SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
Quarterly report pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the quarterly period ended: JUNE 29, 2002
Commission File Number: 001-15023
THE YANKEE CANDLE COMPANY, INC.
-------------------------------
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04 259 1416
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
16 YANKEE CANDLE WAY
SOUTH DEERFIELD, MASSACHUSETTS 01373
(Address of principal executive office and zip code)
(413) 665-8306
(Registrant's telephone number, including area code)
Indicate by check mark whether 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
------- ------
The registrant had 54,353,580 shares of Common Stock, par value $0.01,
outstanding as of August 12, 2002.
THE YANKEE CANDLE COMPANY, INC.
FORM 10-Q - Quarter Ended June 29, 2002
This Quarterly Report on Form 10-Q contains a number of forward-looking
statements. Any statements contained herein, including without limitation
statements to the effect that The Yankee Candle Company, Inc. and its
subsidiaries (the "Company", "we", and "us") or its management "believes",
"expects", "anticipates", "plans" and similar expressions, that relate to
prospective events or developments should be considered forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date the statement was
made. We undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise. There are a number of important factors that could cause
our actual results to differ materially from those indicated by such
forward-looking statements. These factors include, without limitation, those set
forth below in "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Future Operating Results."
Table of Contents
Item Page
- ---- ----
PART I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
as of June 29, 2002 and December 29, 2001 3
Condensed Consolidated Statements of Operations for the
Thirteen and Twenty-Six Weeks Ended June 29, 2002 and
June 30, 2001 4
Condensed Consolidated Statements of Cash Flows for the
Twenty-Six Weeks ended June 29, 2002 and June 30, 2001 5
Notes to the Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures about Market Risk 16
PART II. Other Information
Item 1. Legal Proceedings 16
Item 2. Changes in Securities and Use of Proceeds 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
2
PART I. Financial Information
Item 1. Condensed Consolidated Financial Statements
THE YANKEE CANDLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
June 29, December 29,
2002 2001
--------- ---------
ASSETS (Unaudited)
CURRENT ASSETS:
Cash and cash equivalents $ 7,497 $ 30,531
Accounts receivable, less allowance of $325 at
June 29, 2002 and December 29, 2001 17,096 23,141
Inventory 40,202 23,680
Prepaid expenses and other current assets 10,125 4,340
Deferred tax assets 3,544 3,544
--------- ---------
TOTAL CURRENT ASSETS 78,464 85,236
PROPERTY, PLANT AND EQUIPMENT-NET 108,567 103,975
MARKETABLE SECURITIES 982 961
DEFERRED FINANCING COSTS 2,258 2,815
DEFERRED TAX ASSETS 121,029 127,029
OTHER ASSETS 500 1,268
--------- ---------
TOTAL ASSETS $ 311,800 $ 321,284
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 22,073 $ 19,044
Accrued payroll 8,392 9,170
Accrued income taxes -- 14,462
Other accrued liabilities 11,554 12,367
Current portion of long-term debt 32,000 31,500
--------- ---------
TOTAL CURRENT LIABILITIES 74,019 86,543
DEFERRED COMPENSATION OBLIGATION 874 1,055
LONG TERM DEBT - Less current portion 71,644 83,500
DEFERRED RENT 2,549 2,082
STOCKHOLDERS' EQUITY:
Common stock 1,042 1,041
Additional paid-in capital 225,544 224,850
Treasury stock (213,752) (213,752)
Retained earnings 150,410 137,025
Unearned stock compensation (264) (522)
Accumulated other comprehensive loss (266) (538)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 162,714 148,104
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 311,800 $ 321,284
========= =========
See notes to Condensed Consolidated Financial Statements
3
THE YANKEE CANDLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)
For the Thirteen Weeks Ended For the Twenty-Six Weeks Ended
June 29, June 30, June 29, June 30,
2002 2001 2002 2001
--------- --------- --------- ---------
Sales $ 81,296 $ 62,230 $ 169,480 $ 137,550
Cost of goods sold 37,739 30,132 79,848 68,147
--------- --------- --------- ---------
Gross profit 43,557 32,098 89,632 69,403
Selling expenses 22,452 17,157 43,672 34,332
General and administrative expenses 10,371 9,654 21,565 18,845
Restructuring charge -- -- -- 8,000
--------- --------- --------- ---------
Income from operations 10,734 5,287 24,395 8,226
Interest income (3) (18) (18) (60)
Interest expense 1,157 2,996 2,466 6,372
Other (income) expense (54) (27) 5 (128)
--------- --------- --------- ---------
Income before provision for income taxes 9,634 2,336 21,942 2,042
Provision for income taxes 3,757 911 8,557 797
--------- --------- --------- ---------
Net income $ 5,877 $ 1,425 $ 13,385 $ 1,245
========= ========= ========= =========
Basic earnings per share $ 0.11 $ 0.03 $ 0.25 $ 0.02
========= ========= ========= =========
Diluted earnings per share $ 0.11 $ 0.03 $ 0.24 $ 0.02
========= ========= ========= =========
Weighted average shares
Basic 53,874 53,614 53,756 53,616
========= ========= ========= =========
Diluted 54,835 54,813 54,760 54,738
========= ========= ========= =========
See notes to Condensed Consolidated Financial Statements
4
THE YANKEE CANDLE COMPANY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
For the Twenty-Six Weeks Ended
------------------------------
June 29, June 30,
2002 2001
-------- --------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 13,385 $ 1,245
Adjustments to reconcile net income to net cash from
operating activities:
Depreciation and amortization 8,258 6,629
Impairment -- 2,124
Unrealized loss on marketable securities 14 10
Non-cash stock compensation 258 247
Deferred taxes 6,000 6,000
Gain on disposal of fixed assets and classic vehicles (176) (55)
Changes in assets and liabilities:
Accounts receivable-net 6,122 2,747
Inventory (16,364) (4,459)
Prepaid expenses and other assets (5,324) (8,510)
Accounts payable 3,019 (5,096)
Accrued expenses and other liabilities (15,781) (12,522)
-------- --------
NET CASH FROM OPERATING ACTIVITIES (589) (11,640)
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (13,146) (14,707)
Investments in marketable securities (298) (129)
