Blyth 10Q/A 2003 Q1 Quarterly report (amended)

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q/A

(Amendment No. 3)

(Mark One)

ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

		For the quarterly period ended April 30, 2003

or

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-13026

BLYTH, INC.

(Exact name of registrant as specified in its charter)

DELAWARE		36-2984916
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

One East Weaver Street, Greenwich, Connecticut 06831
	(Address of principal executive offices)	(Zip Code)

(203) 661-1926

(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 ý No o

Indicate by check mark whether the registrant is an accelerated filer (as defined in Exchange Act Rule 12b-2).

Yes ý No o

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

45,946,727 Common Shares as of May 31, 2003

Explanatory Note

In our filing on Form 10-Q/A Amendment No. 2 for the quarter ended April 30, 2003 filed with the Securities and Exchange Commission on December 16, 2004 we disclosed that the interim financial statements included therein had not been reviewed by an independent registered public accounting firm, as required by Section 10-01(d) of Regulation S-X. This Form 10-Q/A Amendment No. 3 is being filed to remedy that deficiency. This amended quarterly report has not required any change to the Consolidated Financial Statements except for a restatement of the Consolidated Statements of Cash Flows as discussed in Note 2 to more properly reflect the impact of foreign currency exchange rates on cash for fiscal 2003 and fiscal 2004. No attempt has been made in this Form 10-Q/A to modify or update any disclosures except as required to reflect the results of the restatements discussed above. This Form 10-Q/A does not reflect events occurring after the filing of the original Form 10-Q or modify or update those disclosures affected by subsequent events unless specifically noted.

BLYTH, INC.

INDEX

Part I FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

BLYTH, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS

(Unaudited, in thousands, except share and per share data)	April 30, 2003			January 31, 2003
	Restated (Note 2)			Restated (Note 2)
ASSETS
Current assets:
Cash and cash equivalents	$	122,391		$	168,596
Accounts receivable, less allowance for doubtful receivables of $3,731 and $4,093, respectively	83,972			82,913
Inventories	200,450			187,935
Prepaid and other	30,479			23,044
Assets held for sale	—			690
Deferred income taxes	17,158			14,297
Total current assets	454,450			477,475
Property, plant and equipment, at cost:
Less accumulated depreciation of $186,119 and $178,397, respectively	260,227			244,798
Other assets:
Investments	3,795			3,564
Excess of cost over fair value of assets acquired	158,753			113,534
Other intangible assets, net of accumulated amortization of $150	29,169			4,219
Deposits and other assets	18,113			16,494
	209,830			137,811
Total assets	$	924,507		$	860,084
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Bank lines of credit	$	15,372		$	7,377
Current maturities of long-term debt	4,411			4,037
Accounts payable	60,317			58,571
Accrued expenses	75,520			80,953
Dividend payable	5,979			—
Income taxes	15,798			2,477
Total current liabilities	177,397			153,415
Deferred income taxes	33,230			20,810
Long-term debt, less current maturities	176,084			165,079
Minority interest and other	19,649			12,928
Commitments and contingencies	—			—
Stockholders’ equity:
Preferred stock - authorized 10,000,000 shares of $0.01 par value; no shares issued	—			—
Common stock - authorized 100,000,000 shares of $0.02 par value; issued 49,733,227 shares and 49,703,682 shares, respectively	995			994
Additional contributed capital	101,906			101,567
Retained earnings	510,275			496,627
Accumulated other comprehensive income (loss)	(5,616		)	(4,751		)
Treasury stock, at cost, 3,755,900 shares and 3,644,100 shares, respectively	(89,413		)	(86,585		)
Total stockholders’ equity	518,147			507,852
Total liabilities and stockholders’ equity	$	924,507		$	860,084

The accompanying notes are an integral part of these financial statements.

BLYTH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS

Three months ended April 30, (Unaudited, in thousands, except per share data)	2003			2002
				Restated (Note 2)
Net sales	$	311,991		$	277,896
Cost of goods sold	150,595			132,888
Gross profit	161,396			145,008
Selling	97,069			88,407
Administrative	30,069			25,693
	127,138			114,100
Operating profit	34,258			30,908
Other expense (income):
Interest expense	3,590			3,823
Interest income and other	(591		)	(441		)
Equity in (earnings) loss of investee	135			(28		)
	3,134			3,354
Earnings before income taxes, minority interest and cumulative effect of change in accounting principle	31,124			27,554
Income tax expense	11,453			10,250
Earnings before minority interest and cumulative effect of change in accounting principle	19,671			17,304
Minority interest	(44		)	—
Cumulative effect of change in accounting principle, net of taxes of $2,887	—			(31,753		)
Net earnings	$	19,627		$	(14,449	)
Basic:
Earnings per common share before cumulative effect of change in accounting principle	$	0.43		$	0.37
Cumulative effect of change in accounting principle	—			(0.69		)
	$	0.43		$	(0.32	)
Weighted average number of shares outstanding	46,080			46,290
Diluted:
Earnings per common share before cumulative effect of change in accounting principle	$	0.42		$	0.37
Cumulative effect of change in accounting principle	—			(0.68		)
	$	0.42		$	(0.31	)
Weighted average number of shares outstanding	46,208			46,474

The accompanying notes are an integral part of these financial statements.

BLYTH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(Unaudited, in thousands, except share data)				Additional contributed capital		Retained earnings								Accumulated other comprehensive income (loss)			Total
	Common stock								Treasury stock
	Shares	Amount							Shares		Amount

For the three months ended April 30, 2002:

Balance, January 31, 2002	49,509,776	$	990	$	97,879	$	449,038		(2,630,900	)	$	(62,950	)	$	(16,894	)	$	468,063

Net earnings for the period - Restated (Note 2)						(14,449		)									(14,449		)
Foreign currency translation adjustments - Restated (Note 2)														(2,305		)	(2,305		)
Unrealized holding gains on certain investments (net of tax of $27)														44			44
Net loss on cash flow hedging instruments (net of tax of $9)														(15		)	(15		)
Comprehensive income - Restated (Note 2)																	(16,725		)

Common stock issued in connection with exercise of stock options	105,065	2		1,709													1,711
Tax benefit from stock options				124													124
Dividends declared		—				(5,098		)									(5,098		)

Treasury stock purchases	—								(638,700	)	(13,660		)				(13,660		)
Balance, April 30, 2002 - Restated (Note 2)	49,614,841	$	992	$	99,712	$	429,491		(3,269,600	)	$	(76,610	)	$	(19,170	)	$	434,415

For the three months ended April 30, 2003:

Balance, January 31, 2003 - Restated (Note 2)	49,703,682	$	994	$	101,567	$	496,627		(3,644,100	)	$	(86,585	)	$	(4,751	)	$	507,852
Net earnings for the period						19,627											19,627
Foreign currency translation adjustments - Restated (Note 2)														(544		)	(544		)
Unrealized holding gain on certain investments (net of tax of $31)														52			52
Net loss on cash flow hedging instruments (net of tax of $217)														(373		)	(373		)
Comprehensive income - Restated (Note 2)																	18,762

Common stock issued in connection with exercise of stock options	29,545	1		334													335

Tax benefit from stock options				5													5
Dividends declared				—		(5,979		)									(5,979		)

Treasury stock purchases						—			(111,800	)	(2,828		)				(2,828		)
Balance, April 30, 2003 - Restated (Note 2)	49,733,227	$	995	$	101,906	$	510,275		(3,755,900	)	$	(89,413	)	$	(5,616	)	$	518,147

The accompanying notes are an integral part of these financial statements.

