION, LTD.

        CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR THE THREE MONTHS
          AND THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998 (UNAUDITED)

<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED             SIX MONTHS ENDED
                                                                       JUNE 30,                      JUNE 30,
                                                                -----------------------       -----------------------
                                                                  1999           1998           1999           1998
                                                                --------       --------       --------       --------
                                                                     (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S>                                                             <C>            <C>            <C>            <C>
NET SALES                                                       $ 43,725       $ 38,394       $100,911       $ 87,730
COST OF GOODS SOLD                                                15,050         12,861         33,726         28,611
                                                                --------       --------       --------       --------
  Gross profit                                                    28,675         25,533         67,185         59,119
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                       4,156          3,492          8,475          6,277
OTHER OPERATING INCOME                                               200            249            516            683
                                                                --------       --------       --------       --------
INCOME FROM OPERATIONS                                            24,719         22,290         59,226         53,525
                                                                --------       --------       --------       --------
OTHER INCOME/(EXPENSE):
  Interest and dividend income                                       129            105            292            223
  Other income                                                      --              (36)          --              (36)
  Expenses related to the recapitalization                          --           (3,248)          --           (3,248)
                                                                --------       --------       --------       --------
TOTAL OTHER INTEREST/(EXPENSE)                                       129         (3,179)           292         (3,061)
                                                                --------       --------       --------       --------
INTEREST EXPENSE:
  Interest expense                                                 5,256          8,045         13,275          8,356
  Amortization of deferred debt issuance costs                       192            472            415            472
                                                                --------       --------       --------       --------
TOTAL INTEREST EXPENSE                                             5,448          8,517         13,690          8,828
                                                                --------       --------       --------       --------
INCOME BEFORE PROVISION FOR INCOME TAXES AND EXTRAORDINARY        19,400         10,594         45,828         41,636
  ITEM
PROVISION FOR INCOME TAXES                                         6,984          3,755         16,498          3,755
                                                                --------       --------       --------       --------
INCOME BEFORE EXTRAORDINARY ITEM                                  12,416          6,839         29,330         37,881
EXTRAORDINARY ITEM:
  REDEMPTION PREMIUM ON BONDS (NET OF $2,138 TAX BENEFIT)          3,802           --            3,802           --
  WRITE OFF OF DEFERRED DEBT ISSUANCE COSTS (NET OF $957           1,700           --            3,080           --
                                                                --------       --------       --------       --------
    AND $1,732 TAX BENEFITS RESPECTIVELY)
TOTAL EXTRAORDINARY ITEMS                                          5,502           --            6,882           --
                                                                --------       --------       --------       --------

NET INCOME                                                      $  6,914       $  6,839       $ 22,448       $ 37,881
                                                                ========       ========       ========       ========

PRO FORMA DATA:

HISTORICAL INCOME BEFORE EXTRAORDINARY ITEM                     $ 12,416       $  6,839       $ 29,330       $ 37,881
PRO FORMA PROVISION FOR INCOME TAXES                                --               55           --           12,900
                                                                --------       --------       --------       --------
PRO FORMA INCOME BEFORE EXTRAORDINARY ITEM                        12,416          6,784         29,330         24,961
EXTRAORDINARY ITEMS:

<PAGE>
                                                                               6


  REDEMPTION PREMIUM ON BONDS (NET OF $2,138 TAX BENEFIT)          3,802           --            3,802           --
  WRITE OFF OF DEFERRED DEBT ISSUANCE COSTS (NET OF $957
  AND $1,732 TAX BENEFITS RESPECTIVELY)                            1,700           --            3,080           --
                                                                --------       --------       --------       --------
TOTAL EXTRAORDINARY ITEMS                                          5,502           --            6,882           --
                                                                --------       --------       --------       --------
PRO FORMA NET INCOME                                            $  6,914       $  6,784       $ 22,448       $ 24,961
                                                                ========       ========       ========       ========

PRO FORMA EARNINGS PER SHARE:
  Basic and Diluted Earnings Per Share Income Before            $   0.20       $   0.09       $   0.50       $   0.21
    Extraordinary Items
    Extraordinary Items:
    - Redemption Premium on Bonds                                  (0.06)          --            (0.07)          --
    - Write Off of Deferred Debt Issuance Costs                    (0.03)          --            (0.05)          --
                                                                --------       --------       --------       --------
    Net Income                                                  $   0.11       $   0.09       $   0.38       $   0.21
                                                                ========       ========       ========       ========
</TABLE>

            See notes to condensed consolidated financial statements.

<PAGE>
                                                                               7

                           THE BOYDS COLLECTION, LTD.

        CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY FOR THE
                        THREE MONTHS ENDED JUNE 30, 1999
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                            COMMON STOCK
                                                               NUMBER OF    AND PAID-IN      RETAINED
                                                                SHARES        CAPITAL        EARNINGS
                                                                             IN EXCESS
                                                                              OF PAR

                                                                           (IN THOUSANDS)
<S>                                                              <C>           <C>           <C>
BALANCE, JANUARY 1, 1999                                        52,588       $(193,043)      $34,277

  Sale of common stock (net of related fees and expenses)        9,250         154,318          --
  Repurchase of common stock                                      (737)         (9,518)
  Net income                                                      --              --          22,448
                                                               -------       ---------       -------

BALANCE, JUNE 30, 1999                                          61,101       $ (48,243)      $56,725
                                                               =======       =========       =======
</TABLE>



            See notes to condensed consolidated financial statements.

<PAGE>
                                                                               8

                           THE BOYDS COLLECTION, LTD.

       CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE SIX MONTHS
                          ENDED JUNE 30, 1999 AND 1998
                                  (UNAUDITED)

<TABLE>
<CAPTION>
                                                                                     SIX MONTHS ENDED
                                                                                         JUNE 30,
                                                                                 -------------------------
                                                                                    1999            1998
                                                                                 ---------       ---------
                                                                                      (IN THOUSANDS)
<S>                                                                              <C>             <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                                     $  22,448       $  37,881
  Adjustments to reconcile net income to net cash provided by operating
    activities:
    Depreciation                                                                       210             126
    Amortization and write off of deferred debt issuance costs                       5,180             472
    Amortization of deferred tax asset                                               8,197           3,493
    Loss on sale of equipment                                                         --                36
    Changes in assets and liabilities:
      Accounts receivable-net                                                         (815)         (2,033)
      Inventory                                                                       (259)         (1,148)
      Inventory in transit                                                           2,245              98
      Other current assets                                                            (179)             80
      Other assets                                                                     (12)           --
      Accounts payable                                                                (536)            142
      Accrued taxes                                                                 (4,707)         (2,296)
      Accrued expenses                                                              (1,038)            (73)
      Interest payable                                                              (2,940)          6,921
      Deferred income                                                                  124            (708)
                                                                                 ---------       ---------
        Net cash provided by operating activities                                   27,918          42,991
                                                                                 ---------       ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
  Purchase of equipment                                                             (1,456)           (670)
  Issuance of notes receivable                                                        --              (400)
                                                                                 ---------       ---------
        Net cash used in investing activities                                       (1,456)         (1,070)
                                                                                 ---------       ---------


<PAGE>
                                                                               9


CASH FLOWS FROM FINANCING ACTIVITIES:
  Repayment of note payable-stockholders                                              --           (30,000)
  Due to stockholder                                                                  --               232
  Short term debt                                                                    4,000            --
  Issuance of debt                                                                    --           490,000
  Repayment of debt                                                               (182,000)        (17,500)
  Recapitalization and stock repurchase (net of related fees and expenses)            --          (484,609)
  Sale of common stock (net of related fees and expenses)                          154,318           3,755
  Capital contribution                                                                --             3,200
  Deferred debt issuance cost                                                         --           (13,856)
  Accrued transaction fees                                                            --             1,500
  Repurchase of common stock                                                        (9,518)           --
                                                                                 ---------       ---------
        Net cash used in financing activities                                      (33,200)        (47,278)
                                                                                 ---------       ---------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                                (6,738)         (5,357)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                      11,606          11,210
                                                                                 ---------       ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD                                         $   4,868       $   5,853
                                                                                 =========       =========
CASH PAID DURING THE PERIOD FOR INTEREST                                         $  16,081       $   1,124
                                                                                 =========       =========
CASH PAID DURING THE PERIOD FOR INCOME TAXES                                     $   8,999       $   2,100
                                                                                 =========       =========
</TABLE>


            See notes to condensed consolidated financial statements.


<PAGE>

                           THE BOYDS COLLECTION, LTD.

              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
     (UNAUDITED) (AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)

1.       INTERIM FINANCIAL STATEMENTS

                  The Boyds Collection, Ltd., (Boyds) is a wholesaler and
         importer of giftware and imports substantially all of its products from
         foreign suppliers, primarily located in The People's Republic of China.
         The condensed consolidated balance sheet, as of June 30, 1999, the
         related condensed consolidated statements of income for the three
         months and six months ended June 30, 1999 and 1998, the statement of
         stockholders' equity for the six months ended June 30, 1999 and the
         statements of cash flows for the six months ended June 30, 1999 and
         1998 are unaudited. In the opinion of management all adjustments,
         consisting only of normal recurring adjustments, necessary for a fair
         presentation of such interim financial statements have been included.
         The results of operations for the six months ended June 30, 1999 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' 1998 Financial
         Statements, which are included in the Registration Statement on Form
         S-1 (File No. 333-69535) filed with the Securities and Exchange
         Commission on March 4, 1999.

2.       INITIAL PUBLIC OFFERING

                  On March 5, 1999, Boyds issued and sold 9,250,000 shares of
         common stock at $18 per share in an initial public offering and listed
         its stock on the New York Stock Exchange. The proceeds to Boyds, after
         deducting the underwriting discount and attorney fees, were
         approximately $154.3 million. On March 12, 1999, $82.5 million of
         indebtedness under the credit facility with DLJ Capital Funding, Inc.
         and other lenders was repaid from the proceeds. On April 12, 1999,
         Boyds paid $71.9 million to the holders of its senior subordinated
         notes. The payment comprised $5.9 million of redemption premium and
         $66.0 million of principal.

3.       RECAPITALIZATION AND FINANCINGS

                  On March 6, 1998, Boyds entered into a Recapitalization and
         Stock Purchase Agreement with Bear Acquisition, Inc. ("Bear"). Bear was
         a subsidiary of KKR 1996 Fund L.P., a limited partnership formed at the
         direction of Kohlberg Kravis Roberts & Co. L.P. ("KKR"). In connection
         with the closing of the Recapitalization on April 21, 1998, Boyds used
         approximately $490 million of aggregate proceeds from certain
         financings described below (the "Financings") and approximately $8
         million of existing cash balances of Boyds to: (i) redeem (the
         "Redemption") a portion of Boyds' common stock held by the existing
         stockholders (the "Stockholders") for approximately $473 million and
         (ii) pay transaction fees and expenses of approximately $25 million. In
         addition, Bear acquired shares of common stock from the Stockholders
         for approximately $184 million (the "Stock Purchase"). The Stock
         Purchase, Redemption and Financings and related transactions have been
         recorded as a recapitalization (the "Recapitalization"). Upon
         completion of the Recapitalization, Bear owned approximately 80% of the
         Common Stock and the Stockholders retained approximately 20% of the
         Common Stock.

<PAGE>
                                                                              11

                  The Financings consisted of: (i) an aggregate of approximately
         $325 million of bank borrowings by Boyds under senior secured term
         loans (the "Term Loans") and (ii) $165 million aggregate principal
         amount of senior subordinated notes (the "Notes"). In addition, Boyds
         entered into a $40 million senior secured revolving credit facility,
         which is available for Boyds' working capital requirements and to
         support trade letters of credit. As at June 30, 1999, Boyds was
         utilizing $4 million under the revolving credit facility.

