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SECURITIES AND EXCHANGE COMMISSIONWashington, DC 20549

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FORM 10-Q

Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For
the quarterly period ended:March 29, 2003

Commission
File Number:001-15023

THE YANKEE CANDLE COMPANY, INC.(Exact name of registrant as specified in its charter)

MASSACHUSETTS(State or other jurisdiction of
incorporation or organization)

04 259 1416(I.R.S. Employer Identification No.)


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 ý    No o

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

The
registrant had 54,366,960 shares of Common Stock, par value $0.01, outstanding as of May 8, 2003.

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THE YANKEE CANDLE COMPANY, INC.

FORM 10-QQuarter Ended March 29, 2003

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 ("Yankee Candle", 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. 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." We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or
otherwise.

Table of Contents

|Item                             |  |                                                                                                                |  | Page
|-------------------------------- |  | -------------------------------------------------------------------------------------------------------------- |  | ----
|PART I.    Financial Information |  |                                                                                                               
|Item 1.                          |  | Condensed Consolidated Financial Statements                                                                    |  | 3   
|                                 |  | Condensed Consolidated Balance Sheets as of March 29, 2003 and December 28, 2002                               |  | 3   
|                                 |  | Condensed Consolidated Statements of Operations for the Thirteen Weeks Ended March 29, 2003 and March 30, 2002 |  | 4   
|                                 |  | Condensed Consolidated Statements of Cash Flows for the Thirteen Weeks Ended March 29, 2003 and March 30, 2002 |  | 5   
|                                 |  | Notes to Condensed Consolidated Financial Statements                                                           |  | 6   
|Item 2.                          |  | Management's Discussion and Analysis of Financial Condition and Results of Operations                          |  | 10  
|Item 3.                          |  | Quantitative and Qualitative Disclosures About Market Risk                                                     |  | 19  
|Item 4.                          |  | Controls and Procedures                                                                                        |  | 19  
|PART II.    Other Information    |  |                                                                                                               
|Item 1.                          |  | Legal Proceedings                                                                                              |  | 20  
|Item 2.                          |  | Changes in Securities and Use of Proceeds                                                                      |  | 20  
|Item 3.                          |  | Defaults Upon Senior Securities                                                                                |  | 20  
|Item 4.                          |  | Submission of Matters to a Vote of Security Holders                                                            |  | 20  
|Item 5.                          |  | Other Information                                                                                              |  | 20  
|Item 6.                          |  | Exhibits and Reports on Form 8-K                                                                               |  | 20  
|Signatures                       |  | 21                                                                                                            

2

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PART I. Financial Information

Item 1. Condensed Consolidated Financial Statements

THE YANKEE CANDLE COMPANY, INC. AND SUBSIDIARIES  CONDENSED CONSOLIDATED BALANCE SHEETS  (in thousands)

