UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

 

FORM 10-Q

(Mark One)

 

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

 

                For the quarterly period ended October 31, 2004

 

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)

 

 

 

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.     Yeso     Noý  See Explanatory Note on Page 3

 

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

 

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

 

40,901,811 Common Shares as of November 30, 2004

 

BLYTH, INC.

 

INDEX

 

 

Part I.     Financial Information
	Item 1.     Financial Statements:
		Condensed Consolidated Balance Sheets
		Condensed Consolidated Statements of Earnings
		Condensed Consolidated Statements of Stockholders’ Equity
		Condensed Consolidated Statements of Cash Flows
		Notes to Condensed Consolidated Financial Statements
	Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations
	Item 3.     Quantitative and Qualitative Disclosures About Market Risk
	Item 4.     Controls and Procedures
Part II.     Other Information
	Item 1.     Legal Proceedings
	Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds
	Item 3.     Defaults upon Senior Securities
	Item 4.     Submission of Matters to a Vote of Security Holders
	Item 5.     Other Information
	Item 6.     Exhibits and Reports on Form 8–K
Signatures

 

 

2

 

Explanatory Note

 

As of January 31, 2004, we revised our reporting segments based on Statement of Financial Accounting Standards No. 131, “Disclosures about Segments of an Enterprise and Related Information”. This revision of segments had the related effect of requiring changes in our reporting units for purposes of goodwill impairment reviews under Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”), retroactive to the February 1, 2002 adoption date. 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. These impairment reviews indicated the need to record additional impairment charges as of the February 1, 2002 adoption of SFAS 142. On August 4, 2004, we filed amendments on Form 10–Q/A restating our Consolidated Financial Statements for the interim periods ended April 30, July 31, and October 31, 2003 to reflect these changes. Our predecessor independent public accountants had performed the reviews that we were required to have performed by Section 10–01(d) of Regulation S–X of our Consolidated Financial Statements as included in our Quarterly Reports on Form 10–Q as initially filed for the interim periods ended April 30, July 31, and October 31, 2003. The amendments filed on Form 10-Q/A were filed after our termination of our predecessor independent public accountants. The Consolidated Financial Statements included in our amended quarterly reports were not reviewed by any independent public accountant, and such amended quarterly reports are therefore not considered fully compliant with the requirements of the Exchange Act and the rules and regulations of the Commission. In addition, because the financial statements as of April 30, July 31, and October 31, 2003 and for the periods then ended as set forth in our Quarterly Reports for the periods ended April 30 and July 31, 2004 and in this Quarterly Report have not been the subject of such a review, these Quarterly Reports on Form 10–Q are also not considered to be compliant with the Exchange Act and the rules and regulations of the Commission. We have had preliminary discussions with and plan to re-engage our predecessor independent public accountants to perform such a review, and we presently expect those reviews to be completed by our predecessor independent public accountants prior to January 31, 2005, although there can be no assurance that they will be able to do so. We do not expect that the reviews of our amended quarterly reports or our quarterly reports filed in fiscal 2005 will require any change to the Consolidated Financial Statements.

 

In light of the absence of the reviews, the Section 906 certifications of our Chief Executive Officer and Chief Financial Officer required by 18 U.S.C. § 1350 and attached as Exhibits 32.1 and 32.2 to this Quarterly Report on Form 10–Q have been qualified by reference to this Item.

 

Deloitte & Touche LLP, our current independent public accountants, have performed the review required by Section 10–01(d) of Regulation S–X of our Condensed Consolidated Financial Statements for all interim periods in our current fiscal year (but not for any periods in fiscal 2004) as included in our quarterly reports for the interim periods ended April 30, July 31, and October 31, 2004.

 

We intend to file amendments to our fiscal 2004 Form 10-Q/A filings to reflect the fact that the financial information included in those reports was not reviewed by any independent public accountant. We also intend to file amendments to our fiscal 2005 Form 10-Q filings for the interim periods ended April 30 and July 31, 2004 to reflect the fact that the financial information with respect to fiscal 2004 was not reviewed by any independent public accountant. At the appropriate time, we intend to file additional amendments to those amended reports, and to this Report on Form 10-Q, to reflect the completion of the review.

 

The staff of the Commission may take the position that because certain information relating to our prior fiscal year in this Quarterly Report on Form 10–Q, our quarterly reports filed for the periods ended April 30 and July 31, 2004, and the amended quarterly reports have 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 be viewed as having made all required filings until the reports are amended to reflect the required review, and even then that the filings were not filed timely. If so, the Company would 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. Second, the safe harbor from registration contained in Rule 144 under the Securities Act of 1933 may be unavailable to our executive officers, directors and other affiliates wishing to sell our securities. We have instructed such persons not to resell securities in reliance upon Rule 144 until otherwise advised. As a precautionary matter, to be consistent with these instructions, on the cover page of this filing, we have checked the box that indicates that we have not made all filings required in the last 90 days.

 

3

 

Part I.   FINANCIAL  INFORMATION

Item I.   FINANCIAL STATEMENTS

 

BLYTH, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

(In thousands, except share and per share data)		October 31, 2004			January 31, 2004
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	45,437		$		229,726
Accounts receivable, less allowance for doubtful receivables of $4,292 and $4,470, respectively		214,191			104,502
Inventories		267,537			208,581
Prepaid and other		28,105			40,302
Assets held for sale		6,597			9,437
Deferred income taxes		14,480			14,191
Total current assets		576,347			606,739
Property, plant and equipment, at cost:
Less accumulated depreciation of $247,939 and $210,961, respectively		250,567			260,497
Other assets:
Investments		3,616			3,510
Goodwill		245,129			204,093
Other intangible assets, net of accumulated amortization of $3,225 and $1,500, respectively		39,875			41,600
Deposits and other assets		12,526			11,524
		301,146			260,727
Total assets		$	1,128,060		$		1,127,963
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Bank lines of credit		$	144,254		$	13,621
Current maturities of long–term debt		4,448			4,522
Accounts payable		70,656			78,407
Dividends payable		7,771			—
Liabilities associated with assets held for sale		—			508
Accrued expenses		110,848			97,395
Income taxes		—			11,746
Total current liabilities		337,977			206,199
Deferred income taxes		35,425			33,773
Long–term debt, less current maturities		271,158			275,743
Minority interest and other		24,117			23,278
Commitments and contingencies		—			—
Stockholders' equity:
Preferred stock – authorized 10,000,000 shares of $0.01 par value; no shares issued and outstanding		—			—
Common stock – authorized 100,000,000 shares of $0.02 par value; issued 50,355,227 shares and 49,975,502 shares, respectively		1,007			999
Additional contributed capital		117,767			107,965
Retained earnings		612,006			570,171
Accumulated other comprehensive income		13,198			15,224
Treasury stock, at cost, 9,453,416 shares and 4,345,100 shares, respectively