Proceeds from sale of fixed assets and classic vehicles 1,519 187
Proceeds from sale of marketable securities 263 --
-------- --------
NET CASH FROM INVESTING ACTIVITIES (11,662) (14,649)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock on option exercises 695 --
Net borrowings (repayments) under bank credit agreements and other 18,980 33,030
Principal payments on long-term debt (30,500) (15,000)
Payments for redemption of common stock -- (764)
-------- --------
NET CASH FROM FINANCING ACTIVITIES (10,825) 17,266
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH 42 (57)
-------- --------
NET DECREASE IN CASH AND CASH EQUIVALENTS (23,034) (9,080)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 30,531 13,297
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 7,497 $ 4,217
======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 2,296 $ 7,423
Income taxes 21,287 14,077
Capital lease obligations incurred 144 --
See notes to Condensed Consolidated Financial Statements
5
THE YANKEE CANDLE COMPANY, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(in thousands, except per share data)
(Unaudited)
1. Basis Of Presentation
The unaudited interim condensed consolidated financial statements of The Yankee
Candle Company, Inc. and its subsidiaries (the "Company") have been prepared in
accordance with accounting principles generally accepted in the United States of
America ("generally accepted accounting principles"). The financial information
included herein is unaudited; however, in the opinion of management such
information reflects all adjustments (consisting of normal recurring accruals)
necessary for a fair presentation of financial position, results of operations,
cash flows and comprehensive income for such periods. All intercompany
transactions and balances have been eliminated. The results of operations for
the interim periods are not necessarily indicative of the results to be expected
for the full fiscal year ending December 28, 2002.
Certain information and disclosures normally included in the notes to
consolidated financial statements have been condensed or omitted as permitted by
the rules and regulations of the Securities and Exchange Commission, although
the Company believes the disclosure is adequate to make the information
presented not misleading. The accompanying unaudited condensed financial
statements should be read in conjunction with the audited consolidated financial
statements of the Company for the year ended December 29, 2001 included in the
Company's Annual Report on Form 10-K.
In August 2001, Statement of Financial Accounting Standards ("SFAS") No. 144,
"Accounting for the Impairment or Disposal of Long-Lived Assets" was issued.
This statement amends the provisions of SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" and
Accounting Principles Board No. 30, "Reporting Results of Operations - Reporting
the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions." This statement, which
excludes goodwill from its scope, establishes the methodology to be used for
evaluating (i) long-lived assets to be held and used, (ii) long-lived assets to
be disposed of other than by sale, and (iii) long-lived assets to be disposed of
by sale, for both ongoing and discontinued operations. In addition, SFAS No. 144
broadens the treatment of discontinued operations to include components of an
entity rather than just segments of a business. SFAS No. 144 was adopted by the
Company in the first quarter of fiscal 2002, and did not have any impact on our
financial position and results of operations.
2. Inventories
Inventories are stated at the lower of cost or market on a last-in first-out
("LIFO") basis.
The components of inventory were as follows:
June 29, December 29,
2002 2001
-------- --------
Finished goods $ 35,302 $ 19,523
Work-in-process 249 275
Raw materials and
packaging 5,254 4,485
-------- --------
40,805 24,283
Less LIFO reserve (603) (603)
-------- --------
$ 40,202 $ 23,680
======== ========
3. Income Taxes
The Company's effective tax rate in the thirteen and twenty-six weeks ended June
29, 2002 and June 30, 2001 was 39%. The Company provides for income taxes at the
end of each interim period based on the estimated effective tax rate for a full
fiscal year.
6
4. Earnings Per Share
Under SFAS No. 128, the Company provides dual presentation of earnings per share
("EPS") on a basic and diluted basis. The computation of basic earnings per
share is based on the weighted average number of common shares outstanding
during the period. The computation of diluted earnings per share includes the
dilutive effect of common stock equivalents consisting of certain shares subject
to stock options and certain contingently returnable shares. The number of
common stock equivalents which could have diluted basic earnings per share, that
were not included in the computation of diluted earnings per share because to do
so would have been antidilutive, was 193 for the thirteen and twenty-six weeks
ended June 30, 2001 and none for the thirteen and twenty-six weeks ended June
29, 2002. The following summarizes the effects of the assumed issuance of
dilutive securities on weighted-average shares.
Thirteen Weeks Ended Twenty-Six Weeks Ended
June 29, June 30, June 29, June 30,
2002 2001 2002 2001
------ ------ ------ ------
Weighted average basic shares
outstanding 53,874 53,614 53,756 53,616
Contingently returnable
shares and shares issuable
pursuant to stock option
grants 961 1,199 1,004 1,122
------ ------ ------ ------
Weighted average diluted
shares outstanding 54,835 54,813 54,760 54,738
====== ====== ====== ======
5. Comprehensive income
Comprehensive income includes all changes in equity during the period. It has
two components: net income and other comprehensive income (loss).
Comprehensive income, net of related tax effects, is as follows:
Thirteen Weeks Ended Twenty-Six Weeks Ended
June 29, June 30, June 29, June 30,
2002 2001 2002 2001
------- ------- ------- -------
Net income $ 5,877 $ 1,425 $13,385 $ 1,245
Other comprehensive income
(loss):
Translation adjustment 364 (50) 272 (362)
------- ------- ------- -------
Total other comprehensive income
(loss) 364 (50) 272 (362)
------- ------- ------- -------
Comprehensive income $ 6,241 $ 1,375 $13,657 $ 883
======= ======= ======= =======
Accumulated other comprehensive loss reported on the Company's Condensed
Consolidated Balance Sheets consists of foreign currency translation
adjustments.