|                                           |                                                                                     | March 29,
2003 |         | December 28,
2002 |  
|------------------------------------------ | ----------------------------------------------------------------------------------- | -------------- | ------- | ----------------- | -
|
|ASSETS                                     |                                                                                     |                |         |                   |  
|CURRENT ASSETS:                            |                                                                                     |                |         |                   |  
|                                           | Cash and cash equivalents                                                           |                | $       | 5,463             |  
|                                           | Accounts receivable, less allowance of $325 at March 29, 2003 and December 28, 2002 |                |         | 28,102            |  
|                                           | Inventory                                                                           |                |         | 41,869            |  
|                                           | Prepaid expenses and other current assets                                           |                |         | 6,802             |  
|                                           | Deferred tax assets                                                                 |                |         | 2,434             |  
|                                           |                                                                                     |                |         |                   |  
|TOTAL CURRENT ASSETS                       |                                                                                     |                | 84,670  |                   |  
|PROPERTY, PLANT AND EQUIPMENT-NET          |                                                                                     |                | 110,853 |                   |  
|MARKETABLE SECURITIES                      |                                                                                     |                | 1,133   |                   |  
|DEFERRED FINANCING COSTS                   |                                                                                     |                | 1,423   |                   |  
|DEFERRED TAX ASSETS                        |                                                                                     |                | 110,144 |                   |  
|OTHER ASSETS                               |                                                                                     |                | 486     |                   |  
|                                           |                                                                                     |                |         |                   |  
|TOTAL ASSETS                               |                                                                                     | $              | 308,709 |                   | $
|                                           |                                                                                     |                |         |                   |  
|LIABILITIES AND STOCKHOLDERS' EQUITY       |                                                                                     |                |         |                   |  
|CURRENT LIABILITIES:                       |                                                                                     |                |         |                   |  
|                                           | Accounts payable                                                                    |                |         | 18,274            |  
|                                           | Accrued payroll                                                                     |                |         | 8,756             |  
|                                           | Accrued income taxes                                                                |                |         | 450               |  
|                                           | Other accrued liabilities                                                           |                |         | 8,995             |  
|                                           | Current portion of long-term debt                                                   |                |         | 33,500            |  
|                                           |                                                                                     |                |         |                   |  
|TOTAL CURRENT LIABILITIES                  |                                                                                     |                | 69,975  |                   |  
|DEFERRED COMPENSATION OBLIGATION           |                                                                                     |                | 1,021   |                   |  
|LONG TERM DEBT  Less current portion      |                                                                                     |                | 12,571  |                   |  
|DEFERRED RENT                              |                                                                                     |                | 3,215   |                   |  
|STOCKHOLDERS' EQUITY:                      |                                                                                     |                |         |                   |  
|                                           | Common stock                                                                        |                |         | 1,042             |  
|                                           | Additional paid-in capital                                                          |                |         | 224,910           |  
|                                           | Treasury stock                                                                      |                |         | (213,883          | )
|                                           | Retained earnings                                                                   |                |         | 210,029           |  
|                                           | Unearned stock compensation                                                         |                |         | (66               | )
|                                           | Accumulated other comprehensive (loss) income                                       |                |         | (105              | )
|                                           |                                                                                     |                |         |                   |  
|TOTAL STOCKHOLDERS' EQUITY                 |                                                                                     |                | 221,927 |                   |  
|                                           |                                                                                     |                |         |                   |  
|TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY |                                                                                     | $              | 308,709 |                   | $
|                                           |                                                                                     |                |         |                   |  

See
notes to Condensed Consolidated Financial Statements

3

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THE YANKEE CANDLE COMPANY, INC. AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS  (In thousands, except per share data)  (Unaudited)

|                                            |  | For the Thirteen Weeks Ended |       
|------------------------------------------- |  | ---------------------------- | ------
|
|Sales                                       |  | $                            | 97,052
|Cost of goods sold                          |  |                              | 44,078
|                                            |  |                              |       
|Gross profit                                |  |                              | 52,974
|Selling expenses                            |  |                              | 24,700
|General and administrative expenses         |  |                              | 12,448
|                                            |  |                              |       
|Income from operations                      |  |                              | 15,826
|Interest income                             |  |                              | (3    
|Interest expense                            |  |                              | 786   
|Other expense                               |  |                              | 126   
|                                            |  |                              |       
|Income before provision for income taxes    |  |                              | 14,917
|Provision for income taxes                  |  |                              | 5,892 
|                                            |  |                              |       
|Net income                                  |  | $                            | 9,025 
|                                            |  |                              |       
|Basic earnings per share                    |  | $                            | 0.17  
|                                            |  |                              |       
|Diluted earnings per share                  |  | $                            | 0.17  
|                                            |  |                              |       
|Weighted-average basic shares outstanding   |  |                              | 54,193
|                                            |  |                              |       
|Weighted-average diluted shares outstanding |  |                              | 54,568
|                                            |  |                              |       

