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UNITED STATES

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: April 4, 2009

Commission File Number: 333-141699-05





YANKEE HOLDING CORP.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|DELAWARE                                                       |  | 20-8304743                          
|(State or other jurisdiction of incorporation or organization) |  | (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 the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.    Yes   ̈    No  x    We are a voluntary filer of reports required of companies with public securities under Section 13 or 15(d) of the Securities Exchange Act of 1934, and we will have filed all reports which
would have been required of us during the past 12 months had we been subject to such provisions.

Indicate by check mark whether the registrant has
submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files).    Yes   ̈    No   ̈

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.



|                        |  |   |  |                           |  |  
|----------------------- |  | - |  | ------------------------- |  | -
|Large accelerated filer |  |  ̈ |  | Accelerated filer         |  |  ̈
|                        |  |   | 
|Non-accelerated filer   |  | x |  | Smaller Reporting Company |  |  ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange
Act).    Yes   ̈    No  x

As of May 11, 2009, there were 499,550 shares of Yankee Holding Corp. common stock, $.01 par value, outstanding, all of which are owned by YCC Holdings LLC.









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YANKEE HOLDING CORP.

FORM 10-Q  Quarter Ended April 4, 2009

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 Yankee Holding Corp. 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 and those set forth
under Item 1A-Risk Factors. Management undertakes 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



|                              |  |                                                                                                                |  |     
|----------------------------- |  | -------------------------------------------------------------------------------------------------------------- |  | ----
|                              |  |                                                                                                                |  | Page
|Item                          |  |                                                                                                                |  |     
|PART I. Financial Information |  |                                                                                                               
|Item 1.                       |  | Financial Statements-Unaudited                                                                                 |  | 3   
|                              |  | Condensed Consolidated Balance Sheets as of April 4, 2009 and January 3, 2009                                  |  | 3   
|                              |  | Condensed Consolidated Statements of Operations for the Thirteen Weeks Ended April 4, 2009 and March 29, 2008  |  | 4   
|                              |  | Condensed Consolidated Statements of Cash Flows for the Thirteen Weeks Ended April 4, 2009, the March 29, 2008 |  | 5   
|                              |  | Notes to Condensed Consolidated Financial Statements                                                           |  | 6   
|Item 2.                       |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                          |  | 18  
|Item 3.                       |  | Quantitative and Qualitative Disclosures About Market Risk                                                     |  | 24  
|Item 4T.                      |  | Controls and Procedures                                                                                        |  | 24  
|PART II. Other Information    |  |                                                                                                               
|Item 1.                       |  | Legal Proceedings                                                                                              |  | 24  
|Item 1A.                      |  | Risk Factors                                                                                                   |  | 24  
|Item 2.                       |  | Unregistered Sales of Equity Securities and Use of Proceeds                                                    |  | 29  
|Item 3.                       |  | Defaults Upon Senior Securities                                                                                |  | 29  
|Item 4.                       |  | Submission of Matters to a Vote of Security Holders                                                            |  | 29  
|Item 5.                       |  | Other Information                                                                                              |  | 29  
|Item 6.                       |  | Exhibits                                                                                                       |  | 29  
|Signatures                    |  | 30                                                                                                            



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PART I. FINANCIAL INFORMATION



|Item 1. | Financial Statements.
|------- | ---------------------

YANKEE HOLDING CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

(Unaudited)



|                                            |  |              |           |   |                |   |           |  
|------------------------------------------- |  | ------------ | --------- | - | -------------- | - | --------- | -
|                                            |  | April 4,2009 |           |   | January 3,2009 |  
|ASSETS                                      |  |              |           |   |                |   |           |  
|CURRENT ASSETS:                             |  |              |           |   |                |   |           |  
|Cash                                        |  | $            | 20,617    |   |                | $ | 130,577   |  
|Accounts receivable, net                    |  |              | 38,159    |   |                |   | 39,153    |  
|Inventory                                   |  |              | 68,445    |   |                |   | 63,035    |  
|Prepaid expenses and other current assets   |  |              | 20,520    |   |                |   | 10,184    |  
|Deferred tax assets                         |  |              | 12,757    |   |                |   | 12,869    |  
|                                            |  |              |           |   |                |   |           |  
|TOTAL CURRENT ASSETS                        |  |              | 160,498   |   |                |   | 255,818   |  
|                                            |  |             
|PROPERTY AND EQUIPMENT-NET                  |  |              | 134,739   |   |                |   | 138,222   |  
|MARKETABLE SECURITIES                       |  |              | 772       |   |                |   | 540       |  
|GOODWILL                                    |  |              | 643,801   |   |                |   | 643,801   |  
|INTANGIBLE ASSETS                           |  |              | 305,405   |   |                |   | 308,877   |  
|DEFERRED FINANCING COSTS                    |  |              | 23,145    |   |                |   | 24,170    |  
|OTHER ASSETS                                |  |              | 1,071     |   |                |   | 1,141     |  
|                                            |  |              |           |   |                |   |           |  
|TOTAL ASSETS                                |  | $            | 1,269,431 |   |                | $ | 1,372,569 |  
|                                            |  |              |           |   |                |   |           |  
|LIABILITIES AND STOCKHOLDERS DEFICIT       |  |              |           |   |                |   |           |  
|CURRENT LIABILITIES:                        |  |              |           |   |                |   |           |  
|Accounts payable                            |  | $            | 23,550    |   |                | $ | 22,812    |  
|Accrued payroll                             |  |              | 6,602     |   |                |   | 7,741     |  
|Accrued interest                            |  |              | 6,524     |   |                |   | 18,042    |  
|Accrued purchases of property and equipment |  |              | 2,741     |   |                |   | 4,279     |  
|Other accrued liabilities                   |  |              | 36,027    |   |                |   | 49,034    |  
|Current portion of long-term debt           |  |              | 31,726    |   |                |   | 37,650    |  
|                                            |  |              |           |   |                |   |           |  
|TOTAL CURRENT LIABILITIES                   |  |              | 107,170   |   |                |   | 139,558   |  
|                                            |  |             
|DEFERRED COMPENSATION OBLIGATION            |  |              | 825       |   |                |   | 740       |  
|DEFERRED TAX LIABILITIES                    |  |              | 78,403    |   |                |   | 75,905    |  
|LONG-TERM DEBT                              |  |              | 1,081,399 |   |                |   | 1,145,475 |  
|DEFERRED RENT                               |  |              | 10,625    |   |                |   | 10,810    |  
|OTHER LONG-TERM LIABILITIES                 |  |              | 2,921     |   |                |   | 2,902     |  
|STOCKHOLDERS DEFICIT                       |  |              | (11,912   | ) |                |   | (2,821    | )
|                                            |  |              |           |   |                |   |           |  
|TOTAL LIABILITIES AND STOCKHOLDERS DEFICIT |  | $            | 1,269,431 |   |                | $ | 1,372,569 |  
|                                            |  |              |           |   |                |   |           |  

See notes to condensed consolidated financial statements



3



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YANKEE HOLDING CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands)

(Unaudited)



|                                      |  |                                  |         |   |                                   |   |         |  
|------------------------------------- |  | -------------------------------- | ------- | - | --------------------------------- | - | ------- | -
|                                      |  | Thirteen WeeksEndedApril 4, 2009 |         |   | Thirteen WeeksEndedMarch 29, 2008 |  
|Sales                                 |  | $                                | 125,708 |   |                                   | $ | 140,899 |  
|Cost of sales                         |  |                                  | 56,306  |   |                                   |   | 64,537  |  
|                                      |  |                                  |         |   |                                   |   |         |  
|Gross profit                          |  |                                  | 69,402  |   |                                   |   | 76,362  |  
|Selling expenses                      |  |                                  | 48,479  |   |                                   |   | 49,514  |  
|General and administrative expenses   |  |                                  | 14,935  |   |                                   |   | 14,414  |  
|Restructuring charge                  |  |                                  | 2,415   |   |                                   |   | 1,475   |  
|                                      |  |                                  |         |   |                                   |   |         |  
|Income from operations                |  |                                  | 3,573   |   |                                   |   | 10,959  |  
|Interest income                       |  |                                  | (10     | ) |                                   |   | (12     | )
|Interest expense                      |  |                                  | 21,716  |   |                                   |   | 23,808  |  
|Other expense (income)                |  |                                  | 1,439   |   |                                   |   | (101    | )
|                                      |  |                                  |         |   |                                   |   |         |  
|Loss before benefit from income taxes |  |                                  | (19,572 | ) |                                   |   | (12,736 | )
|Benefit from income taxes             |  |                                  | (8,083  | ) |                                   |   | (4,878  | )
|                                      |  |                                  |         |   |                                   |   |         |  
|Net loss                              |  | $                                | (11,489 | ) |                                   | $ | (7,858  | )
|                                      |  |                                  |         |   |                                   |   |         |  

See notes to condensed consolidated financial statements



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YANKEE HOLDING CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(Unaudited)



|                                                                            |  |                                  |          |   |                                   |   |         |  
|--------------------------------------------------------------------------- |  | -------------------------------- | -------- | - | --------------------------------- | - | ------- | -
|                                                                            |  | ThirteenWeeks EndedApril 4, 2009 |          |   | ThirteenWeeks EndedMarch 29, 2008 |  
|CASH FLOWS USED IN OPERATING ACTIVITIES:                                    |  |                                  |          |   |                                   |   |         |  
|Net loss                                                                    |  | $                                | (11,489  | ) |                                   | $ | (7,858  | )
|Adjustments to reconcile net loss to net cash used in operating activities: |  |                                  |          |   |                                   |   |         |  
|Depreciation and amortization                                               |  |                                  | 11,351   |   |                                   |   | 11,595  |  
|Unrealized loss on marketable securities                                    |  |                                  | 43       |   |                                   |   | 17      |  
|Stock-based compensation expense                                            |  |                                  | 202      |   |                                   |   | 226     |  
|Deferred taxes                                                              |  |                                  | 1,492    |   |                                   |   | 1,335   |  
|Restructuring charges                                                       |  |                                  | (62      | ) |                                   |   |        |  
|Loss on disposal and impairment of property and equipment                   |  |                                  | 236      |   |                                   |   | 462     |  
|Investments in marketable securities                                        |  |                                  | (341     | ) |                                   |   | (222    | )
|Changes in assets and liabilities:                                          |  |                                  |          |   |                                   |   |         |  
|Accounts receivable                                                         |  |                                  | 1,066    |   |                                   |   | 6,468   |  
|Inventory                                                                   |  |                                  | (5,319   | ) |                                   |   | (11,756 | )
|Prepaid expenses and other assets                                           |  |                                  | 570      |   |                                   |   | (2,061  | )
|Accounts payable                                                            |  |                                  | 725      |   |                                   |   | 8,440   |  
|Income taxes                                                                |  |                                  | (15,676  | ) |                                   |   | (19,657 | )
|Accrued expenses and other liabilities                                      |  |                                  | (17,589  | ) |                                   |   | (26,028 | )
|                                                                            |  |                                  |          |   |                                   |   |         |  
|NET CASH USED IN OPERATING ACTIVITIES                                       |  |                                  | (34,791  | ) |                                   |   | (39,039 | )
|                                                                            |  |                                  |          |   |                                   |   |         |  
|CASH FLOWS USED IN INVESTING ACTIVITIES:                                    |  |                                  |          |   |                                   |   |         |  
|Purchase of property and equipment                                          |  |                                  | (5,196   | ) |                                   |   | (2,935  | )
|Payment of contingent consideration on Aroma Naturals                       |  |                                  |         |   |                                   |   | (225    | )
|                                                                            |  |                                  |          |   |                                   |   |         |  
|NET CASH USED IN INVESTING ACTIVITIES                                       |  |                                  | (5,196   | ) |                                   |   | (3,160  | )
|                                                                            |  |                                  |          |   |                                   |   |         |  
|CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES:                      |  |                                  |          |   |                                   |   |         |  
|Net proceeds from issuance of common stock                                  |  |                                  | 20       |   |                                   |   |        |  
|(Repayments) borrowings under senior secured revolving credit facility      |  |                                  | (70,000  | ) |                                   |   | 40,000  |  
|Repurchase of common stock                                                  |  |                                  |         |   |                                   |   | (121    | )
|                                                                            |  |                                  |          |   |                                   |   |         |  
|NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES                         |  |                                  | (69,980  | ) |                                   |   | 39,879  |  
|                                                                            |  |                                  |          |   |                                   |   |         |  
|EFFECT OF EXCHANGE RATE CHANGES ON CASH                                     |  |                                  | 7        |   |                                   |   | (2      | )
|                                                                            |  |                                  |          |   |                                   |   |         |  
|NET DECREASE IN CASH                                                        |  |                                  | (109,960 | ) |                                   |   | (2,322  | )
|CASH, BEGINNING OF PERIOD                                                   |  |                                  | 130,577  |   |                                   |   | 5,627   |  
|                                                                            |  |                                  |          |   |                                   |   |         |  
|CASH, END OF PERIOD                                                         |  | $                                | 20,617   |   |                                   | $ | 3,305   |  
|                                                                            |  |                                  |          |   |                                   |   |         |  
|SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:                          |  |                                  |          |   |                                   |   |         |  
|Cash paid during the period for:                                            |  |                                  |          |   |                                   |   |         |  
|Interest                                                                    |  | $                                | 32,152   |   |                                   | $ | 34,060  |  
|                                                                            |  |                                  |          |   |                                   |   |         |  
|Income taxes                                                                |  | $                                | 6,100    |   |                                   | $ | 13,619  |  
|                                                                            |  |                                  |          |   |                                   |   |         |  
|Net decrease in accrued purchases of property and equipment                 |  | $                                | 1,538    |   |                                   | $ | 593     |  
|                                                                            |  |                                  |          |   |                                   |   |         |  

See notes to condensed consolidated financial statements



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YANKEE HOLDING CORP. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share data)

(Unaudited)

1. BASIS OF PRESENTATION

The unaudited interim condensed consolidated financial statements of Yankee Holding Corp. and subsidiaries (Yankee
Candle or the Company) have been prepared in accordance with accounting principles generally accepted in the United States of America (generally accepted accounting principles or GAAP). 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, and
cash flows as of the date and for the periods indicated. 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.