7
6. Segment Information
The Company has segmented its operations in a manner that reflects how its chief
operating decision-maker (the "CEO") currently reviews the results of the
Company and its subsidiaries' businesses. The Company has two reportable
segments - retail and wholesale. The identification of these segments results
from management's recognition that while the product produced is similar, the
type of customer for the product and services and the methods used to distribute
the product are different.
The CEO evaluates both its retail and wholesale operations based on an
"operating earnings" measure. Such measure gives recognition to specifically
identifiable operating costs such as cost of sales and selling expenses.
Administrative charges are generally not allocated to specific operating
segments and are accordingly reflected in the unallocated/corporate/other
category. Other components of the statement of operations, which are classified
below operating income, are also not allocated by segments. The Company does not
account for or report assets, capital expenditures or depreciation and
amortization by segment to the CEO.
Balance per
Condensed
Thirteen Weeks Unallocated/ Consolidated
Ended Corporate/ Statements of
June 29, 2002 Retail Wholesale Other Operations
- ------------- ------ --------- ----- ----------
Sales $41,067 $40,229 $ - $81,296
Gross profit 24,649 18,908 - 43,557
Operating margin 4,744 16,361 (10,371) 10,734
Unallocated costs - - (1,100) (1,100)
Income before provision for - - - 9,634
income taxes
Balance per
Condensed
Thirteen Weeks Unallocated/ Consolidated
Ended Corporate/ Statements of
June 30, 2001 Retail Wholesale Other Operations
- ------------- ------ --------- ----- ----------
Sales $34,114 $28,116 $ - $62,230
Gross profit 20,018 12,080 - 32,098
Operating margin 4,912 10,029 (9,654) 5,287
Unallocated costs - - (2,951) (2,951)
Income before provision for - - - 2,336
income taxes
Balance per
Condensed
Twenty-Six Weeks Unallocated/ Consolidated
Ended Corporate/ Statements of
June 29, 2002 Retail Wholesale Other Operations
- ------------- ------ --------- ----- ----------
Sales $83,216 $86,264 $ - $169,480
Gross profit 50,302 39,330 - 89,632
Operating margin 11,865 34,095 (21,565) 24,395
Unallocated costs - - (2,453) (2,453)
Income before provision for - - - 21,942
income taxes
Balance per
Condensed
Twenty-Six Weeks Unallocated/ Consolidated
Ended Corporate/ Statements of
June 30, 2001 Retail Wholesale Other Operations
- ------------- ------ --------- ----- ----------
Sales $68,871 $68,679 $ - $137,550
Gross profit 40,845 28,558 - 69,403
Operating margin 10,775 24,296 (26,845) 8,226
Unallocated costs - - (6,184) (6,184)
Income before provision for - - - 2,042
income taxes
8
7. Restructuring Charge
On February 14, 2001, the Company announced plans to consolidate and restructure
its distribution, manufacturing and supply chain operations. The Company's Form
10-K for the fifty-two weeks ended December 29, 2001 disclosed the principal
components of this restructuring plan. An analysis of the activity within the
restructuring reserve since December 29, 2001 is as follows:
For the thirteen weeks ended For the thirteen weeks ended
March 30, 2002 June 29, 2002
------------------------------------------ ------------------------
Reserve as of Reserve as of Reserve as of
December 29, 2001 Costs paid March 30, 2002 Costs paid June 29, 2002
------ ------ ------ ------ ------
Occupancy $1,854 $ 254 $1,600 $ 202 $1,398
Employee related 331 73 258 71 187
------ ------ ------ ------ ------
Total $2,185 $ 327 $1,858 $ 273 $1,585
====== ====== ====== ====== ======
During the thirteen weeks ended June 29, 2002, we were successful in subletting
the facility covered under the "Occupancy" heading for the remaining lease term.
Management believes that the remaining reserve at June 29, 2002 appropriately
reflects the Company's lease commitment exposure in light of the sub-lease
arrangement and that the total reserve is adequate and not excessive.
8. New Accounting Pronouncements
In July 2002, SFAS No. 146 "Accounting for Costs Associated with Exit or
Disposal Activities" was issued. The standard requires companies to recognize
costs associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan. It is to be
implemented for restructuring or disposal activities occurring after December
31, 2001. The Company's fiscal 2001 restructuring activities, as described in
Note 7, occurred prior to the effective date of SFAS No. 146 and were therefore
accounted for under previously promulgated accounting guidance then in effect -
specifically, EITF Consensus No. 94-3 "Liability Recognition for certain
Employee Termination Benefits and Other Costs to Exit an Activity."
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" discusses our consolidated financial statements, which have been
prepared in accordance with accounting principles generally accepted in the
United States of America. The preparation of these financial statements requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. On an on-going basis, management evaluates
its estimates and judgements, including those related to inventories,
restructuring costs, bad debts, intangible assets, income taxes, debt service
and contingencies and litigation. Management bases its estimates and judgements
on historical experience and on various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis for
making judgements about operating results and the carrying values of assets and
liabilities that are not readily apparent from other sources. Actual results may
differ from these estimates under different assumptions or conditions.
Management believes the following critical accounting policies, among others,
involve its more significant judgements and estimates and are therefore
particularly important to an understanding of our results of operations and
financial position.
As described in the Notes to the Condensed Consolidated Financial Statements, we
sell our products both directly to retail customers and through wholesale
channels. Revenue from the sale of merchandise to retail customers is recognized
at the time of sale, while revenue from wholesale customers is recognized when
shipped. Customers, be they retail or wholesale, do have the right to return
product to us in certain limited situations. Such rights of return have not
precluded revenue recognition because we have a long history with such returns,
which we use in constructing a reserve. This reserve, however, is subject to
change. In addition to returns, we bear credit risk relative to our wholesale
customers. We have provided a reserve for bad debts in our financial statements
based on our estimates of the creditworthiness of our customers. However, this
estimate is also subject to change.
