---



UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



---



FORM 10-K/A

Amendment No. 1



(Mark One)

|x |  | Amendment to Annual Report pursuant to Section 13 or 15(d) of the securities exchange act of 1934
|- |  | -------------------------------------------------------------------------------------------------

| | For |  | the fiscal year ended October 31, 2002
| | --- |  | --------------------------------------

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 1-9481



MAXWELL SHOE COMPANY INC.

(Exact name of registrant as specified in its charter)



|Delaware                                                                                       |  | 04-2599205                          
|---------------------------------------------------------------------------------------------- |  | ------------------------------------
|(State or other jurisdiction of incorporation or
organization)                                 |  | (IRS Employer Identification
Number)
|                                                                                              
|101 Sprague Street P.O. Box 37 Readville (Boston), MA (Address of principal executive offices) |  | 02137 (Zip code)                    



(617)
364-5090

(Registrants telephone number, including area code)



Securities Registered Pursuant to Section 12(b) of the Act:



|Title of Each Class: |  | Name of Each Exchange on Which Registered:
|-------------------- |  | ------------------------------------------
|None                 |  | None                                      



Securities Registered to Section 12(g) of the Act:

Class A Common Stock,  par value $.01 per
share

(Title of Each Class)



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 by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by referene in Part III of this Form 10-K or any
amendment to this Form 10-K.    Yes x    No ̈



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



The aggregate market
value of the Class A Common Stock of the registrant held by nonaffiliates of registrant on February 22, 2003, based on the closing price of the Class A Common Stock on the NASDAQ National Market on such date, was $161,875,681.



The number of shares of the registrants Class A Common
Stock outstanding at February 22, 2003, was 14,715,971 shares.



---



---



Explanatory
Note to Amendment No. 1



This Amendment No. 1
on Form 10-K/A is filed (i) to correct a typographical error in the Balance Sheet relating to the number of authorized shares of Class A Common Stock set forth in the Registrants Annual Report on Form 10-K filed on January 29, 2003 (the
Original Report) and (ii) to provide that the Registrant is an accelerated filer, as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended.



The list of exhibits set forth in, and incorporated by reference from, the Exhibit Index in the Original
Report is amended to include the following additional exhibits, filed herewith:



|23.1 |  | Consent of Ernst & Young LLP, Independent Auditors                                                                                                                                                         
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|99.2 |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, with respect to Amendment No. 1 on Form 10-K/A
to the Registrants Annual Report on Form 10-K for the year ended October 31, 2002.



Other
than as set forth above, the Original Report is not being amended or updated in any respect.





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PART II



Item 8.    Consolidated Financial
Statements and Supplementary Data:



MAXWELL
SHOE COMPANY INC.



CONSOLIDATED BALANCE
SHEETS

(In Thousands  except per share amounts)



|                                                                                                                                     |  | October 31, |        
|------------------------------------------------------------------------------------------------------------------------------------ |  | ----------- | -------
|ASSETS                                                                                                                               |  | 2001        |        
|Current assets:                                                                                                                      |  |             |        
|Cash and cash equivalents                                                                                                            |  | $           | 58,256 
|Accounts receivable, trade (net of allowance for doubtful accounts and discounts
of$1,326 in 2001 and $955 in 2002)                  |  |             | 37,392 
|Inventory, net                                                                                                                       |  |             | 18,289 
|Prepaid expenses                                                                                                                     |  |             | 642    
|Prepaid income taxes                                                                                                                 |  |             |       
|Deferred income taxes                                                                                                                |  |             | 1,538  
|                                                                                                                                     |  |             |        
|Total current assets                                                                                                                 |  |             | 116,117
|Property and equipment, net                                                                                                          |  |             | 5,115  
|Trademarks, net                                                                                                                      |  |             | 14,462 
|Other assets                                                                                                                         |  |             | 93     
|                                                                                                                                     |  |             |        
|                                                                                                                                     |  | $           | 135,787
|                                                                                                                                     |  |             |        
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                 |  |             |        
|Current liabilities:                                                                                                                 |  |             |        
|Accounts payable                                                                                                                     |  | $           | 1,354  
|Accrued expenses                                                                                                                     |  |             | 7,378  
|Accrued income taxes                                                                                                                 |  |             | 3,443  
|                                                                                                                                     |  |             |        
|Total current liabilities                                                                                                            |  |             | 12,175 
|Long-term deferred income taxes                                                                                                      |  |             | 1,939  
|Stockholders equity:                                                                                                                |  |             |        
|Class A common stock, par value $.01, 20,000 shares authorized, 13,394 shares
outstanding in 2001, 14,517 shares outstanding in 2002 |  |             | 134    
|Additional paid-in capital                                                                                                           |  |             | 45,336 
|Deferred compensation                                                                                                                |  |             | (1,325 
|Retained earnings                                                                                                                    |  |             | 77,528 
|                                                                                                                                     |  |             |        
|Total stockholders equity                                                                                                           |  |             | 121,673
|                                                                                                                                     |  |             |        
|                                                                                                                                     |  | $           | 135,787
|                                                                                                                                     |  |             |        





See accompanying notes.



2



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MAXWELL SHOE
COMPANY INC.



