SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

[x]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

September 30, 2002

OR

[ ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number

1-457

BULOVA CORPORATION

(Exact name of registrant as specified in its charter)

             New York

     11-1719409

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

ONE BULOVA AVENUE, WOODSIDE, NY 11377-7874

Address of principal executive offices (Zip code)

(718) 204-3300

(Registrant's telephone number, including area code)

NOT APPLICABLE

(Former name, former address and former fiscal year,

if changed since last report)

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

Yes

       X       

No

                 Class                      

Outstanding at November 1, 2002

Common stock, $5 par value

                4,599,857 shares

  Item

Part I. Financial Information

   Page

    No.  

    No.  

    1.

Financial Statements

  Consolidated Condensed Balance Sheets
    September 30, 2002 and December 31, 2001

     3

  Consolidated Condensed Statements of Income

    Three and nine months ended September 30, 2002 and 2001

     4

  Consolidated Condensed Statements of Cash Flows

    Nine months ended September 30, 2002 and 2001

     5

Notes to Consolidated Condensed Financial Statements

     6

    2.

Management's Discussion and Analysis of Financial Condition and Results
   of Operations

     9

    4.

Controls and Procedures

   11

Part II. Other Information

    6.

Exhibits and Reports on Form 8-K

   12

BULOVA CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(Amounts in thousands)

______________________________________________________________________________________

September 30,

December 31,

Assets

2002 

2001 

______________________________________________________________________________________

Current Assets:

   Cash and cash equivalents

$          11,319 

$          18,937 

   Short-term investments

100 

   Accounts and notes receivable -- net

73,162 

77,008 

   Inventories, principally watches and clocks

58,420 

48,914 

   Prepaid expenses

3,427 

2,607 

   Deferred income taxes

10,875 

11,809 

______________________________________________________________________________________

      Total current assets

157,303 

159,275 

______________________________________________________________________________________

Property, plant and equipment-net

16,212 

16,645 

______________________________________________________________________________________

Other assets:

   Deferred income taxes

12,523 

12,904 

   Trademarks

4,983 

4,983 

   Other

727 

193 

______________________________________________________________________________________

      Total other assets

18,233 

18,080 

______________________________________________________________________________________

      Total assets

$        191,748 

$        194,000 

=====================================================================================

Liabilities and Shareholders' Equity

Current Liabilities:

   Accounts payable

$            2,375 

$            8,391 

   Accrued expenses

16,386 

20,257 

   Accrued federal and foreign income taxes

2,959 

1,140 

______________________________________________________________________________________

      Total current liabilities

21,720 

29,788 

______________________________________________________________________________________

Other long-term liabilities:

   Postretirement benefits payable

29,953 

31,041 

   Pension benefits payable

2,020 

2,020 

______________________________________________________________________________________

      Total long-term liabilities

31,973 

33,061 

______________________________________________________________________________________

Shareholders' equity

138,055 

131,151 

______________________________________________________________________________________

      Total liabilities and shareholders' equity

$        191,748 

$        194,000 

===================================================================================================

BULOVA CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

(Dollars in thousands, except per share data)

1.

See Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2001 filed with the Securities and Exchange Commission on March 27, 2002. There have been no changes in significant accounting policies since December 31, 2001.

(a) Accounting Pronouncements - In 2002, the Company implemented the provisions of the Emerging Issues Task Force ("EITF") Issue No. 00-14, "Accounting for Certain Sales Incentives" and EITF Issue No. 00-25, "Vendor Income Statement Characterization of Consideration from a Vendor to a Retailer." EITF Issue No. 00-14 addresses the recognition, measurement, and income statement characterization of sales incentives, including rebates, coupons and free products or services, offered voluntarily by a vendor without charge to the customer that can be used in, or that are exercisable by a customer as a result of, a single exchange transaction. EITF Issue No. 00-25 addresses whether consideration from a vendor to a reseller of the vendor's products is (i) an adjustment of the selling prices of the vendor's products and, therefore, should be deducted from revenue when recognized in the vendor's income statement or (ii) a cost incurred by the vendor for assets or services received from t he reseller and, therefore, should be included as a cost or an expense when recognized in the vendor's income statement. Adoption of this standard did not have a material impact on the Company's results of operations or financial position.