See
notes to Condensed Consolidated Financial Statements

4

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THE YANKEE CANDLE COMPANY, INC. AND SUBSIDIARIES  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS  (In thousands)  (Unaudited)

|                                                                                            |                                                                                   | For the Thirteen Weeks Ended |        
|------------------------------------------------------------------------------------------- | --------------------------------------------------------------------------------- | ---------------------------- | -------
|
|CASH FLOWS PROVIDED BY (USED IN) OPERATING ACTIVITIES:                                      |                                                                                   |                              |        
|Net income                                                                                  |                                                                                   | $                            | 9,025  
|Adjustments to reconcile net income to net cash provided by (used in) operating activities: |                                                                                   |                              |        
|Depreciation and amortization                                                               |                                                                                   |                              | 4,475  
|Unrealized loss (gain) on marketable securities                                             |                                                                                   |                              | 29     
|Non-cash stock compensation                                                                 |                                                                                   |                              | 22     
|Deferred taxes                                                                              |                                                                                   |                              | 3,000  
|Loss on disposal of fixed assets and classic vehicles                                       |                                                                                   |                              | 114    
|Changes in assets and liabilities:                                                          |                                                                                   |                              |        
|                                                                                            | Accounts receivable, net                                                          |                              |        
|                                                                                            | Inventory                                                                         |                              |        
|                                                                                            | Prepaid expenses and other assets                                                 |                              |        
|                                                                                            | Accounts payable                                                                  |                              |        
|                                                                                            | Accrued expenses and other liabilities                                            |                              |        
|                                                                                            |                                                                                   |                              |        
|NET CASH USED IN OPERATING ACTIVITIES                                                       |                                                                                   |                              | (20,215
|                                                                                            |                                                                                   |                              |        
|CASH FLOWS (USED IN) PROVIDED BY INVESTING ACTIVITIES:                                      |                                                                                   |                              |        
|                                                                                            | Purchase of property and equipment                                                |                              |        
|                                                                                            | Investments in marketable securities                                              |                              |        
|                                                                                            | Proceeds from sale of property & equipment                                        |                              |        
|                                                                                            |                                                                                   |                              |        
|NET CASH USED IN INVESTING ACTIVITIES                                                       |                                                                                   |                              | (3,566 
|                                                                                            |                                                                                   |                              |        
|CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES:                                      |                                                                                   |                              |        
|                                                                                            | Net (repayments) borrowings under bank credit agreements                          |                              |        
|                                                                                            | Principal payments on long-term debt                                              |                              |        
|                                                                                            | Proceeds from the sale of common stock in 2002 (net of fees and expenses) & other |                              |        
|                                                                                            |                                                                                   |                              |        
|NET CASH USED IN FINANCING ACTIVITIES                                                       |                                                                                   |                              | (14,426
|                                                                                            |                                                                                   |                              |        
|EFFECT OF EXCHANGE RATE CHANGES ON CASH                                                     |                                                                                   |                              | (19    
|                                                                                            |                                                                                   |                              |        
|NET DECREASE IN CASH AND CASH EQUIVALENTS                                                   |                                                                                   |                              | (38,226
|CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD                                              |                                                                                   |                              | 43,689 
|                                                                                            |                                                                                   |                              |        
|CASH AND CASH EQUIVALENTS, END OF PERIOD                                                    |                                                                                   | $                            | 5,463  
|                                                                                            |                                                                                   |                              |        
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                                          |                                                                                   |                              |        
|Cash paid during the period for:                                                            |                                                                                   |                              |        
|                                                                                            | Interest                                                                          |                              | $      
|                                                                                            |                                                                                   |                              |        
|                                                                                            | Income taxes                                                                      |                              | $      
|                                                                                            |                                                                                   |                              |        
|                                                                                            | Purchase of equipment by assumption of capital lease                              |                              | $      
|                                                                                            |                                                                                   |                              |        

See notes to Condensed Consolidated Financial Statements

5

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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 contains all adjustments necessary for a fair presentation of the results for such periods. In addition, the Company believes 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 period are not necessarily indicative of the results to be expected for the
full fiscal year ending January 3, 2004.

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. 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 28, 2002 included in the Company's Annual Report on Form 10-K.

2.    INVENTORIES

The
components of inventory were as follows:

March 29,
2003

December 28,
2002Finished goods

$
37,722

$
30,273Work-in-process


819


641Raw materials and packaging


4,000


4,28742,541


35,201Less LIFO adjustment


(672
)

(672
)$
41,869

$
34,529


3.    INCOME TAXES

The Company's effective tax rate in the first quarter of fiscal 2003 and 2002 was 39.5% and 39.0%, respectively. 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. Management re-evaluates the Company's effective tax rate on a quarterly basis.