                  Financing costs of approximately $13,800 were classified as
         deferred debt issuance costs and will be amortized over the lives of
         the related debt facilities. In addition, Boyds incurred approximately
         $11,800 of costs associated with the Redemption, which were charged to
         paid-in capital in excess of par. Fees in the amount of $6,000 were
         paid to KKR in connection with the recapitalization.

4.       FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK

                  At June 30, 1999 and at December 31, 1998, Boyds had letters
         of credit outstanding under bank credit agreements amounting to $13,529
         and $11,172, respectively. These letters of credit represent Boyds'
         commitment to purchase inventory which is to be produced and/or
         shipped.

5.       RELATED PARTY TRANSACTIONS AND NOTE PAYABLE - STOCKHOLDERS

                  Certain stockholders loaned $30,000 to Boyds at December 31,
         1997, at an interest rate of 5.0%. These notes payable were repaid in
         1998. Interest amounting to $333 was paid to these stockholders during
         the six months ended June 30, 1998.

                  For the second quarter and first six months ended June 30,
         1999, Boyds paid to KKR approximately $140 and $274 respectively for
         management fees and related expenses.

6.       LONG-TERM DEBT

                  Long-term debt is summarized as follows:

<TABLE>
<CAPTION>
                                                                                    JUNE 30,    DECEMBER 31,
                                                                                      1999          1998

<S>                                                                                 <C>           <C>
         9% Senior Subordinated Notes due May 15, 2008                              $ 99,000      $165,000


         Credit Agreement:
                  Secured Tranche A Term Loans due April 2005.  Interest based
                    on LIBOR or base rate as defined                                  88,250        88,250
                  Secured Tranche B Term Loans due April 2006.  Interest based
                    on LIBOR or base rate as defined                                  73,750       189,750
                                                                                    --------      --------
                                                                                    $261,000      $443,000
                                                                                    ========      ========
</TABLE>

<PAGE>
                                                                              12


                  At June 30, 1999, the weighted average interest rate in effect
         for the Term Loans was 6.976%.

                  The Notes have an optional redemption feature any time after
         May 15, 2003. Interest on the Notes is payable semiannually on May 15
         and November 15.

                  The Credit Agreement contains certain covenants, including the
         requirement of a minimum interest coverage ratio as defined in the
         agreement and substantial restrictions as to dividends and
         distributions. The agreement also provides that the Term Loans and
         revolving loan commitment be secured by the capital stock of Boyds'
         future subsidiaries. In connection with the transfer of Boyds' assets
         to its wholly owned subsidiary, The Boyds Collection Ltd. L.P. ("Boyds
         L.P.") in 1998, Boyds pledged its interests in Boyds L.P. In addition,
         the Term Loans are subject to mandatory prepayment with the proceeds of
         certain asset sales and a portion of Boyds' excess cash flow as defined
         in the credit agreement. Boyds has the option of selecting its own
         interest period at one, two, three, six, nine or twelve month periods.

                  The scheduled maturities of the long-term debt are as follows:

                            1999                  $     --
                            2000                        --
                            2001                     6,250
                            2002                    14,000
                            2003                    17,000
                            Thereafter             223,750

7.       INCOME TAXES

                  Prior to April 21, 1998, Boyds had elected to be treated as an
         S Corporation for federal and state income tax purposes. Boyds
         subsequently elected to change its tax status from an S Corporation to
         a C Corporation. The income statement reflects a provision for income
         taxes for the period Boyds was a C Corporation. Pro forma income
         statement data reflects pro forma income tax information as if Boyds
         was a C Corporation for the entire periods presented.

                  For federal income tax purposes, Boyds has elected to treat
         the Recapitalization and Stock Purchase as an asset acquisition by
         making a Section 338 Section (h)(10) election. As a result, there is a
         difference between the financial reporting and tax basis of Boyds'
         assets. The difference creates deductible goodwill for tax purposes,
         which creates a deferred tax asset for financial reporting purposes.
         The deferred tax asset will be realized as the goodwill is amortized
         over a period of fifteen years. In the opinion of management, Boyds
         believes it will have

<PAGE>
                                                                              13


         sufficient profits in the future to realize the deferred tax asset.

8.       CONTINGENCIES

                  Boyds is engaged in various lawsuits, either as plaintiff or
         defendant, involving alleged patent infringement and breaches of
         contract. In the opinion of management, based upon advice of counsel,
         the ultimate outcome of these lawsuits will not have a material impact
         on Boyds' financial statements.

9.       EARNINGS PER SHARE:

         The following is a reconciliation of the numerators and denominators of
         the basic and diluted earnings per share computations:

<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED          SIX MONTHS ENDED
                                                                        JUNE 30,                  JUNE 30,
                                                                  --------------------      ---------------------
                                                                   1999         1998         1999          1998
                                                                  -------      -------      -------      --------
                                                                      (IN THOUSANDS)           (IN THOUSANDS)
<S>                                                               <C>          <C>          <C>          <C>
         Numerator for basic and diluted earnings per share:
            Pro forma net income                                  $ 6,914      $ 6,784      $22,448      $ 24,981
                                                                  -------      -------      -------      --------
         Denominator:
            Denominator for basic earnings per
              share--weighted average shares                       61,651       75,441       58,524       116,329

         Effect of dilutive securities:
            Effect of shares issuable under stock
              option plans based on treasury stock
              method                                                  619         --            635          --
                                                                  -------      -------      -------      --------

         Denominator for diluted earnings per share
            --weighted average shares                              62,270       75,441       59,159       116,329
                                                                  -------      -------      -------      --------
</TABLE>


10.      PRO FORMA INFORMATION (UNAUDITED)

                  The following pro forma information for the periods presented
         in 1999 give effect to the initial public offering as if it were
         consummated on January 1, 1999, and for the periods presented in 1998
         give effect to the initial public offering and the recapitalization and
         related transactions as if such transactions were consummated on
         January 1, 1998. The pro forma

<PAGE>
                                                                              14


         information excludes the effects of the extraordinary items related to
         the redemption premium on the bonds and the write off of deferred debt
         issuance costs:

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED          SIX MONTHS ENDED
                                                                    JUNE 30,                  JUNE 30,
                                                              --------------------      --------------------
                                                               1999         1998         1999         1998
                                                              -------      -------      -------      -------
                                                                 (IN THOUSANDS)           (IN THOUSANDS)
<S>                                                           <C>          <C>          <C>          <C>
         Historical Income from Operations                    $24,719      $22,290      $59,226      $53,525

         Expenses Related to the Recapitalization                --          3,248         --          3,248

         Pro Forma Interest Expense                             5,113        7,439       10,508       14,538
                                                              -------      -------      -------      -------
         Pro Forma Income Before Income
                  Taxes and Extraordinary Items                19,606       11,603       48,718       35,739
                                                              -------      -------      -------      -------
         Pro Forma Provision for Income Taxes                   7,058        4,279       17,538       14,296
                                                              -------      -------      -------      -------
         Pro Forma Income Before Extraordinary Items          $12,548      $ 7,324      $31,180      $21,443
                                                              =======      =======      =======      =======
         Pro Forma Basic and Diluted Earnings Per Share,
                  before Extraordinary Items                  $  0.20      $  0.12      $  0.50      $  0.35

         Weighted Average Basic Shares Outstanding             61,651       61,838       61,744       61,838

         Weighted Average Diluted Shares Outstanding           62,270       62,013       62,379       61,926
</TABLE>


11.      SUBSEQUENT EVENTS

                  Boyds' exchange offer for all of its outstanding 9% Senior
         Subordinated Notes due 2008 expired at 5.00 p.m. New York City Time on
         July 22, 1999. The purpose of this offer was to comply with Boyds'
         obligation under the registration rights agreement entered into in
         connection with the original sale of the outstanding senior
         subordinated notes.

<PAGE>
                                                                              15


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS.

GENERAL

         Boyds has grown significantly to become a leading domestic designer,
importer and distributor of branded, high-quality, hand-crafted collectibles and
other specialty giftware products. Boyds' products include resin figurines,
plush animals, porcelain dolls and boxes and related clothing and accessories.
Boyds sells its products through an extensive network of approximately 19,950
accounts comprised of independent gift and collectibles retailers, premier
department stores, selected catalogue retailers and other electronic and retail
channels.

         Boyds' resin figurine and plush animal sales accounted for 86.3% and
86.4% of the second quarter and the first six months 1999 net sales,
respectively, with other product sales, freight sales, collectors club sales and
distributor sales comprising the remainder. Freight sales represent shipping and
handling charges assessed on each order based on order size. Collectors club
sales are generated from annual dues collected directly from consumers who
become members of Boyds' collectors club, THE LOYAL ORDER OF FRIENDS OF BOYDS,
which began in July 1996 and currently has approximately 120,000 paying members.
Distributor sales represent sales of Boyds' products to independent distributors
in other countries and to certain accounts in the U.S., which are shipped
directly from overseas suppliers.

         Selling, general and administrative expenses are comprised of overhead,
selling and marketing costs, administration, professional fees and Pennsylvania
capital stock taxes. Boyds exhibits its products at many national and regional
tradeshows where orders are taken by Boyds' employees and part-time help. Boyds
operates almost exclusively out of a leased office/distribution facility in
McSherrystown, Pennsylvania where it believes both labor and rental costs are
attractive. These factors, combined with Boyds' access to low-cost manufacturing
sources located primarily in China, have resulted in an operating income margin
that Boyds believes is among the highest in the industry.

         Boyds licenses its product designs to other companies for products
including stationery, greeting cards and home textiles. 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 as
other operating income.

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
                                                          THREE MONTHS ENDED       SIX MONTHS ENDED
                                                               JUNE 30,                JUNE 30,
                                                          ------------------      ------------------
                                                           1999        1998        1999        1998
                                                          ------      ------      ------      ------
<S>                                                        <C>         <C>         <C>         <C>
Net sales                                                  100.0%      100.0%      100.0%      100.0%
Gross profit                                                65.6        66.5        66.6        67.4


<PAGE>
                                                                              16



Selling, general and administrative expenses                 9.5         9.1         8.4         7.2
Other operating income                                       0.4         0.7         0.5         0.8

  Income from operations                                    56.5        58.1        58.7        61.0
                                                           -----       -----       -----       -----
Other income                                                 0.3         0.2         0.3         0.2
Expenses related to the recapitalization                      --         8.5          --         3.7
Interest expense                                            12.4        22.2        13.6        10.0
Provision for income taxes                                  16.0         9.8        16.3         4.3
                                                           -----       -----       -----       -----
  Income before extraordinary items                         28.4%       17.8%       29.1%       43.2%
                                                           =====       =====       =====       =====
Extraordinary items (net of $3,095 tax benefit)             12.6          --         6.9          --
                                                           -----       -----       -----       -----
  Net income                                                15.8%       17.8%       22.2%       43.2%
                                                           =====       =====       =====       =====

PRO FORMA INFORMATION:
Historical income from operations                           56.5%       58.1%       58.7%       61.0%
Expenses related to the recapitalization                      --         8.5          --         3.7
Pro forma interest expense                                  11.7        19.4        10.4        16.6
Pro forma provision for income taxes                        16.1        11.1        17.4        16.3
  Pro forma net income before extraordinary items .         28.7%       19.1%       30.9%       24.4%
                                                           =====       =====       =====       =====
</TABLE>


THREE MONTHS ENDED MARCH 31, 1999 VS. THREE MONTHS ENDED MARCH 31, 1998

         NET SALES - Net sales increased $5.3 million, or 13.9%, to $43.7
million in the second quarter of 1999 from $38.4 million for the second quarter
of 1998. Sales of Boyds' plush products increased $5.8 million, or 35.4%,
compared to the same period last year. Sales of the Boyds' resin figurine
product category decreased $1.1 million, or 6.6%, in the second quarter of
fiscal 1999. Sales of plush products represented 51% of the Company's net sales
of $43.7 million in the quarter, while sales of resin figurines represented 35%.
The significant increase in sales of the Company's plush products offset the
slight decrease in sales of its resin figurines.