9
We write down our inventory for estimated obsolescence or unmarketable inventory
equal to the difference between the cost of inventory and the estimated market
value, based upon assumptions about future demand and market conditions. If
actual future demand or market conditions are less favorable than those
projected by management, additional inventory write-downs may be required. In
addition, our inventory is stated at the lower of cost or market on a last-in
first-out ("LIFO") basis. Fluctuations in inventory levels along with the cost
of raw materials could impact the carrying value of our inventory.
We have a significant deferred tax asset recorded on our financial statements.
This asset arose at the time of our recapitalization in 1998 and is, in essence,
a future tax deduction for us. The recoverability of this future tax deduction
is dependent upon our future profitability. We have made an assessment that this
asset is likely to be recovered and is appropriately reflected on the balance
sheet. Should we find that we are not able to utilize this deduction in the
future, we would have to record a reserve for all or a part of this asset, which
would adversely affect our operating results.
In fiscal 2001, we closed our distribution facility in Utah and recorded a
restructuring charge. Part of the restructuring charge related to the lease
commitment that we have through 2005. In connection with the restructuring, we
did not record the entire lease commitment as a liability because we believed we
would be able to sublet the facility. During the thirteen weeks ended June 29,
2002, we were successful in subletting the facility for the remaining lease
term. Management believes that the remaining reserve at June 29, 2002 is
adequate and not excessive.
Performance Measures
We measure the performance of our retail and wholesale segments through a
segment margin calculation, which specifically identifies not only gross profit
on the sales of products through the two channels but also costs and expenses
specifically related to each segment.
Fluctuations in Quarterly Operating Results
We have experienced, and may experience in the future, fluctuations in our
quarterly operating results. There are numerous factors that can contribute to
these fluctuations; however, the principal factors have been seasonality and new
store openings.
Seasonality. We have historically realized higher revenues and operating income
in our fourth quarter, particularly in our retail business which is becoming a
larger portion of our sales. We believe that this has been due primarily to
increased sales in the giftware industry during the holiday season of the fourth
quarter.
New Store Openings. The timing of our new store openings may also have an impact
on our quarterly results. First, we incur certain one-time expenses related to
opening each new store. These expenses, which consist primarily of salaries,
supplies and marketing costs, are expensed as incurred. Second, most store
expenses vary proportionately with sales, but there is a fixed cost component.
This typically results in lower store profitability when a new store opens
because new stores generally have lower sales than mature stores. Due to both of
these factors, during periods when new store openings as a percentage of the
base are higher, operating profit may decline in dollars and/or as a percentage
of sales. As the overall store base matures, the fixed cost component of selling
expenses is spread over an increased level of sales, resulting in a decrease in
selling and other expenses as a percentage of sales.
RESULTS OF OPERATIONS
Sales
Sales increased 30.6% to $81.3 million for the thirteen weeks ended June 29,
2002 from $62.2 million for the thirteen weeks ended June 30, 2001; and
increased 23.2% to $169.5 million for the twenty-six weeks ended June 29, 2002
from $137.6 million for the twenty-six weeks ended June 30, 2001.
Wholesale sales increased 43.1% to $40.2 million for the thirteen weeks ended
June 29, 2002 from $28.1 million for the thirteen weeks ended June 30, 2001; and
increased 25.6% to $86.3 million for the twenty-six weeks ended June 29, 2002
from $68.7 million for the twenty-six weeks ended June 30, 2001. The increase in
wholesale sales was primarily due to an increase in sales to existing customers
and increasing the number of wholesale locations.
Retail sales increased 20.4% to $41.1 million for the thirteen weeks ended June
29, 2002 from $34.1 million for the thirteen weeks ended June 30, 2001; and
increased 20.8% to $83.2 million for the twenty-six weeks ended June 29, 2002
from $68.9 million for the twenty-six weeks ended June 29, 2001. This growth was
achieved by increasing the number of retail stores and increasing sales in
catalog and Internet operations. There were 218 retail stores open as of
10
June 29, 2002 compared to 157 retail stores open as of June 29, 2001 and 192
retail stores open as of December 29, 2001. Comparable store and catalog and
Internet sales decreased 2% for the quarter ended June 29, 2002 and decreased 1%
for the twenty-six weeks ended June 29, 2002. Retail comparable store sales
decreased 5% for both the thirteen weeks and the twenty-six weeks ended June 29,
2002. There were 156 retail stores included in the comparable store base as of
June 29, 2002.
Gross Profit
Gross profit increased 35.7% to $43.6 million for the thirteen weeks ended June
29, 2002 from $32.1 million for the thirteen weeks ended June 30, 2001; and
increased 29.1% to $89.6 million for the twenty-six weeks ended June 29, 2002
from $69.4 million for the twenty-six weeks ended June 30, 2001. As a percentage
of sales, gross profit increased to 53.6% for the thirteen weeks ended June 29,
2002 from 51.6% for the thirteen weeks ended June 30, 2001; and increased to
52.9% for the twenty-six weeks ended June 29, 2002 from 50.5% for the twenty-six
weeks ended June 30, 2001. The increase in the gross profit dollars in both
periods was primarily attributable to the increase in sales and more efficient
supply chain operations. The improvement in gross profit rate for the thirteen
weeks ended June 29, 2002 compared to the thirteen weeks ended June 30, 2001 was
primarily the result of improved productivity in supply chain operations. The
improvement in gross profit rate for the twenty-six weeks ended June 29, 2002
compared to the twenty-six weeks ended June 30, 2001 was primarily the result of
improved productivity in supply chain operations in 2002 and to supply chain
inefficiencies in early 2001 that were not experienced in the first six months
of 2002.