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 SEC). The accompanying unaudited condensed financial statements should be read in conjunction with the audited consolidated financial statements of the
Company for the year ended January 3, 2009 included in the Companys Annual Report on Form 10-K. Unless otherwise indicated, all amounts are in thousands.

2. RECENT ACCOUNTING PRONOUNCEMENTS

In September 2006, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 157, Fair Value Measurements, (SFAS 157). SFAS 157 defines fair value, establishes a framework for measuring fair value in GAAP and expands disclosures about fair
value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements. SFAS 157 does not expand or require new fair value measures, however the application of this statement may change
current practice. The requirements of SFAS 157 were first effective for the Companys fiscal year beginning December 30, 2007 and interim periods within that fiscal year. In February 2008, the FASB deferred the application of this
statement to non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a nonrecurring basis until the subsequent year.

Accordingly, our adoption of this standard on December 30, 2007 was limited to financial assets and liabilities, which primarily impacted the valuation of the Companys derivative contracts. On
January 4, 2009, in accordance with the deferral, the Company adopted this standard with respect to its impact on non-financial assets and liabilities. The adoption of SFAS 157 did not have a material effect on the Companys financial
condition, results of operations and cash flows. See Note 8, Fair Value Measurements, for additional information.

In March 2008, the FASB
issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities, an amendment of FASB Statement No. 133 (SFAS 161). SFAS 161 amends and expands the disclosure requirements of SFAS 133 with the intent
to provide users of financial statements with an enhanced understanding of how and why an entity uses derivative instruments and their impact on an entitys financial position, financial performance and cash flows. The Company adopted the
requirements of SFAS 161 on January 4, 2009. The adoption of SFAS 161 did not have a material impact on the Companys financial condition, results of operations and cash flows. See Note 7, Derivative Financial Instruments, for
the required disclosures.

In April 2009, the FASB issued FSP FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial
Instruments (FSP FAS 107-1 and APB 28-1), which requires an entity to provide interim disclosures about the fair value of all financial instruments within the scope of SFAS 107 and to include disclosures related to the methods and significant
assumptions used in estimating those instruments. The provisions of this FSP will become effective for the Companys second quarter ending on July 4, 2009. The Company is currently evaluating the impact the adoption of this FSP will have
on our related disclosures.

In April 2009, the FASB staff issued FSP FAS 157-4, Determining Fair Value When the Volume and Level of Activity
for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly (FSP FAS 157-4). This FSP provides additional guidance for estimating fair value in accordance with FAS 157 when the volume and level of
activity for the asset or liability have significantly decreased. This FSP also includes guidance on identifying circumstances that indicate a transaction is not orderly (i.e. a forced liquidation or distressed sale). FSP 157-4 provides guidance on
how to determine the fair value of assets and liabilities under SFAS 157, in the current economic environment and reemphasizes that the objective of a fair value measurement remains the determination of an exit price. The provisions of FSP FAS 157-4
will become effective for the Companys second quarter ending on July 4, 2009. The Company is currently evaluating the potential impact, if any, of the adoption of FSP FAS 157-4 on its financial condition, results of operations and cash
flows.

3. EQUITY-BASED COMPENSATION

In connection with the
February 2007 merger of the Predecessor Company with the affiliates of Madison Dearborn Partners LLC (the Merger), the Company entered into equity arrangements with certain members of senior management of the Company (Management
Investors). The equity consists of ownership interests in Holdings. At the time of the Merger there were two classes of these ownership interests: Class A common units and Class B common units. The Class A and Class B common units
were issued to and purchased by the Management Investors under the YCC Holdings LLC 2007 Incentive Equity Plan adopted on February 6, 2007 (the Plan). The Plan grants the Board authorization to issue up to 593,622 Class B common
units. The rights and obligations of Holdings and the holders of its Class A and Class B common units are generally set forth in Holdings limited liability company agreement, Holdings unitholders agreement and the individual
Class A and Class B unit purchase agreements entered into with the respective unitholders (the equity agreements).

Upon closing of the
Merger, certain eligible Management Investors purchased 40,933 Class A common units (approximately 0.96% of Holdings Class A common units). The remaining 4,233,353 Class A common units were purchased by MDP in connection with
the consummation of the Merger. The purchase price paid by the Management Investors for the Class A common units was $101.22 per unit, the same as that paid by MDP pursuant to the Merger. The Class A common units are not subject to
vesting.

Additionally, the Board approved the issuance of 474,897 shares of Class B common units. Pursuant to the Plan the Management Investors purchased
427,643 Class B common units of Holdings (representing approximately 9.9% of the residual equity interest of Holdings). The remainder of the Class B common units were available for issuance to eligible participants under the Plan. The Class B common
units were purchased at a cost of $1.00 per unit. The Class B common units are subject to a five-year vesting period, with 10% of the units vesting immediately upon the date of purchase and the remainder generally vesting daily beginning on the
sixth month anniversary of the purchase date, continuing over the subsequent 54 month period. If the Management Investors employment is terminated as a result of death or disability, an additional amount of Class B common units equal to the
lesser of (i) twenty percent (20%) of the aggregate number of units held by such Management Investor and (ii) the remainder of the Management Investors unvested units, shall automatically become vested units. All unvested Class
B common units will vest upon a sale of all or substantially all of the business to an independent third party so long as the employee holding such units continues to be an employee of the Company at the closing of the sale. Class B common units are
also subject to the right of Holdings or, if not exercised by Holdings, of MDP, to repurchase such Class B common units upon a termination of employment, as more fully set forth in the equity agreements.



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In October 2007, the Compensation Committee approved the creation of a new class of equity interest in Holdings, Class C
common units, for future issuance to eligible participants under the Management Equity Plan. As approved by the Compensation Committee, the number of remaining authorized and unissued Class B common units will be reduced by any Class C common unit
grants made, and the number of combined Class B common units and Class C common units can not exceed the initial pool of Class B common units originally reserved in connection with the Merger. Class C common units will otherwise have the same
general characteristics as Class B common units, including with respect to time vesting and repurchase terms (except that unvested Class C common units are forfeited rather than repurchased as there is no initial capital outlay for the Class C
common units). The recipient of a Class C common unit incentive grant is required to make a corresponding purchase of Class A common units, at then fair market value, which may range in size from $1 to $15 depending on the size of the Class C
common unit grant. The Company currently anticipates that all future long-term equity incentive grants will be made using Class C common units.

Class A, Class B and Class C common units are all subject to various restrictions on transfer and other conditions, all as more fully set forth in the equity agreements. Holdings may issue additional units subject to the terms and
conditions of certain of the equity agreements.

As of April 4, 2009, shares outstanding were as follows:



|                               |  |                    |  |                    |   |  |                   
|------------------------------ |  | ------------------ |  | ------------------ | - |  | ------------------
|                               |  | Class ACommonUnits |  | Class BCommonUnits |   |  | Class CCommonUnits
|Outstanding at January 3, 2009 |  | 4,271,937          |  | 395,120            |   |  | 41,348            
|Granted                        |  | 370                |  |                   |   |  | 12,400            
|Forfeited                      |  |                   |  | (17,789            | ) |  |                  
|Repurchased                    |  |                   |  | (7,217             | ) |  |                  
|                               |  |                    |  |                    |   |  |                   
|Outstanding at April 4, 2009   |  | 4,272,307          |  | 370,114            |   |  | 53,748            
|                               |  |                    |  |                    |   |  |                   
|Vested at April 4, 2009        |  | 4,272,307          |  | 162,304            |   |  | 11,088            
|                               |  |                    |  |                    |   |  |                   

A summary of the Companys nonvested shares as of April 4, 2009, and the activity for the thirteen weeks
ended April 4, 2009 is presented below:



|                             |  |                    |   |  |                                |      |                    |        |   |                                |   |      
|---------------------------- |  | ------------------ | - |  | ------------------------------ | ---- | ------------------ | ------ | - | ------------------------------ | - | -----
|                             |  | Class BCommonUnits |   |  | WeightedAverageCalculatedValue |      | Class CCommonUnits |        |   | WeightedAverageCalculatedValue
|Nonvested at January 3, 2009 |  | 244,204            |   |  | $                              | 9.39 |                    | 33,558 |   |                                | $ | 13.77
|Granted                      |  |                   |   |  |                                |     |                    | 12,400 |   |                                | $ | 8.59 
|Forfeited                    |  | (17,789            | ) |  | $                              | 9.39 |                    |       |   |                                |   |     
|Vested                       |  | (18,605            | ) |  | $                              | 9.39 |                    | (3,298 | ) |                                | $ | 11.83
|                             |  |                    |   |  |                                |      |                    |        |   |                                |   |      
|Nonvested at April 4, 2009   |  | 207,810            |   |  | $                              | 9.39 |                    | 42,660 |   |                                | $ | 12.42
|                             |  |                    |   |  |                                |      |                    |        |   |                                |   |      

The total estimated fair value of equity awards vested during the thirteen weeks ended April 4, 2009 was
$214. Stock-based compensation expense for the thirteen weeks ended April 4, 2009 and March 29, 2008 was $202 and $226, respectively.

As of
April 4, 2009, there was approximately $2,501 of total unrecognized compensation cost related to Class B and Class C common unit equity awards and there is no unrecognized expense related to the Class A common unit equity awards. This cost
is expected to be recognized over the remaining vesting period, of approximately 57 months (April 2009 to January 2014).

Presented below is a summary of
assumptions for the indicated period. There were no grants during the thirteen weeks ended March 29, 2008.



|                                                    |  |                                  |      |  
|--------------------------------------------------- |  | -------------------------------- | ---- | -
|Assumptions                                         |  | Thirteen WeeksEnded April 4,2009 |     
|Weighted average calculated value of awards granted |  | $                                | 8.59 |  
|Weighted average volatility                         |  |                                  | 36.5 | %
|Weighted average expected term (in years)           |  |                                  | 5.0  |  
|Dividend yield                                      |  |                                  |     |  
|Weighted average risk-free interest rate            |  |                                  | 1.7  | %

With respect to the Class C common units, since the Company is no longer publicly traded, the Company based its
estimate of expected volatility on the median historical volatility of a group of eight comparable public companies. The historical volatilities of the comparable companies were measured over a 5-year historical period. The expected term of the
Class C common units granted represents the period of time that the units are expected to be outstanding and is assumed to be approximately 5 years based on managements estimate of the time to a liquidity event. The Company does not expect to
pay dividends, and accordingly, the dividend yield is zero. The risk free interest rate reflects a five-year period commensurate with the expected time to a liquidity event and was based on the U.S. Treasury yield curve.



7



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4. INVENTORIES

The Company
values its inventories on the firstin firstout (FIFO) basis. The components of inventories were as follows:



|                            |  |              |        |                |   |       
|--------------------------- |  | ------------ | ------ | -------------- | - | ------
|                            |  | April 4,2009 |        | January 3,2009
|Finished goods              |  | $            | 60,081 |                | $ | 54,939
|Work-in-process             |  |              | 587    |                |   | 212   
|Raw materials and packaging |  |              | 7,777  |                |   | 7,884 
|                            |  |              |        |                |   |       
|                            |  | $            | 68,445 |                | $ | 63,035
|                            |  |              |        |                |   |       

5. GOODWILL AND INTANGIBLE ASSETS

The Company accounts for goodwill and intangible assets in accordance with SFAS No. 142, Goodwill and Other Intangible Assets. The Company has determined that its tradenames have an indefinite useful
life and, therefore, are not being amortized. Under SFAS 142, goodwill and indefinite lived intangible assets are not amortized but are subject to an annual impairment test.

Intangible Assets

The carrying amount and accumulated amortization of intangible assets consisted of the following:



|                                     |  |                                      |  |                     |         |                         |   |         |               |  |   |        
|------------------------------------ |  | ------------------------------------ |  | ------------------- | ------- | ----------------------- | - | ------- | ------------- |  | - | -------
|                                     |  | WeightedAverageUseful Life(in years) |  | GrossCarryingAmount |         | AccumulatedAmortization |   |         | Net BookValue
|April 4, 2009                        |  |                                      |  |                     |         |                         |   |         |               |  |   |        
|Indefinite life:                     |  |                                      |  |                     |         |                         |   |         |               |  |   |        
|Tradenames                           |  | N/A                                  |  | $                   | 267,955 |                         | $ |        |               |  | $ | 267,955
|                                     |  |                                      |  |                     |         |                         |   |         |               |  |   |        
|Finite-lived intangible assets:      |  |                                      |  |                     |         |                         |   |         |               |  |   |        
|Customer lists                       |  | 5                                    |  |                     | 65,223  |                         |   | (28,859 | )             |  |   | 36,364 
|Favorable lease agreements           |  | 5                                    |  |                     | 2,330   |                         |   | (1,254  | )             |  |   | 1,076  
|Other                                |  | 3                                    |  |                     | 36      |                         |   | (26     | )             |  |   | 10     
|                                     |  |                                      |  |                     |         |                         |   |         |               |  |   |        
|Total finite-lived intangible assets |  |                                      |  |                     | 67,589  |                         |   | (30,139 | )             |  |   | 37,450 
|                                     |  |                                      |  |                     |         |                         |   |         |               |  |   |        
|Total intangible assets              |  |                                      |  | $                   | 335,544 |                         | $ | (30,139 | )             |  | $ | 305,405
|                                     |  |                                      |  |                     |         |                         |   |         |               |  |   |        
|January 3, 2009                      |  |                                      |  |                     |         |                         |   |         |               |  |   |        
|Indefinite life:                     |  |                                      |  |                     |         |                         |   |         |               |  |   |        
|Tradenames                           |  | N/A                                  |  | $                   | 267,955 |                         | $ |        |               |  | $ | 267,955
|                                     |  |                                      |  |                     |         |                         |   |         |               |  |   |        
|Finite-lived intangible assets:      |  |                                      |  |                     |         |                         |   |         |               |  |   |        
|Customer lists                       |  | 5                                    |  |                     | 65,218  |                         |   | (25,500 | )             |  |   | 39,718 
|Favorable lease agreements           |  | 5                                    |  |                     | 2,330   |                         |   | (1,138  | )             |  |   | 1,192  
|Other                                |  | 3                                    |  |                     | 36      |                         |   | (24     | )             |  |   | 12     
|                                     |  |                                      |  |                     |         |                         |   |         |               |  |   |        
|Total finite-lived intangible assets |  |                                      |  |                     | 67,584  |                         |   | (26,662 | )             |  |   | 40,922 
|                                     |  |                                      |  |                     |         |                         |   |         |               |  |   |        
|Total intangible assets              |  |                                      |  | $                   | 335,539 |                         | $ | (26,662 | )             |  | $ | 308,877
|                                     |  |                                      |  |                     |         |                         |   |         |               |  |   |        

Total amortization expense from finitelived intangible assets was $3,477 and $3,484 for the thirteen weeks
ended April 4, 2009 and March 29, 2008, respectively. The intangible assets are amortized on a straight line basis. Favorable lease agreements are amortized over the remaining lease term of each respective lease.