CONSOLIDATED STATEMENTS OF
INCOME

(In Thousands  except per share amounts)



|                                           |  | Year Ended October 31, |        
|------------------------------------------ |  | ---------------------- | -------
|                                           |  | 2000                   |        
|Net sales                                  |  | $                      | 158,205
|Cost of sales                              |  |                        | 116,991
|                                           |  |                        |        
|Gross profit                               |  |                        | 41,214 
|Operating expenses:                        |  |                        |        
|Selling                                    |  |                        | 11,584 
|General and administrative                 |  |                        | 16,141 
|                                           |  |                        |        
|                                           |  |                        | 27,725 
|                                           |  |                        |        
|Operating income                           |  |                        | 13,489 
|Other expenses (income)                    |  |                        |        
|Interest income                            |  |                        | (3,039 
|Amortization of trademarks                 |  |                        | 367    
|Other, net                                 |  |                        | (310   
|                                           |  |                        |        
|                                           |  |                        | (2,982 
|                                           |  |                        |        
|Income before income taxes                 |  |                        | 16,471 
|Income taxes                               |  |                        | 6,589  
|                                           |  |                        |        
|Net income                                 |  | $                      | 9,882  
|                                           |  |                        |        
|Earnings per share:                        |  |                        |        
|Basic                                      |  |                        | $0.75  
|Diluted                                    |  |                        | $0.70  
|Shares used to compute earnings per share: |  |                        |        
|Basic                                      |  |                        | 13,194 
|Diluted                                    |  |                        | 14,202 



See
accompanying notes.



3



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MAXWELL SHOE
COMPANY INC.



CONSOLIDATED STATEMENTS OF
CASH FLOWS

(In Thousands)



|                                                                                  |  | Year Ended October 31, |        
|--------------------------------------------------------------------------------- |  | ---------------------- | -------
|                                                                                  |  | 2000                   |        
|Operating activities:                                                             |  |                        |        
|Net income                                                                        |  | $                      | 9,882  
|Adjustments to reconcile net income to net cash provided by operating
activities: |  |                        |        
|Depreciation and amortization                                                     |  |                        | 2,496  
|Deferred income taxes                                                             |  |                        | 176    
|Doubtful accounts provision                                                       |  |                        | 150    
|Deferred compensation                                                             |  |                        | 70     
|Loss on sale of equipment                                                         |  |                        |       
|Changes in operating assets and liabilities:                                      |  |                        |        
|Accounts receivable                                                               |  |                        | (2,341 
|Inventory                                                                         |  |                        | (709   
|Prepaid expenses                                                                  |  |                        | 199    
|Prepaid income taxes                                                              |  |                        | (2,173 
|Other assets                                                                      |  |                        | (173   
|Accounts payable                                                                  |  |                        | (1,316 
|Accrued expenses                                                                  |  |                        | 2,603  
|Income taxes payable                                                              |  |                        |       
|                                                                                  |  |                        |        
|Net cash provided by operating activities                                         |  |                        | 8,864  
|Investing activities:                                                             |  |                        |        
|Release of restricted cash                                                        |  |                        | 25,000 
|Purchases of property and equipment                                               |  |                        | (837   
|Purchase of Joan & David®trademark and inventory                                  |  |                        | (17,421
|Proceeds from sale of Joan & David®inventory                                      |  |                        | 3,675  
|Adjustments to purchase price of Joan & David®trademarks                          |  |                        |       
|                                                                                  |  |                        |        
|Net cash (used) provided by investing activities                                  |  |                        | 10,417 
|Financing activities:                                                             |  |                        |        
|Proceeds from exercise of stock options including tax benefit                     |  |                        | 9      
|Payments on capital lease obligation                                              |  |                        | (117   
|                                                                                  |  |                        |        
|Net cash provided (used) by financing activities                                  |  |                        | (108   
|                                                                                  |  |                        |        
|Net increase in cash and cash equivalents                                         |  |                        | 19,173 
|Cash and cash equivalents at beginning of year                                    |  |                        | 28,901 
|                                                                                  |  |                        |        
|Cash and cash equivalents at end of year                                          |  | $                      | 48,074 
|                                                                                  |  |                        |        
|Supplemental Disclosure of Cash Flow Information:                                 |  |                        |        
|Interest paid                                                                     |  | $                      | 25     
|                                                                                  |  |                        |        
|Income taxes paid                                                                 |  | $                      | 8,652  
|                                                                                  |  |                        |        



See
accompanying notes.



4



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MAXWELL SHOE
COMPANY INC.



CONSOLIDATED STATEMENTS OF
CHANGES IN STOCKHOLDERS EQUITY

(In Thousands)