Selling Expenses
Selling expenses increased 30.8% to $22.5 million for the thirteen weeks ended
June 29, 2002 from $17.2 million for the thirteen weeks ended June 30, 2001; and
increased 27.2% to $43.7 million for the twenty-six weeks ended June 29, 2002
from $34.3 million for the twenty-six weeks ended June 30, 2001. These expenses
are related to both wholesale and retail operations and consist of payroll,
occupancy, advertising and other operating costs, as well as preopening costs,
which are expensed as incurred. As a percentage of sales, selling expenses were
27.6% for both the thirteen weeks ended June 29, 2002 and the thirteen weeks
ended June 30, 2001; and increased to 25.8% for the twenty-six weeks ended June
29, 2002 from 25.0% for the twenty-six weeks ended June 30, 2001. The increase
in selling expense in dollars for the thirteen weeks ended June 29, 2002 and in
dollars and as a percentage of sales for twenty-six weeks ended June 29, 2002
was primarily related to the continued growth in the number of retail stores,
from 157 as of June 30, 2001 to 218 as of June 29, 2002. The increase in selling
expense as a percentage of sales is also explained by the heavy weighting of
immature stores. Immature stores are generally stores that are less than four
years old. Immature stores typically generate higher selling expense as a
percentage of sales than stores that have been open for more than four years
since fixed costs, as a percent of sales, are higher during the early sales
maturation period. Excluding the sales and selling expenses of our most immature
stores, the 2001 and 2002 store classes, from the thirteen and twenty-six weeks
ended June 29, 2002, and the sales and selling expenses of the 2001 store class
from the thirteen and twenty-six weeks ended June 30, 2001, selling expense
declined as a percent of sales.
Segment Profitability
Segment profitability is sales less cost of sales and selling expenses. Segment
profitability for our wholesale operations, including Europe, was $16.4 million,
or 40.7% of wholesale sales, for the thirteen weeks ended June 29, 2002 compared
to $10.0 million, or 35.7% of wholesale sales, for the thirteen weeks ended June
30, 2001. Segment profitability for our retail operations was $4.7 million, or
11.6% of retail sales, for the thirteen weeks ended June 29, 2002 compared to
$4.9 million, or 14.4% of retail sales, for the thirteen weeks ended June 30,
2001. The increase in wholesale segment profitability for the thirteen weeks
ended June 29, 2002 was primarily attributable to increased wholesale sales and
improved productivity in supply chain operations. The decrease in retail segment
profitability was primarily attributable to a decline in comparable store sales
and operating profit in catalog and Internet operations and to an increase in
preopening expenses associated with new store openings, partially offset by
improved productivity in supply chain operations. We opened 16 new stores in the
thirteen weeks ended June 29, 2002 compared to three new stores opened in the
thirteen weeks ended June 30, 2001.
Segment profitability for our wholesale operations, including Europe, was $34.1
million, or 39.5% of wholesale sales, for the twenty-six weeks ended June 29,
2002 compared to $24.3 million, or 35.4% of wholesale sales, for the twenty-six
weeks ended June 30, 2001. Segment profitability for our retail operations was
$11.9 million, or 14.3% of retail sales, for the twenty-six weeks ended June 29,
2002 compared to $10.8 million, or 15.7% of retail sales, for the twenty-six
weeks ended June 30, 2001. The increase in wholesale segment profitability for
the twenty-six weeks ended June 29, 2002 was primarily attributable to increased
wholesale sales, improved productivity in supply chain operations and to supply
chain inefficiencies in early 2001 that were not experienced in the first six
months of 2002. The decrease in retail segment profitability as a percentage of
sales was primarily attributable to a decline in operating profit in catalog and
Internet operations and to an increase in preopening expenses associated with
new store openings. The increase in
11
retail segment profitability in dollars was primarily attributable to increased
retail sales, improved productivity in supply chain operations and to supply
chain inefficiencies in early 2001 that were not experienced in the first six
months of 2002. We opened 26 new stores in the twenty-six weeks ended June 29,
2002 compared to ten new stores opened in the twenty-six weeks ended June 30,
2001.
General And Administrative Expenses
General and administrative expenses, which consist primarily of
personnel-related costs, increased 7.4% to $10.4 million for the thirteen weeks
ended June 29, 2002 from $9.7 million for the thirteen weeks ended June 30,
2001; and increased 14.4% to $21.6 million for the twenty-six weeks ended June
29, 2002 from $18.9 million for the twenty-six weeks ended June 30, 2001. As a
percentage of sales, general and administrative expenses decreased to 12.8% for
the thirteen weeks ended June 29, 2002 from 15.5% for the thirteen weeks ended
June 30, 2001; and decreased to 12.7% for the twenty-six weeks ended June 29,
2002 from 13.7% for the twenty-six weeks ended June 30, 2001. The increase in
general and administrative expenses in dollars for the thirteen and twenty-six
weeks ended June 29, 2002 compared to the prior year periods ended June 30, 2001
was primarily attributable to occupancy expenses associated with our new
headquarters opened in May 2001, expense associated with the fiscal 2002 bonus
program and to headcount additions in the second half of 2001 and first half of
2002. The decrease in general and administrative expenses as a percentage of
sales for the thirteen and twenty-six weeks ended June 29, 2002 is primarily
attributable to the Company's leveraging of these expenses over a larger sales
base and its continued focus on expense control.
Restructuring Charge
On February 14, 2001, the Company announced plans to consolidate and restructure
its distribution, manufacturing and supply chain operations. The Company's Form
10-K for the fifty-two weeks ended December 29, 2001 disclosed the principal
components of this restructuring plan. An analysis of the activity within the
restructuring reserve since December 29, 2001 is as follows:
For the thirteen weeks ended For the thirteen weeks ended
March 30, 2002 June 29, 2002
------------------------------------------------ ---------------------------
Reserve as of Reserve as of Reserve as of
December 29, 2001 Costs paid March 30, 2002 Costs paid June 29, 2002
------ ------ ------ ------ ------
Occupancy $1,854 $ 254 $1,600 $ 202 $1,398
Employee
related 331 73 258 71 187
------ ------ ------ ------ ------
Total $2,185 $ 327 $1,858 $ 273 $1,585
====== ====== ====== ====== ======
During the thirteen weeks ended June 29, 2002, we were successful in subletting
the facility covered under the "Occupancy" heading for the remaining lease term.