4.    EARNINGS PER SHARE

SFAS No. 128, "Earnings Per Share," requires two presentations of earnings per share, "basic" and "diluted." Basic earnings per share is computed by
dividing income available to common stockholders (the numerator) by the weighted- average number of common shares outstanding (the denominator) for the period. The computation of diluted earnings per
share is similar to basic earnings per share, except that the denominator is increased to include the number of additional common shares that would have

6

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been
outstanding if the potentially dilutive common shares had been issued. The number of potential common shares which could dilute basic earnings per share in the future, that were not included in
the computation of diluted earnings per share because to do so would have been antidilutive, was 565 and 78 for the thirteen weeks ended March 29, 2003 and March 30, 2002, respectively.
The following summarizes the effects of the assumed issuance of dilutive securities on weighted-average shares.

For the Thirteen Weeks EndedMarch 29, 2003

March 30, 2002Basic

54,193

53,638Add:Contingently returnable shares and shares issuable pursuant to stock option grants

375

1,047Diluted

54,568

54,685


5.    STOCK BASED COMPENSATION

The Company accounts for employee options or share awards under the intrinsic-value method prescribed by Accounting Principles Board Opinion No. 25
"Accounting for Stock Issued to Employees"
with pro forma disclosures of net earnings and earnings per share, as if the fair value method of accounting defined in SFAS No. 123 "Accounting for Stock Based Compensation" had been applied.
SFAS No. 123 establishes a fair value based method of accounting for stock based employee compensation plans. Under the fair value method, compensation cost is measured at the grant date based
on the value of the award and is recognized over the service period, which is usually the vesting period. Under SFAS No. 123, the Company's net income and net income per share would have
decreased as reflected in the following pro forma amounts.

March 29, 2003

March 30, 2002Net income, as reported

$
9,025

$
7,508Deduct: Total stock based employee compensation expense determined under fair value based method for all awards, net of related tax effects


281


255Pro forma net income

$
8,744

$
7,253Earnings per share:Basic-as reported

$
0.17

$
0.14Basic-pro forma

$
0.16

$
0.14Diluted-as reported

$
0.17

$
0.14Diluted-pro forma

$
0.16

$
0.13


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6.    COMPREHENSIVE INCOME

Comprehensive income includes all changes in equity during the period. It has two components: net income and other comprehensive loss. Comprehensive income, net
of related tax effects, is as follows:

For the Thirteen Weeks EndedMarch 29, 2003

March 30, 2002Net income

$
9,025

$
7,508Other comprehensive loss:Translation adjustment


(127
)

(92
)Total other comprehensive loss


(127
)

(92
)Comprehensive income

$
8,898

$
7,416


Accumulated
other comprehensive (loss) income reported on the Company's Condensed Consolidated Balance Sheets consists primarily of foreign currency translation adjustments.

7.    SEGMENTS OF ENTERPRISE AND RELATED 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.

|                                         |  | Retail |        | Wholesale |   | Unallocated/
Corporate/
Other |  | Balance per
Consolidated
Statements of
Operations |        
|---------------------------------------- |  | ------ | ------ | --------- | - | ----------------------------- |  | ------------------------------------------------- | -------
|Thirteen weeks ended March 29, 2003      |  |        |        |           |   |                               |  |                                                   |        
|Sales                                    |  | $      | 44,016 |           | $ | 53,036                        |  | $                                                 |       
|Gross profit                             |  |        | 28,498 |           |   | 24,476                        |  |                                                   |       
|Operating margin                         |  |        | 6,304  |           |   | 21,970                        |  |                                                   | (12,448
|Unallocated costs                        |  |        |       |           |   |                              |  |                                                   | (909   
|Income before provision for income taxes |  |        |       |           |   |                              |  |                                                   |       
|Thirteen weeks ended March 30, 2002      |  |        |        |           |   |                               |  |                                                   |        
|Sales                                    |  | $      | 42,148 |           | $ | 46,036                        |  | $                                                 |       
|Gross Profit                             |  |        | 25,652 |           |   | 20,423                        |  |                                                   |       
|Operating Margin                         |  |        | 7,120  |           |   | 17,735                        |  |                                                   | (11,194
|Unallocated costs                        |  |        |       |           |   |                              |  |                                                   | (1,353 
|Income before provision for income taxes |  |        |       |           |   |                              |  |                                                   |       