         GROSS PROFIT - Gross profit increased $3.2 million, or 12.3%, to $28.7
million in the second quarter of 1999 from $25.5 million for the second quarter
of 1998. Gross profit as a percent of sales decreased to 65.6% for the period
from 66.5% for the same period in 1998. The dollar increase in gross profit was
primarily attributable to the increase in sales volume. The decrease in gross
profit as a percent of sales was primarily attributable to increased warehousing
costs due to higher inventory levels needed to satisfy customer demand and to
increased inbound freight costs.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - SG&A expenses increased
$0.7 million, or 19.0%, to $4.2 million in the second quarter of 1999 from $3.5
million for the second quarter of 1998. SG&A expenses as a percent of sales
increased to 9.5% for the period from 9.1% for the same period in 1998. The
dollar increase in SG&A was primarily due to increased administrative costs as a
result of Boyds' net sales increase during the period. The increase in SG&A
expenses as a percent of sales was primarily due to increased wages incurred in
adding additional management personnel.

<PAGE>
                                                                              17


         INCOME FROM OPERATIONS - Income from operations increased $2.4 million,
or 10.9%, to $24.7 million in the second quarter of 1999 from $22.3 million for
the second quarter of 1998. The operating income margin decreased to 56.5% for
the period from 58.1% for the same period in 1998. The dollar increase in income
from operations was primarily attributable to the increase in net sales for the
period. The decrease in operating income margin was due to a decrease in gross
profit margin and an increase in SG&A expenses as a percent of sales for the
period.

         EXPENSES RELATED TO THE RECAPITALIZATION - Transaction costs of $3.2
million for the second quarter of 1998 related to non-recurring bonuses paid to
key employees in connection with the recapitalization.

         INTEREST EXPENSE - Interest expense decreased $3.1 million, or 36.0%,
to $5.4 million in the second quarter of 1999 from $8.5 million in the second
quarter of 1998. Interest expense as a percent of sales decreased to 12.5% for
the period from 22.2% for the same period in 1998. The decrease in interest
expense in both dollars and as a percent of sales was due to the application of
the funds received from the initial public offering in March 1999, which reduced
the debt incurred in connection with the recapitalization, which took place in
April, 1998.

         INCOME TAXES - Income taxes increased $3.2 million, or 86.0%, to $7.0
million in the second quarter of 1999 from $3.8 million in the second quarter of
1998. This increase was due to the increase in taxable income and the change in
Boyds' tax status from an S Corporation to a C Corporation in April 1998.

         EXTRAORDINARY ITEMS - An extraordinary item of $3.8 million, net of
tax, for the redemption premium on bonds related to the early retirement of
$66.0 million of senior subordinated notes. A second extraordinary item of $1.7
million, net of tax, for the amortization of deferred debt issuance costs
related to the early paydown of $82.5 million of other long term debt. Both of
these items resulted from the use of the proceeds of the initial public
offering, which occurred in March 1999.

         NET INCOME - Net income increased $0.1 million, or 1.1%, to $6.9
million in the second quarter of 1999 from $6.8 million in the second quarter of
1998. The net income margin decreased to 15.8% in the second quarter of 1999
from 17.8% in the second quarter of 1998. The decrease in net income margin was
attributable to the extraordinary items as discussed above.

         PRO FORMA INTEREST EXPENSE - Pro forma interest expense for 1999 was
calculated assuming the initial public offering occurred on January 1, 1999, and
for 1998 assuming the recapitalization and the initial public offering occurred
on January 1, 1998. Pro forma interest expense decreased $2.3 million, or 31.3%,
in the second quarter of 1999 to $5.1 million from $7.4 million for the second
quarter of 1998. Pro forma interest expense as a percent of sales decreased to
11.7% for the period from 19.4% for the same period in 1998. The decrease in pro
forma interest in both dollars and as a percent of sales was due to the
reduction of debt from excess cash and reduction of interest rates due to the
deleveraging of Boyds.

         PRO FORMA INCOME TAXES - Due to a change in Boyds' state tax status the
overall tax rate fell from 40.0% in 1998 to 36% in 1999.

         PRO FORMA NET INCOME BEFORE EXTRAORDINARY ITEMS - Pro forma net income
before extraordinary

<PAGE>
                                                                              18


items increased $5.2 million, or 71.3%, to $12.5 million in the second quarter
of 1999 from $7.3 million for the second quarter of 1998. The pro forma net
income before extraordinary items margin increased to 28.7% for the period from
19.1% for the same period in 1998. The increase in pro forma net income before
extraordinary items in both dollars and as a percent of sales was primarily
attributable to the increase in net sales and the decrease in pro forma interest
expense.

SIX MONTHS ENDED JUNE 30, 1999 VS. SIX MONTHS ENDED JUNE 30, 1998

         NET SALES - Net sales increased $13.2 million, or 15.0%, to $100.9
million in the first six months of 1999 from $87.7 million for the first six
months of 1998. Sales of Boyds' plush products increased $11.2 million, or
30.2%, compared to the same period last year. Sales of Boyds' resin figurine
product category decreased $0.2 million, or 0.5%, in the first half of fiscal
1999. Sales of plush products represented 48% of Boyds' net sales of $100.9
million in the first half, while sales of resin figurines represented 39%. The
significant increase in sales of Boyds' plush products offset the slight
decrease in sales of its resin figurines.

         GROSS PROFIT - Gross profit increased $8.1 million, or 13.6%, to $67.2
million in the first six months of 1999 from $59.1 million for the first six
months of 1998. Gross profit as a percent of sales decreased to 66.6% for the
period from 67.4% for the same period in 1998. The dollar increase in gross
profit was primarily attributable to the increase in sales volume. The decrease
in gross profit as a percent of sales was primarily attributable to increased
warehousing costs due to higher inventory levels needed to satisfy customer
demand.