BLYTH, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended April 30, (Unaudited, in thousands)	2003			2002
	Restated (Note 2)			Restated (Note 2)
Cash flows from operating activities:
Net earnings	$	19,627		$	(14,449	)
Adjustments to reconcile net earnings to net cash provided by operating activities:
Cumulative effect of change in accounting principle, net of tax	—			31,753
Depreciation and amortization	7,872			7,549
Tax benefit from stock options	5			124
Deferred income taxes	(598		)	529
Equity in earnings of investee	135			(28		)
Minority interest	150			—
Changes in operating assets and liabilities, net of effect of business acquisitions:
Accounts receivable	569			8,520
Inventories	(1,370		)	2,965
Prepaid and other	(4,584		)	(7,043		)
Deposits and other assets	(305		)	(168		)
Accounts payable	(3,651		)	(3,503		)
Accrued expenses	(7,889		)	(1,648		)
Other liabilities	1,109			708
Income taxes	10,606			4,958
Total adjustments	2,049			44,716
Net cash provided by operating activities	21,676			30,267
Cash flows from investing activities:
Purchases of property, plant and equipment	(2,875		)	(2,984		)
Purchases of long-term investment	(360		)	—
Purchase of businesses, net of cash acquired	(65,974		)	(10		)
Net cash used in investing activities	(69,209		)	(2,994		)
Cash flows from financing activities:
Proceeds from issuance of common stock	335			1,711
Purchase of treasury stock	(2,828		)	(13,660		)
Borrowings from bank line of credit	11,643			4,031
Repayments on bank line of credit	(3,663		)	(324		)
Repayments on long-term debt	(114		)	(201		)
Net cash provided by (used in) financing activities	5,373			(8,443		)
Effect of exchange rate changes on cash	(4,045		)	947
Net increase (decrease) in cash and cash equivalents	(46,205		)	19,777
Cash and cash equivalents at beginning of period	168,596			135,357
Cash and cash equivalents at end of period	$	122,391		$	155,134
Non-cash financing activities:
Cash dividend declared, $0.13 per share in 2003 and $0.11 in 2002	$	5,979		$	5,098

The accompanying notes are an integral part of these financial statements.

BLYTH, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Basis of Presentation

Blyth is a global competitor in the gift and decorative accessories market, which the Company calls the Home Expressions category. Within this category, the Company reports its financial results in five segments – the Direct Selling segment, the Wholesale Home Fragrance segment, the Wholesale Creative Expressions segment, the Catalog & Internet segment, and the All Other segment. Miles Kimball, acquired in April 2003 is included in the Catalog & Internet segment. Prior to January 31, 2004, the Company reported its financial results in two reporting segments, the Candles & Home Fragrance segment and the Creative Expressions segment. The Company reevaluated its operating segments based on the application of FASB Statement No. 131, “Disclosures about Segments of an Enterprise and Related Information,” and determined that the appropriate number of reportable segments should have been five in fiscal 2004 and four in fiscal 2003 and 2002 (The increase in segments in fiscal 2004 was due to acquisitions that were consummated in fiscal 2004.) The Company’s financial statement footnotes have been restated to reflect the revised segments. In addition, the revision of segments had the related effect of requiring changes in the Company’s reporting units for purposes of goodwill impairment reviews under FASB Statement No. 142, “Goodwill and Other Intangible Assets”, retroactive to the February 1, 2002 adoption date of SFAS 142. This resulted in a restatement for an additional impairment charge as of February 1, 2002. See Notes 2 and 9 to the financial statements for further details. The Company’s reportable and operating segments are based on financial information regularly evaluated by the chief operating decision maker in determining resource allocation and assessing performance. Revenues are not reported by product or group of similar products, as it is impractical to do so. The Company has operations outside of the United States and sells products in the Direct Selling and Wholesale Home Fragrance segments worldwide. The majority of sales in the Wholesale Creative Expressions, Catalog & Internet and All Other segments are domestically based.

Within the Direct Selling segment, the Company designs, manufactures and markets an extensive line of products including scented candles, fragranced bath gels and body lotions and other fragranced products. It also designs and markets a broad range of related candle accessories. These products are sold direct to the consumer under the PartyLite® brand in North America, Europe and Australia through a network of more than 56,000 independent sales consultants.

Within the Wholesale Home Fragrance segment, the Company designs, manufactures and markets an extensive line of products including scented candles, potpourri and other fragranced products. It also designs and markets a wide range of related candle accessories. Products in this segment are sold worldwide to retailers in the premium and specialty wholesale channels under the Ambria®, Carolina®, Colonial™(1), Colonial Candle of Cape Cod®, Colonial at HOMEâ, Gies®(1), Kate’s™ and Liljeholmens® brands and in the mass retail channel under the Ambria®, FilterMate®, Florasense® and Gies®(1) brands.

Within the Wholesale Creative Expressions segment, the Company designs, sources and markets a broad range of home décor products under the CBK® brand, seasonal decorations under the Holiday365Ô, JMC ImpactÔ and Seasons of Cannon FallsÔ brands, and, until Jeanmarie was sold in April 2004, decorative gift bags under the Jeanmarie® brand. These products are sold primarily in North America.

Within the Catalog & Internet segment, the Company designs, sources and markets a broad range of household convenience items, premium photo albums, frames, holiday cards and gifts under the Exposuresâ and Miles Kimballâ brands. These products are sold primarily in North America.

Within the All Other segment, the Company designs, manufactures or sources and markets a variety of chafing fuel, candles and tabletop lighting products to the Away From Home or foodservice trade under the brand names Ambriaâ, HandyFuelâ and Sternoâ. These products are sold primarily in North America.

(1) Colonial and Gies are registered and sold only outside the United States.