8.    RESTRUCTURING RESERVE

A restructuring charge for $8.0 million was recorded in fiscal 2001 to record costs associated with the Company's decision to consolidate and restructure
distribution and manufacturing operations. The Company closed its Utah distribution facility and restructured its distribution and manufacturing work-force during 2001. Included in the
restructuring charge are severance and other employee related

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costs,
the non-cash write-down of non-recoverable leasehold improvements, fixture and equipment investments and estimated continuing occupancy expenses for
abandoned facilities, net of anticipated sub-lease income. An analysis of the activity within the remaining restructuring reserve is as follows as of March 29, 2003:

Accrued as of
December 28, 2002

Costs paid

Accrued as of
March 29, 2003Occupancy

$
1,107

$
87

$
1,020Employee related


47


41


6Total

$
1,154

$
128

$
1,026


During
the second quarter of fiscal 2002, the Company was successful in subletting the facility for the remaining lease term. The sublet income does not fully offset the Company's lease
obligations, therefore the initial occupancy reserve remained unchanged after this sublet.

9.    SUBSEQUENT EVENTS

On
May 9, 2003, the Company announced that its board of directors authorized the repurchase of up to $100 million of the Company's common stock from time to time on the
open market or in privately negotiated transactions. The repurchase program will be funded using cash generated from operating activities and/or borrowings under the Company's credit agreement. The
terms, timing and amount of any shares repurchased will be determined by the Company's management and the Executive Committee of the Company's board of directors, based on their evaluation of market
conditions and other factors. The repurchase program may be suspended or discontinued at any time. Any repurchased shares will be available for use in connection with the Company's stock plans and for
other corporate purposes.

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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 judgments 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 judgments, including those related to inventories, restructuring costs, bad debts, intangible
assets, income taxes, debt service and contingencies and litigation. Management bases its estimates and judgments 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 judgments 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 estimates and judgments and are therefore particularly important to an understanding of our results of operations and financial position.

REVENUE / RECEIVABLES

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. We believe that this is the time that persuasive evidence of an
agreement exists, delivery has occurred, the price is fixed and determinable; and collectability is reasonably assured. Revenue is recognized net of any applicable discounts and allowances. 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 reserve is also subject to change. Changes in these reserves could
affect our operating results and cash flows.

INVENTORY

We
write down our inventory for estimated obsolescence or unmarketable inventory in an amount equal to the difference between the cost of inventory and the estimated market value less
costs to sell, 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. Cost is based on standard
costs estimated at the beginning of the year. Fluctuations in production quantities, wage rates and in the cost of raw materials could impact the carrying value of our inventory. Accordingly, we
periodically adjust the standard costs for variances owing to these fluctuations. Changes in the carrying value of inventory could affect our operating results and cash flow.

10

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TAXES

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 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 and cash flows.

RESTRUCTURING RESERVE

In
fiscal 2001, we closed our distribution facility in Utah, recorded a restructuring charge and established a reserve for future expenses related to the restructuring. 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 second quarter of fiscal 2002, we were successful in subletting the facility for the remaining lease term. If the facility were to be vacated by the
current tenant in breach of its sublease, this would negatively affect our results of operations and cash flows.

VALUE OF LONG-LIVED ASSETS, INCLUDING INTANGIBLES

Long-lived
assets on our balance sheet consist primarily of property, plant and equipment and trademarks. We periodically review the carrying value of all of these assets
based, in part, upon current estimated market values, and our projections of anticipated future cash flows. We undertake this review when facts and circumstances suggest that cash flows emanating from
those assets may be diminished. Any impairment charge that we record reduces our earnings. While we believe that our future estimates are reasonable, different assumptions regarding items such as
future cash flows and the volatility inherent in markets which we serve could affect our evaluations and result in impairment charges against the carrying value of those assets.