Management believes that the remaining reserve at June 29, 2002 appropriately
reflects the Company's lease commitment exposure in light of the sub-lease
arrangement and that the total reserve is adequate and not excessive.
Net Other Expense
Net other expense was $1.1 million, or 1.4% of sales, for the thirteen weeks
ended June 29, 2002 compared to $3.0 million, or 4.7% of sales, for the thirteen
weeks ended June 30, 2001; and $2.5 million, or 1.5% of sales, for the
twenty-six weeks ended June 29, 2002 compared to $6.2 million, or 4.5% of sales,
for the twenty-six weeks ended June 30, 2001. The primary component of the
expense in each of these periods was interest expense, which was $1.2 million in
the thirteen weeks ended June 29, 2002 compared to $3.0 million in the thirteen
weeks ended June 30, 2001; and $2.5 million for the twenty-six weeks ended June
29, 2002 compared to $6.4 million for the twenty-six weeks ended June 30, 2001.
Interest expense in the thirteen weeks and the twenty-six weeks ended June 29,
2002 decreased when compared to the same periods in the prior year primarily due
to a reduction in the total debt outstanding from $175.5 million at June 30,
2001 to $103.5 million at June 29, 2002.
Provision For Income Taxes
The Company's effective tax rate for the thirteen and the twenty-six week
periods ended June 29, 2002 and June 30, 2001 was 39%. Management estimates that
such rate will remain in place for the entire year based on its current tax
structure.
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Liquidity And Capital Resources
Cash and cash equivalents decreased by $23.0 million compared to December 29,
2001. This decrease was primarily attributable to net cash used in investing
activities of $11.7 million and debt paydowns of $11.5 million. Capital
expenditures for the twenty-six weeks ended June 29, 2002, which are included in
investing activities, were $13.1 million, primarily related to the capital
requirements to open 26 new stores, investments in our new Home Store
located in our Flagship location in South Deerfield, Massachusetts, which opened
in the second quarter of 2002, and investments in manufacturing operations. Net
cash used in operating activities was $0.6 million, which included $21.3 million
of corporate income tax payments for fiscal 2001 and fiscal 2002.
As of June 29, 2002, we were in compliance with all covenants under our credit
facility. Available borrowings under the revolving credit facility were $113.5
million. See our most recent Annual Report on Form 10-K for a description of the
credit facility.
We opened twenty-six stores during the twenty-six weeks ended June 29, 2002 and
we expect to open approximately 19 additional stores during the next twenty-six
weeks of fiscal 2002.
We expect that the principal sources of funding for our planned store openings
and other working capital needs, capital expenditures and debt service
obligations will be a combination of our available cash and cash equivalents,
funds generated from operations, and borrowings under our credit facility. We
believe that our current funds and sources of funds will be sufficient to fund
our liquidity needs for at least the next 12 months. However, there are a number
of factors that may negatively impact our available sources of funds. The amount
of cash generated from operations will be dependent upon factors such as the
successful execution of our business plan and worldwide economic conditions. In
addition, borrowings under our credit facility are dependent upon our continued
compliance with the financial and other covenants contained therein.
NEW ACCOUNTING PRONOUNCEMENTS
In July 2002, SFAS No. 146 "Accounting for Costs Associated with Exit or
Disposal Activities" was issued. The standard requires companies to recognize
costs associated with exit or disposal activities when they are incurred rather
than at the date of a commitment to an exit or disposal plan. It is to be
implemented for restructuring or disposal activities occurring after December
31, 2001. The Company's fiscal 2001 restructuring activities, as described in
Note 7, occurred prior to the effective date of SFAS No. 146 and were therefore
accounted for under previously promulgated accounting guidance then in effect -
specifically, EITF Consensus No. 94-3 "Liability Recognition for certain
Employee Termination Benefits and Other Costs to Exit an Activity."
FUTURE OPERATING RESULTS
As referenced above, there are a number of factors that might cause our actual
results to differ significantly from the results reflected by the
forward-looking statements contained herein or which might adversely affect the
market price of our common stock. In addition to factors generally affecting the
political, economic and competitive conditions in the United States and abroad,
such factors include those set forth below.
IF WE FAIL TO GROW OUR BUSINESS AS PLANNED, OUR BUSINESS COULD SUFFER AND
FINANCIAL RESULTS COULD DECLINE; AS WE GROW IT WILL BE DIFFICULT TO MAINTAIN OUR
HISTORICAL GROWTH RATES.
We intend to continue to pursue a business strategy of increasing sales and
earnings by expanding our retail and wholesale operations both in the United
States and internationally. We intend to grow internally and not by acquisition.
In particular, our retail growth strategy depends in large part on our ability
to open new stores in both existing and new geographic markets. Since our
ability to implement our growth strategy successfully will be dependent in part
on factors beyond our control, including consumer preferences and our
competitive environment, we may not be able to achieve our planned growth or
sustain our financial performance. Our ability to anticipate changes in the
candle and giftware industries, and identify industry trends, will be critical
factors in our ability to remain competitive.
We expect that, as we grow, it will become more difficult to maintain our
historical growth rate, which could negatively impact our operating margins and
results of operations. New stores typically generate lower operating margin
contributions than mature stores because fixed costs, as a percentage of sales,
are higher and because preopening costs are fully expensed as incurred. In
addition, our retail sales generate lower margins than our wholesale sales. Our
wholesale business has grown by increasing sales to existing customers and by
adding new customers. If we are not able to continue this, our sales growth and
profitability could be adversely affected. In addition, if we do not effectively
manage our growth, we may experience problems such as the supply chain
inefficiencies that occurred in 2000 and early 2001 due to overstaffing in our
manufacturing and logistics operations. These inefficiencies were
13
corrected in 2001 through a workforce reduction and the closing of our Salt Lake
City distribution center, but resulted in a decline in our gross profit in the
last quarter of 2000 and a restructuring charge of $8.0 million in 2001. We
cannot assure that we will continue to grow at a rate comparable to our historic
growth rate or that our historic financial performance will continue as we grow.