The consolidated financial statements include the accounts of the Company, and its direct and indirect subsidiaries. All significant intercompany accounts and transactions have been eliminated. Investments in companies, which are not majority owned or controlled, are reported using the equity method and are recorded in investments. Certain of the Company’s subsidiaries operate on a 52 or 53-week fiscal year ending on the Saturday closest to January 31. European operations maintain a calendar year accounting period, which is consolidated with the Company’s fiscal period. In the opinion of management, the accompanying unaudited consolidated financial statements include all normal recurring accruals necessary for fair presentation of the Company’s consolidated financial position at April 30, 2003 and the consolidated results of its operations and cash flows for the three-month periods ended April 30, 2003 and 2002. These interim statements should be read in conjunction with the Company’s consolidated financial statements for the year ended January 31, 2003, as set forth in the Company’s Annual Report on Form 10-K. Operating results for the three months ended April 30, 2003 are not necessarily indicative of the results that may be expected for the year ending January 31, 2004.

Reclassifications

Certain reclassifications have been made in prior years’ financial statements to conform to classifications used in the current year.

Employee Stock Options

The Company accounts for stock-based compensation under the intrinsic value-based method of accounting, whereby no compensation expense is recorded for stock options issued to employees unless the option price is below market at the time options are granted. The Company does not at this time, issue stock options below market value, therefore no compensation expense has been recorded in the financial statements. The following pro forma net earnings and net earnings per common share data are presented for informational purposes only and have been computed using the fair value method of accounting for stock-based compensation:

Three months ended (In thousands, except per share data)	April 30, 2003		April 30, 2002
			Restated (Note 2)
Net earnings:
As reported	$	19,627	$	(14,449	)
Stock-based employee compensation expense determined under SFAS No. 123 for all awards, net of related tax	927		993
Pro forma	$	18,700	$	(15,442	)
Net earnings per common share:
As reported:
Basic	$	0.43	$	(0.32	)
Diluted	0.42		(0.31		)
Pro forma:
Basic	$	0.41	$	(0.33	)
Diluted	0.39		(0.33		)

The fair value of each option is estimated on the date of grant, using the Black-Scholes option pricing model with the following weighted-average assumptions used for grants in fiscal quarters ended April 30, 2003 and April 30, 2002, respectively: expected volatility was 40.75% for the first quarter of fiscal 2004 and 39.82% for the first quarter of fiscal 2003; risk-free interest rates at 2.71% for the first quarter of fiscal 2004 and 2.76% to 4.66% for the first quarter of fiscal 2003; expected life of 5 years for the first quarter of fiscal 2004 and 2003 and an expected dividend yield of 0.99%.

2. Restatement

Prior to January 31, 2004, the Company reported its financial results in two reporting segments, the Candles & Home Fragrance segment and the Creative Expressions segment. The Company reevaluated its operating segments based on the application of FASB Statement No. 131, “Disclosures about Segments of an Enterprise and Related Information” (“SFAS 131”), and determined that the appropriate number of reportable segments should have been five during fiscal 2004 and four during fiscal 2003 and 2002 (The increase in segments in fiscal 2004 was due to the acquisitions that were consummated in fiscal 2004.) See Note 9 for further details. This revision of segments had the related effect of requiring changes in the Company’s reporting units for purposes of goodwill impairment reviews under SFAS 142, retroactive to the February 1, 2002 adoption date of SFAS 142. This resulted in the need to perform impairment reviews of several additional reporting units as of February 1, 2002 and each subsequent year-end balance sheet date, thereafter. These impairment reviews have indicated the need to record additional impairment charges as of the February 1, 2002 adoption of SFAS 142, specifically to write-off $20.9 million in goodwill associated with the 1999 acquisition of the Gies Group and $6.3 million in goodwill associated with the 1999 acquisition of the Colony Group. Both of these businesses are components of the Wholesale Home Fragrance Segment. The Company’s fiscal 2003 financial statements have been restated to reflect the recording of these $27.2 million in goodwill impairment charges as part of the cumulative effect of adopting SFAS 142 as of February 1, 2002. There was no income tax impact for these impairment charges. A restatement of the Consolidated Statements of Cash Flows has also been made to more properly reflect the impact of foreign currency exchange rates on cash for fiscal 2003 and 2004. The Company has now presented the effect of foreign currency rate changes on cash as a separate line on the cash flow statements, instead of including this effect within cash flows from operating, investing and financing activities as previously reported. Also, fiscal 2004 cash flows have been revised to reflect the reporting currency equivalent of foreign currency cash flows using weighted average exchange rates that approximated the actual exchange rates in effect at the time of the cash flows, rather than using period-end exchange rates.

A summary of the effects of the restatements on the Company’s financial statements is as follows:

	As of April 30, 2003
(In thousands)	As Previously Reported			As Restated
Balance sheet :
Excess of cost over fair value of assets acquired	$	191,922	(a)	$	158,753	(b)
Total assets	957,676		(a)	924,507
Retained earnings	537,513			510,275
Accumulated other comprehensive income (loss)	315			(5,616		)(b)
Total stockholders’ equity	551,316			518,147
Total liabilities and stockholders’ equity	957,676		(a)	924,507
Statement of Stockholders’ Equity:
Retained earnings	$	537,513		$	510,275
Foreign currency translation adjustments, for the quarter ended April 30, 2003	1,117			(544		)
Comprehensive income, for the quarter ended April 30, 2003	20,423		(a)	18,762
Accumulated other comprehensive income (loss)	315			(5,616		)
Total stockholders’ equity	551,316			518,147

	Quarter ended April 30, 2003
	As Previously Reported			As Restated
Statement of Cash Flows:
Total adjustments to reconcile net earnings to net cash from operations	$	(127	)	$	2,049
Net cash provided by operating activities	19,500			21,676
Net cash used in investing activities	(71,085		)	(69,209		)
Net cash provided by financing activities	5,380			5,373
Effect of exchange rate changes on cash	—			(4,045		)

(a) Reflects certain other reclassifications to conform with current year presentation.

(b) Includes the reversal of $5,931 of foreign currency translation adjustments on the Gies and Colony goodwill written off.

A summary of the effects of the restatements on the Company’s financial statements is as follows:

	Quarter ended April 30, 2002
	As Previously Reported			As Restated
Statement of Earnings:
Earnings before cumulative effect of accounting change	$	17,304		$	17,304
Cumulative effect of accounting change	(4,515		)	(31,753		)
Net earnings	$	12,789		$	(14,449	)
Basic earnings per share:
Before cumulative effect of accounting change	$	0.37		$	0.37
Cumulative effect of accounting change	(0.10		)	(0.69		)
	$	0.27		$	(0.32	)
Diluted earnings per share:
Before cumulative effect of accounting change	$	0.37		$	0.37
Cumulative effect of accounting change	(0.10		)	(0.68		)
	$	0.27		$	(0.31	)
Statement of Stockholders’ Equity:
Retained earnings, as of April 30, 2002	$	456,729		$	429,491
Foreign currency translation adjustments	(2,914		)	(2,305		)
Comprehensive income (loss)	9,904			(16,725		)
Accumulated other comprehensive loss, as of April 30, 2002	(19,779		)	(19,170		)
Total stockholders’ equity, as of April 30, 2002	461,044			434,415
Statement of Cash Flows:
Total adjustments to reconcile net earnings to net cash from operations	$	18,425		$	44,716
Net cash provided by operating activities	31,214			30,267
Effect of exchange rate changes on cash	—			947

3. New Accounting Pronouncements

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” This standard 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).” This standard was effective for exit or disposal activities that are initiated after December 31, 2002. The implementation of this standard has not had an impact on our financial statements.