6. LONG-TERM DEBT

Long-term debt consisted of the following at
April 4, 2009 and January 3, 2009:



|                                         |  |              |           |                |   |          
|---------------------------------------- |  | ------------ | --------- | -------------- | - | ---------
|                                         |  | April 4,2009 |           | January 3,2009
|Senior secured revolving credit facility |  | $            |          |                | $ | 70,000   
|Senior secured term loan facility        |  |              | 600,125   |                |   | 600,125  
|Senior notes due 2015                    |  |              | 325,000   |                |   | 325,000  
|Senior subordinated notes due 2017       |  |              | 188,000   |                |   | 188,000  
|                                         |  |              |           |                |   |          
|Total                                    |  |              | 1,113,125 |                |   | 1,183,125
|Less current portion                     |  |              | 31,726    |                |   | 37,650   
|                                         |  |              |           |                |   |          
|                                         |  |             
|Long-term debt                           |  | $            | 1,081,399 |                | $ | 1,145,475
|                                         |  |              |           |                |   |          

Senior Secured Credit Facility

The Companys senior secured credit facility (the Credit Facility) consists of a $650,000 senior secured term loan facility (Term Facility) maturing on February 6, 2014 and a $125,000
senior secured revolving credit facility (Revolving Facility), which expires on February 6, 2013.

All borrowings under the Credit
Facility bear interest at a rate per annum equal to an applicable margin, plus, at the Companys option, (i) the higher of (a) the prime rate (as set forth on the British Banking Association Telerate Page 5) and (b) the federal
funds effective rate, plus one-half percent (0.50%) per annum or (ii) the Eurodollar rate, and resets periodically. In addition to paying interest on outstanding principal under the senior secured credit facility, the Company is required to pay
a commitment fee to the lenders in respect of unutilized loan commitments at a rate of 0.50% per annum. As of April 4, 2009, the weighted average combined interest rate on the senior secured term loan facility and senior secured revolving
credit facility was 3.19%.



8



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##### Table of Contents

Subject to certain exceptions, the Credit Facility requires that 100% of the net proceeds from certain asset sales,
casualty insurance, condemnations and debt issuances, and 50% (subject to step downs) from excess cash flow, as defined, for each fiscal year must be used to pay down outstanding borrowings. The calculation to determine if the Company has excess
cash flow per the Credit Facility is prepared on an annual basis at the end of each fiscal year. As of January 3, 2009, the Company had excess cash flow, as defined in the Credit Facility of $31,726. This amount is classified as short-term debt
on the accompanying consolidated balance sheet and was paid by the Company on April 13, 2009 to further reduce the Companys outstanding borrowings. Of the $31,726 excess cash flow payment, approximately $21,000 was paid with internally
generated cash with the remainder generated through the Companys revolving Credit Facility.

The Credit Facility contains a customary financial
covenant which requires that the Company maintain at the end of each fiscal quarter, commencing with the quarter ended January 3, 2009 through the quarter ending October 3, 2009, a consolidated total secured debt (net of cash and cash
equivalents not to exceed $30,000) to consolidated EBITDA ratio of no more than 4.00 to 1.00. As of April 4, 2009, the Companys actual secured leverage ratio was 3.24 to 1.00, as calculated in accordance with the Credit Facility. As of
April 4, 2009, total secured debt was approximately $579,508 (net of $20,617 in cash). Under the Credit Facility, EBITDA is defined as net income plus, interest, taxes, depreciation and amortization, further adjusted to add back extraordinary,
unusual or non-recurring losses, non-cash stock option expense, fees and expenses related to the Transaction, fees and expenses under the Management Agreement with our equity sponsor, restructuring charges or reserves, as well as other non-cash
charges, expenses or losses, and further adjusted to subtract extraordinary, unusual or non-recurring gains, other non-cash income or gains, and certain cash contributions to our common equity.

As a result of concerns about the stability of the financial and credit markets and the strength of counterparties during this challenging global macroeconomic
environment, many financial institutions have reduced, and in some instances ceased to provide, funding to borrowers. In the Companys case, Lehman Commercial Paper, Inc. (LCP), one of the lenders under the Companys $125,000
Revolving Facility, and who also serves as the Administrative Agent thereunder, of the Revolving Facility declared bankruptcy in September 2008. LCPs share of the Revolving Facility was 12% or $15,000 of the total funds available under the
Revolving Facility. As a result of the bankruptcy, the Companys ability to draw upon that portion of the Revolving Facility has been reduced. To date, the Company has not secured substitute financing. If the Company is unable to secure
additional or substitute funding from other parties, the Revolving Facility would be effectively reduced from $125,000 to $110,000. As of April 4, 2009, there were no amounts outstanding under the Revolving Facility.

As of April 4, 2009, the Company had outstanding letters of credit of $1,527, leaving $108,473 in availability under the Revolving Facility, excluding the $15,000
applicable to LCP.

7. DERIVATIVE FINANCIAL INSTRUMENTS

On
January 1, 2009, the Company adopted SFAS 161, which requires enhanced disclosures regarding an entitys derivative and hedging activities as provided below. The Company follows SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities, as amended and related interpretations, including the disclosure requirements of SFAS 161. SFAS 133 establishes accounting and reporting standards for derivative instruments. Specifically, SFAS 133 requires
an entity to recognize all derivatives as either assets or liabilities in the statement of financial position and to measure those instruments at fair value. Additionally, the fair value adjustments will affect either stockholders equity as
accumulated other comprehensive income (loss) or net income (loss) depending on whether the derivative instrument qualifies as a hedge for accounting purposes and, if so, the nature of the hedging activity.

Cash Flow Hedges

The Company uses interest rate swaps to eliminate
the variability of a portion of cash flows associated with the forecasted interest payments on its $650,000 senior secured term loan facility. This is achieved through converting a portion of the floating rate senior secured term loan facility to a
fixed rate by entering into pay-fixed interest rate swaps. The Company has determined that its interest rate swap agreements have been appropriately designated and documented as cash flow hedges under SFAS 133. Gains and losses related to a hedge
that result from changes in the fair value of the hedge are either recognized in income immediately to offset the gain or loss on the hedged item, or the effective portion is deferred and reported as a component of other comprehensive income in
stockholders equity and subsequently recognized in income when the hedged item affects earnings. Since inception there has been no hedge ineffectiveness recorded in earnings. The cash flow hedges are recorded in the Companys condensed
consolidated balance sheet at fair value, with the offset reflected in other comprehensive income (OCI) and deferred taxes.

On February 14, 2007 the
Company entered into an interest rate swap agreement with Merrill Lynch Capital Services, Inc. to hedge a portion of the cash flows associated with its $650,000 senior secured term loan facility. The agreement has a total notional value of $415,000.
The $415,000 notional value amortizes over the life of the swap. The interest rate swap agreement effectively converts the senior secured term loan facility, which is floating-rate debt, to a fixed-rate up to the unamortized notional value of the
swap by having the Company pay fixed-rate amounts in exchange for the receipt of the floating-rate interest payments. Under the terms of this agreement, a quarterly net settlement is made for the difference between the fixed rate of 5.095% and the
variable rate based upon the three-month LIBOR rate on the notional amount of the interest rate swap. This interest rate swap agreement terminates on February 14, 2010.

On February 13, 2008 the Company entered into another interest rate swap agreement with Bank of America, N.A., effective March 31, 2008, to hedge an additional portion of the cash flows associated with its
$650,000 senior secured term loan facility. The agreement has an initial notional value of $100,000. The $100,000 notional value increases on March 31, 2010 to approximately $397,000 and then amortizes over the remaining life of the swap. The
interest rate swap agreement converts amounts under the senior secured term loan facility, which is floatingrate debt, to a fixedrate by having the Company pay fixedrate amounts in exchange for the receipt of the amount of the
floatingrate interest payments. Under the terms of this agreement, a quarterly net settlement is made for the difference between the fixed rate of 3.347% and the variable rate based upon the threemonth LIBOR rate on the notional amount
of the interest rate swap. This interest rate swap agreement terminates on March 31, 2011.

Derivatives Not Designated as Hedging Instruments

In November 2008, the Company entered into an agreement with a financial institution to hedge a portion of its diesel fuel requirements. This agreement is
based on diesel fuel consumed by independent freight carriers delivering the Companys products. These carriers charge the Company a basic rate per mile that is subject to a fuel surcharge for diesel fuel price increases that they incur. The
hedge agreement is designed to reduce the Companys exposure to the volatility of diesel fuel pricing and the resulting fuel surcharges payable by the Company by setting a fixed price per gallon for the year. This diesel hedge agreement does
not qualify for hedge accounting under SFAS 133. Accordingly, the Company marks the diesel hedge to market every quarter with the changes in fair value recognized in earnings.



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The fair values of the Companys derivative instruments outstanding as of April 4, 2009, were as follows:



|                                                                      |  |                                                            |  |              |       
|--------------------------------------------------------------------- |  | ---------------------------------------------------------- |  | ------------ | ------
|                                                                      |  | Fair Values of Derivative InstrumentsLiability Derivatives
|                                                                      |  |                                                            |  | April 4,2009
|                                                                      |  | Balance Sheet Location                                     |  | Fair Value  
|Derivatives designated as hedging instruments under Statement 133     |  |                                                            |  |              |       
|Interest rate swaps                                                   |  | Other current liabilities                                  |  | $            | 19,128
|                                                                      |  |                                                            |  |              |       
|                                                                      |  |                                                           
|Derivatives not designated as hedging instruments under Statement 133 |  |                                                            |  |              |       
|Diesel hedge contract                                                 |  | Other current liabilities                                  |  |              | 319   
|                                                                      |  |                                                            |  |              |       
|Total Derivative Liabilities                                          |  |                                                            |  | $            | 19,447
|                                                                      |  |                                                            |  |              |       

The effect of derivative instruments on the condensed consolidated statement of operations for the thirteen weeks
ended April 4, 2009, was as follows:



|                                                                      |  |                                          |  |   |   
|--------------------------------------------------------------------- |  | ---------------------------------------- |  | - | --
|                                                                      |  | Location of Gain Recognized onDerivative |  |  
|Derivatives not designated as hedging instruments under Statement 133 |  |                                          |  |   |   
|Diesel hedge contract                                                 |  | Other income                             |  | $ | 26
|                                                                      |  |                                          |  |   |   
|Total                                                                 |  |                                          |  | $ | 26
|                                                                      |  |                                          |  |   |   



|                                                                  |  |                                                                 |        |   |                                                                                 |                  |                                                                              |   |        |  
|----------------------------------------------------------------- |  | --------------------------------------------------------------- | ------ | - | ------------------------------------------------------------------------------- | ---------------- | ---------------------------------------------------------------------------- | - | ------ | -
|                                                                  |  | Amount of LossRecognized in OCI onDerivative(Effective Portion) |        |   | Location of LossReclassified fromAccumulated OCI intoIncome (Effective Portion) |                  | Amount of LossReclassified fromAccumulated OCIinto Income(Effective Portion) |  
|Derivatives designated as hedging instruments under Statement 133 |  |                                                                 |        |   |                                                                                 |                  |                                                                              |   |        |  
|Interest rate swaps                                               |  | $                                                               | (1,941 | ) |                                                                                 | Interest Expense |                                                                              | $ | (3,727 | )
|                                                                  |  |                                                                 |        |   |                                                                                 |                  |                                                                              |   |        |  
|Total                                                             |  | $                                                               | (1,941 | ) |                                                                                 |                  |                                                                              | $ | (3,727 | )
|                                                                  |  |                                                                 |        |   |                                                                                 |                  |                                                                              |   |        |  

8. FAIR VALUE MEASUREMENTS

On January 4, 2009, the Company adopted SFAS 157, for all non-financial assets and non-financial liabilities recognized or disclosed in the financial statements on a nonrecurring basis. The adoption of SFAS 157 did not have a material
effect on the Companys financial statements. As of April 4, 2009, the Company had no non-financial assets or non-financial liabilities requiring measurement at fair value.

SFAS 157 defines fair value, provides a consistent framework for measuring fair value under GAAP and expands fair value financial statement disclosure requirements. SFAS 157s valuation techniques are based on
observable and unobservable inputs. Observable inputs reflect readily obtainable data from independent sources, while unobservable inputs reflect market assumptions. SFAS 157 classifies these inputs into the following hierarchy:

Level 1 Inputs Quoted prices for identical instruments in active markets.

Level 2 Inputs Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are
observable or whose significant value drivers are observable.

Level 3 Inputs Instruments with primarily unobservable value drivers.