WE FACE SIGNIFICANT COMPETITION IN THE GIFTWARE INDUSTRY. THIS COMPETITION COULD
CAUSE OUR REVENUES OR MARGINS TO FALL SHORT OF EXPECTATIONS, WHICH COULD
ADVERSELY AFFECT OUR FUTURE OPERATING RESULTS, FINANCIAL CONDITION AND LIQUIDITY
AND OUR ABILITY TO CONTINUE TO GROW OUR BUSINESS.
We compete generally for the disposable income of consumers with other producers
in the approximately $55 billion giftware industry. The giftware industry is
highly competitive with a large number of both large and small participants. Our
products compete with other scented and unscented candle and personal care
products and with other gifts within a comparable price range, like boxes of
candy, flowers, wine, fine soap and related merchandise. Our retail stores
compete with franchised candle store chains, specialty candle stores and gift
and houseware retailers. Some of our competitors are part of large, diversified
companies which have greater financial resources and a wider range of product
offerings than we do. This competitive environment could adversely affect our
future revenues and profits, financial condition and liquidity and our ability
to continue to grow our business.
A MATERIAL DECLINE IN CONSUMERS' DISCRETIONARY INCOME COULD CAUSE OUR SALES AND
INCOME TO DECLINE.
Our results depend on consumer spending, which is influenced by general economic
conditions and the availability of discretionary income. Accordingly, we may
experience declines in sales during economic downturns or during periods of
uncertainty like that which followed the terrorist attacks on the United States
or which result from the possibility of further terrorist attacks. Any material
decline in the amount of discretionary spending could have a material adverse
effect on our sales and income.
BECAUSE WE ARE NOT A DIVERSIFIED COMPANY AND ARE DEPENDENT UPON ONE INDUSTRY, WE
HAVE LESS FLEXIBILITY IN REACTING TO UNFAVORABLE CONSUMER TRENDS AND ADVERSE
ECONOMIC CONDITIONS AND BUSINESS CYCLES.
We rely primarily on the sale of premium scented candles and related products in
the giftware industry. In the event that sales of these products decline or do
not meet our expectations, we cannot rely on the sales of other products to
offset such a shortfall. As a significant portion of our expenses is comprised
of fixed costs, such as lease payments, our ability to decrease expenses in
response to adverse business conditions is limited in the short term. As a
result, unfavorable consumer trends, adverse economic conditions or changes in
the business cycle could have a material and adverse impact on our earnings.
IF WE LOSE OUR SENIOR EXECUTIVE OFFICERS, OUR BUSINESS COULD BE DISRUPTED AND
OUR FINANCIAL PERFORMANCE COULD SUFFER.
Our success is substantially dependent upon the retention of our senior
executive officers. If one or more of our senior executive officers become
unable or unwilling to participate in our business, our future business and
financial performance could be materially affected.
MANY ASPECTS OF OUR MANUFACTURING AND DISTRIBUTION FACILITIES ARE CUSTOMIZED FOR
OUR BUSINESS; AS A RESULT, THE LOSS OF ONE OF THESE FACILITIES WOULD DISRUPT OUR
OPERATIONS.
Approximately 80% of our sales are generated by products we manufacture at our
manufacturing facility in Whately, Massachusetts and we rely primarily on our
distribution facilities in South Deerfield, Massachusetts to distribute our
products. Because most of our machinery is designed or customized by us to
manufacture our products, and because we have strict quality control standards
for our products, the loss of our manufacturing facility, due to natural
disaster or otherwise, would materially affect our operations. Similarly, our
distribution facilities rely upon customized machinery, systems and operations,
the loss of which would materially affect our operations. Although our
manufacturing and distribution facilities are adequately insured, we believe it
would take up to twelve months to resume operations at a level equivalent to
current operations.
SEASONAL, QUARTERLY AND OTHER FLUCTUATIONS IN OUR BUSINESS, AND GENERAL INDUSTRY
AND MARKET CONDITIONS, COULD AFFECT THE MARKET PRICE OF OUR COMMON STOCK.
Our sales and operating results vary from quarter to quarter. We have
historically realized higher sales and operating income in our fourth quarter,
particularly in our retail business. We believe that this has been due primarily
to an increase in giftware industry sales during the holiday season of the
fourth quarter. As a result of this seasonality, we believe that quarter to
quarter comparisons of our operating results are not necessarily meaningful and
that these
14
comparisons cannot be relied upon as indicators of future performance. In
addition, we may also experience quarterly fluctuations in our sales and income
depending on various factors, including, among other things, the number of new
retail stores we open in a particular quarter, changes in the ordering patterns
of our wholesale customers during a particular quarter, and the mix of products
sold. Most of our operating expenses, such as rent expense, advertising and
promotional expense and employee wages and salaries, do not vary directly with
sales and are difficult to adjust in the short term. As a result, if sales for a
particular quarter are below our expectations, we might not be able to
proportionately reduce operating expenses for that quarter, and therefore a
sales shortfall could have a disproportionate effect on our operating results
for that quarter. Further, our comparable store sales from our retail business
in a particular quarter could be adversely affected by competition, economic or
other general conditions or our inability to execute a particular business
strategy. As a result of these factors, we may report in the future sales,
operating results or comparable store sales that do not match the expectations
of market analysts and investors. This could cause the trading price of our
common stock to decline. In addition, broad market and industry fluctuations may
adversely affect the price of our common stock, regardless of our operating
performance.
OUR TWO LARGEST STOCKHOLDERS, WHO ARE AFFILIATES OF FORSTMANN LITTLE & CO.,
EFFECTIVELY CONTROL US AND THEIR INTERESTS MAY CONFLICT WITH THOSE OF OTHER
STOCKHOLDERS.