         SELLING, GENERAL AND ADMINISTRATIVE EXPENSES - SG&A expenses increased
$2.2 million, or 35.0%, to $8.5 million in the first six months of 1999 from
$6.3 million for the first six months of 1998. SG&A expenses as a percent of
sales increased to 8.4% for the period from 7.2% for the same period in 1998.
The dollar increase in SG&A was primarily due to increased administrative costs
as a result of Boyds' net sales increase during the period. The increase in SG&A
expenses as a percent of sales was primarily due to increased wages incurred in
adding additional management personnel.

         INCOME FROM OPERATIONS - Income from operations increased $5.7 million,
or 10.7%, to $59.2 million in the first six months of 1999 from $53.5 million
for the first six months of 1998. The operating income margin decreased to 58.7%
for the period from 61.0% for the same period in 1998. The dollar increase in
income from operations was primarily attributable to the increase in net sales
for the period. The decrease in operating income margin was due to a decrease in
gross profit margin and an increase in SG&A expenses as a percent of sales for
the period.

         EXPENSES RELATED TO THE RECAPITALIZATION - Transaction costs of $3.2
million for the first six months of 1998 related to non-recurring bonuses paid
to key employees in connection with the recapitalization,

         INTEREST EXPENSE - Interest expense increased $4.9 million, or 55.1%,
to $13.7 million in the first six months of 1999 from $8.8 million for the first
six months of 1998. Interest expense as a percent of sales increased to 13.6%
for the period from 10.1% for the same period in 1998. The increase in interest
expense in both dollars and as a percent of sales was due to the debt incurred
in connection with the recapitalization, which took place in April, 1998.


<PAGE>
                                                                              19


         INCOME TAXES - Income taxes increased $12.7 million, or 339.4%, to
$16.5 million in the first six months of 1999 from $3.8 million in the first six
months of 1998. This increase was due to the change in Boyds' tax status from an
S Corporation to a C Corporation in April 1998.

         EXTRAORDINARY ITEMS - An extraordinary item of $3.8 million, net of
tax, for the redemption premium on bonds related to the early retirement of
$66.0 million of senior subordinated notes. A second extraordinary item of $3.1
million, net of tax, for the amortization of deferred debt issuance costs
related to the early paydown of $82.5 million of other long term debt. Both of
these items resulted from the use of the proceeds of the initial public
offering, which occurred in March 1999.

         NET INCOME - Net income decreased $15.4 million, or 40.7%, to $22.4
million in the first six months of 1999 from $37.9 million in the first six
months of 1998. The net income margin decreased to 22.2% in the first six months
of 1999 from 43.2% in the first six months of 1998. The decrease in net income
and net income margin was primarily due to the increase in interest expense,
income taxes and extraordinary items as discussed above.

         PRO FORMA INTEREST EXPENSE - Pro forma interest expense for 1999 was
calculated assuming the initial public offering occurred on January 1, 1999, and
for 1998 assuming the recapitalization and the initial public offering occurred
on January 1, 1998. Pro forma interest expense decreased $4.0 million, or 27.7%,
in the first six months of 1999 to $10.5 million from $14.5 million for the
first six months of 1998. Pro forma interest expense as a percent of sales
decreased to 10.4% for the period from 16.6% for the same period in 1998. The
decrease in pro forma interest in both dollars and as a percent of sales was due
to the reduction of debt from excess cash and reduction of interest rates due to
the deleveraging of Boyds..

         PRO FORMA INCOME TAXES - Due to a change in the company's state tax
status the overall tax rate fell from 40.0% in 1998 to 36% in 1999.

         PRO FORMA NET INCOME BEFORE EXTRAORDINARY ITEMS - Pro forma net income
before extraordinary items increased $9.7 million, or 45.4%, to $31.2 million in
the first six months of 1999 from $21.4 million for the first six months of
1998. The pro forma net income before extraordinary items margin increased to
30.9% for the period from 24.4% for the same period in 1998. The increase in pro
forma net income before extraordinary items in both dollars and as a percent of
sales was primarily attributable to the increase in net sales and the decrease
in pro forma interest expense.

LIQUIDITY AND CAPITAL RESOURCES

         Historically, Boyds utilized its operating cash flow to support working
capital and ongoing capital expenditures. Cash flow from operations decreased
$15.1 million, or 35.1%, to $27.9 million for the first six months of 1999 from
$43.0 million for the first six months of 1998. The cash flow decrease was
primarily attributable to the decrease in net income, interest payable and
accrued taxes payable, partially offset by increases in the amortization of
deferred debt issuance costs, the amortization of the deferred tax asset, and
decreases in inventory and accounts receivable. Net cash used in financing
activities decreased $14.1 million, or 29.8%, to $33.2 million for the first six
months of 1999, from $47.3 million for the first six months of 1998. The funds,
realized primarily from the sale of Boyds' stock, were

<PAGE>
                                                                              20


used to repay outstanding debt and the fees and expenses related to the stock
sale.

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

         In connection with the recapitalization, Boyds issued 9% Senior
Subordinated Notes due 2008 in an amount of $165.0 million and entered into the
credit agreement. On April 12, 1999, Boyds repaid $66.0 million of the notes,
leaving a balance outstanding of $99.0 million. Boyds has repaid $163.0 million
of the $325.0 million of term loans under the credit agreement through June 30,
1999, leaving a balance outstanding of $162.0 million. The revolving credit
facility provides loans in an aggregate amount of up to $40.0 million. Boyds has
borrowed $4.0 million under the revolving credit facility and this amount is due
to be repaid in the third quarter of 1999. The balance remaining under the
revolving credit facility will be available to fund the working capital
requirements of Boyds.

         On May 28, 1999, Boyds' Board of Directors approved the repurchase
of up to 3 million shares of Boyds' common stock. As of June 30, 1999, Boyds
had repurchased 737,000 shares of common stock pursuant to this stock
repurchase program for an aggregate amount of approximately $9.5 million.
These repurchases were financed out of operating cash flow and approximately
$4.0 million of borrowings under the revolving credit facility. Any future
repurchases under this program are expected to be financed similarly.