|                                      |  | Class A Common Stock |  |        |     |                            |   |                         |  |   |                  
|------------------------------------- |  | -------------------- |  | ------ | --- | -------------------------- | - | ----------------------- |  | - | -----------------
|                                      |  | Number of Shares     |  | Amount |     | Additional Paid-In Capital |   | Deferred Compen- sation |  |   | Retained Earnings
|Balance at October 31, 1999           |  | 13,194               |  | $      | 132 |                            | $ | 42,982                  |  | $ | (244             
|Options exercised                     |  | 2                    |  |        |    |                            |   | 9                       |  |   |                  
|Net income for 2000                   |  |                      |  |        |     |                            |   |                         |  |   |                  
|Options granted                       |  |                      |  |        |     |                            |   | 77                      |  |   | (77              
|Amortization of deferred compensation |  |                      |  |        |     |                            |   |                         |  |   | 70               
|                                      |  |                      |  |        |     |                            |   |                         |  |   |                  
|Balance at October 31, 2000           |  | 13,196               |  |        | 132 |                            |   | 43,068                  |  |   | (251             
|Options exercised                     |  | 198                  |  |        | 2   |                            |   | 477                     |  |   |                  
|Net income for 2001                   |  |                      |  |        |     |                            |   |                         |  |   |                  
|Options granted                       |  |                      |  |        |     |                            |   | 1,435                   |  |   | (1,435           
|Amortization of deferred compensation |  |                      |  |        |     |                            |   |                         |  |   | 361              
|Tax benefit from options exercised    |  |                      |  |        |     |                            |   | 356                     |  |   |                  
|                                      |  |                      |  |        |     |                            |   |                         |  |   |                  
|Balance at October 31, 2001           |  | 13,394               |  |        | 134 |                            |   | 45,336                  |  |   | (1,325           
|Options exercised                     |  | 1,123                |  |        | 11  |                            |   | 2,425                   |  |   |                  
|Net income for 2002                   |  |                      |  |        |     |                            |   |                         |  |   |                  
|Amortization of deferred compensation |  |                      |  |        |     |                            |   |                         |  |   | 359              
|Tax benefits from options exercised   |  |                      |  |        |     |                            |   | 2,848                   |  |   |                  
|                                      |  |                      |  |        |     |                            |   |                         |  |   |                  
|Balance at October 31, 2002           |  | 14,517               |  | $      | 145 |                            | $ | 50,609                  |  | $ | (966             
|                                      |  |                      |  |        |     |                            |   |                         |  |   |                  



See
accompanying notes.





5



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MAXWELL SHOE COMPANY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousandsexcept per share amounts)





October
31, 2002



1.    Summary of
Significant Accounting Policies



Principles of Consolidation



The consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation.



Concentration of Credit Risk



The Company sells footwear for women and
children to retailers located throughout the United States and Canada. The Company performs periodic credit evaluations of its customers financial condition and generally does not require collateral. Credit losses in most recent years have
generally been within or below managements expectations, although during 2001, credit losses exceeded management expectations as a large and several medium sized retailers declared bankruptcy. In fiscal year 2000, there was no customer that
accounted for greater than 10% of net sales. In fiscal 2001, one customer accounted for approximately 11.2% of net sales. In fiscal 2002, there were three customers that accounted for 10.1%, 10.8% and 11.4%, respectively, of net sales. At October
31, 2002, one customer accounted for 14.3% of trade receivables outstanding.



Use of Estimates



The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported
in the consolidated financial statements and accompanying notes. Actual results could differ from those estimates.



Recognition of Revenue



Sales are recognized upon shipment of products.



Cash and Cash Equivalents



Cash, checking accounts and all highly liquid investments with original maturities of three months or less
are deemed to be cash and cash equivalents.



Inventory



Inventory,
which consists only of finished goods, is valued at the lower of cost or market, using the first-in, first-out method.



Impairment of Long Lived Assets



During fiscal 2002, the Company adopted SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets (FAS 144). If facts and circumstances indicate that the Companys long-lived assets might be impaired, the estimated future undiscounted cash flows associated with the long-lived asset would be compared



6



---

MAXWELL SHOE COMPANY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousandsexcept per share amounts)





to its carrying amount to
determine if a write down to fair value is necessary. If a write-down is required, the amount is determined by estimation of the present value of net discounted cash flows in accordance with FAS 144.



Property and Equipment



Property and equipment are stated at cost. Depreciation is
provided using both straight line and accelerated methods over the estimated useful lives of these assets or the lease term, if shorter. The estimated useful lives of these assets are as follows:



|Asset                  |  | Useful Life
|---------------------- |  | -----------
|Furniture and fixtures |  | 5 Years    
|Warehouse equipment    |  | 7 Years    
|Leasehold improvements |  | 7 Years    
|Computer equipment     |  | 5 Years    



Trademarks



In fiscal
2002, the Company adopted SFAS No. 142, Goodwill and Other Intangible Assets (FAS 142). Amortization of indefinite lived trademarks was no longer allowed under FAS 142, however these identified assets are subject to annual
impairment tests. The Company has determined that the carrying amount of trademarks is not impaired at October 31, 2002. Diluted earnings per share without the impact of amortization was $0.71 and $0.86 for fiscal year 2000 and 2001, respectively.



In August 1996, the Company acquired the rights
to the Sam & Libby®trademark and certain
related trademarks and tradenames for $5.5 million in cash. The trademarks and tradenames were amortized on a straight-line basis over 15 years, their estimated useful lives. Amortization began in 1997 when sale of product with the trademark names
commenced. No amortization was recorded subsequent to October 31, 2001. Accumulated amortization at October 31, 2000, 2001 and 2002 was $1,467, $1,833 and $1,833 respectively.



In October 2000, the Company completed its acquisition of certain assets of joan and david incorporated and
JOAN HELPERN DESIGNS, INC. The Company acquired all the rights to the Joan & David®trademark and tradenames and all related inventory for $16.8 million in cash. Upon acquisition, the Company immediately sold all inventory to a liquidator. The total acquisition price less proceeds
from the sale of the inventory was approximately $11.0 million and has been recorded as the value of the trademarks and tradenames. The Company began to amortize the trademark and tradenames over a 30-year period in the fourth quarter of 2001 when
sales under the Joan & David®brand began.
Accumulated amortization at October 31, 2002 was $91.