In January 2003, the FASB issued Financial Interpretation No. 46, “Consolidation of Variable Interest Entities,” which is an interpretation of Accounting Research Bulletin No. 51, “Consolidated Financial Statements,” and addresses consolidation by business enterprises of variable interest entities that have specific characteristics as described in the Interpretation. This Interpretation was effective immediately to variable interest entities created after January 31, 2003, and to variable interest entities in which an enterprise obtains an interest after that date. It applies in the first fiscal year or interim period beginning after June 15, 2003, to variable interest entities in which an enterprise holds a variable interest that it acquired before February 1, 2003. The Company has evaluated the impact of this interpretation and we do not expect it to have a significant impact on our financial statements.

3. New Accounting Pronouncements

In April 2003, the FASB issued SFAS No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” This statement amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts (collectively referred to as derivatives) and for hedging activities under FASB Statement No. 133, “Accounting for Derivative Instruments and Hedging Activities.” This standard is effective for derivative contracts entered into or modified after June 30, 2003. We do not expect that implementation of this standard will have a significant impact on our financial statements.

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.” This Statement establishes standards for how an issuer classifies and measures certain financial instruments with characteristics of both liabilities and equity. It requires that an issuer classify a financial instrument that is within its scope as a liability (or an asset in some circumstances). This standard is effective for financial instruments entered into or modified after May 31, 2003. We do not expect that implementation of this standard will have an impact on our financial statements.

4. Excess of Cost Over Fair Value of Assets Acquired

Prior to February 1, 2002, excess of costs of acquisitions over fair value of identifiable net assets acquired less liabilities assumed (“goodwill”) was being amortized on a straight-line basis over estimated lives ranging from 15-40 years. Amortization of goodwill ceased on February 1, 2002, upon adoption of the new goodwill rules under SFAS 142.

In June 2001, the FASB issued SFAS No. 142, “Goodwill and Other Intangible Assets.” Under SFAS No. 142, goodwill and any other intangibles deemed to have indefinite lives are no longer subject to amortization; however, goodwill is subject to an assessment for impairment using a two-step fair value-based test and such other intangibles are also subject to impairment reviews, which must be performed at least annually, or more frequently if events or circumstances indicate that goodwill or other indefinite lived intangibles might be impaired. The Company performs its annual assessment of impairment in the fourth fiscal quarter. For goodwill the first step compares the fair value of a reporting unit to its carrying amount, including goodwill. If the carrying amount of the reporting unit exceeds its fair value, the second step is performed. The second step compares the carrying amount of the goodwill to the fair value of the goodwill. If fair value is less than the carrying amount, an impairment loss is reported as a reduction to the asset and a charge to operating expense, except at the transition date, when the loss was reflected as a cumulative effect of a change in accounting principle.

As of January 31, 2002, Blyth’s Consolidated Balance Sheets reflected approximately $108.1 million in goodwill net of accumulated amortization, including $27.2 million related to the Wholesale Home Fragrance segment businesses, $42.2 million related to the All Other segment and $38.7 million related to the Wholesale Creative Expressions segment businesses. The Company adopted SFAS 142, effective February 1, 2002. In accordance with the new standard, Blyth ceased amortization of goodwill and performed an assessment for impairment of its goodwill. As a result of the impairment review, Blyth reduced the carrying value of the goodwill related to its 1997 acquisition of the Sternoâ brand by $7.4 million, which is included in the All Other segment. In addition, a revision of its operating and reporting segments by the Company (See Note 2), required changes in the Company’s reporting units for purposes of goodwill impairment reviews under SFAS 142, retroactive to the February 1, 2002 adoption date of SFAS 142. This resulted in the need to perform impairment reviews of several additional reporting units as of February 1, 2002 and each subsequent year-end balance sheet date thereafter. These impairment reviews have indicated the need to record additional impairment charges as of the February 1, 2002 adoption of SFAS 142, specifically to write-off $20.9 million in goodwill associated with the 1999 acquisition of the Gies Group and $6.3 million in goodwill associated with the 1999 acquisition of the Colony Group. Both of these businesses are components of the Wholesale Home Fragrance Segment, and the impairment charges reduced goodwill in that segment to zero at February 1, 2002. The fair values of the Sterno Group, the Gies Group and the Colony Group were determined through independent valuations utilizing market-comparable

analysis, as well as discounted cash flow models reflecting the expected range of future cash flow outcomes over the life of the models. These cash flows were discounted to February 1, 2002 using a risk-adjusted discount rate. The impairment of the Sterno Group’s goodwill, which was recorded as a cumulative effect of a change in accounting principle, had the effect of reducing net income by $4.5 million (after tax) or $0.10 per share. The impairments of the Gies Group and Colony Group goodwill, which were not deductible for tax purposes, were, via restatement of the fiscal 2003 financial statements, also recorded as a cumulative effect of change in accounting principle, and had the effect of reducing net income by $27.2 million or $0.58 per share.

5. Business Acquisitions

On May 10, 2002, the Company purchased all of the interests in CBK Styles, Inc., formerly CBK, Ltd., LLC (“CBK”), a designer and marketer of premium everyday giftware and home décor, for approximately $51.0 million in cash. The excess of the purchase price over the estimated fair value of the net assets acquired approximated $40.0 million, which will be deductible for income tax purposes over 15 years. The results of operations of CBK are included in the Consolidated Statements of Earnings of the Company since May 11, 2002. For segment reporting purposes CBK is included in the Wholesale Creative Expressions segment.

On April 1, 2003, the Company acquired 100% of the Miles Kimball Company (“MK”), a direct marketer of giftware, home décor and household convenience items, premium photo albums, frames and holiday cards under the Miles Kimball and Exposures catalog titles for approximately $66.0 million in cash. The excess of the purchase price over the estimated fair value of the net assets acquired approximated $45.2 million, which will not be deductible for income tax purposes. The other intangibles acquired consist of $16.1 million of trade names and trademarks, which are deemed to have an indefinite life and will not be amortized, plus $9.0 million of customer lists, which will be amortized on an accelerated basis over 12 years. Estimated amortization expense for the next 5 fiscal years is as follows: $1.5 million, $1.5 million, $1.2 million, $0.9 million and $0.9 million. The results of operations of MK are included in the Consolidated Statements of Earnings of the Company since April 1, 2003. For segment reporting purposes, MK is included in the Catalog & Internet segment.