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 141, "Business Combinations." SFAS No. 141 requires companies to use the purchase method of accounting for business combinations initiated after June 30, 2001 and prohibits the use of the pooling-of-interests method of accounting. The Company has adopted this standard for the acquisition of the Wittnauer brand. See Note 3 to the Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2001 for further details of the acquisition.

In June 2001, FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 142 changes the accounting for goodwill and intangible assets with indefinite lives from an amortization method to an impairment-only approach. The Company has adopted this standard for the acquisition of the Wittnauer brand and has not recorded any amortization expense on its Wittnauer trademark. In compliance with SFAS No. 142, the Company completed impairment tests on its Wittnauer trademark in June 2002 and based upon the analysis performed, the Company believes there is no impairment at this time. In the future the Company will perform its impairment test annually.

.

In June 2001, the FASB issued SFAS No. 143, "Accounting for Asset Retirement Obligations." SFAS No. 143 applies to the accounting and reporting obligations associated with the retirement of tangible long-lived assets and the associated asset retirement costs. This standard applies to legal obligations associated with the retirement of long-lived assets that result from the acquisition, construction, development and the normal operation of long-lived assets, except for certain obligations of lessees. Adoption of this standard is required for fiscal years beginning after June 15, 2002 and will not have a material impact on the Company's results of operations or financial position.

Effective January 1, 2002, the Company adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." SFAS No. 144 essentially applies one accounting model for long-lived assets to be disposed of by sale, whether previously held and used or newly acquired, and broadens the presentation of discontinued operations to include more disposal transactions. Adoption of this standard did not have a material impact on the consolidated results of operations or financial position of the Company.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections." This Statement rescinds and amends existing authoritative pronouncements to make various technical corrections, clarify meanings or describe their applicability under changed conditions. The provisions of SFAS No. 145 were adopted upon its effective date, May 15, 2002 and did not have a material effect on Company's results of operations or financial position.

In June 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with Exit or Disposal Activities. SFAS No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force ("EITF") Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring). SFAS No. 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. This statement also established that fair value is the objective for initial measurement of the liability. The provisions of SFAS No. 146 are effective for exit or disposal activities that are initiated after December 31, 2002. The Company does not expect that the adoption of this standard to have a material impact on the Company's results of operations or financial position.

(b) The accompanying consolidated condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America applicable to interim financial information. Accordingly, they do not include all disclosures required by accounting principles generally accepted in the United States of America for complete financial statements. The accompanying consolidated condensed financial statements have not been audited, however, in the opinion of Management, contain all adjustments (consisting of only normal recurring accruals) necessary to present fairly the financial position as of September 30, 2002 and December 31, 2001 and the results of operations for the three and nine months ended September 30, 2002 and 2001, and changes in cash flows for the nine months ended September 30, 2002 and 2001.

Results of operations through the third quarter and nine months of each of the years is not necessarily indicative of results of operations for that entire year.

2.

Under the tax allocation agreement between the Company and its parent, Loews Corporation ("Loews"), the Company has paid Loews approximately $1,432, $221, $3,155, and $2,693 for the three and nine months ended September 30, 2002 and 2001, respectively.

See Note 2 of the Notes to Consolidated Financial Statements in the Annual Report on Form 10-K for the year ended December 31, 2001.

3.

Loews provides administrative and managerial services for which the Company was charged $750 and $2,250 in each of the three and nine months ended September 30, 2002 and 2001, respectively. This expense is included in selling, general and administrative expenses. The cost allocated to the Company is estimated to be the incremental cost incurred by Loews in providing these services to the Company.

4.