Operating Expenses



General and administrative expenses include the cost of warehousing and shipping operations.



Advertising Expenses



Advertising costs are expensed as incurred. Advertising expenses (including cooperative advertising with retailers) amounted to $4,063,
$5,394 and $6,119 for the years ended October 31, 2000, 2001 and 2002, respectively.



7



---

MAXWELL SHOE COMPANY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousandsexcept per share amounts)





Income Taxes



The Company
utilizes the liability method for accounting for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and income tax bases of assets and liabilities and are measured using the enacted
tax rates and laws that will be in effect when the differences are expected to reverse. Deferred tax assets may be reduced by a valuation allowance to reflect the uncertainty associated with their ultimate realization.



Earnings Per Share



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



Stock Split



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



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



Forward Exchange Contracts



The Company adopted SFAS No.133,
Accounting for Derivative Instruments and Hedging Activities (FAS 133),as amended by SFAS No. 138, Accounting for Certain Derivative Instruments and Certain Hedging Activities, which established accounting
and reporting standards for derivative instruments. FAS 133, as amended, requires the recognition of all derivative instruments as either assets or liabilities in the statement of financial position measured at fair value. The Company uses forward
exchange contracts to manage its foreign currency exposure. The forward exchange contracts entered into by the Company during fiscal 2002, which remain outstanding at year-end, do not meet hedge accounting criteria as defined by FAS 133 and,
accordingly, are marked to market each period, with the resulting gains or losses recognized in other income and expense.



Stock Based Compensation



The Company grants stock options for a fixed number of shares to employees, generally with an exercise price equal to the fair value of
the shares at the date of grant. The Company accounts for stock option grants in accordance with Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (APB 25) and, accordingly, recognizes no
compensation expense for the stock option grants when the exercise price equals the fair value of the shares at the date of grant.



The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards (SFAS) No. 123,
Accounting for Stock-Based Compensation. These provisions require the Company to disclose pro forma net income and earnings per share amounts as if compensation related to grants of stock options were recognized based on the fair value
of such options (see Note 5).



8



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MAXWELL SHOE COMPANY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousandsexcept per share amounts)





Segment Reporting



All of
the Companys efforts are devoted to selling footwear that are managed and reported in one segment. The Company is located in the U.S. and derives substantially all of its revenues from sales in the U.S.



Recent Accounting Pronouncements



During fiscal 2002, the Company adopted
SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities (FAS 146) which addresses financial accounting and reporting for costs associated with exit or disposal activities. The adoption of the FAS 146
did not have a significant impact on the Companys financial statements.



2.    Property and Equipment



Property and equipment consists of the following:



|                              |  | 2001 |        | 2002
|----------------------------- |  | ---- | ------ | ----
|Warehouse equipment           |  | $    | 4,524  |     
|Furniture and fixtures        |  |      | 980    |     
|Leasehold improvements        |  |      | 1,091  |     
|Computer equipment            |  |      | 6,696  |     
|                              |  |      |        |     
|                              |  |      | 13,291 |     
|Less accumulated depreciation |  |      | 8,176  |     
|                              |  |      |        |     
|Property and equipment, net   |  | $    | 5,115  |     
|                              |  |      |        |     



At
October 31, 2001 and 2002, property and equipment included assets recorded under capital leases of $1,047, which was fully depreciated as of October 31, 2001 and 2002. Depreciation expense, including amortization of assets recorded under capital
leases, for the years ended October 31, 2000, 2001 and 2002 amounted to $2,129, $2,127 and $1,958, respectively.



3.    Bank Borrowings



The Company currently has a $35.0 million discretionary demand credit facility bearing interest at either FleetBostons base rate or
Adjusted Eurodollar Rate plus one percent (1.0%), renewable annually under certain conditions. The credit agreement provides that the bank will both advance funds directly to the Company and issue letters of credit on behalf of the Company. As of
October 31, 2002, there were no outstanding borrowings, $15.0 million was outstanding under letters of credit and $20.0 million was available for future borrowings.



4.    Accrued Expenses



Accrued expenses consist of the following at October 31:



|                                   |  | 2001 |       | 2002
|---------------------------------- |  | ---- | ----- | ----
|Inventory purchases                |  | $    | 1,867 |     
|Compensation                       |  |      | 1,983 |     
|Employee benefit plan contribution |  |      | 532   |     
|Advertising                        |  |      | 1,040 |     
|Other                              |  |      | 1,956 |     
|                                   |  |      |       |     
|                                   |  | $    | 7,378 |     
|                                   |  |      |       |     



9



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MAXWELL SHOE COMPANY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousandsexcept per share amounts)





|5. |  | Stockholders Equity
|-- |  | --------------------



Preferred Stock



The Companys Charter authorizes the issuance of 1,000,000 shares of preferred stock. The Companys Charter provides that the
Board of Directors of the Company may authorize the issuance of one or more series of preferred stock having such rights, including voting, conversion and redemption rights, and such preferences, including dividend and liquidation preferences, as
the Board may determine without any further action by the stockholders of the Company. There are no shares of preferred stock currently outstanding.