At April 30, 2003, Miles Kimball had approximately $10.2 million of long-term debt outstanding under a real estate mortgage note payable to John Hancock Life Insurance Company, which matures June 1, 2020. Under the terms of the note, payments of principal and interest are required monthly at a fixed interest rate of 7.89%.

The following provides a preliminary allocation of the purchase price of Miles Kimball (in thousands)

Cash Purchase Price	$	65,974
Less: Assets acquired
Accounts receiveable	1,124
Inventories	9,983
Property, plant and equipment	18,399
Intangible assets	25,100
Other	1,706
	56,312
Plus: Liabilities assumed
Accounts Payable	3,610
Accrued expense	1,649
Deferred income tax	11,155
Debt	10,729
Other	8,412
	35,555
Unallocated purchase price (goodwill)	45,217

The following unaudited pro forma summary financial information summarizes the estimated combined results of operations of the Company, CBK and MK assuming that the acquisitions of CBK and MK had taken place on February 1, 2002. The unaudited pro forma combined results of operations were prepared on the basis of information provided to the Company by the former management of CBK and MK and no representation is made by the Company with respect to the accuracy of such information. The pro forma combined results of operations reflect adjustments for interest income, additional depreciation based on the fair market value of CBK’s and MK’s property, plant, and equipment, amortization of identifiable intangibles of MK and income tax expense.

	Three months ended April 30,
(In thousands except per share data)	2003		2002
			Restated (Note 2)
Net sales	$	324,664	$	316,245
Earnings before cumulative effect of change in accounting principle	17,994		18,006
Net earnings	17,994		(13,747		)

Basic:
Earnings per common share before the cumulative effect of change in accounting principle	$	0.39	$	0.39
Net earnings per common share	0.39		(0.30		)

Diluted:
Earnings per common share before the cumulative effect of change in accounting principle	$	0.39	$	0.39
Net earnings per common share	0.39		(0.30		)

The unaudited pro forma combined results of operations are not necessarily indicative of, and do not purport to represent, what the Company’s results of operations or financial condition actually would have been had the acquisitions been made as of February 1, 2002.

At April 30, 2003, the Company had a total of $158.8 million of goodwill on its balance sheet compared to $113.5 million at January 31, 2003. Goodwill attributable to the Wholesale Creative Expressions segment at April 30, 2003 was $78.7 million, unchanged from January 31, 2003. Goodwill attributable to the Catalog & Internet segment at April 30, 2003 was $45.3 million as a result of the April 2003 acquisition of Miles Kimball. Goodwill attributable to the All Other segment at April 30, 2003 was $34.8 million, unchanged from January 31, 2003.

6. Inventories

The components of inventory consist of the following (in thousands):

	April 30, 2003		January 31, 2003
Raw materials	$	28,573	$	33,950
Work in process	2,151		2,509
Finished goods	169,726		151,476
	$	200,450	$	187,935

7. Earnings per Share

The components of basic and diluted earnings per share are as follows (in thousands):

Three months ended April 30,	2003		2002
			Restated (Note 2)
Net earnings	$	19,627	$	(14,449	)
Weighted average number of common shares outstanding:
Basic	46,080		46,290
Dilutive effect of stock options	128		184
Weighted average number of common shares outstanding:
Diluted	46,208		46,474

As of April 30, 2003 and 2002, options to purchase 102,754 and 95,004 shares of common stock, respectively, are not included in the computation of earnings per share because the effect would be anti-dilutive.

8. Unusual Charges

At January 31, 2003, the Company had approximately $0.4 million of restructuring charges included in the Consolidated Balance Sheet, which related to lease obligations. As a result of payments made during the quarter ended April 30, 2003 approximately $0.3 million of lease obligations were remaining on the balance sheet at April 30, 2003. The lease obligation continues through the third quarter of fiscal 2004.

The following is a tabular roll forward of the unusual charges described above that were recorded on the balance sheet of the Company:

(In thousands)	Lease Obligations			Severence Costs		Total

Balance at January 31, 2003	$	405		$	—	$	405
Payments made against 2002 charges	(67		)	—		(67		)
Balance at April 30, 2003	$	338		$	—	$	338

9. Segment Information

Blyth is a global competitor in the gift and decorative accessories market, which the Company calls the Home Expressions category. Within this category, the Company reports its financial results in five segments – the Direct Selling segment, the Wholesale Home Fragrance segment, the Wholesale Creative Expressions segment, the Catalog & Internet segment, and the All Other segment. Miles Kimball, acquired in April 2003 is included in the Catalog & Internet segment. Prior to January 31, 2004, the Company reported its financial results in two reporting segments, the Candles & Home Fragrance segment and the Creative Expressions segment. The Company reevaluated its operating segments based on the application of FASB Statement No. 131, “Disclosures about Segments of an Enterprise and Related Information,” and determined that the appropriate number of reportable segments should have been five in fiscal 2004 and four in fiscal 2003 and 2002 (The increase in segments in fiscal 2004 was due to the acquisitions that were consummated in fiscal 2004.) The Company’s financial statement footnotes have been restated to reflect the revised segments. The Company’s reportable and operating segments are based on financial information regularly evaluated by the chief operating decision maker in determining resource allocation and assessing performance. Revenues are not reported by product or group of similar products, as it is impractical to do so. The Company has operations outside of the United States and sells products in the Direct Selling and Wholesale Home Fragrance segments worldwide. The majority of sales in the Wholesale Creative Expressions, Catalog & Internet and All Other segments are domestically based.

(1) Colonial and Gies are registered and sold only outside the United States.

Earnings in all segments represent net sales less operating expenses directly related to the business segments and corporate expenses allocated to the business segments. Other income (expense) includes interest expense, interest income and equity in earnings of investees, which are not allocated to the business segments. Identifiable assets for each segment consist of assets used directly in its operations and intangible assets, if any, resulting from purchase business combinations. Unallocated Corporate within the identifiable assets include corporate cash and cash equivalents, deferred bond costs and other long-term investments, which are not allocated to the business segments.

Three months ended April 30, (In thousands)

	2003			2002
	Restated (Note 2)			Restated (Note 2)
Net Sales
Direct Selling	$	191,239		177,915
Wholesale Home Fragrance	66,441			68,718
Wholesale Creative Expressions	35,926			17,691
Catalog & Internet	5,970			—
All Other	12,415			13,572
Total	$	311,991		$	277,896

Earnings
Direct Selling	$	38,372		$	37,137
Wholesale Home Fragrance	(3,472		)	(5,387		)
Wholesale Creative Expressions	22			(1,780		)
Catalog & Internet	(590		)	—
All Other	(74		)	938
	34,258			30,908
Other expense	(3,134		)	(3,354		)
Earnings before income taxes, minority interest and cumulative effect of change in accounting principle	$	31,124		$	27,554

	April 30, 2003			January 31, 2003
	Restated (Note 2)			Restated (Note 2)
Identifiable Assets
Direct Selling	$	258,667		$	246,607
Wholesale Home Fragrance	229,846			238,829
Wholesale Creative Expressions	165,198			174,827
Catalog & Internet	103,021			—
All Other	61,573			61,816
Unallocated Corporate	106,202			138,005
Total	$	924,507		$	860,084

10. Contingencies

The Company has contingent liabilities that have arisen in the ordinary course of its business, including pending litigation. The Company believes the outcome of these matters will not have a material adverse effect on its consolidated financial position, results of operations, or cash flows.