The following table represents the fair value hierarchy for those financial assets and liabilities measured at fair value on a recurring basis as of
April 4, 2009:



|                      |  |                                                                 |     |         |   |         |  |       |   |  |   |       
|--------------------- |  | --------------------------------------------------------------- | --- | ------- | - | ------- |  | ----- | - |  | - | ------
|                      |  | Fair Value Measurements on a Recurring Basisas of April 4, 2009
|                      |  | Level 1                                                         |     | Level 2 |   | Level 3 |  | Total
|Assets                |  |                                                                 |     |         |   |         |  |       |   |  |   |       
|Marketable securities |  | $                                                               | 772 |         | $ |        |  | $     |  |  | $ | 772   
|                      |  |                                                                 |     |         |   |         |  |       |   |  |   |       
|Total Assets          |  | $                                                               | 772 |         | $ |        |  | $     |  |  | $ | 772   
|                      |  |                                                                 |     |         |   |         |  |       |   |  |   |       
|Liabilities           |  |                                                                 |     |         |   |         |  |       |   |  |   |       
|Interest rate swaps   |  | $                                                               |    |         | $ | 19,128  |  | $     |  |  | $ | 19,128
|Diesel hedge contract |  |                                                                 |    |         |   | 319     |  |       |  |  |   | 319   
|                      |  |                                                                 |     |         |   |         |  |       |   |  |   |       
|Total Liabilities     |  | $                                                               |    |         | $ | 19,447  |  | $     |  |  | $ | 19,447
|                      |  |                                                                 |     |         |   |         |  |       |   |  |   |       

The Company holds marketable securities in its deferred compensation plan. The marketable securities consist of
investments in mutual funds and are recorded at fair value based on third party quotes. The Company uses an income approach to value the asset and liability for its outstanding interest rate swaps using a discounted cash flow model that takes into
account the present value of future cash flows under the terms of the contract using current market information as of the reporting date such as the three month LIBOR curve and the creditworthiness of the Company and its counterparties. The fair
value of the diesel hedge contract is based on home heating oil future prices for the duration of the contract. See Note 7, Derivative Financial Instruments for additional information on the interest rate swaps and diesel hedge contract.



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##### Table of Contents

9. COMPREHENSIVE LOSS

The
computation of comprehensive loss, net of tax, is as follows:



|                                                       |  |                                |         |   |                                 |   |         |  
|------------------------------------------------------ |  | ------------------------------ | ------- | - | ------------------------------- | - | ------- | -
|                                                       |  | ThirteenWeeksEndedApril 4,2009 |         |   | ThirteenWeeksEndedMarch 29,2008 |  
|Net loss                                               |  | $                              | (11,489 | ) |                                 | $ | (7,858  | )
|Other comprehensive loss:                              |  |                                |         |   |                                 |   |         |  
|Currency translation adjustments                       |  |                                | 1,089   |   |                                 |   | (33     | )
|Change in unrealized gain (loss) on interest rate swap |  |                                | 1,087   |   |                                 |   | (5,227  | )
|                                                       |  |                                |         |   |                                 |   |         |  
|Other comprehensive income (loss)                      |  |                                | 2,176   |   |                                 |   | (5,260  | )
|                                                       |  |                                |         |   |                                 |   |         |  
|Comprehensive loss                                     |  | $                              | (9,313  | ) |                                 | $ | (13,118 | )
|                                                       |  |                                |         |   |                                 |   |         |  

10. 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 sold is similar, the type of customer for the product and services and 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 reconciliation to the total consolidated results. Other components of the condensed consolidated statements 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.

The following are the relevant data for the
thirteen weeks ended April 4, 2009 and March 29, 2008:



|                                      |  |        |        |           |   |                             |  |   |                                                         |   |  |   |         |  
|------------------------------------- |  | ------ | ------ | --------- | - | --------------------------- |  | - | ------------------------------------------------------- | - |  | - | ------- | -
|Thirteen Weeks Ended April 4, 2009    |  | Retail |        | Wholesale |   | Unallocated/Corporate/Other |  |   | Balance perCondensedConsolidatedStatements ofOperations |  
|Sales                                 |  | $      | 70,360 |           | $ | 55,348                      |  | $ |                                                        |   |  | $ | 125,708 |  
|Gross profit                          |  |        | 44,147 |           |   | 25,263                      |  |   | (8                                                      | ) |  |   | 69,402  |  
|Selling expenses                      |  |        | 39,207 |           |   | 5,314                       |  |   | 3,958                                                   |   |  |   | 48,479  |  
|Income (loss) from operations         |  |        | 4,940  |           |   | 19,949                      |  |   | (21,316                                                 | ) |  |   | 3,573   |  
|Other expense, net                    |  |        |       |           |   |                            |  |   | (23,145                                                 | ) |  |   | (23,145 | )
|Loss before benefit from income taxes |  |        |       |           |   |                            |  |   |                                                        |   |  |   | (19,572 | )
|                                      |  |        |        |          
|Thirteen Weeks Ended March 29, 2008   |  | Retail |        | Wholesale |   | Unallocated/Corporate/Other |  |   | Balance perCondensedConsolidatedStatements ofOperations |  
|Sales                                 |  | $      | 72,839 |           | $ | 68,060                      |  | $ |                                                        |   |  | $ | 140,899 |  
|Gross profit                          |  |        | 45,301 |           |   | 30,970                      |  |   | 91                                                      |   |  |   | 76,362  |  
|Selling expenses                      |  |        | 40,411 |           |   | 5,365                       |  |   | 3,738                                                   |   |  |   | 49,514  |  
|Income (loss) from operations         |  |        | 4,889  |           |   | 25,605                      |  |   | (19,535                                                 | ) |  |   | 10,959  |  
|Other expense, net                    |  |        |       |           |   |                            |  |   | (23,695                                                 | ) |  |   | (23,695 | )
|Loss before benefit from income taxes |  |        |       |           |   |                            |  |   |                                                        |   |  |   | (12,736 | )

Sales for the Companys international operations, which are included in the wholesale segment for reporting
purposes, were approximately $10,915 and $9,607 for the thirteen weeks ended April 4, 2009 and March 29, 2008, respectively. Long lived assets of the Companys international operations were approximately $892 and $1,094 as of
April 4, 2009 and March 29, 2008, respectively.

11. RESTRUCTURING CHARGE

During the first quarter of fiscal 2008, the Company initiated a restructuring plan designed to close three underperforming Illuminations stores and move the Illuminations corporate headquarters from Petaluma,
California to the Companys South Deerfield, Massachusetts headquarters. In connection with this restructuring plan, a charge of $1,475 was recorded during the thirteen weeks ended March 29, 2008. Included in the restructuring charge was
$632 related to lease termination costs, $493 related to non-cash fixed assets write-offs and other costs, and $350 in employee related costs. As of March 29, 2008 the three underperforming stores had been closed.

During the fourth quarter of 2008, the Company initiated a restructuring plan involving the closing of the Companys remaining 28 Illuminations retail stores and
the discontinuance of the related Illuminations consumer direct business, the closing of one underperforming Yankee Candle retail store, and limited reductions in the Companys corporate and administrative workforce. As of April 30, 2009,
the Company had closed all but one of the Illuminations stores. In connection with this restructuring plan, a charge of $2,415 was recorded during the thirteen weeks ended April 4, 2009. Included in the first quarter 2009 restructuring charge
was $1,381 related to occupancy related costs, primarily consisting of lease termination costs, $273 related to other costs and $761 primarily related to employee severance costs. The Company currently expects the total charge related to the
restructuring plan to be approximately $18,000 to $22,000 including the $12,382 and $2,415 recorded during the fourth quarter of 2008 and the first quarter of 2009, respectively. The majority of these additional costs relate to lease termination
costs that will be incurred during the second quarter of 2009. The lease related to the Illuminations corporate headquarters in Petaluma, California expires in March 2013. This lease will be paid through March 2013 unless the Company is able to
structure a buyout agreement with the landlord.



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The following is a summary of restructuring charge activity for the thirteen weeks ended April 4, 2009:



|                  |  |                             |       |                                    |   |            |                           |   |                 |   |  |   |     |   |  |   |    
|----------------- |  | --------------------------- | ----- | ---------------------------------- | - | ---------- | ------------------------- | - | --------------- | - |  | - | --- | - |  | - | ---
|                  |  | Accrued as ofJanuary 3,2009 |       | Thirteen Weeks Ended April 4, 2009 |   |            | Accrued as ofApril 4,2009
|                  |  |                             |       | Expense                            |   | Costs Paid |                           |   | Non-CashCharges |   |  |  
|Occupancy related |  | $                           | 1,041 |                                    | $ | 1,381      |                           | $ | (2,020          | ) |  | $ | 96  |   |  | $ | 498
|Employee related  |  |                             |      |                                    |   | 761        |                           |   | (537            | ) |  |   |    |   |  |   | 224
|Other             |  |                             | 25    |                                    |   | 273        |                           |   | (30             | ) |  |   | (34 | ) |  |   | 234
|                  |  |                             |       |                                    |   |            |                           |   |                 |   |  |   |     |   |  |   |    
|                  |  |                             |       |                                    |  
|Total             |  | $                           | 1,066 |                                    | $ | 2,415      |                           | $ | (2,587          | ) |  | $ | 62  |   |  | $ | 956
|                  |  |                             |       |                                    |   |            |                           |   |                 |   |  |   |     |   |  |   |    

12. COMMITMENTS AND CONTINGENCIES

Contingencies

A class action lawsuit was filed against the Company in February 2005 for alleged violations of
certain California state wage and hour and employment laws with respect to certain employees in the Companys California retail stores. In December 2007 a preliminary settlement agreement was reached pursuant to mediation. The settlement is now
pending court approval. Pursuant to the agreement the Company would pay a total of $950 (inclusive of attorneys fees and administrative expenses) into a settlement fund. This amount was recorded in the Companys consolidated statement of
operations during the fourth quarter of fiscal 2007. The Company made the settlement payment on April 3, 2009.

In connection with the Linens N
Things (Linens) bankruptcy proceedings the Company received a letter dated December 19, 2008 from counsel to Linens Holding Co. and its affiliates, which letter alleges that, pursuant to Sections 547 and 550 of the United States
Bankruptcy Code, the Company is required to return to Linens approximately $6,600 in allegedly preferential transfers allegedly made to Yankee Candle during the 90-day period preceding the filing of the Linens bankruptcy cases. The
letter also alleges that Yankee Candle is required to pay to Linens approximately $1,300 on account of credits allegedly earned but not redeemed by Linens prior to the filing of the Linens bankruptcy cases. The letter offered to settle these claims
and threatened legal action if settlement terms cannot be reached. The Company is currently evaluating these alleged claims with outside counsel. While the Company believes it has a number of strong potential defenses to all or a significant portion
of these claims and plan to vigorously contest any action brought by Linens, the Company cannot at this time predict what the outcome of this matter would be if legal action were to be pursued by Linens. As of April 4, 2009, the Company did not
record any amount related to these claims in its consolidated statement of operations. If any matter were to be brought by Linens and were decided in a manner adverse to us, it could materially adversely impact our results of operations.

13. FINANCIAL INFORMATION RELATED TO GUARANTOR SUBSIDIARIES

As discussed
in Note 6 Long-term Debt, obligations under the senior notes are guaranteed on an unsecured senior basis and obligations under the senior subordinated notes are guaranteed on an unsecured senior subordinated basis by the Parent and 100%
of the issuers existing and future domestic subsidiaries. The senior notes are fully and unconditionally guaranteed by all of our 100% owned U.S. subsidiaries (the Guarantor Subsidiaries) on a senior unsecured basis. These
guarantees are joint and several obligations of the Guarantors. The foreign subsidiary does not guarantee these notes.

The following tables present
condensed consolidating supplementary financial information for the issuer of the notes, the Parent, the issuers domestic guarantor subsidiaries and the non guarantor together with eliminations as of and for the periods indicated. The
issuers parent company is also a guarantor of the notes. Parent was a newly formed entity with no assets, liabilities or operations prior to the completion of the Merger on February 6, 2007. Separate complete financial statements of the
respective guarantors would not provide additional material information that would be useful in assessing the financial composition of the guarantors.

The
Company had previously presented its intercompany payables and receivables transactions between the issuer and its guarantor and non-guarantor subsidiaries as financing activities in the condensed consolidating statements of cash flows. These
transactions should have been presented in investing and financing activities. The accompanying condensed consolidating statement of cash flows for the thirteen weeks ended March 29, 2008 has been corrected to properly present these cash flow
activities in the respective columns. Any changes in the classification between investing and financing activities are eliminated in consolidation, therefore there is no impact on the condensed consolidating statement of cash flows for the thirteen
weeks ended March 29, 2008.