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 are seasonality and new store openings.

Seasonality.We have historically realized higher revenues and operating income in our fourth quarter, particularly in our
retail business. We believe that this has been due primarily to the increase in the number of our retail stores and 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

11

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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.

12

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RESULTS OF OPERATIONSThirteen weeks ended March 29, 2003 versus thirteen weeks ended March 30, 2002

SALES

Sales
increased 10.1% to $97.0 million for the thirteen weeks ended March 29, 2003 from $88.2 million for the thirteen weeks ended March 30, 2002. Wholesale
sales, including European operations, increased 15.2% to $53.0 million for the thirteen weeks ended March 29, 2003 from $46.0 million for the thirteen weeks ended March 30,
2002. This growth was achieved primarily by increasing sales to existing customers and to a lesser extent by increasing the number of wholesale locations.

Retail
sales increased 4.4% to $44.0 million for the thirteen weeks ended March 29, 2003 from $42.1 million for the thirteen weeks ended March 30, 2002. The
increase in retail sales was due primarily to increased sales attributable to the 47 stores opened in 2002 (which in 2002 were open for less than a full year), and to the net addition of ten new
stores in 2003. These factors were partially offset by a decrease in comparable store and catalog and Internet sales. Comparable store and catalog and Internet sales for the thirteen weeks ended
March 29, 2003 decreased 10% compared to the thirteen weeks ended March 30, 2002. Retail comparable store sales for the thirteen weeks ended March 29, 2003 decreased 9% compared
to the thirteen weeks ended March 30, 2002. There were 193 retail stores included in the comparable store base as of March 29, 2003. The primary factor which drove the decrease in
comparable stores sales was a decline in store traffic and mall traffic generally. We believe that comparable store sales and store traffic were negatively impacted by the President's Day snowstorm
which affected most of our store base in the Eastern half of the United States; by the commencement of the war with Iraq and its impact on consumer sentiment; and by the shift in the Easter holiday
selling period, which occurred in the first quarter of 2002 and second quarter of 2003. There were 249 retail stores open as of March 29, 2003 compared to 202 retail stores open as of
March 30, 2002 and 239 retail stores open as of December 28, 2002.

GROSS PROFIT

Gross
profit increased 15.0% to $53.0 million for the thirteen weeks ended March 29, 2003 from $46.1 million for the thirteen weeks ended March 30, 2002. As a
percentage of sales, gross profit increased to 54.6% for the thirteen weeks ended March 29, 2003 from 52.2% for the thirteen weeks ended March 30, 2002. The increase in gross profit as a
percentage of sales was primarily the result of improved productivity in supply chain operations and, to a lesser extent, a decrease in shrink expense at the retail level. This latter reduction is a
result of our store operations group continuing to focus on decreasing this controllable expense. The increase in gross profit in dollars was primarily attributable to an increase in sales and also to
improved productivity in supply chain operations.

SELLING EXPENSES

Selling
expenses increased 16.4% to $24.7 million for the thirteen weeks ended March 29, 2003 from $21.2 million for the thirteen weeks ended March 30, 2002.
These expenses are related to both wholesale and retail operations and consist of payroll, occupancy, advertising and other operating costs, as well as pre-opening costs, which are
expensed as incurred. As a percentage of sales, selling expenses increased to 25.5% for the thirteen weeks ended March 29, 2003 from 24.1% for the thirteen weeks ended March 30, 2002.
The increase in selling expenses in dollars and as a percentage of sales was primarily related to the continued growth in the number of retail stores, from 239 as of December 28, 2002 to 249 as
of March 29, 2003, the effect of which is an increase in the weighting of immature stores. Immature stores are generally stores that are less than four years old. Immature stores typically
generate higher selling expenses as a percentage of sales than stores that have been open for more

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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 2002 and 2003
store classes, selling expenses as a percentage of sales were 22.6% for the thirteen weeks ended March 29, 2003 compared to 23.8% for the thirteen weeks ended March 30, 2002. The
increase in selling expense as a percentage of sales for 2003 is also explained by the decrease in retail comparable store sales since the fixed components of labor and occupancy do not decrease with
negative comparable store sales.