On June 2, 2003, the parties agreed in open court to settle and resolve all matters involving or in any way relating to the previously reported legal proceedings by and between the Company and its wholly-owned subsidiary, Endar Corp., on the one hand, and Ennio Racinelli, Darlene Racinelli and others, on the other hand, by means of a written settlement and release agreement, without any payment by any party.

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS:

Net Sales

Net sales in the quarter ended April 30, 2003, increased $34.1 million, or 12.3% to $312.0 million when compared with $277.9 million a year earlier. Sales in the quarter ended April 30, 2003 were affected by four main factors. First, the favorable impact of the inclusion of sales from the acquisitions of Miles Kimball in April 2003 and CBK in May 2002 and the negative impact of the closure of our UK retailer Wax Lyrical in December 2002. Second, PartyLite Worldwide posted a 9% increase in net sales when compared to the prior year, which we believe is partly attributable to an early launch of PartyLite’s spring product line and strong sales of the PartyLite 30^th anniversary promotional votive sampler. Third, the continued weakness in the US and European economies negatively impacted sales. Lastly, the favorable impact of foreign exchange rates versus the US dollar positively impacted reported sales.

Net sales in the Direct Selling segment, which is represented by our PartyLite business, increased $13.3 million, or 7.5% to $191.2 million in the first quarter ended April 30, 2003, compared with $177.9 million in the same period last year. As mentioned above we believe this sales increase is partly attributable to an early launch of PartyLite’s spring product line and strong sales of the PartyLite 30^th anniversary promotional votive sampler.

Net sales in the Wholesale Home Fragrance segment decreased $2.3 million, or 3.3% to $66.4 million in the first quarter ended April 30, 2003, compared with $68.7 million in the same period last year. The net sales decrease in this segment is reflective of the continued weakness in the US and European economies which was partially offset by the positive impact of foreign currency exchange rates on our European businesses reported sales.

Net sales in the Wholesale Creative Expressions segment increased $18.2 million to $35.9 million in the quarter ended April 30, 2003 compared to $17.7 million in the prior year period. This increase is entirely attributable to the effect of the inclusion of the sales of CBK acquired in May 2002.

Net sales in the Catalog & Internet segment, which was newly created this quarter as a result of the acquisition of Miles Kimball in April 2003, contributed sales of $6.0 million.

Net sales in the All Other segment decreased $1.2 million, or 8.8% to $12.4 million in the first quarter of fiscal 2004, compared with $13.6 million in the same period last year as the travel industry was impacted by the war in the Middle East and SARS.

Gross Profit

Gross profit as a percent of sales was 51.7%, in the first quarter of fiscal 2004, a decrease of 0.5% when compared to 52.2% in the prior year’s first quarter. This was primarily due to a mix shift of sales among our businesses.

Selling Expense

Selling expense increased $8.7 million, or 9.8%, from $88.4 million in the quarter ended April 30, 2002 to $97.1 million in the quarter ended April 30, 2003. As a percent of sales, selling expense was 31.1% in the most recent fiscal quarter compared to 31.8% a year earlier primarily due to a mix shift in sales to businesses with lower selling expenses as a percentage of sales.

Administrative Expense

Administrative expense increased $4.4 million, or 17.1%, from $25.7 million in the quarter ended April 30, 2002 to $30.1 million in the quarter ended April 30, 2003. Administrative expenses increased due to the addition of expenses of Miles Kimball and CBK, as well as costs related to compliance with the Sarbanes-Oxley Act of 2002 and related regulations.

Operating Profit

Operating profit increased $3.4 million, or 11.0%, to $34.3 million in the quarter ended April 30, 2003 compared with $30.9 million a year earlier. The increase in operating profit in the three month period ended April 30, 2003 versus the same period in the prior year is primarily a result of the increase in PartyLite’s business, the inclusion of CBK and the favorable impact of foreign exchange rates.

Interest Expense

Interest expense decreased approximately $0.2 million in the current fiscal year’s first quarter when compared to the prior year. This decrease was a result of the benefit of the interest rate swap, as described in Item 3, Quantitative and Qualitative Disclosures About Market Risk, under the heading Interest Rate Risk, entered into in March 2002, for the full first fiscal quarter of 2004.

Income Taxes

Income tax expense increased $1.2 million, from $10.3 million in the quarter ended April 30, 2002 to $11.5 million in the quarter ended April 30, 2003. This increase is due to the increased earnings in the most recent quarter. The effective tax rate decreased to approximately 36.8% from 37.2% in the prior year.

Cumulative Effect of Change in Accounting Principle

The Company recorded a one-time charge of $34.6 million pre-tax, $31.8 million net of income taxes on February 1, 2002, which is reflected as the cumulative effect of a change in accounting principle, as a result of adopting SFAS No. 142, “Goodwill and Other Intangible Assets” (See Note 4 to the Consolidated Financial Statements).

Net Earnings

As a result of the foregoing, earnings before the cumulative effect of change in accounting principle increased $2.3 million, or 13.3%, from $17.3 million the quarter ended April 30, 2002 to $19.6 million for the quarter ended April 30, 2003. Net earnings after the cumulative effect of change in accounting principle increased $6.8 million, or 53.1%, from $12.8 million in the first quarter of fiscal 2003 to $19.6 million in the first quarter of fiscal 2004.

Basic earnings per share before the cumulative effect of change in accounting principle, based upon the weighted average number of shares outstanding for the quarter ended April 30, 2003, were $0.43, an increase of $.06, or 16.2% compared to $0.37 for the quarter ended April 30, 2002. Basic earnings per share after the cumulative effect of change in accounting principle, based upon the weighted average number of shares outstanding for the quarter ended April 30, 2003, were $0.43, an increase of $0.75 compared to a loss of $0.32 for the quarter ended April 30, 2002. Diluted earnings per share before the cumulative effect of change in accounting principle, based upon the potential dilution that could occur if options to issue common stock were exercised, were $0.42 compared to $0.37 for the same period the prior year. The cumulative effect of change in accounting principle on diluted earnings per share equaled $0.68. Diluted earnings per share after the cumulative effect of change in accounting principle, based upon the potential dilution that could occur if options to issue common stock were exercised, were $0.42 compared to a loss of $0.31 for the same period the prior year.