Stock Options



Under the 1994 Stock Incentive Plan (the Plan), as amended, the Board of Directors has reserved 1,125,000 shares of Class A
Common Stock for issuance upon exercise of options or grants of other awards under the Plan. On June 1, 1998, the Plan was amended to increase the number of shares by 450,000 of Class A Common Stock for issuance upon exercise of options or grants of
other awards under the Plan. Except for options granted to non-employee directors, which vest immediately, options generally vest annually over a four-year period.



In April 2000, the Company granted 15,000 options to a certain employee to purchase stock at $0.67 per share.
Based on the market price of the Company stock on the date of grant, the Company recorded deferred compensation expense of $77, which will be recognized ratably over the vesting period of five years.



In August 2000, the Companys Board of Directors approved
an amendment to the Plan, which included an increase in the maximum common shares issuable under the Plan from 1,575,000 shares to 2,475,000 shares. At the April 13, 2001 Annual Meeting of Stockholders, the Company stockholders approved an amendment
to the Plan to increase the maximum common shares issuable under the Plan and approved grants of options to certain employees of the Company. Options were granted for the purchase of 453,161 shares of the Companys Common Stock at $7.00 per
share. Based on the market price of the Companys stock on the date of shareholder approval ($10.17 per share), the Company recorded deferred compensation expense of $1,435, which will be recognized ratably over the vesting period of four
years.



Presented below is a summary of the
status of the Companys 1994 Stock Incentive Plan, as amended, and related transactions:



|                                         |  | Year ended October 31,
|---------------------------------------- |  | ----------------------
|                                         |  | 2000                  
|                                         |  | Shares                
|Options outstanding at beginning of year |  | 1,299,600             
|Granted                                  |  | 116,840               
|Exercised                                |  | (2,250                
|Canceled                                 |  | (375                  
|                                         |  |                       
|Options outstanding at end of year       |  | 1,413,815             
|                                         |  |                       
|Options exercisable at end of year       |  | 913,877               
|                                         |  |                       



10



---

MAXWELL SHOE COMPANY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousandsexcept per share amounts)





The
following table summarizes information about stock options outstanding under the Companys 1994 Stock Incentive Plan, as amended, at October 31, 2002:



|                        |  | Options Outstanding |  | Options Exercisable                                 
|----------------------- |  | ------------------- |  | ----------------------------------------------------
|Range of Exercise Price |  | Shares              |  | Weighted- Average Remaining Contractual Life (Years)
|$0.67                   |  | 60,000              |  | 6.4                                                 
|$3.33$ 4.33            |  | 189,250             |  | 3.5                                                 
|$5.17$ 7.00            |  | 982,525             |  | 6.7                                                 
|$9.53$12.96            |  | 378,750             |  | 7.5                                                 
|                        |  |                     |  |                                                     
|                        |  | 1,610,525           |  | 6.5                                                 
|                        |  |                     |  |                                                     



At
October 31, 2002 there were 240,590 shares available for future grants under stock option plans.



In 1994, in consideration of the termination of a deferred compensation agreement, the Board of Directors approved a non-transferable stock option grant to the CEO for the purchase of 1,332,618 shares
of Class A Common Stock at an exercise price of $1.00 per share. The grant was outside of the Companys 1994 Stock Incentive Plan, as amended, and the stock options were immediately exercisable. During 2001 and 2002, options for an additional
105,450 and 752,575 shares were exercised. At October 31, 2002, 24,593 shares remained exercisable pursuant to the CEOs 1994 stock option grant.



SFAS No. 123, Accounting for Stock-Based Compensation (FAS 123) utilizes the fair value method of accounting for
employee stock options. Under this method, compensation expense for stock-based compensation plans is measured at the grant date based on the fair value of the award and is recognized over the service period. In accordance with FAS 123, the Company
has elected to continue to follow Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees, (APB 25) and related interpretations in accounting for its employee stock options. Under APB 25, no
compensation expense is recognized as long as the exercise price equals the market price of the underlying stock on the date of grant.



Pro forma information regarding net income and earnings per share is required by FAS 123, which also requires that the information be
determined as if the Company had accounted for its employee stock options and other stock-based compensation granted subsequent to October 31, 1995 under the fair value method of that Statement. The fair value for these options was estimated at the
date of grant using a Black-Scholes option pricing model with the following weighted-average assumptions: risk-free interest rates ranging from 4.54% to 6.89%; dividend yield of 0%; volatility factor of the expected market price of the
Companys common stock of 48.0%, 34.2% and 39.2% for 2000, 2001 and 2002; and a weighted average expected life of 5.0 years for options granted in 2000, 2001 and 2002. For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options vesting period.



11



---

MAXWELL SHOE COMPANY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousandsexcept per share amounts)





|                                                                             |  | Year ended October 31,
|---------------------------------------------------------------------------- |  | ----------------------
|                                                                             |  | 2000                  
|Pro forma:                                                                   |  |                       
|Net income                                                                   |  | $                     
|Earnings per share:                                                          |  |                       
|Basic                                                                        |  | $                     
|Diluted                                                                      |  | $                     
|Options granted whose exercise price equals market price on grant date       |  |                       
|Weighted average fair value of options granted                               |  | $                     
|Weighted average exercise price                                              |  | $                     
|Options granted whose exercise price is less than market price on grant
date |  |                       
|Weighted average fair value of options granted                               |  | $                     
|Weighted average exercise price                                              |  | $                     



During
the initial phase-in period, the effects of applying SFAS 123 for recognizing pro forma compensation expense may not be representative of the effects on pro forma net income or loss for future years because the options granted by the Company vest
over several years and additional awards may be made in future years.