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Condensed consolidating financial information is as follows:

YANKEE HOLDING CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

April 4, 2009

(in thousands)



|                                                     |  |        |         |   |                 |   |           |                       |  |                        |       |                          |   |        |              |   |         |   |  |   |           |  
|---------------------------------------------------- |  | ------ | ------- | - | --------------- | - | --------- | --------------------- |  | ---------------------- | ----- | ------------------------ | - | ------ | ------------ | - | ------- | - |  | - | --------- | -
|                                                     |  | Parent |         |   | Issuer of Notes |   |           | GuarantorSubsidiaries |  | NonGuarantorSubsidiary |       | IntercompanyEliminations |   |        | Consolidated |  
|ASSETS                                               |  |        |         |   |                 |   |           |                       |  |                        |       |                          |   |        |              |   |         |   |  |   |           |  
|CURRENT ASSETS:                                      |  |        |         |   |                 |   |           |                       |  |                        |       |                          |   |        |              |   |         |   |  |   |           |  
|Cash                                                 |  | $      |        |   |                 | $ | 17,611    |                       |  | $                      | 1,960 |                          | $ | 1,046  |              | $ |        |   |  | $ | 20,617    |  
|Accounts receivable, net                             |  |        |        |   |                 |   | 31,233    |                       |  |                        | 46    |                          |   | 6,880  |              |   |        |   |  |   | 38,159    |  
|Inventory                                            |  |        |        |   |                 |   | 61,324    |                       |  |                        | 77    |                          |   | 7,044  |              |   |        |   |  |   | 68,445    |  
|Prepaid expenses and other current assets            |  |        |        |   |                 |   | 19,663    |                       |  |                        | 245   |                          |   | 612    |              |   |        |   |  |   | 20,520    |  
|Deferred tax assets                                  |  |        |        |   |                 |   | 12,745    |                       |  |                        | 12    |                          |   |       |              |   |        |   |  |   | 12,757    |  
|                                                     |  |        |         |   |                 |   |           |                       |  |                        |       |                          |   |        |              |   |         |   |  |   |           |  
|TOTAL CURRENT ASSETS                                 |  |        |        |   |                 |   | 142,576   |                       |  |                        | 2,340 |                          |   | 15,582 |              |   |        |   |  |   | 160,498   |  
|PROPERTY AND EQUIPMENT, NET                          |  |        |        |   |                 |   | 133,781   |                       |  |                        | 66    |                          |   | 892    |              |   |        |   |  |   | 134,739   |  
|MARKETABLE SECURITIES                                |  |        |        |   |                 |   | 772       |                       |  |                        |      |                          |   |       |              |   |        |   |  |   | 772       |  
|GOODWILL                                             |  |        |        |   |                 |   | 643,801   |                       |  |                        |      |                          |   |       |              |   |        |   |  |   | 643,801   |  
|INTANGIBLE ASSETS                                    |  |        |        |   |                 |   | 304,951   |                       |  |                        |      |                          |   | 454    |              |   |        |   |  |   | 305,405   |  
|DEFERRED FINANCING COSTS                             |  |        |        |   |                 |   | 23,145    |                       |  |                        |      |                          |   |       |              |   |        |   |  |   | 23,145    |  
|OTHER ASSETS                                         |  |        |        |   |                 |   | 1,049     |                       |  |                        |      |                          |   | 22     |              |   |        |   |  |   | 1,071     |  
|INTERCOMPANY RECEIVABLES                             |  |        |        |   |                 |   | 12,730    |                       |  |                        | 613   |                          |   |       |              |   | (13,343 | ) |  |   |          |  
|INVESTMENT IN SUBSIDIARIES                           |  |        | (11,912 | ) |                 |   | 2,137     |                       |  |                        |      |                          |   |       |              |   | 9,775   |   |  |   |          |  
|                                                     |  |        |         |   |                 |   |           |                       |  |                        |       |                          |   |        |              |   |         |   |  |   |           |  
|TOTAL ASSETS                                         |  | $      | (11,912 | ) |                 | $ | 1,264,942 |                       |  | $                      | 3,019 |                          | $ | 16,950 |              | $ | (3,568  | ) |  | $ | 1,269,431 |  
|                                                     |  |        |         |   |                 |   |           |                       |  |                        |       |                          |   |        |              |   |         |   |  |   |           |  
|LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITY       |  |        |         |   |                 |   |           |                       |  |                        |       |                          |   |        |              |   |         |   |  |   |           |  
|CURRENT LIABILITIES:                                 |  |        |         |   |                 |   |           |                       |  |                        |       |                          |   |        |              |   |         |   |  |   |           |  
|Accounts payable                                     |  | $      |        |   |                 | $ | 22,133    |                       |  | $                      | 67    |                          | $ | 1,350  |              | $ |        |   |  | $ | 23,550    |  
|Accrued payroll                                      |  |        |        |   |                 |   | 6,286     |                       |  |                        | 63    |                          |   | 253    |              |   |        |   |  |   | 6,602     |  
|Accrued interest                                     |  |        |        |   |                 |   | 6,524     |                       |  |                        |      |                          |   |       |              |   |        |   |  |   | 6,524     |  
|Accrued purchases of property and equipment          |  |        |        |   |                 |   | 2,741     |                       |  |                        |      |                          |   |       |              |   |        |   |  |   | 2,741     |  
|Other accrued liabilities                            |  |        |        |   |                 |   | 33,271    |                       |  |                        | 1,567 |                          |   | 1,189  |              |   |        |   |  |   | 36,027    |  
|Current portion of long-term debt                    |  |        |        |   |                 |   | 31,726    |                       |  |                        |      |                          |   |       |              |   |        |   |  |   | 31,726    |  
|                                                     |  |        |         |   |                 |   |           |                       |  |                        |       |                          |   |        |              |   |         |   |  |   |           |  
|TOTAL CURRENT LIABILITIES                            |  |        |        |   |                 |   | 102,681   |                       |  |                        | 1,697 |                          |   | 2,792  |              |   |        |   |  |   | 107,170   |  
|DEFERRED COMPENSATION OBLIGATION                     |  |        |        |   |                 |   | 825       |                       |  |                        |      |                          |   |       |              |   |        |   |  |   | 825       |  
|DEFERRED TAX LIABILITIES                             |  |        |        |   |                 |   | 78,403    |                       |  |                        |      |                          |   |       |              |   |        |   |  |   | 78,403    |  
|LONG-TERM DEBT                                       |  |        |        |   |                 |   | 1,081,399 |                       |  |                        |      |                          |   |       |              |   |        |   |  |   | 1,081,399 |  
|DEFERRED RENT                                        |  |        |        |   |                 |   | 10,625    |                       |  |                        |      |                          |   |       |              |   |        |   |  |   | 10,625    |  
|OTHER LONG-TERM LIABILITIES                          |  |        |        |   |                 |   | 2,921     |                       |  |                        |      |                          |   |       |              |   |        |   |  |   | 2,921     |  
|INTERCOMPANY PAYABLES                                |  |        |        |   |                 |   |          |                       |  |                        |      |                          |   | 13,343 |              |   | (13,343 | ) |  |   |          |  
|STOCKHOLDERS (DEFICIT) EQUITY                       |  |        | (11,912 | ) |                 |   | (11,912   | )                     |  |                        | 1,322 |                          |   | 815    |              |   | 9,775   |   |  |   | (11,912   | )
|                                                     |  |        |         |   |                 |   |           |                       |  |                        |       |                          |   |        |              |   |         |   |  |   |           |  
|TOTAL LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITY |  | $      | (11,912 | ) |                 | $ | 1,264,942 |                       |  | $                      | 3,019 |                          | $ | 16,950 |              | $ | (3,568  | ) |  | $ | 1,269,431 |  
|                                                     |  |        |         |   |                 |   |           |                       |  |                        |       |                          |   |        |              |   |         |   |  |   |           |  



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YANKEE HOLDING CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATING BALANCE SHEET

January 3, 2009

(in thousands)



|                                                     |  |        |        |   |                 |   |           |                       |  |   |                        |   |                          |   |        |              |   |         |   |  |   |           |  
|---------------------------------------------------- |  | ------ | ------ | - | --------------- | - | --------- | --------------------- |  | - | ---------------------- | - | ------------------------ | - | ------ | ------------ | - | ------- | - |  | - | --------- | -
|                                                     |  | Parent |        |   | Issuer of Notes |   |           | GuarantorSubsidiaries |  |   | NonGuarantorSubsidiary |   | IntercompanyEliminations |   |        | Consolidated |  
|ASSETS                                               |  |        |        |   |                 |   |           |                       |  |   |                        |   |                          |   |        |              |   |         |   |  |   |           |  
|CURRENT ASSETS:                                      |  |        |        |   |                 |   |           |                       |  |   |                        |   |                          |   |        |              |   |         |   |  |   |           |  
|Cash                                                 |  | $      |       |   |                 | $ | 128,037   |                       |  | $ | 2,147                  |   |                          | $ | 393    |              | $ |        |   |  | $ | 130,577   |  
|Accounts receivable, net                             |  |        |       |   |                 |   | 31,356    |                       |  |   | 783                    |   |                          |   | 7,014  |              |   |        |   |  |   | 39,153    |  
|Inventory                                            |  |        |       |   |                 |   | 54,843    |                       |  |   | 1,696                  |   |                          |   | 6,496  |              |   |        |   |  |   | 63,035    |  
|Prepaid expenses and other current assets            |  |        |       |   |                 |   | 9,447     |                       |  |   | 241                    |   |                          |   | 496    |              |   |        |   |  |   | 10,184    |  
|Deferred tax assets                                  |  |        |       |   |                 |   | 12,581    |                       |  |   | 288                    |   |                          |   |       |              |   |        |   |  |   | 12,869    |  
|                                                     |  |        |        |   |                 |   |           |                       |  |   |                        |   |                          |   |        |              |   |         |   |  |   |           |  
|TOTAL CURRENT ASSETS                                 |  |        |       |   |                 |   | 236,264   |                       |  |   | 5,155                  |   |                          |   | 14,399 |              |   |        |   |  |   | 255,818   |  
|                                                     |  |        |        |   |                 |  
|PROPERTY AND EQUIPMENT, NET                          |  |        |       |   |                 |   | 136,724   |                       |  |   | 621                    |   |                          |   | 877    |              |   |        |   |  |   | 138,222   |  
|MARKETABLE SECURITIES                                |  |        |       |   |                 |   | 540       |                       |  |   |                       |   |                          |   |       |              |   |        |   |  |   | 540       |  
|GOODWILL                                             |  |        |       |   |                 |   | 643,570   |                       |  |   | 231                    |   |                          |   |       |              |   |        |   |  |   | 643,801   |  
|INTANGIBLE ASSETS                                    |  |        |       |   |                 |   | 307,220   |                       |  |   | 1,191                  |   |                          |   | 466    |              |   |        |   |  |   | 308,877   |  
|DEFERRED FINANCING COSTS                             |  |        |       |   |                 |   | 24,170    |                       |  |   |                       |   |                          |   |       |              |   |        |   |  |   | 24,170    |  
|OTHER ASSETS                                         |  |        |       |   |                 |   | 1,103     |                       |  |   |                       |   |                          |   | 38     |              |   |        |   |  |   | 1,141     |  
|INTERCOMPANY RECEIVABLES                             |  |        |       |   |                 |   | 26,956    |                       |  |   |                       |   |                          |   |       |              |   | (26,956 | ) |  |   |          |  
|INVESTMENT IN SUBSIDIARIES                           |  |        | (2,821 | ) |                 |   | (9,173    | )                     |  |   |                       |   |                          |   |       |              |   | 11,994  |   |  |   |          |  
|                                                     |  |        |        |   |                 |   |           |                       |  |   |                        |   |                          |   |        |              |   |         |   |  |   |           |  
|TOTAL ASSETS                                         |  | $      | (2,821 | ) |                 | $ | 1,367,374 |                       |  | $ | 7,198                  |   |                          | $ | 15,780 |              | $ | (14,962 | ) |  | $ | 1,372,569 |  
|                                                     |  |        |        |   |                 |   |           |                       |  |   |                        |   |                          |   |        |              |   |         |   |  |   |           |  
|LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITY       |  |        |        |   |                 |   |           |                       |  |   |                        |   |                          |   |        |              |   |         |   |  |   |           |  
|CURRENT LIABILITIES:                                 |  |        |        |   |                 |   |           |                       |  |   |                        |   |                          |   |        |              |   |         |   |  |   |           |  
|Accounts payable                                     |  | $      |       |   |                 | $ | 21,445    |                       |  | $ | 290                    |   |                          | $ | 1,077  |              | $ |        |   |  | $ | 22,812    |  
|Accrued payroll                                      |  |        |       |   |                 |   | 7,495     |                       |  |   | 27                     |   |                          |   | 219    |              |   |        |   |  |   | 7,741     |  
|Accrued interest                                     |  |        |       |   |                 |   | 18,042    |                       |  |   |                       |   |                          |   |       |              |   |        |   |  |   | 18,042    |  
|Accrued purchases of property and equipment          |  |        |       |   |                 |   | 4,279     |                       |  |   |                       |   |                          |   |       |              |   |        |   |  |   | 4,279     |  
|Other accrued liabilities                            |  |        |       |   |                 |   | 45,475    |                       |  |   | 2,365                  |   |                          |   | 1,194  |              |   |        |   |  |   | 49,034    |  
|Current portion of long-term debt                    |  |        |       |   |                 |   | 37,650    |                       |  |   |                       |   |                          |   |       |              |   |        |   |  |   | 37,650    |  
|                                                     |  |        |        |   |                 |   |           |                       |  |   |                        |   |                          |   |        |              |   |         |   |  |   |           |  
|TOTAL CURRENT LIABILITIES                            |  |        |       |   |                 |   | 134,386   |                       |  |   | 2,682                  |   |                          |   | 2,490  |              |   |        |   |  |   | 139,558   |  
|                                                     |  |        |        |   |                 |  
|DEFERRED COMPENSATION OBLIGATION                     |  |        |       |   |                 |   | 740       |                       |  |   |                       |   |                          |   |       |              |   |        |   |  |   | 740       |  
|DEFERRED TAX LIABILITIES                             |  |        |       |   |                 |   | 75,905    |                       |  |   |                       |   |                          |   |       |              |   |        |   |  |   | 75,905    |  
|LONG-TERM DEBT                                       |  |        |       |   |                 |   | 1,145,475 |                       |  |   |                       |   |                          |   |       |              |   |        |   |  |   | 1,145,475 |  
|DEFERRED RENT                                        |  |        |       |   |                 |   | 10,787    |                       |  |   | 23                     |   |                          |   |       |              |   |        |   |  |   | 10,810    |  
|OTHER LONG-TERM LIABILITIES                          |  |        |       |   |                 |   | 2,902     |                       |  |   |                       |   |                          |   |       |              |   |        |   |  |   | 2,902     |  
|INTERCOMPANY PAYABLES                                |  |        |       |   |                 |   |          |                       |  |   | 15,495                 |   |                          |   | 11,461 |              |   | (26,956 | ) |  |   |          |  
|STOCKHOLDERS (DEFICIT) EQUITY                       |  |        | (2,821 | ) |                 |   | (2,821    | )                     |  |   | (11,002                | ) |                          |   | 1,829  |              |   | 11,994  |   |  |   | (2,821    | )
|                                                     |  |        |        |   |                 |   |           |                       |  |   |                        |   |                          |   |        |              |   |         |   |  |   |           |  
|TOTAL LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITY |  | $      | (2,821 | ) |                 | $ | 1,367,374 |                       |  | $ | 7,198                  |   |                          | $ | 15,780 |              | $ | (14,962 | ) |  | $ | 1,372,569 |  
|                                                     |  |        |        |   |                 |   |           |                       |  |   |                        |   |                          |   |        |              |   |         |   |  |   |           |  