Liquidity and Capital Resources

Inventory increased from $187.9 million at January 31, 2003 to $200.5 million at April 30, 2003. The increase in inventory is primarily due to the inclusion of inventory of Miles Kimball acquired in April 2003. Accounts receivable increased $1.1 million from $82.9 million at the end of fiscal 2003 to $84.0 million at April 30, 2003. The increase in accounts receivable is due to the inclusion of Miles Kimball. Accounts payable and accrued expenses decreased $3.7 million from $139.5 million at the end of fiscal 2003 to $135.8 million at April 30, 2003. The decrease in accounts payable and accrued expenses is attributable to normal patterns of payment of operating expenses including the semi-annual payment of accrued interest and incentive bonuses.

Capital expenditures for property, plant and equipment were $2.9 million in the quarter ended April 30, 2003 compared to $3.0 million in the prior year period. Capital expenditures consisted primarily of investments in information technology and upgrades of equipment and facilities. The Company expects total capital spending of approximately $25.0 million for fiscal 2004.

The Company has a $200 million unsecured revolving credit facility having a three-year term (the “Credit Facility”). The Company has the ability to increase the Credit Facility, under certain circumstances, by an additional $50 million. The Credit Facility may be used for seasonal working capital needs, general corporate purposes and funding for strategic acquisitions. The Credit Facility contains, among other provisions, requirements for maintaining certain financial ratios and limitations on certain payments. At April 30, 2003, the Company was in compliance with such covenants. Amounts outstanding under the Credit Facility bear interest, at the Company’s option, at JPMorgan Chase Bank’s prime rate (4.25% at April 30, 2003) or at the Eurocurrency rate plus a credit spread ranging from 0.525% to 1.5%, calculated on the basis of a combination of the Company’s senior unsecured long-term debt rating and the Company’s usage of the Credit Facility. On April 30, 2003, approximately $3.2 million of letters of credit were outstanding under the Credit Facility.

As of April 30, 2003, the Company had a total of $15.0 million available under an uncommitted bank line of credit with La Salle Bank National Association, which matures in June 2003. Amounts outstanding under the line of credit bear interest at short-term fixed rates. No amounts were outstanding under the uncommitted line of credit at April 30, 2003.

At April 30, 2003, the Company had a total of $10.0 million available under an uncommitted line of credit with Bank of America to be used for letters of credit. At April 30, 2003, approximately $1.6 million of letters of credit were outstanding under this credit line.

As of March 31, 2003, The Gies Group (“Gies”) had available lines of credit of approximately $36.6 million of which approximately $9.2 million was outstanding. The amounts outstanding under the lines of credit bear interest at a weighted average rate of 3.87% at March 31, 2003. The lines of credit are renewed annually.

Colony Gift Corporation Limited (“Colony”) has a short-term revolving credit facility with Barclays Bank (“Barclays”), which matures on June 20, 2003, pursuant to which Barclays has agreed to provide a revolving credit facility in an amount of up to $23.7 million. As of March 31, 2003, Colony had borrowings under the credit facility of approximately $6.2 million, at a weighted average interest rate of 4.32%.

At April 30, 2003, CBK had $4.7 million of long-term debt outstanding under an Industrial Revenue Bond (“IRB”), which matures on January 1, 2025. The bond is backed by an irrevocable letter of credit issued by La Salle Bank National Association. The amount outstanding under the IRB bears interest at short-term floating rates for a weighted average interest rate of 1.4% at April 30, 2003.

Net cash provided by operating activities amounted to $21.7 million for the three months ended April 30, 2003 compared to $30.3 million provided from operating activities for the three months ended April 30, 2002. The decrease in cash flow from operations compared to the prior year is primarily attributable to changes in working capital, which more than offset the improvement in net earnings.

The Company’s Board of Directors has authorized the Company to repurchase up to 6,000,000 shares of common stock under the Company’s share repurchase program. Since January 31, 2003, the Company has purchased an additional 111,800 shares on the open market for a total cost of $2.8 million, bringing the cumulative total purchased shares to 3,755,900 as of May 31, 2003 for a total cost of approximately $89.4 million. The acquired shares are held as common stock in treasury at cost.

On April 1, 2003 the Company declared a cash dividend of $0.13 per share of the Company’s common stock for the six months ended January 31, 2003. The dividend was payable to shareholders of record as of May 1, 2003 and was paid on May 15, 2003 in the amount of $6.0 million.

Critical Accounting Policies

For a discussion of the Company’s critical accounting policies see our Annual Report on Form 10-K for the fiscal year ended January 31, 2003.

Impact of Adoption of Recently Issued Accounting Standards

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures.

Our management, with the participation of our principal executive officer and our principal financial officer, evaluated the effectiveness of our disclosure controls and procedures (as defined in Securities Exchange Act of 1934 (“Exchange Act”) Rules 13a-15(e) or 15d-15(e)) as of the end of the period covered by this quarterly report as required by paragraph (b) of Exchange Act Rules 13a-15 or 15d-15. Based upon this evaluation, our principal executive officer and our principal financial officer have concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of the end of the period covered by this quarterly report.

Nonetheless, we note that, as discussed in Item 4(b) below, we have made changes in our internal controls after the end of the period covered by this quarterly report in response to the fact that, as discussed in Item 9 “Changes in and Disagreements with Accountants on Accounting and Financial Disclosure” in our fiscal 2004 Form 10-K, on April 21, 2004, PricewaterhouseCoopers (“PwC”) advised the Company that it had identified an internal control issue which PwC considered to be a material weakness in that changes in circumstances, internal reporting and management structures appeared not to have been properly evaluated by management or considered in connection with ongoing compliance with SFAS 131 and SFAS 142 guidance. PwC recommended that the Company should (A) have a process in place to evaluate changes in management structure and reporting to the chief operating decision maker that would effect segment determination, (B) strengthen procedures to monitor all changes in operations that impact accounting and reporting matters and (C) ensure that it has sufficient staffing in its financial reporting function, with appropriate technical qualifications and tasked with ensuring ongoing compliance with relevant accounting and financial reporting requirements.

(b) Changes in internal control over financial reporting.

There was no change in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

In response to the matter discussed in Item 9A. “Controls and Procedures” in our fiscal 2004 Form 10-K, whereby PwC had identified an internal control issue which they considered to be a material weakness, the Company in fiscal 2005 now reviews and evaluates more carefully the information that is presented to the Board of Directors and the chief operating decision maker (“CODM”) on a monthly and quarterly basis, as well as the information that is provided on its website and to investors, with a view toward ensuring that such information is consistent with the Company’s segment reporting and how the CODM reviews operating results in order to make decisions about the allocation of resources. Moreover, the Company believes that, by reason of the Company’s experience in connection with its change in reporting segments for fiscal 2004, the Company’s financial personnel, as well as its other members of management, are particularly well informed as to the issues that may arise under SFAS 131 and 142 and are sensitive to the need to ensure that such issues are properly and promptly addressed and resolved.