Stockholder Rights Plan



In November 1998, the Company adopted a Stockholder Rights Plan, under which each outstanding share of the Companys Class A Common Stock carries one Common Stock Purchase Right. The rights may
only become exercisable under certain circumstances involving acquisition of the Companys Common Stock by a person or group of persons without the prior written consent of the Companys Board of Directors. Depending on the circumstances,
if the rights become exercisable, the holder of rights may be entitled to purchase shares of the Companys Class A Common Stock or shares of common stock of the acquiring person at discounted prices. The rights will expire on November 2, 2008
unless they are earlier exercised, redeemed or exchanged.



12



---

MAXWELL SHOE COMPANY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousandsexcept per share amounts)





6.    Income Taxes



Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components
of the Companys deferred tax liabilities and assets as of October 31 were as follows:



|                                             |  | 2001 |        |   | 2002 |  
|-------------------------------------------- |  | ---- | ------ | - | ---- | -
|Deferred tax assets:                         |  |      |        |   |      |  
|Stock option compensation                    |  | $    | 1,632  |   |      | $
|Inventory reserve                            |  |      | 437    |   |      |  
|Allowance for doubtful accounts              |  |      | 530    |   |      |  
|Inventory capitalization                     |  |      | 323    |   |      |  
|Unearned compensation                        |  |      | 248    |   |      |  
|                                             |  |      |        |   |      |  
|                                             |  |      | 3,170  |   |      |  
|Valuation allowances for deferred tax assets |  |      | (1,632 | ) |      |  
|                                             |  |      |        |   |      |  
|Total deferred tax assets                    |  |      | 1,538  |   |      |  
|Deferred tax liabilities:                    |  |      |        |   |      |  
|Trademark                                    |  |      | 1,443  |   |      |  
|Property and equipment                       |  |      | 491    |   |      |  
|Pension contribution                         |  |      | 5      |   |      |  
|                                             |  |      |        |   |      |  
|Total deferred tax liabilities               |  |      | 1,939  |   |      |  
|                                             |  |      |        |   |      |  
|Net deferred tax liabilities                 |  | $    | (401   | ) |      | $
|                                             |  |      |        |   |      |  



SFAS 109
requires a Company to recognize a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. In connection with the stock option compensation discussed in Note 5, the Company recorded a
valuation allowance in 1994 for the related deferred tax asset. The stock option compensation is deductible for tax purposes upon exercise of the option. During 2001 and 2002, a portion of the options were exercised and a proportionate share of the
valuation allowance was reduced resulting in a tax benefit of $222 and $1,581, respectively, which is included in the income tax provision. Furthermore, for tax purposes, the Company recognized additional compensation expense for the difference
between the market price at the date of grant and the market price at the date of exercise. This additional tax benefit of $356 and $2,848 for 2001 and 2002 was recorded as a reduction of current taxes payable and an increase in additional
paid-in-capital.



Significant
components of the provision for income taxes are as follows:



|               |  | 2000 |       | 2001 |   |       | 2002
|-------------- |  | ---- | ----- | ---- | - | ----- | ----
|Current:       |  |      |       |      |   |       |     
|Federal        |  | $    | 5,180 |      | $ | 6,719 |     
|State          |  |      | 1,233 |      |   | 1,603 |     
|               |  |      |       |      |   |       |     
|Total current  |  |      | 6,413 |      |   | 8,322 |     
|Deferred:      |  |      |       |      |   |       |     
|Federal        |  |      | 142   |      |   | (663  | )   
|State          |  |      | 34    |      |   | (157  | )   
|               |  |      |       |      |   |       |     
|Total deferred |  |      | 176   |      |   | (820  | )   
|               |  |      |       |      |   |       |     
|               |  | $    | 6,589 |      | $ | 7,502 |     
|               |  |      |       |      |   |       |     



13



---

MAXWELL SHOE COMPANY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousandsexcept per share amounts)





The
reconciliation of income tax computed at the U.S. federal statutory tax rate to the effective income tax rate is as follows:



|                                               |  | 2000 |   |  | 2001 |   |  | 2002 |  
|---------------------------------------------- |  | ---- | - |  | ---- | - |  | ---- | -
|U.S. statutory rate                            |  | 35   | % |  | 35   | % |  | 35   | %
|State income taxes, net of federal tax benefit |  | 5    |   |  | 5    |   |  | 6    |  
|Stock option compensation                      |  |     |   |  | (1   | ) |  | (8   | )
|Tax free interest                              |  |     |   |  | (1   | ) |  | (1   | )
|                                               |  |      |   |  |      |   |  |      |  
|Effective tax rate                             |  | 40   | % |  | 38   | % |  | 32   | %
|                                               |  |      |   |  |      |   |  |      |  



7.    Profit-Sharing Plan



The Company has a contributory 401(k) profit-sharing plan covering substantially all employees. Employees may contribute a percent of their pre-tax salary subject to statutory limitations. The plan requires the Company to
match 100% of employee contributions up to 2% of total employee compensation. The plan also allows for additional discretionary Company contributions. Total plan expense amounted to $459, $532 and $608 for fiscal years 2000, 2001 and 2002,
respectively.