SEGMENT PROFITABILITY

Segment
profitability is sales less cost of goods sold and selling expenses. Segment profitability for our wholesale operations, including Europe, was $22.0 million, or 41.4% of
wholesale sales for the thirteen weeks ended March 29, 2003 compared to $17.7 million or 38.5% of wholesale sales for the thirteen weeks ended March 30, 2002. The increase in
wholesale segment profitability was primarily attributable to increased wholesale sales and improved productivity in supply chain operations. Segment profitability for the Company's retail operations
was $6.3 million or 14.3% of retail sales for the thirteen weeks ended March 29, 2003 compared to $7.1 million or 16.9% of retail sales for the thirteen weeks ended
March 30, 2002. The decrease in retail segment profitability as a percentage of retail sales was primarily attributable to the impact of our most immature stores, the 2002 and 2003 store
classes. Excluding
these immature stores, retail segment profitability was 17.1% for the thirteen weeks ended March 29, 2003 compared to 17.4% in the thirteen weeks ended March 30, 2002. The decrease in
retail segment profitability in dollars is primarily attributable to a decline in retail comparable store sales, partially offset by improved productivity in supply chain operations.

GENERAL AND ADMINISTRATIVE EXPENSES

General
and administrative expenses, which consist primarily of personnel-related costs incurred in support functions, increased 11.2% to $12.4 million for the thirteen weeks
ended March 29, 2003 from $11.2 million for the thirteen weeks ended March 30, 2002. As a percentage of sales, general and administrative expenses increased to 12.8% for the
thirteen weeks ended March 29, 2003 from 12.7% for the thirteen weeks ended March 30, 2002. The increase in general and administrative expenses in dollars and as a percentage of sales is
due primarily to approximately $0.7 million in consulting costs related to a strategic planning project that began in late February.

NET OTHER EXPENSE

Net
other expense was $0.9 million for the thirteen weeks ended March 29, 2003, compared to $1.4 million for the thirteen weeks ended March 30, 2002. The
primary component of the expense in each of these periods was interest expense, which was $0.8 million in the thirteen weeks ended March 29, 2003 compared to $1.3 million in the
thirteen weeks ended March 30, 2002. Interest expense in the thirteen weeks ended March 29, 2003 decreased compared to the thirteen weeks ended March 30, 2002 primarily due to a
reduction in the total debt outstanding from $111.5 million at March 30, 2002 to $46.0 million at March 29, 2003.

PROVISION FOR INCOME TAXES

The
effective tax rate for the thirteen weeks ended March 29, 2003 and March 30, 2002 was 39.5% and 39.0%, respectively. We are currently providing a valuation allowance
against the deferred tax asset for our international operations. As a result, it is anticipated that our effective tax rate for 2003 will be approximately 39.5%. We re-evaluate our
effective tax rate on a quarterly basis.

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LIQUIDITY AND CAPITAL RESOURCES

Cash and cash equivalents at March 29, 2003 decreased by $38.2 million compared to December 28, 2002. This decrease was partially
attributable to cash used in operating activities of $20.2 million, which includes a $20.5 million payment of corporate income taxes for fiscal 2002 and fiscal 2003. Capital expenditures
for the thirteen weeks ended March 29, 2003 were $3.4 million, primarily related to the capital requirements to open twelve new stores and investments in manufacturing and logistics
operations. Net cash used in financing activities was $14.4 million for the thirteen weeks ended March 29, 2003 which primarily represents payment of credit facility borrowings and
principal payments on long-term debt.

We
opened 12 stores and closed two stores during the thirteen weeks ended March 29, 2003 and we expect to open approximately 33 additional stores during the last three quarters of
fiscal 2003. We expect to meet our cash requirements through a combination of available cash, operating cash flow and borrowings under our credit facility.

As
of March 29, 2003, we were in compliance with all covenants under our credit facility. Available borrowings under the revolving credit facility were $147.0 million. See
our most recent Annual Report on Form 10-K for a description of the credit facility.