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YANKEE HOLDING CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

For the Thirteen Weeks Ended
April 4, 2009

(in thousands)



|                                                           |  |        |         |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |         |  
|---------------------------------------------------------- |  | ------ | ------- | - | --------------- | - | ------- | --------------------- |  | - | ---------------------- | - |  | ------------------------ | ------ | - | ------------ | - | ------- | - |  | - | ------- | -
|                                                           |  | Parent |         |   | Issuer of Notes |   |         | GuarantorSubsidiaries |  |   | NonGuarantorSubsidiary |   |  | IntercompanyEliminations |        |   | Consolidated |  
|Sales                                                      |  | $      |        |   |                 | $ | 122,835 |                       |  | $ | 548                    |   |  | $                        | 9,964  |   |              | $ | (7,639  | ) |  | $ | 125,708 |  
|Cost of sales                                              |  |        |        |   |                 |   | 54,037  |                       |  |   | 167                    |   |  |                          | 8,870  |   |              |   | (6,768  | ) |  |   | 56,306  |  
|                                                           |  |        |         |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |         |  
|Gross profit                                               |  |        |        |   |                 |   | 68,798  |                       |  |   | 381                    |   |  |                          | 1,094  |   |              |   | (871    | ) |  |   | 69,402  |  
|Selling expenses                                           |  |        |        |   |                 |   | 45,670  |                       |  |   | 468                    |   |  |                          | 2,401  |   |              |   | (60     | ) |  |   | 48,479  |  
|General and administrative expenses                        |  |        |        |   |                 |   | 14,883  |                       |  |   |                       |   |  |                          |       |   |              |   | 52      |   |  |   | 14,935  |  
|Restructuring charge                                       |  |        |        |   |                 |   | 2,415   |                       |  |   |                       |   |  |                          |       |   |              |   |        |   |  |   | 2,415   |  
|                                                           |  |        |         |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |         |  
|Income (loss) from operations                              |  |        |        |   |                 |   | 5,830   |                       |  |   | (87                    | ) |  |                          | (1,307 | ) |              |   | (863    | ) |  |   | 3,573   |  
|Interest income                                            |  |        |        |   |                 |   | (2      | )                     |  |   |                       |   |  |                          | (8     | ) |              |   |        |   |  |   | (10     | )
|Interest expense                                           |  |        |        |   |                 |   | 21,716  |                       |  |   |                       |   |  |                          |       |   |              |   |        |   |  |   | 21,716  |  
|Other (income) expense                                     |  |        |        |   |                 |   | (33     | )                     |  |   |                       |   |  |                          | 1,472  |   |              |   |        |   |  |   | 1,439   |  
|                                                           |  |        |         |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |         |  
|Loss before benefit from income taxes                      |  |        |        |   |                 |   | (15,851 | )                     |  |   | (87                    | ) |  |                          | (2,771 | ) |              |   | (863    | ) |  |   | (19,572 | )
|Benefit from income taxes                                  |  |        |        |   |                 |   | (6,913  | )                     |  |   | (38                    | ) |  |                          | (776   | ) |              |   | (356    | ) |  |   | (8,083  | )
|                                                           |  |        |         |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |         |  
|Loss before equity in (earnings of) losses of subsidiaries |  |        |        |   |                 |   | (8,938  | )                     |  |   | (49                    | ) |  |                          | (1,995 | ) |              |   | (507    | ) |  |   | (11,489 | )
|Equity in (earnings of) losses of subsidiaries, net of tax |  |        | 11,489  |   |                 |   | 2,044   |                       |  |   |                       |   |  |                          |       |   |              |   | (13,533 | ) |  |   |        |  
|                                                           |  |        |         |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |         |  
|Net (loss) income                                          |  | $      | (11,489 | ) |                 | $ | (10,982 | )                     |  | $ | (49                    | ) |  | $                        | (1,995 | ) |              | $ | 13,026  |   |  | $ | (11,489 | )
|                                                           |  |        |         |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |         |  

YANKEE HOLDING CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF OPERATIONS

For the Thirteen Weeks Ended
March 29, 2008

(in thousands)



|                                                           |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |       |   |              |   |        |   |  |   |         |  
|---------------------------------------------------------- |  | ------ | ------ | - | --------------- | - | ------- | --------------------- |  | - | ---------------------- | - |  | ------------------------ | ----- | - | ------------ | - | ------ | - |  | - | ------- | -
|                                                           |  | Parent |        |   | Issuer of Notes |   |         | GuarantorSubsidiaries |  |   | NonGuarantorSubsidiary |   |  | IntercompanyEliminations |       |   | Consolidated |  
|Sales                                                      |  | $      |       |   |                 | $ | 135,519 |                       |  | $ | 1,724                  |   |  | $                        | 8,674 |   |              | $ | (5,018 | ) |  | $ | 140,899 |  
|Cost of sales                                              |  |        |       |   |                 |   | 60,487  |                       |  |   | 1,102                  |   |  |                          | 6,806 |   |              |   | (3,858 | ) |  |   | 64,537  |  
|                                                           |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |       |   |              |   |        |   |  |   |         |  
|Gross profit                                               |  |        |       |   |                 |   | 75,032  |                       |  |   | 622                    |   |  |                          | 1,868 |   |              |   | (1,160 | ) |  |   | 76,362  |  
|Selling expenses                                           |  |        |       |   |                 |   | 46,532  |                       |  |   | 829                    |   |  |                          | 2,213 |   |              |   | (60    | ) |  |   | 49,514  |  
|General and administrative expenses                        |  |        |       |   |                 |   | 14,373  |                       |  |   |                       |   |  |                          |      |   |              |   | 41     |   |  |   | 14,414  |  
|Restructuring charge                                       |  |        |       |   |                 |   | 1,475   |                       |  |   |                       |   |  |                          |      |   |              |   |       |   |  |   | 1,475   |  
|                                                           |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |       |   |              |   |        |   |  |   |         |  
|Income (loss) from operations                              |  |        |       |   |                 |   | 12,652  |                       |  |   | (207                   | ) |  |                          | (345  | ) |              |   | (1,141 | ) |  |   | 10,959  |  
|Interest income                                            |  |        |       |   |                 |   |        |                       |  |   |                       |   |  |                          | (12   | ) |              |   |       |   |  |   | (12     | )
|Interest expense                                           |  |        |       |   |                 |   | 23,808  |                       |  |   |                       |   |  |                          |      |   |              |   |       |   |  |   | 23,808  |  
|Other income                                               |  |        |       |   |                 |   | (50     | )                     |  |   |                       |   |  |                          | (51   | ) |              |   |       |   |  |   | (101    | )
|                                                           |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |       |   |              |   |        |   |  |   |         |  
|Loss before benefit from income taxes                      |  |        |       |   |                 |   | (11,106 | )                     |  |   | (207                   | ) |  |                          | (282  | ) |              |   | (1,141 | ) |  |   | (12,736 | )
|Benefit from income taxes                                  |  |        |       |   |                 |   | (4,281  | )                     |  |   | (80                    | ) |  |                          | (80   | ) |              |   | (437   | ) |  |   | (4,878  | )
|                                                           |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |       |   |              |   |        |   |  |   |         |  
|Loss before equity in (earnings of) losses of subsidiaries |  |        |       |   |                 |   | (6,825  | )                     |  |   | (127                   | ) |  |                          | (202  | ) |              |   | (704   | ) |  |   | (7,858  | )
|Equity in (earnings of) losses of subsidiaries, net of tax |  |        | 7,858  |   |                 |   | 329     |                       |  |   |                       |   |  |                          |      |   |              |   | (8,187 | ) |  |   |        |  
|                                                           |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |       |   |              |   |        |   |  |   |         |  
|Net (loss) income                                          |  | $      | (7,858 | ) |                 | $ | (7,154  | )                     |  | $ | (127                   | ) |  | $                        | (202  | ) |              | $ | 7,483  |   |  | $ | (7,858  | )
|                                                           |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |       |   |              |   |        |   |  |   |         |  



15



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##### Table of Contents

YANKEE HOLDING CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the Thirteen Weeks Ended
April 4, 2009

(in thousands)



|                                                                                            |  |        |         |   |                 |   |          |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |          |  
|------------------------------------------------------------------------------------------- |  | ------ | ------- | - | --------------- | - | -------- | --------------------- |  | - | ---------------------- | - |  | ------------------------ | ------ | - | ------------ | - | ------- | - |  | - | -------- | -
|                                                                                            |  | Parent |         |   | Issuer of Notes |   |          | GuarantorSubsidiaries |  |   | NonGuarantorSubsidiary |   |  | IntercompanyEliminations |        |   | Consolidated |  
|CASH FLOWS (USED IN ) PROVIDED BY OPERATING ACTIVITIES:                                     |  |        |         |   |                 |   |          |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |          |  
|Net (loss) income                                                                           |  | $      | (11,489 | ) |                 | $ | (10,982  | )                     |  | $ | (49                    | ) |  | $                        | (1,995 | ) |              | $ | 13,026  |   |  | $ | (11,489  | )
|Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |        |         |   |                 |   |          |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |          |  
|Depreciation and amortization                                                               |  |        |        |   |                 |   | 11,264   |                       |  |   | 6                      |   |  |                          | 81     |   |              |   |        |   |  |   | 11,351   |  
|Unrealized loss on marketable securities                                                    |  |        |        |   |                 |   | 43       |                       |  |   |                       |   |  |                          |       |   |              |   |        |   |  |   | 43       |  
|Stock based compensation expense                                                            |  |        |        |   |                 |   | 202      |                       |  |   |                       |   |  |                          |       |   |              |   |        |   |  |   | 202      |  
|Deferred taxes                                                                              |  |        |        |   |                 |   | 1,217    |                       |  |   | 275                    |   |  |                          |       |   |              |   |        |   |  |   | 1,492    |  
|Restructuring charges                                                                       |  |        |        |   |                 |   | (62      | )                     |  |   |                       |   |  |                          |       |   |              |   |        |   |  |   | (62      | )
|Loss on disposal and impairment of property and equipment                                   |  |        |        |   |                 |   | 236      |                       |  |   |                       |   |  |                          |       |   |              |   |        |   |  |   | 236      |  
|Investments in marketable securities                                                        |  |        |        |   |                 |   | (341     | )                     |  |   |                       |   |  |                          |       |   |              |   |        |   |  |   | (341     | )
|Equity in earnings of subsidiaries                                                          |  |        | 11,489  |   |                 |   |         |                       |  |   |                       |   |  |                          | 1,537  |   |              |   | (13,026 | ) |  |   |         |  
|Changes in assets and liabilities                                                           |  |        |         |   |                 |   |          |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |          |  
|Accounts receivable, net                                                                    |  |        |        |   |                 |   | 692      |                       |  |   | 168                    |   |  |                          | 206    |   |              |   |        |   |  |   | 1,066    |  
|Inventory                                                                                   |  |        |        |   |                 |   | (4,874   | )                     |  |   | 12                     |   |  |                          | (457   | ) |              |   |        |   |  |   | (5,319   | )
|Prepaid expenses and other assets                                                           |  |        |        |   |                 |   | 683      |                       |  |   | (4                     | ) |  |                          | (109   | ) |              |   |        |   |  |   | 570      |  
|Accounts payable                                                                            |  |        |        |   |                 |   | 415      |                       |  |   | 48                     |   |  |                          | 262    |   |              |   |        |   |  |   | 725      |  
|Income Taxes                                                                                |  |        |        |   |                 |   | (15,676  | )                     |  |   |                       |   |  |                          |       |   |              |   |        |   |  |   | (15,676  | )
|Accrued expenses and other liabilities                                                      |  |        |        |   |                 |   | (18,250  | )                     |  |   | (699                   | ) |  |                          | 1,360  |   |              |   |        |   |  |   | (17,589  | )
|                                                                                            |  |        |         |   |                 |   |          |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |          |  
|NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES                                         |  |        |        |   |                 |   | (35,433  | )                     |  |   | (243                   | ) |  |                          | 885    |   |              |   |        |   |  |   | (34,791  | )
|                                                                                            |  |        |         |   |                 |   |          |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |          |  
|CASH FLOWS USED IN INVESTING ACTIVITIES:                                                    |  |        |         |   |                 |   |          |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |          |  
|Purchase of property and equipment                                                          |  |        |        |   |                 |   | (5,141   | )                     |  |   |                       |   |  |                          | (55    | ) |              |   |        |   |  |   | (5,196   | )
|Intercompany payables/receivables                                                           |  |        |        |   |                 |   | 128      |                       |  |   |                       |   |  |                          |       |   |              |   | (128    | ) |  |   |         |  
|                                                                                            |  |        |         |   |                 |   |          |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |          |  
|NET CASH USED IN INVESTING ACTIVITIES                                                       |  |        |        |   |                 |   | (5,013   | )                     |  |   |                       |   |  |                          | (55    | ) |              |   | (128    | ) |  |   | (5,196   | )
|                                                                                            |  |        |         |   |                 |   |          |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |          |  
|CASH FLOWS (USED IN) PROVIDED BY FINANCING ACTIVITIES:                                      |  |        |         |   |                 |   |          |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |          |  
|Net proceeds from issuance of common stock                                                  |  |        |        |   |                 |   | 20       |                       |  |   |                       |   |  |                          |       |   |              |   |        |   |  |   | 20       |  
|Repayment of borrowings                                                                     |  |        |        |   |                 |   | (70,000  | )                     |  |   |                       |   |  |                          |       |   |              |   |        |   |  |   | (70,000  | )
|Intercompany payables/receivables                                                           |  |        |        |   |                 |   |         |                       |  |   | 56                     |   |  |                          | (184   | ) |              |   | 128     |   |  |   |         |  
|                                                                                            |  |        |         |   |                 |   |          |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |          |  
|NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES                                         |  |        |        |   |                 |   | (69,980  | )                     |  |   | 56                     |   |  |                          | (184   | ) |              |   | 128     |   |  |   | (69,980  | )
|                                                                                            |  |        |         |   |                 |   |          |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |          |  
|EFFECT EXCHANGE RATE CHANGES ON CASH                                                        |  |        |        |   |                 |   |         |                       |  |   |                       |   |  |                          | 7      |   |              |   |        |   |  |   | 7        |  
|NET (DECREASE) INCREASE IN CASH                                                             |  |        |        |   |                 |   | (110,426 | )                     |  |   | (187                   | ) |  |                          | 653    |   |              |   |        |   |  |   | (109,960 | )
|                                                                                            |  |        |         |   |                 |   |          |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |          |  
|CASH, BEGINNING OF PERIOD                                                                   |  |        |        |   |                 |   | 128,037  |                       |  |   | 2,147                  |   |  |                          | 393    |   |              |   |        |   |  |   | 130,577  |  
|                                                                                            |  |        |         |   |                 |   |          |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |          |  
|CASH, END OF PERIOD                                                                         |  | $      |        |   |                 | $ | 17,611   |                       |  | $ | 1,960                  |   |  | $                        | 1,046  |   |              | $ |        |   |  | $ | 20,617   |  
|                                                                                            |  |        |         |   |                 |   |          |                       |  |   |                        |   |  |                          |        |   |              |   |         |   |  |   |          |  