8.    Commitments



The Company leases equipment and office and
warehouse space under long-term non-cancelable operating leases which expire at various dates through January 31, 2011. These leases require the Company to pay the real estate taxes on the real property.



At October 31, 2002, future minimum payments under such leases
were as follows:



|2003                         |  | $ | 2,287
|---------------------------- |  | - | -----
|2004                         |  |   | 1,782
|2005                         |  |   | 943  
|2006                         |  |   | 932  
|2007                         |  |   | 494  
|Later years                  |  |   | 1,213
|                             |  |   |      
|Total minimum lease payments |  | $ | 7,651
|                             |  |   |      



In
September 2001, the Company entered into an agreement to sublease approximately 120,000 square feet of its Brockton facility to an unaffiliated third party. The contract term expires in September 2003. Future minimum lease payments to be received in
fiscal 2003 are $523. The Company received $48 and $570 in sublease income for 2001 and 2002, respectively.



Rent expense for the years ended October 31, 2000, 2001 and 2002 was $1,024, $1,487 and $1,789 respectively.



The Company is a licensee under three agreements which allow
for the manufacture and sale of various items of footwear. The agreements require the payment of royalties on qualified product sales and generally guarantee minimum royalty payments regardless of sales volume. The aggregate minimum royalty payments
for all license agreements are $2,116, $2,115 and $2,075 for the years ending December 31, 2002, 2003 and 2004, respectively.



In April 1997, the Company entered into a license agreement with J. G. Hook®, Inc. (the Hook Agreement). In May 2000, the Company entered into a new
license agreement with J. G. Hook®with an initial
expiration date of December 2003, under similar terms to the Hook Agreement, with three one year options to extend.





14



---

MAXWELL SHOE COMPANY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousandsexcept per share amounts)



In November 1998, the Company entered into a license agreement with Levi Strauss Co.,
which allows for the manufacture and sale of a full range of womens casual footwear under the Dockers®Khakis Footwear For Womenbrand name. The agreement requires the payment of royalties on qualified sales and guarantees minimum royalty payments. The initial
term of the agreement ended December 31, 2001 and was extended until May 2002, at which time the Company and Levi Strauss Co. entered into a new license agreement effective through December 31, 2005.



Effective July 1999, the Company entered into a license
agreement with Kasper A.S.L., Ltd., which allows for the manufacture and sale of womens footwear under the AK Anne Kleinbrand. The agreement requires the payment of royalties. In addition, the agreement requires payments into an
advertising fund. The minimum payment for 2001 was $300, and thereafter, the minimum is calculated as a percentage of royalties paid. The Company extended the term of the agreement, as amended, for an additional five (5) year term ending December
31, 2007, with an option to extend, subject to certain conditions through December 2012.



In January 1997, the Company entered into a license agreement with IPC, which provides IPC with the exclusive rights to design, manufacture and distribute Sam & Libby®beachwear type footwear for an initial term of January 1997 to May 2000. For the
use of the Sam & Libby®trademark, IPC paid the
Company royalties based on qualified product sales subject to payment of minimum royalties of $396 over the initial term of the agreement. IPC has exercised its option to extend the license agreement until May 2003. Minimum royalties for this
period, June 2000 until May 2003, are $651.



9.    Earnings Per Share



The following table sets forth the computation of basic and diluted earnings per share:



|                                                         |  | 2000 |        | 2001 |   | 2002  
|-------------------------------------------------------- |  | ---- | ------ | ---- | - | ------
|Numerator:                                               |  |      |        |      |   |       
|Net income                                               |  | $    | 9,882  |      | $ | 12,280
|                                                         |  |      |        |      |   |       
|Denominator (shares in thousands):                       |  |      |        |      |   |       
|Denominator for basic earnings per share                 |  |      |        |      |   |       
|Weighted average shares                                  |  |      | 13,194 |      |   | 13,235
|Denominator for diluted earnings per share               |  |      |        |      |   |       
|Dilutive stock options                                   |  |      | 1,008  |      |   | 1,330 
|                                                         |  |      |        |      |   |       
|Adjusted weighted average shares and assumed conversions |  |      | 14,202 |      |   | 14,565
|                                                         |  |      |        |      |   |       
|Earnings per share:                                      |  |      |        |      |   |       
|Basic                                                    |  | $    | 0.75   |      | $ | 0.93  
|                                                         |  |      |        |      |   |       
|Diluted                                                  |  | $    | 0.70   |      | $ | 0.84  
|                                                         |  |      |        |      |   |       



Options
for 69,758, 17,042 and 4,054 shares for the years 2000, 2001 and 2002, respectively, were excluded from the calculation of diluted earnings per share as the effect would have been anti-dilutive.



15



---

MAXWELL SHOE COMPANY INC.



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousandsexcept per share amounts)





10.    Supplementary Quarterly Financial Data (Unaudited)



The following is a summary of unaudited quarterly results for the fiscal years ended October 31, 2001 and October 31, 2002.



|                   |  | Quarter Ended
|------------------ |  | -------------
|                   |  | January 31   
|Fiscal 2001        |  |              
|Net sales          |  | $            
|Gross profit       |  |              
|Net income         |  |              
|Earnings per share |  |              
|Basic              |  |              
|                   |  |              
|Diluted            |  |              
|                   |  |              
|Fiscal 2002        |  |              
|Net sales          |  | $            
|Gross profit       |  |              
|Net income         |  |              
|Earnings per share |  |              
|Basic              |  |              
|                   |  |              
|Diluted            |  |              
|                   |  |              



MAXWELL SHOE COMPANY INC.