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.

On
May 9, 2003, we announced that our board of directors authorized the repurchase of up to $100 million of our common stock from time to time on the open market or in
privately negotiated transactions. The repurchase program will be funded using cash generated from operating activities and/or borrowings under our credit agreement. The terms, timing and amount of
any shares repurchased will be determined by our management and the Executive Committee of our board of directors, based on their evaluation of market conditions and other factors. As noted below, we
have filed a registration statement on Form S-3 with respect to a proposed offering by certain of our stockholders. We will not be purchasing any shares in that offering. The repurchase program
may be suspended or discontinued at any time. Any repurchased shares will be available for use in connection with our stock plans and for other corporate purposes.

There
are a number of important factors that could cause actual results of our share repurchase program, including the amount of shares repurchased, the intended use of any repurchased
shares and the source of funding, to differ materially from those suggested or indicated by our forward-looking statements describing the program. These factors include, among others, the market price
of our common stock prevailing from time to time, the nature of other investment opportunities presented to us from time to time, our cash generated from operating activities, general economic
conditions and other factors identified below and in our Annual Report on Form 10-K filed with the SEC.

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. In addition

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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. Our current plans are to grow internally and not by acquisition, although from time to time we do consider possible acquisition candidates. 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 the 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 pre-opening costs are fully expensed
in the year of opening. 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 due to overstaffing in our manufacturing and logistics operations. These inefficiencies
were 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 you 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 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 September 11, 2001 terrorist attacks on the United States or which result
from the threat of war or the possibility of further

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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 effectively dependent upon one industry, we have less flexibility in reacting to unfavorable consumer trends, adverse economic
conditions or 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 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 76% 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 for 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, which accounts for a larger portion of our sales. 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 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

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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.

Public health epidemics such as Severe Acute Respiratory Syndrome may affect our operating results.

Approximately 12% of our sales in 2002 were generated by products, primarily accessories, that we purchased overseas. Substantially all of these products were
purchased from East Asia. A sustained interruption of the operations of our suppliers, as a result of the impact of Severe Acute Respiratory Syndrome or other similar health epidemics, could have an
adverse effect on our ability to receive timely shipments of certain of our products and could result in scrutiny or embargoing of goods produced in infected areas.

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. currently own approximately 40% of our outstanding common stock and effectively control us.
Accordingly, they are able to:



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 also may conflict with the interests of the other holders of common stock.

On
May 6, 2003 we filed a Registration Statement on Form S-3 with respect to a proposed secondary offering by certain selling shareholders including affiliates
of Forstmann Little & Co. If the offering is completed as proposed, the Forstmann Little partnerships would together own approximately 20% of our outstanding common stock and together would
continue to retain significant influence over the foregoing matters.

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:



Massachusetts
law may also discourage, delay or prevent someone from acquiring or merging with us.

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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 currently intend to pay any cash dividends in the foreseeable future. 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 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 (as defined in our credit agreement) 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 bank debt. At March 29, 2003, there was
$46.0 million of bank debt outstanding, which consisted of $43.0 million in term loans and $3.0 million from our revolving credit facility. Because this bank 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.

Item 4.    Controls and Procedures



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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.
Not Applicable
|Item 5. |  | Other Information
Not Applicable                                   
|Item 6. |  | Exhibits and Reports on Form 8-K                                   





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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 hereunto duly authorized.

|                  |  | THE YANKEE CANDLE COMPANY, INC.
|----------------- |  | -------------------------------
|Date: May 9, 2003 |  | By:                            

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CERTIFICATIONS

I,
Craig W. Rydin, certify that:

|                   |  | /s/ CRAIG W. RYDIN                    
|------------------ |  | --------------------------------------
|                   |  |                                       
|Dated: May 9, 2003 |  | Craig W. Rydin
Chief Executive Officer

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CERTIFICATIONS

I, Robert R. Spellman, certify that:

|                   |  | /s/ROBERT R. SPELLMANRobert R. Spellman
Chief Financial Officer
|------------------ |  | ---------------------------------------------------------------
|                   |  |                                                                
|Dated: May 9, 2003 |  |                                                                

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