16



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##### Table of Contents

YANKEE HOLDING CORP. AND SUBSIDIARIES

CONDENSED CONSOLIDATING STATEMENTS OF CASH FLOWS

For the Thirteen Weeks Ended
March 29, 2008

(in thousands)



|                                                                                            |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |        |   |  |   |         |  
|------------------------------------------------------------------------------------------- |  | ------ | ------ | - | --------------- | - | ------- | --------------------- |  | - | ---------------------- | - |  | ------------------------ | ------ | - | ------------ | - | ------ | - |  | - | ------- | -
|                                                                                            |  | Parent |        |   | Issuer of Notes |   |         | GuarantorSubsidiaries |  |   | NonGuarantorSubsidiary |   |  | IntercompanyEliminations |        |   | Consolidated |  
|CASH FLOWS (USED IN ) PROVIDED BY OPERATING ACTIVITIES:                                     |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |        |   |  |   |         |  
|Net (loss) income                                                                           |  | $      | (7,858 | ) |                 | $ | (7,154  | )                     |  | $ | (127                   | ) |  | $                        | (202   | ) |              | $ | 7,483  |   |  | $ | (7,858  | )
|Adjustments to reconcile net income to net cash provided by (used in) operating activities: |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |        |   |  |   |         |  
|Depreciation and amortization                                                               |  |        |       |   |                 |   | 11,327  |                       |  |   | 129                    |   |  |                          | 139    |   |              |   |       |   |  |   | 11,595  |  
|Unrealized loss on marketable securities                                                    |  |        |       |   |                 |   | 17      |                       |  |   |                       |   |  |                          |       |   |              |   |       |   |  |   | 17      |  
|Stock based compensation expense                                                            |  |        |       |   |                 |   | 226     |                       |  |   |                       |   |  |                          |       |   |              |   |       |   |  |   | 226     |  
|Deferred taxes                                                                              |  |        |       |   |                 |   | 1,000   |                       |  |   | 335                    |   |  |                          |       |   |              |   |       |   |  |   | 1,335   |  
|Loss on disposal and impairment of property and equipment                                   |  |        |       |   |                 |   | 462     |                       |  |   |                       |   |  |                          |       |   |              |   |       |   |  |   | 462     |  
|Investments in marketable securities                                                        |  |        |       |   |                 |   | (222    | )                     |  |   |                       |   |  |                          |       |   |              |   |       |   |  |   | (222    | )
|Equity in earnings of subsidiaries                                                          |  |        | 7,858  |   |                 |   | 329     |                       |  |   |                       |   |  |                          | (704   | ) |              |   | (7,483 | ) |  |   |        |  
|Changes in assets and liabilities                                                           |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |        |   |  |   |         |  
|Accounts receivable, net                                                                    |  |        |       |   |                 |   | 3,683   |                       |  |   | 561                    |   |  |                          | 2,224  |   |              |   |       |   |  |   | 6,468   |  
|Inventory                                                                                   |  |        |       |   |                 |   | (11,399 | )                     |  |   | (157                   | ) |  |                          | (200   | ) |              |   |       |   |  |   | (11,756 | )
|Prepaid expenses and other assets                                                           |  |        |       |   |                 |   | (1,969  | )                     |  |   | (193                   | ) |  |                          | 101    |   |              |   |       |   |  |   | (2,061  | )
|Accounts payable                                                                            |  |        |       |   |                 |   | 8,036   |                       |  |   | 3                      |   |  |                          | 401    |   |              |   |       |   |  |   | 8,440   |  
|Income Taxes Payable                                                                        |  |        |       |   |                 |   | (19,657 | )                     |  |   |                       |   |  |                          |       |   |              |   |       |   |  |   | (19,657 | )
|Accrued expenses and other liabilities                                                      |  |        |       |   |                 |   | (24,934 | )                     |  |   | (850                   | ) |  |                          | (244   | ) |              |   |       |   |  |   | (26,028 | )
|                                                                                            |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |        |   |  |   |         |  
|NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES                                         |  |        |       |   |                 |   | (40,255 | )                     |  |   | (299                   | ) |  |                          | 1,515  |   |              |   |       |   |  |   | (39,039 | )
|                                                                                            |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |        |   |  |   |         |  
|CASH FLOWS USED IN INVESTING ACTIVITIES:                                                    |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |        |   |  |   |         |  
|Purchase of property and equipment                                                          |  |        |       |   |                 |   | (2,894  | )                     |  |   | (7                     | ) |  |                          | (34    | ) |              |   |       |   |  |   | (2,935  | )
|Payment of contingent consideration on Aroma Naturals                                       |  |        |       |   |                 |   |        |                       |  |   | (225                   | ) |  |                          |       |   |              |   |       |   |  |   | (225    | )
|Intercompany payables/receivables                                                           |  |        |       |   |                 |   | 2,811   |                       |  |   |                       |   |  |                          |       |   |              |   | (2,811 | ) |  |   |        |  
|                                                                                            |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |        |   |  |   |         |  
|NET CASH USED IN INVESTING ACTIVITIES                                                       |  |        |       |   |                 |   | (83     | )                     |  |   | (232                   | ) |  |                          | (34    | ) |              |   | (2,811 | ) |  |   | (3,160  | )
|                                                                                            |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |        |   |  |   |         |  
|CASH FLOWS PROVIDED BY (USED IN) FINANCING ACTIVITIES:                                      |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |        |   |  |   |         |  
|Borrowings under senior secured revolving credit facility                                   |  |        |       |   |                 |   | 40,000  |                       |  |   |                       |   |  |                          |       |   |              |   |       |   |  |   | 40,000  |  
|Repurchase of common stock                                                                  |  |        |       |   |                 |   | (121    | )                     |  |   |                       |   |  |                          |       |   |              |   |       |   |  |   | (121    | )
|Intercompany payables/receivables                                                           |  |        |       |   |                 |   |        |                       |  |   | 45                     |   |  |                          | (2,856 | ) |              |   | 2,811  |   |  |   |        |  
|                                                                                            |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |        |   |  |   |         |  
|NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES                                         |  |        |       |   |                 |   | 39,879  |                       |  |   | 45                     |   |  |                          | (2,856 | ) |              |   | 2,811  |   |  |   | 39,879  |  
|                                                                                            |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |        |   |  |   |         |  
|EFFECT EXCHANGE RATE CHANGES ON CASH                                                        |  |        |       |   |                 |   |        |                       |  |   |                       |   |  |                          | (2     | ) |              |   |       |   |  |   | (2      | )
|NET DECREASE IN CASH                                                                        |  |        |       |   |                 |   | (459    | )                     |  |   | (486                   | ) |  |                          | (1,377 | ) |              |   |       |   |  |   | (2,322  | )
|                                                                                            |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |        |   |  |   |         |  
|CASH, BEGINNING OF PERIOD                                                                   |  |        |       |   |                 |   | 1,316   |                       |  |   | 2,341                  |   |  |                          | 1,970  |   |              |   |       |   |  |   | 5,627   |  
|                                                                                            |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |        |   |  |   |         |  
|CASH, END OF PERIOD                                                                         |  | $      |       |   |                 | $ | 857     |                       |  | $ | 1,855                  |   |  | $                        | 593    |   |              | $ |       |   |  | $ | 3,305   |  
|                                                                                            |  |        |        |   |                 |   |         |                       |  |   |                        |   |  |                          |        |   |              |   |        |   |  |   |         |  



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##### Table of Contents

|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 ongoing basis, management evaluates its estimates and judgments, including those related to inventories, derivative financial instruments, restructuring costs, bad debts, intangible assets, income taxes,
promotional allowances, sales returns, self-insurance, 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.

Sales/receivables

We sell our products both directly to retail customers and through wholesale channels. Merchandise sales are recognized upon transfer of ownership, including passage of title to the customer and transfer of the risk of loss related to those
goods. In our wholesale segment, products are shipped free on board shipping point; however revenue is recognized at the time the product is received for certain customers due to our practice of absorbing risk of loss in the event of
damaged or lost shipments for those customers. In our retail segment, transfer of title takes place at the point of sale (i.e., at our retail stores). There are no situations, either in our wholesale or retail segments, where legal risk of loss does
not transfer immediately upon receipt by our customers. Although we do not provide a contractual right of return, in the course of arriving at practical business solutions to various claims, we have allowed sales returns and allowances. In these
situations, customer claims for credit or return due to damage, defect, shortage or other reason must be pre-approved by us before credit is issued or such product is accepted for return. Such returns have not precluded sales recognition because we
have a long history with such returns, which we use in estimating a reserve. This reserve, however, is subject to change. In our wholesale segment, we have included a reserve in our financial statements representing our estimated obligation related
to promotional marketing activities. 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 would affect our operating results.

Other income statement
accounts

Included within cost of sales on our consolidated statements of operations are the cost of the merchandise we sell through our retail and
wholesale segments, inbound and outbound freight costs, the operational costs of our distribution facilities (which include receiving costs, inspection and warehousing costs and salaries) and expenses incurred by the Companys merchandising and
buying operations.

Included within selling expenses are costs directly related to both wholesale and retail operations and primarily consist of payroll,
occupancy, advertising and other operating costs, as well as preopening costs, which are expensed as incurred.

Included within general and
administrative expenses are costs associated with corporate overhead departments, including senior management, accounting, information systems, management incentive programs and bonus and costs that are not readily allocable to either the retail or
wholesale segments.

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, 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. We value our inventory at the lower of cost or market on a firstin firstout (FIFO)
basis. Fluctuations in inventory levels along with the cost of raw materials could impact the carrying value of our inventory. Changes in the carrying value of inventory could affect our operating results.

Derivative instruments

In accordance with SFAS 133, Accounting
for Derivative Instruments and Hedging Activities, as amended, we designated our interest rate swap derivative arrangements as cash flow hedges and recognize the fair value of the instruments on the accompanying consolidated balance sheets.
Gains and losses related to a hedge that result from changes in the fair value of the hedge are either recognized in income immediately to offset the gain or loss on the hedged item, or the effective portion is deferred and reported as a component
of other comprehensive income in stockholders equity and subsequently recognized in income when the hedged item affects earnings. Since inception there has been no hedge ineffectiveness recorded in earnings. Changes in the hedges effectiveness
could adversely impact our future operating results.

Income Taxes

We file income tax returns in the U.S. federal jurisdiction, various states, the United Kingdom and Germany. Significant judgment is required in evaluating our tax positions and determining our provision for income
taxes. During the ordinary course of business there are many transactions and calculations for which the ultimate tax determination is uncertain. We establish reserves for tax-related uncertainties based on estimates of whether, and to what extent,
additional taxes will be due. We adjust these reserves in light of changing facts and circumstances. The provision for income taxes includes the impact of our reserve positions and changes to those reserves when appropriate. We also recognize
deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities using expected tax rates in effect in the years in which the differences
are expected to reverse.

We have significant deferred tax liabilities recorded on our financial statements, which are attributable to the effect of
purchase accounting adjustments recorded as a result of the Merger. We also have a significant deferred tax asset recorded on our financial statements. This asset arose at the time of our recapitalization in 1998 and reflects the tax benefit of
future tax deductions for us from the recapitalization. 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.



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##### Table of Contents

Valuation of long-lived assets, including intangibles

Long-lived assets on our consolidated balance sheets consist primarily of property and equipment, customer lists, tradenames and goodwill. An intangible asset with a
finite useful life is amortized; an intangible asset with an indefinite useful life is not amortized, but is evaluated annually for impairment. Reaching a determination on useful life requires significant judgments and assumptions regarding the
future effects of obsolescence, competition and other economic factors. We have determined that our tradenames have an indefinite useful life and, therefore, are not being amortized. We periodically review the carrying value of all of these assets.
We undertake this review when facts and circumstances suggest that cash flows emanating from those assets may be diminished, and at least annually in the case of tradenames and goodwill.

For goodwill, the annual impairment evaluation compares the fair value of a reporting unit to its carrying value and consists of two steps. First, we determine the fair value of each of our reporting units and compare
them to the corresponding carrying values. Second, if the carrying amount of a reporting unit exceeds its fair value, an impairment loss is recognized for any excess of the carrying amount of the reporting units goodwill over the implied fair
value of the goodwill. The implied fair value of goodwill is determined by allocating the fair value of the reporting unit in a manner similar to a purchase price allocation, in accordance with SFAS 141, Business Combinations. The
residual fair value after this allocation is the implied fair value of the reporting unit goodwill.