SCHEDULE IIVALUATION AND QUALIFYING ACCOUNTS

(In Thousands)



|Description                     |  | Balance at Beginning of Period |       | Charged to Costs and Expenses |   | Deductions1 |  | Balance at End of Period
|------------------------------- |  | ------------------------------ | ----- | ----------------------------- | - | ----------- |  | ------------------------
|Year ended October 31, 2000     |  |                                |       |                               |   |             |  |                         
|Allowance for doubtful accounts |  | $                              | 785   |                               | $ | 150         |  | $                       
|Year ended October 31, 2001     |  |                                |       |                               |   |             |  |                         
|Allowance for doubtful accounts |  | $                              | 625   |                               | $ | 796         |  | $                       
|Year ended October 31, 2002     |  |                                |       |                               |   |             |  |                         
|Allowance for doubtful accounts |  | $                              | 1,326 |                               | $ | 250         |  | $                       



| | 1 |  | Uncollectible accounts written off, net of recoveries.
| | - |  | ------------------------------------------------------



16



---



Item 15



(c)    Exhibits





|23.1 |  | Consent of Ernst & Young LLP, Independent Auditors                                                                                                                                                         
|---- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    
|99.2 |  | Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, with respect to Amendment No. 1 on Form
10-K/A to the Registrants Annual Report on Form 10-K for the year ended October 31, 2002.





17



---



SIGNATURES



Pursuant to the requirements of Section 13
or 15(d) 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.



MAXWELL SHOE COMPANY INC.By

/s/ MARK J. COCOZZAMark J. Cocozza, Chairman and Chief Executive Officer February
25, 2003




Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.



|Signature                                   |  | Title                                                                                                             |  | Date             
|------------------------------------------- |  | ----------------------------------------------------------------------------------------------------------------- |  | -----------------
|/s/    MARK J.
COCOZZAMark J. Cocozza       |  | Chairman of the Board and Chief Executive Officer (Principal Executive
Officer)                                   |  | February 25, 2003
|                                           
|/s/    JAMES J.
TINAGEROJames J. Tinagero   |  | Executive Vice President, Chief Operating Officer and Director (Principal Operating Officer)                      |  | February 25, 2003
|                                           
|/s/    RICHARD J.
BAKOSRichard J. Bakos     |  | Vice President Finance and Chief Financial Officer (Principal Financial Officer and
Principal Accounting Officer) |  | February 25, 2003
|                                           
|/s/    MAXWELL V.
BLUMMaxwell V. Blum       |  | Director                                                                                                          |  | February 25, 2003
|                                           
|/s/    STEPHEN A.
FINEStephen A. Fine       |  | Director                                                                                                          |  | February 25, 2003
|                                           
|/s/    MALCOLM L.
SHERMANMalcolm L. Sherman |  | Director                                                                                                          |  | February 25, 2003
|                                           
|/s/    ANTHONY J.
TIBERIIAnthony J. Tiberii |  | Director                                                                                                          |  | February 25, 2003



18



---



CERTIFICATION



Certification of Chief
Financial Officer



I, Mark J. Cocozza, certify that:



|1. |  | I have reviewed this Annual Report on Form 10-K of Maxwell Shoe Company Inc.;
|-- |  | -----------------------------------------------------------------------------



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



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



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



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



| | b) |  | evaluated the effectiveness of the Registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this Annual Report
(the Evaluation Date); and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The Registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the Registrants auditors and the audit committee
of Registrants Board of Directors (or persons performing the equivalent functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



|6. |  | The Registrants other certifying officers and I have indicated in this Annual Report whether there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Date: February 25, 2003 |  |  |  | By:    /s/    MARK J.
COCOZZA                                                         
|----------------------- |  |  |  | --------------------------------------------------------------------------------------
|                        |  |  |  | Name:    Mark J. Cocozza Title:      Chairman of the Board and Chief Executive Officer



19



---



CERTIFICATION



Certification of Chief
Financial Officer



I, Richard J. Bakos, certify that:



|1. |  | I have reviewed this Annual Report on Form 10-K of Maxwell Shoe Company Inc.;
|-- |  | -----------------------------------------------------------------------------



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



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



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



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



| | b) |  | evaluated the effectiveness of the Registrants disclosure controls and procedures as of a date within 90 days prior to the filing date of this Annual Report
(the Evaluation Date); and
| | -- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) |  | presented in this Annual Report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
| | -- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



|5. |  | The Registrants other certifying officers and I have disclosed, based on our most recent evaluation, to the Registrants auditors and the audit committee
of Registrants Board of Directors (or persons performing the equivalent functions):
|-- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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



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



|6. |  | The Registrants other certifying officers and I have indicated in this Annual Report whether there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
|-- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Date: February 25, 2003 |  |  |  | By:    /s/    RICHARD J.
BAKOS                                                          
|----------------------- |  |  |  | ----------------------------------------------------------------------------------------
|                        |  |  |  | Name:    Richard J. Bakos Title:      Vice President, Finance and ChiefFinancial Officer



20