Geographic Information:

The Company operates in a single industry segment, the distribution and sale of watches and clocks under the brand names of Bulova, Caravelle, Accutron and Wittnauer. Substantially all of the Company's sales are in the United States, Canada and Mexico. The Company evaluates performance based on operating earnings of the respective geographic area and the geographic distribution of the Company's identifiable assets and operating results are summarized in the following tables:

United

Three Months Ended September 30, 2002

States

Canada

Mexico

Total

______________________________________________________________________________________

Sales

$          37,430 

$         3,821 

$              435 

$         41,686 

Intercompany sales

(962)

(962)

______________________________________________________________________________________

Total net sales

$          36,468 

$         3,821 

$              435 

$         40,724 

===================================================================================================

Operating income (loss)

$            3,881 

$            526 

$              (26)

$           4,381 

Royalty income

167 

167 

Interest income -- net

41 

17 

58 

Other expense

80 

(9)

(58)

13 

______________________________________________________________________________________

Income (loss) before income taxes

$            4,169 

$            534 

$              (84)

$           4,619 

===================================================================================================

4.      Geographic Information (continued)

United

Three Months Ended September 30, 2001

States

Canada

Mexico

Total

______________________________________________________________________________________

Sales

$          31,567 

$         3,231 

$             426 

$         35,224 

Intercompany sales

(566)

(566)

______________________________________________________________________________________

Total net sales

$          31,001 

$         3,231 

$             426 

$         34,658 

===================================================================================================

Operating income (loss)

$            1,560 

$            597 

$           (198)

$           1,959 

Royalty income

614 

614 

Interest income -- net

273 

33 

306 

Other expense

(164)

(31)

(11)

(206)

______________________________________________________________________________________

Income (loss) before income taxes

$            2,283 

$            599 

$           (209)

$           2,673 

===================================================================================================

Nine Months Ended September 30, 2002

______________________________________________________________________________________

Sales

$        103,864 

$       10,244 

$          2,200 

$       116,308 

Intercompany sales

(3,266)

(3,266)

______________________________________________________________________________________

Total net sales

$        100,598 

$       10,244 

$          2,200 

$       113,042 

===================================================================================================

Operating income

$            9,383 

$            971 

$             239 

$         10,593 

Royalty income

1,080 

1,080 

Interest income -- net

219 

43 

262 

Other income (expense)

189 

15 

56 

260 

______________________________________________________________________________________

Income before income taxes

$          10,871 

$         1,029 

$             295 

$         12,195 

===================================================================================================

Nine Months Ended September 30, 2001

______________________________________________________________________________________

Sales

$         88,273 

$         8,968 

$          2,767 

$      100,008 

Intercompany sales

(2,564)

(2,564)

______________________________________________________________________________________

Total net sales

$         85,709 

$         8,968 

$          2,767 

$        97,444 

===================================================================================================

Operating income

$           6,343 

$         1,212 

$             190 

$          7,745 

Royalty income

1,806 

1,806 

Interest income -- net

804 

129 

933 

Other expense

(150)

(6)

(4)

(160)

______________________________________________________________________________________

Income before income taxes

$           8,803 

$          1,335 

$             186 

$        10,324 

===================================================================================================

5.  Shareholders' equity:

September 30,

December 31,

2002 

2001 

______________________________________________________________________________________

Common stock

$         22,999 

$          22,999 

Additional paid-in capital

23,197 

23,197 

Retained earnings

96,029 

89,226 

Accumulated other comprehensive loss

(4,165)

(4,266)

______________________________________________________________________________________

Total

138,060 

131,156 

Less treasury stock, at cost

5 

5 

______________________________________________________________________________________

Total shareholders' equity

$       138,055 

$        131,151 

Page 8

6.

For the three and nine months ended September 30, 2002 and 2001, comprehensive income totaled $2,016, $1,037, $6,904 and $5,598 respectively. Comprehensive income includes all changes to shareholders' equity, except those resulting from investments by owners and distributions to owners. Comprehensive income includes net income, foreign currency translation gains or losses, unrealized appreciation (depreciation) on marketable securities and pension liability adjustments.

7.