         Borrowings under the credit agreement bear interest at a rate per
annum, equal to a margin over either a base rate or LIBOR, at Boyds' option. The
revolving credit facility commitment will terminate seven years after the date
of the initial funding of the credit agreement. The term loans will be amortized
over an eight-year period with no amortization in the first two years. The
credit agreement contains customary covenants and events of default, including
substantial restrictions on Boyds' ability to declare dividends or make
distributions. The term loans are subject to mandatory prepayment with the
proceeds of certain asset sales and a portion of Boyds' excess cash flow, as
defined in the credit agreement.

         Boyds does not expect to incur significant capital expenditures for the
foreseeable future. Boyds does not incur significant capital expenditures due to
its sourcing arrangements with suppliers.

         Management believes that cash flow from operations and availability
under the revolving loan will provide adequate funds for Boyds' foreseeable
working capital needs, planned capital expenditures and debt service
obligations. Any future acquisitions, joint ventures or other similar
transactions may require additional capital and there can be no assurance that
any such capital will be available to Boyds on acceptable terms or at all.
Boyds' ability to fund its working capital needs, planned capital expenditures
and scheduled debt payments, to refinance indebtedness and to comply with all of
the financial covenants under its debt agreements, depends on its future
operating performance and cash flow, which in turn are subject to prevailing
economic conditions and to financial, business and other factors, some of which
are beyond Boyds' control.

<PAGE>
                                                                              21


SEASONALITY

         Boyds does not have significant seasonal variation in its orders. Boyds
receives orders throughout the year and generally ships merchandise out on a
first-in, first-out basis. Approximately 40% of orders are taken between
November and April while approximately 60% of orders are placed between May and
October in anticipation of the holiday season. Boyds does not build a large
receivables balance relative to sales because it typically does not offer its
customers long payment terms or dating programs.

EFFECTS OF RECENTLY ISSUED ACCOUNTING STANDARDS

         In June 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, "Reporting Comprehensive Income."
Comprehensive income includes net income and several other items that current
accounting standards require to be recognized outside of net income. This
standard requires enterprises to display comprehensive income and its components
in financial statements, to classify items of comprehensive income by their
nature in financial statements, and to display the accumulated balances of other
comprehensive income in stockholders' equity separately from retained earnings
and additional paid-in capital. Boyds adopted SFAS No. 130 for the year ended
December 31, 1998. There were no items of other comprehensive income for all
periods presented.

         In June 1997, the FASB issued SFAS No. 131, "Disclosure about Segments
of an Enterprise and Related Information." This statement is effective for
fiscal years beginning after December 15, 1997. As provided by SFAS No. 131,
disclosures are not required for interim periods of the initial year of
application, but comparative information will be reported in financial
statements for interim periods during the second year of application. Management
has determined that Boyds operates in a single industry segment.

         During 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which is effective for periods beginning
after June 15, 1999. During 1999, the FASB delayed the effective date for one
year to fiscal years beginning after June 15, 2000. Boyds is currently
evaluating the impact, if any, of this statement.

FOREIGN EXCHANGE

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

         Boyds imports most of its products from manufacturers in China. Boyds'
costs could be adversely affected on a short-term basis if the Chinese renminbi
appreciates significantly relative to the United States dollar. Conversely, its
costs would be favorably affected on a short-term basis if the Chinese renminbi
depreciates significantly relative to the United States dollar. Although Boyds
generally pays for its products in United States dollars, the cost of such
products fluctuates with the value of the Chinese renminbi. In the future Boyds
may, from time to time, enter into foreign exchange contracts or prepay
inventory purchases as a partial hedge against currency fluctuations.
Differences between the amounts of such contracts and costs of specific material
purchases are included in inventory and cost of sales. Boyds intends to manage
foreign exchange risks to the extent appropriate.

<PAGE>
                                                                              22


YEAR 2000 COMPLIANCE

         The Year 2000 issue is the result of computer programs being written to
use two digits to define year dates. Computer programs running date-sensitive
software may recognize a date using A00" as the year 1900 rather than the year
2000. This could result in systems failure or miscalculations causing
disruptions of operations. Boyds currently uses information technology for
processing orders and tracking inventory.

         Management believes that Boyds' systems are Year 2000 compliant. Boyds
has purchased Year 2000 compliant software and currently has Year 2000
compliance certificates from its key software suppliers. In addition, Boyds has
substantially completed the internal testing of its information technology
systems and will continue to monitor such systems through the summer of 1999.
Boyds has also specifically addressed internally its non-information technology
related systems and believes that there will be no significant operational
problems relating to the Year 2000 issue. Boyds has not obtained, and does not
intend to obtain, an independent verification and validation of its Year 2000
compliance.

         Other than system replacements due to planned upgrades, Boyds has not
replaced any of its information technology or non-information technology systems
as a result of the Year 2000 issue.

         Boyds depends heavily on its relationships with customers, buying
agencies, manufacturers and shippers. It is communicating with customers, buying
agencies, manufacturers and shippers to determine the extent to which these
third parties are moving toward Year 2000 compliance. To assess Year 2000
compliance and any potential exposure to the Year 2000 problem, Boyds is in the
process of sending surveys to such third parties. Boyds is also seeking Year
2000 compliance certificates from third parties it has identified as "critical"
to its operations, which include all of its buying agencies and manufacturers
and its most important customers and shippers. To date, all of these critical
third parties have been contacted, and Boyds has not been made aware of any Year
2000 compliance problems.

         Boyds believes that any adverse effect on its relationship with
customers, buying agencies, manufacturers and shippers due to the Year 2000
problem will be lessened by the fact that it does not share information
technology. However, failure of any of these parties to have their systems
timely converted may have a material adverse effect on Boyds' business and
operations.