Partnerships affiliated with Forstmann Little & Co. own approximately 40% of
our outstanding common stock and effectively control us. Accordingly, they are
able to:
- - influence the election of our entire board of directors and, until they no
longer own any shares of our common stock, they have the contractual right
to nominate two directors to our board of directors,
- - influence our management and policies, and
- - affect the outcome of any corporate transaction or other matter submitted
to our stockholders for approval, including mergers, consolidations and the
sale of all or substantially all of our assets, even where the transaction
is not in the best interests of all stockholders.
They may also be able to prevent or cause a change in control of Yankee Candle
and may be able to amend our Articles of Organization and By-Laws. The interests
of the Forstmann Little partnerships may conflict with the interests of the
other holders of common stock.
PROVISIONS IN OUR CORPORATE DOCUMENTS AND MASSACHUSETTS LAW COULD DELAY OR
PREVENT A CHANGE IN CONTROL OF YANKEE CANDLE.
Our Articles of Organization and By-Laws may discourage, delay or prevent a
merger or acquisition involving Yankee Candle that our stockholders may consider
favorable, by:
- - authorizing the issuance of preferred stock, the terms of which may be
determined at the sole discretion of the board of directors,
- - providing for a classified board of directors, with staggered three-year
terms, and
- - establishing advance notice requirements for nominations for election to
the board of directors or for proposing matters that can be acted on by
stockholders at meetings.
Massachusetts law may also discourage, delay or prevent someone from acquiring
or merging with us.
THE PLEDGE OF SUBSTANTIALLY ALL OF OUR ASSETS TO SECURE OUR OBLIGATIONS UNDER
OUR CREDIT AGREEMENT MAY HINDER OUR ABILITY TO OBTAIN ADDITIONAL DEBT FINANCING
ON FAVORABLE TERMS.
We have pledged substantially all of our assets to secure our obligations under
our credit agreement. Subject to restrictions contained in our credit agreement,
we may incur additional indebtedness in the future. However, due to the pledge
of our assets, a creditor lending to us on a senior unsecured basis will be
effectively subordinated to our bank lenders. This could limit our ability to
obtain, or obtain on favorable terms, and may make it more costly to obtain
additional debt financing outside of our credit agreement. While we do not
expect to require additional financing prior to the expiration of our credit
agreement, if we needed to do so the inability to obtain additional financing on
favorable terms could adversely impact our results of operations and inhibit our
ability to realize our growth strategy.
WE DO NOT CURRENTLY INTEND TO PAY DIVIDENDS ON OUR CAPITAL STOCK.
We have never paid a cash dividend on our common stock as a public company and
we do not intend to pay any cash dividends in the foreseeable future. Instead we
intend to retain earnings for the future operation of our business. Any
determination to pay dividends in the future will be at the discretion of our
board of directors and will be dependent upon our results of operations, our
financial condition, contractual and legal restrictions and other factors deemed
15
relevant by our board of directors. Under the terms of our existing credit
agreement, we may not declare or pay dividends on our common stock unless our
ratio of consolidated total debt to consolidated EBITDA is less than or equal to
2:1 or our aggregate principal amount of loans and letters of credit outstanding
is less than $100 million. Although we meet this requirement, we do not
currently intend to pay dividends.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Our market risks relate primarily to changes in interest rates. We bear this
risk in our outstanding debt. At June 29, 2002, there was $103.5 million of debt
outstanding, which consisted of $67.0 million in term loans and $36.5 million
from our revolving credit facility. Because this debt carries a variable
interest rate pegged to market indices, our results of operations and cash flows
are exposed to changes in interest rates.
We buy a variety of raw materials for inclusion in our products. The only raw
material that we consider to be of a commodity nature is wax. Wax is a
petroleum-based product; however, its market price has not historically
fluctuated with the movement of oil prices. Rather, over the past five years wax
prices have moved with inflation.
At this point in time, our operations outside of the United States are
immaterial. Accordingly, we are not exposed to substantial risks arising from
foreign currency exchange rates.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not Applicable
Item 2. Changes in Securities and Use of Proceeds
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its 2002 Annual Meeting of Stockholders (the "Annual
Meeting") on June 12, 2002. At the Annual Meeting, the following
matters were submitted to a vote of the stockholders and the following
actions were taken with respect thereto:
The stockholders elected Sandra J. Horbach, Emily Woods and Craig W.
Rydin as Class III directors of the Company, to serve until the 2005
Annual Meeting or until their successors are duly elected and
qualified. According to the report of the Inspector of Election,
holders of 51,453,585 shares of common stock voted to elect Ms.
Horbach. Holders of 51,430,369 shares of common stock voted to elect
Ms. Woods. Holders of 49,484,252 shares of common stock voted to elect
Mr. Rydin. In addition to Ms. Horbach, Ms. Woods and Mr. Rydin, the
following directors currently hold office for terms which extend beyond
the date of the Annual Meeting: Theodore J. Forstmann, Dale F. Frey,
Michael J. Kittredge, Jamie C. Nicholls, Michael S. Ovitz, Ronald L.
Sargent and Robert R. Spellman.
The stockholders voted to ratify the appointment of Deloitte & Touche
L.L.P. as the Company's independent auditors for the current fiscal
year by a vote of 51,190,495 shares of common stock in favor, 299,971
shares of common stock against, and 9,514 shares of common stock
abstaining.
No other matters were submitted to a vote of the stockholders at the
Annual Meeting.
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 99.1 Certification of Craig W. Rydin Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002.
16
Exhibit 99.2 Certification of Robert R. Spellman Pursuant to
18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002.
(b) Reports on Form 8-K
On April 1, 2002, in connection with its filing of a
Registration Statement on Form S-3 (SEC File No. 333-83368),
as amended, the Company filed a Report on Form 8-K in order to
disclose certain financial information provided in the
Registration Statement, including Management's updated
expectations regarding the Company's financial performance for
the first fiscal quarter of 2002.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
THE YANKEE CANDLE COMPANY, INC.
Date: August 13, 2002 By: /s/ Robert R. Spellman
Senior Vice President, Finance
and Chief Financial Officer
(Principal Financial Officer)
17