During the third quarter of 2002 the Company received notice of potential additional environmental contaminates at two facilities formerly owned by the Company, and settled a claim related to contaminates at an offsite disposal location formerly used by the Company. For the three and nine months ended September 30, 2002, the Company accrued $733 and $1,113, respectively, related to the foregoing matters. At September 30, 2002, the environmental liability is approximately $650, which represents the Company's estimate of its remaining cost for these properties.

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

Liquidity and Capital Resources

Net cash used by operating activities was $7,094,000 for the nine months ended September 30, 2002 as compared to net cash provided by operating activities of $12,231,000 for the same period in 2001. The decrease in net cash flow is primarily the result of an increase in the level of accounts receivable related to higher net sales resulting primarily from the introduction of the new Wittnauer brand product line and Harley Davidson license product, and an increase in inventory purchase, partially offset by a change in the timing of accounts payable and accrued expenses.

During the third quarter of 2001, the Company purchased from Wittnauer International Inc. and Wittnauer Worldwide, L.P., Wittnauer's trademarks for timepieces and related inventory and receivables for a purchase price of $11,613,000. The purchase price was funded from the Company's existing working capital balances.

The Company and Loews, which owns approximately 97% of the Company's common stock, have a credit agreement ("the Credit Agreement") which provides, under terms and conditions set forth therein, for unsecured loans to be made by Loews from time to time, in principal amounts aggregating up to $50,000,000. The Company has not utilized the Credit Agreement since 1995 and there are no amounts outstanding thereunder. The Company may require working capital advances under this agreement for financing line extensions for Wittnauer and the Harley Davidson licensed product discussed below, as well as the Company's international expansion efforts and operating needs.

Results of Operations

Net sales increased $6,066,000 and $15,598,000, for the three and nine months ended September 30, 2002, respectively, as compared to the prior year. Income before taxes increased $1,946,000 and $1,871,000 for the three and nine months ended September 30, 2002, respectively, as compared to the corresponding periods of prior year. Income before taxes is reduced by $733,000 and $1,133,000 in the three and nine months ended September 30, 2002, respectively, relating to environmental remediation costs.

The increase in net sales is primarily attributable to the Wittnauer watch brand, which was acquired during the third quarter of 2001, sales of the Harley Davidson licensed product associated with the license agreement signed in May 2001, and an increase in clock unit volume sales of 40.2% as compared to the prior year. These increases were partially offset by a unit volume decrease of the Company's Bulova brand of 7.6% for the nine month period ended September 2002, as compared to the corresponding periods of the prior year.

The Company's overall gross margins are primarily affected by three major factors: sales mix, product pricing strategy and efficient procurement practices. Gross profit as a percentage of net sales for the three and nine months ended September 30, 2002, was 58.6% and 54.8%, respectively, as compared to 53.7% and 53.3% for the corresponding periods of prior year.

The Company's operating expenses as a percentage of net sales for the three and nine months ended September 30, 2002 was 47.8% and 45.4% as compared to 48.0% and 45.3% for the corresponding prior year periods.

PART II. OTHER INFORMATION

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

    (a)  Exhibits--

            None

    (b)  Current reports on Form 8-K --

            On August 13, 2002, Registrant filed a report on Form 8-K regarding statements under oath of the Principal Executive Officer and Principal Financial Officer in connection with the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2002.

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.

BULOVA CORPORATION

(Registrant)

Dated:  November 13, 2002

By:

          /s/ John T. O'Reilly             

           JOHN T. O'REILLY

         Chief Financial Officer

     (Duly authorized officer and

       principal financial officer)

CERTIFICATIONS

I, Herbert C. Hofmann, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Bulova Corporation;

2.

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

3.

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

4.

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

5.

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

6.

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

Date:  November 13, 2002

By:

          /s/ Herbert C. Hofmann          

             Herbert C. Hofmann

           Chief Executive Officer

CERTIFICATIONS

I, John T. O'Reilly, certify that:

1.

I have reviewed this quarterly report on Form 10-Q of Bulova Corporation;

2.

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

3.

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

4.

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

5.

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

6.

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

Date:  November 13, 2002

By:

            /s/ John T. O'Reilly             

                John T. O'Reilly

            Chief Financial Officer