         Boyds believes it has substantially completed its Year 2000 project.
Boyds did not incur significant incremental costs specifically in connection
with seeking to achieve Year 2000 compliance and all upgrades and system
replacements made in connection with its Year 2000 project were part of
previously planned software and hardware upgrades. Furthermore, in order to
achieve Year 2000 compliance, Boyds has needed, and expects that it will
continue to need, only existing employees who otherwise have been assigned to
the planned upgrade of Boyds' software and hardware.

         Notwithstanding Boyds' progress to date, there are several ways in
which its systems could still be affected by the Year 2000 problem. First, the
software code Boyds uses in its information systems may not in fact be Year 2000
compliant in all instances. Second, Boyds may be unable to complete the
remaining upgrades to its information technology systems by the Year 2000.
Third, even if Boyds completes the system upgrade by the Year 2000, it may be
unable to fully test and monitor the upgrades, making it difficult for Boyds to
identify and remedy any problems that might exist. Fourth, Boyds'

<PAGE>
                                                                              23


customers, buying agencies, independent manufacturers and shippers may be unable
to achieve Year 2000 compliance in time.

         The most reasonably likely worst-case scenario resulting from Boyds'
inability, or the inability of its customers, buying agencies, manufacturers or
shippers, to become Year 2000 compliant, includes the following adverse effects:

          -    SUPPLY PROBLEMS. Boyds would be unable to receive products due to
               year 2000-related failures on the part of its manufacturers and
               suppliers causing Boyds to be unable to fulfill the orders of
               many of its customers for Boyds' products.

          -    ORDER DIFFICULTIES. Boyds' customers would be unable to place
               their orders with Boyds because of its own system failures or
               those of its customers resulting in delayed or potentially lost
               orders for Boyds' products.

          -    DELIVERY DELAYS. Boyds would be unable to deliver ordered
               products to its customers on a timely basis due to a system
               failure at Boyds or at one of its product shippers leading to
               delays in arrival of Boyds' products and possibly dissatisfied
               customers.

         Boyds has not developed, and does not intend to develop, contingency
plans relating to the Year 2000 problem unless Boyds becomes aware of a Year
2000 compliance problem in its own systems or those of its manufacturers, buying
agencies, customers or shippers.

         Boyds' assessment of its Year 2000 compliance is based on numerous
assumptions about future events, including third party modification plans and
other factors. However, there can be no guarantee that this assessment is
correct and actual results could differ materially from those anticipated.
Specific factors that might cause such material differences include, but are not
limited to, the availability and cost of personnel trained in this area, the
ability to locate and correct all relevant computer codes and similar
uncertainties.

INFLATION

         Boyds does not believe that inflation has had a material impact on its
operations.

FORWARD LOOKING STATEMENTS

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

         The forward-looking statements in this report are based on a number of
assumptions and estimates which are inherently subject to significant
uncertainties and contingencies, many of which are beyond the control of Boyds,
and reflect future business decisions that are subject to change. A variety of
factors could cause actual results to differ materially from those anticipated
in Boyds' forward-looking statements, including: the effects of economic
conditions; the inability to grow Boyds' business as

<PAGE>
                                                                              24


planned; the loss of either 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; the impact of
Year 2000 compliance by Boyds or those entities with which it does business; and
other risk factors that are discussed in this report and, from time to time, in
other Securities and Exchange Commission reports and filings. One or more of the
factors discussed above may cause actual results to differ materially from those
expressed in or implied by the statements in this report.

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

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

         Not applicable.


<PAGE>
                                                                              25


                            PART II OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS.

         Boyds does not believe that there are any pending or threatened legal
proceedings that, if adversely determined, would have a material adverse effect
on Boyds.

ITEM 2.           CHANGES IN SECURITIES AND USE OF PROCEEDS.

         As a result of higher than expected fees and expenses for printing and
engraving and accounting services used by Boyds' in connection with the initial
public offering of its common stock in March 1999, Boyds currently estimates
that its aggregate expenses incurred in connection with the initial public
offering, other than the underwriting fees of $9.99 million paid to the
underwriters, will be approximately $2.6 million, which is approximately
$430,000 greater than Boyds' estimate in its Quarterly Report on Form 10-Q for
the Quarterly Period Ended March 31, 1999.

ITEM 3.           DEFAULTS UPON SENIOR SECURITIES.

         None.

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

         None.

ITEM 5.           OTHER INFORMATION.

         None.

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K.

         (a)      Exhibits:

                  Exhibit
                  Number   Description
                  ------   -----------

                  3.1      Amendment and Restated Articles of Incorporation
                           (incorporated by reference from Exhibit 3.1 of
                           Amendment No. 1 to Boyd's Registration Statement on
                           Form S-1, filed on February 8, 1999, File No.
                           333-69535).

                  3.       Bylaws of Boyds (incorporated by reference from
                           Exhibit 3.2 of Amendment No. 4 to Boyd's Registration
                           Statement on Form S-1, filed on March 3, 1999, File
                           No. 333-69535).

                  4        Indenture, dated as of April 21, 1998, between Boyds
                           and The Bank of New York, as trustee (incorporated by
                           reference from Exhibit 4.3 of Amendment No. 1 to
                           Boyd's Registration Statement on Form S-1, filed on
                           February 8, 1999, File No. 333-69535).

                  27       Financial Data Schedule


<PAGE>
                                                                              26


         (b)      Reports on Form 8-K:

                  A Current Report on Form 8-K was filed on June 21, 1999 under
                  "Item 5-Other Events" to report the approval by Boyds' Board
                  of Directors of a program to repurchase up to 3 million shares
                  of Boyds' common stock, which program was also publicly
                  disclosed in a press release that was attached as Exhibit 99
                  to such Current Report on Form 8-K.





<PAGE>
                                                                              27


                                   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:   August 3, 1999            The Boyds Collection, Ltd.


                                           By: /s/ Christine L. Bell
                                               --------------------------------
                                               Christine L. Bell
                                               Chief Operating Officer,
                                               Controller and Secretary




                                           By: /s/ Peter H. Frost
                                               --------------------------------
                                               Peter H. Frost
                                               Vice President--Finance