PART II. OTHER INFORMATION

Item 5. Other Information

The staff of the Commission may take the position that because certain information relating to our Quarterly Reports for fiscal 2004 had not been reviewed by any independent public accountants prior to filing as required by Section 10–01(d) of Regulation S–X, we would not have been viewed as having made all required filings until the reports were amended to reflect the required review, and even then that the filings were not filed timely. Therefore, we could be ineligible to use Forms S–2 and S–3 to register securities (or amend an existing registration statement) until all required reports under the Exchange Act have been timely filed for the 12 months prior to the filing of the registration statement or amendment. While ineligibility to use Form S–2 or S–3 would involve additional expense should we need to file or amend a registration statement, we do not view ineligibility as having a material adverse effect on our access to capital resources.

The Company is including the following cautionary statement in this Report to make applicable, and to take advantage of, the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of, the Company. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements, which are other than statements of historical facts. From time to time, the Company and its representatives may publish or otherwise make available forward-looking statements of this nature. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the Company, are expressly qualified by the following cautionary statements. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. Such forward-looking statements are expected to be based on various assumptions, many of which are based, in turn, upon further assumptions. There can be no assurance that management’s expectations, beliefs or projections will occur or be achieved or accomplished. In addition to other factors and matters discussed elsewhere in this Report and in the Company’s other public filings and statements, the following are important factors that, in the view of the Company, could cause actual results to differ materially from those discussed in the Company’s forward-looking statements. The Company disclaims any obligation to update any forward-looking statements, or the following factors, to reflect events or circumstances after the date of this Report.

Risk of Inability to Maintain Sales Growth Rate

The Company has experienced significant sales growth in past years. While management expects continued growth, our future growth rate will likely be less than our historical growth rate. The Company expects faster sales growth in its international market versus its United States market, particularly in the Direct Selling and Wholesale segments. The Company’s ability to increase sales depends on numerous factors, including market acceptance of existing products, the successful introduction of new products, the increase in consumers’ discretionary spending, the ability to recruit new independent sales consultants, sourcing of raw materials and demand-driven increases in production and distribution capacity. Business in all of our segments is driven by consumer preferences. Accordingly, there can be no assurances that the Company’s current or future products will maintain or achieve market acceptance. Our sales and earnings results can be negatively impacted by the worldwide economic environment, particularly the Canadian, United States and European economies. There can be no assurances that the Company’s financial results will not be materially adversely affected by these factors in the future. The Company’s historical growth has been due in part to acquisitions and management continues to consider additional strategic acquisitions. There can be no assurances that management will continue to identify suitable acquisition candidates, consummate acquisitions on terms favorable to the Company, finance acquisitions or successfully integrate acquired operations.

Risks Associated with International Sales and Foreign-Sourced Products

Our international sales growth rate has outpaced our United States growth rate in recent years. Moreover, the Company sources a portion of its products in all of its business segments from independent manufacturers in the Pacific Rim, Europe and Mexico. For these reasons, we are subject to the following risks associated with international manufacturing and sales: fluctuations in currency exchange rates, economic or political instability, international public heath crises, transportation costs and delays, difficulty in maintaining quality control, restrictive governmental actions, nationalizations, the laws and policies of the United States, Canada and certain European countries affecting the importation of goods (including duties, quotas and taxes) and the trade and tax laws of other nations.

Ability to Respond to Increased Product Demand

The Company’s ability to meet future product demand in all of its business segments will depend upon its success in (1) bringing new production and distribution capacity on line in a timely manner, (2) improving its ability to forecast product demand and fulfill customer orders promptly, (3) improving customer service-oriented management information systems and (4) training, motivating and managing new employees. The failure of any of the above could result in a material adverse effect on our financial results.

Risk of Shortages of Raw Materials

Certain raw materials could be in short supply due to capacity, availability, a change in requirements, weather or other factors, including supply disruptions due to production or transportation delays. Such shortages have not had and are not presently expected to have a material adverse effect on the Company’s operations. While the price of crude oil is only one of several factors impacting the price of petroleum wax, it is possible that recent fluctuations in oil prices may have a material adverse affect on the cost of petroleum-based products used in the manufacture or transportation of our products, particularly in the Direct Selling and Wholesale segments.

Dependence on Key Corporate Management Personnel

Our success depends in part on the contributions of key corporate management, including our Chairman and Chief Executive Officer, Robert B. Goergen. The Company does not have employment contracts with any of its key corporate management personnel except Mr. Goergen, nor does it maintain any key person life insurance policies. The loss of any of the key corporate management personnel could have a material adverse effect on the Company.

Risk of Increased Competition

Our business is highly competitive both in terms of pricing and new product introductions. The worldwide market for home expressions products is highly fragmented with numerous suppliers serving one or more of the distribution channels served by the Company. In addition, the Company competes for direct selling consultants with other direct selling companies. Because there are relatively low barriers to entry in all of our business segments, the Company may face increased competition from other companies, some of which may have substantially greater financial or other resources than those available to us. Competition includes companies selling candles manufactured at low cost outside of the United States. Moreover, certain competitors focus on a single geographic or product market and attempt to gain or maintain market share solely on the basis of price.

Risks Related to Information Technology Systems

Our information technology systems are dependent on global communications providers, telephone systems, hardware, software and other aspects of Internet infrastructure that have experienced significant system failures and outages in the past. Our systems are susceptible to outages due to fire, floods, power loss, telecommunications failures, break-ins and similar events. Despite the implementation of network security measures, the Company’s systems are vulnerable to computer viruses, break-ins and similar disruptions from unauthorized tampering with Company systems. The occurrence of these or other events could disrupt or damage our information technology systems and inhibit internal operations, the ability to provide customer service or the ability of customers or sales personnel to access the Company’s information systems.

Item 6. Exhibits

a) Exhibits

31.1 Certification of Chairman, Chief Executive Officer and President pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

31.2 Certification of Vice President and Chief Financial Officer pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934.

32.1 Certification of Chairman, Chief Executive Officer and President pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2 Certification of Vice President and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 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.

				BLYTH, INC.


Date:	April 14, 2005	By:	/s/Robert B. Goergen
				Robert B. Goergen
				Chairman and Chief Executive Officer

Date:	April 14, 2005	By:	/s/Robert H. Barghaus
				Robert H. Barghaus
				Vice President and Chief Financial Officer

Blyth (BTH) Inactive 10-Q/A2003 Q1 Quarterly report (amended)

For the quarterly period ended April 30, 2003

One East Weaver Street, Greenwich, Connecticut 06831

(Address of principal executive offices)

Not Applicable

Explanatory Note

BLYTH, INC.

INDEX

Risk of Inability to Maintain Sales Growth Rate

Risks Associated with International Sales and Foreign-Sourced Products

Ability to Respond to Increased Product Demand

Risk of Shortages of Raw Materials

Dependence on Key Corporate Management Personnel

Risk of Increased Competition