We perform our annual impairment testing at the
reporting unit level. We reviewed the provisions of SFAS 142, Goodwill and Other Intangible Assets, with respect to the criteria necessary to evaluate the number of reporting units that exist. We also considered the way it manages its
operations and the nature of those operations. Based on its review, we identified four reporting units: retail, wholesale, Aroma Naturals and Illuminations.

Fair values of the reporting units are derived through a combination of market-based and income-based approaches, each of which were weighted at 50% for the impairment test performed as of November 1, 2008. The market-based approach
estimates fair value by applying multiples of potential earnings, such as EBITDA and revenue, of publicly traded comparable companies. We believe this approach is appropriate because it provides a fair value using multiples from companies with
operations and economic characteristics similar to our reporting units. The income-based approach is based on projected future debt-free cash flow that is discounted to present value using factors that consider the timing and risk of the future cash
flows. We believe this approach is appropriate because it provides a fair value estimate based upon the reporting units expected long-term operations and cash flow performance. The income-based approach is based on a reporting units future
projections of operating results and cash flows. These projections are discounted to present value using a weighted average cost of capital for market participants, who are generally thought to be industry participants. The future projections are
based on both past performance and the projections and assumptions used in our current operating plan. Such assumptions are subject to change as a result of changing economic and competitive conditions. In the fourth quarter of 2008, we incurred an
impairment charge of $462.6 million. We could have additional charges in the future which would affect our earnings.

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 will 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, new store openings and the addition of new wholesale accounts.

Seasonality. We have historically realized higher revenues and operating income in our fourth quarter, particularly in our retail business. This has been primarily due to increased sales in the giftware industry during the holiday
season of the fourth quarter.

Retail Store Openings and Closings. The timing of our new store openings and closings may 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 occupancy, 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, assuming sales increase as stores age, resulting in a decrease in selling and other expenses as a percentage of sales.

Wholesale Account Activity. The timing of new wholesale accounts may have an impact on our quarterly results due to the size of initial opening orders and promotional programs associated with the roll-out of orders. In addition, the
loss of wholesale accounts may impact our quarterly results.

RESULTS OF OPERATIONS

Recent Economic Environment

The macroeconomic environment clearly continues to have a significant impact on consumer
spending. Unemployment levels continue to rise, consumer confidence levels remain depressed and credit markets remain challenging. These conditions point to consumption challenges for virtually all consumer facing companies including Yankee Candle.
Our operations for the thirteen weeks ended April 4, 2009 were significantly affected by these unprecedented macroeconomic conditions, as declining mall traffic and reduced consumer spending negatively impacted both our retail and wholesale
businesses. During the remainder of 2009, we expect that the deteriorating economic conditions will continue to challenge our business.

Overview

We are the largest specialty branded premium scented candle company in the United States based on
our annual sales and profitability. The strong brand equity of the Yankee Candle ® brand, coupled with our vertically integrated multi-channel business model, have enabled us to be the
market leader in the premium scented candle market for many years. We design, develop, manufacture, and distribute the majority of the products we sell which allows us to offer distinctive, trend-appropriate products for every season, every
customer, and every room in your home. We have a 40-year history of category leadership and growth by marketing Yankee Candle products as affordable luxuries, consumable products, and valued gifts for everyone on your list. We offer the broadest
assortment of highly scented candles, innovative home fragrance products, and candle related home décor accessories in a variety of compelling fragrances, colors, styles, and price points.

Candle products are the foundation of our business, and are available in a wide range of fragrances and colors
across a variety of jar candles, Samplers® votive candles, Tarts® wax potpourri, pillars and other candle products, the vast
majority of which are marketed under the Yankee Candle® brand. Our candles are moderately-priced and our variety ensures each customer can find Yankee Candle products appropriate for her
lifestyle and budget. In addition to our core candle business, we successfully have extended the Yankee Candle brand into the growing home fragrance segment with a portfolio of innovative fragrance products for your home. Our assortment includes
electric plug home fragrancers, decorative reed diffusers, room sprays, potpourri, and scented oils. Additionally, we offer products such as the Yankee Candle Car Jars® auto air fresheners
to fragrance cars and small spaces. We also offer a wide array of coordinated candle related and home decor accessories in dozens of exclusive patterns, colors and styles, and numerous giftsets. In addition to our everyday product
offerings, we also offer seasonally-appropriate fragrances, products, home décor accessories, and giftsets on a limited edition, seasonal basis. These themed temporary programs occur four times a year: Spring, Summer, Fall, and the
Christmas/Holiday season.



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We sell our products in multiple channels of distribution across dozens of countries. Our customer touchpoints include
our own company-operated retail stores and our direct-to-consumer catalogs and e-commerce/web business, as well as a global network of both national account and independent specialty gift customers and channels. We have an extensive and growing
national and international wholesale segment with a diverse customer base that as of April 4, 2009 consisted of approximately 18,100 locations in North America, typically in non-shopping mall locations. We also have a growing retail store base
primarily located in shopping malls and lifestyle centers. As of April 4, 2009, we operated 474 Yankee Candle retail stores. We operate two flagship stores, a 90,000-square-foot store in South Deerfield, Massachusetts, which is a major tourist
destination in Massachusetts, and a second 42,000-square-foot flagship store in Williamsburg, Virginia. We also sell our products directly to consumers through our direct mail catalogs and our Internet web sites at www.yankeecandle.com and
www.aromanaturals.com. Outside of North America, we sell our products primarily through our subsidiary, Yankee Candle Company (Europe), LTD, which has an international wholesale customer network of approximately 3,100 locations and distributors
covering 23 countries.

Due to the seasonal nature of our business, interim results are not necessarily indicative of results for the entire fiscal year.
Our revenue and earnings are typically greater during our fiscal fourth quarter, which includes the majority of the holiday selling season.

Illuminations

In 2008 our operations included 28 Illuminations retail stores as of January 3, 2009, together with the consumer direct
business. During the fourth quarter of 2008, the Company initiated a restructuring plan involving the closing of the Companys 28 Illuminations retail stores and the discontinuance of the related Illuminations consumer direct and wholesale
businesses. As of April 30, 2009, we had closed our Illuminations consumer direct business and all but one of our Illuminations stores. The remaining Illuminations store will be closed by the end of the second quarter of 2009. During the
thirteen weeks ended April 4, 2009, as part of the plan to wind down the Illuminations operations we conducted a liquidation sale which generated $5.8 million in sales.

The following table sets forth the various components of our condensed consolidated statements of operations, expressed as a percentage of sales, for the periods indicated that are used in connection with the
discussion herein.



|                                      |  |                                |    |  |                                 |   
|------------------------------------- |  | ------------------------------ | -- |  | ------------------------------- | --
|                                      |  | ThirteenWeeksEndedApril 4,2009 |    |  | ThirteenWeeksEndedMarch 29,2008 |   
|Statements of Operations Data:        |  |                                |    |  |                                 |   
|Sales:                                |  |                                |    |  |                                 |   
|Wholesale                             |  | 44.0                           | %  |  | 48.3                            | % 
|Retail                                |  | 56.0                           | %  |  | 51.7                            | % 
|                                      |  |                                |    |  |                                 |   
|Total net sales                       |  | 100.0                          | %  |  | 100.0                           | % 
|Cost of sales                         |  | 44.8                           | %  |  | 45.8                            | % 
|                                      |  |                                |    |  |                                 |   
|Gross profit                          |  | 55.2                           | %  |  | 54.2                            | % 
|Selling expenses                      |  | 38.5                           | %  |  | 35.1                            | % 
|General and administrative expenses   |  | 11.9                           | %  |  | 10.2                            | % 
|Restructuring charge                  |  | 1.9                            | %  |  | 1.1                             | % 
|                                      |  |                                |    |  |                                 |   
|Income from operations                |  | 2.9                            | %  |  | 7.8                             | % 
|Net other expense                     |  | 18.4                           | %  |  | 16.8                            | % 
|                                      |  |                                |    |  |                                 |   
|Loss before benefit from income taxes |  | (15.5                          | )% |  | (9.0                            | )%
|Benefit from income taxes             |  | (6.4                           | )% |  | (3.5                            | )%
|                                      |  |                                |    |  |                                 |   
|Net loss                              |  | (9.1                           | )% |  | (5.5                            | )%
|                                      |  |                                |    |  |                                 |   

Thirteen weeks ended April 4, 2009 versus the Thirteen weeks ended March 29, 2008

SALES

Sales decreased 10.8% to $125.7 million for the thirteen weeks ended
April 4, 2009 from $140.9 million for the thirteen weeks ended March 29, 2008.

Retail Sales

Retail sales decreased 3.3% to $70.4 million for the thirteen weeks ended April 4, 2009 from $72.8 million for the thirteen weeks ended March 29, 2008. The
decrease in retail sales was primarily due to decreased comparable store sales of approximately $4.9 million and decreased sales in our catalog and Internet division of approximately $1.9 million, which were significantly impacted by the
deteriorating economic environment, offset in part by (i) increased sales in our Yankee Candle Fundraising division of approximately $1.8 million, (ii) increased sales at our Illuminations division of $1.2 million, driven primarily by the
liquidation sale (iii) increased sales attributable to stores opened in 2008 that have not entered the comparable store base (which in 2008 were open for less than a full year) of approximately $0.8 million and (iv) the addition of 11 new
Yankee Candle retail stores opened during the thirteen weeks ended April 4, 2009, which increased sales by approximately $0.4 million.

Comparable
store and catalog and Internet sales for our Yankee Candle stores decreased 9.8% for the thirteen weeks ended April 4, 2009 compared to the thirteen weeks ended March 29, 2008. Yankee Candle comparable store sales for the thirteen weeks
ended April 4, 2009 decreased 8.9% compared to the thirteen weeks ended March 29, 2008. Comparable store sales represent a comparison of sales during the corresponding fiscal periods on stores in our comparable stores sales base. A store
first enters our comparable store sales base in the fourteenth fiscal month of operation. The decrease in comparable store sales was driven by a decrease in mall traffic due to the deteriorating economic environment. There were 428 stores included
in the Yankee Candle comparable store base as of April 4, 2009 as compared to 403 stores included in the Yankee Candle comparable store base as of March 29, 2008, and 426 stores included in the Yankee Candle comparable store base as of
January 3, 2009. Illuminations stores are not included in our comparable store base. There were 498 total retail stores (including 24 Illuminations stores) open as of April 4, 2009, compared to 463 total retail stores (including 28
Illuminations stores) open as of March 29, 2008, and 491 total retail stores (including 28 Illuminations stores) open as of January 3, 2009. Permanently closed stores are excluded from the comparable store calculation beginning in the
month in which the store closes.



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Wholesale Sales

Wholesale sales, including European operations, decreased 18.8% to $55.3 million for the thirteen weeks ended April 4, 2009 from $68.1 million for the thirteen weeks ended March 29, 2008.

The decrease in wholesale sales was primarily due to decreased sales to domestic wholesale locations in operation prior to March 29, 2008 of approximately $15.9
million and decreased sales from our Aroma Naturals division of approximately $0.4 million, partially offset by increased sales to domestic wholesale locations opened during the last 12 months of approximately $1.9 million, increased sales in our
European operations of approximately $1.3 million and increased sales from new product ventures of $0.4 million. The decrease in wholesale sales was primarily due to the deteriorating economic environment which has resulted in a pullback in
inventory levels by our wholesale customers and by the decrease in revenue within the Home Specialty Channel, which was impacted by the loss of Linens N Things.

GROSS PROFIT

Gross profit is sales less cost of sales. Included within cost of sales are the cost of the merchandise we
sell through our retail and wholesale segments, inbound and outbound freight costs, the operational costs of our distribution facilities, which include receiving costs, inspection and warehousing costs, and salaries and expenses incurred by the
Companys buying and merchandising operations.

Gross profit decreased 9.2% to $69.4 million for the thirteen weeks ended April 4, 2009 from
$76.4 million for the thirteen weeks ended March 29, 2008. As a percentage of sales, gross profit increased to 55.2% for the thirteen weeks ended April 4, 2009 from 54.2% for the thirteen weeks ended March 29, 2008.

Retail Gross Profit

Retail gross profit dollars decreased 2.9% to
$44.1 million for the thirteen weeks ended April 4, 2009 from $45.4 million for the thirteen weeks ended March 29, 2008. The decrease in gross profit dollars was primarily due to sales decreases in our retail operations, which decreased
gross profit by approximately $4.2 million, and increased promotional activity of $2.0 million. The decreases in gross profit dollars were offset in part by (i) the impact of price increases initiated on selected products during the first and
third quarters of fiscal 2008 which, assuming no elasticity, contributed approximately $3.1 million, (ii) increased profitability in our Yankee Candle Fundraising division of approximately $0.9 million, (iii) increased profitability in our
Illuminations division of approximately $0.8 million due to the restructuring and liquidation sale and (iv) decreased costs in our supply chain operations of approximately $0.2 million.

As a percentage of sales, retail gross profit increased to 62.7% for the thirteen weeks ended April 4, 2009 from 62.3% for the thirteen weeks ended March 29,
2008. The increase in retail gross profit rate was impacted by price increases initiated on selected products during the first quarter of fiscal 2008 which, assuming no elasticity, contributed an increase of approximately 1.7% and increased
profitability in our Illuminations division of approximately 0.1% partially offset by increased marketing and promotional activity of 1.0% and decreased profitability in our Yankee Candle Fundraising division of approximately 0.3%.

Wholesale Gross Profit

Wholesale gross profit dollars decreased
18.4% to $25.3 million for the thirteen weeks ended April 4, 2009 from $31.0 million for the thirteen weeks ended March 29, 2008. The decrease in wholesale gross profit dollars was attributable to sales decreases within our wholesale
operations, which decreased gross profit by approximately $6.6 million, increased marketing and promotional activity of $0.6 million and increased costs in our supply chain operations of approximately $0.5 million. These decreases to gross profit
dollars were partially offset by the impact of price increases initiated on selected products during the first and third quarters of fiscal 2008 which, assuming no elasticity, contributed approximately $2.0 million.

As a percentage of sales, wholesale gross profit increased slightly to 45.6% for the thirteen weeks ended April 4, 2009 from 45.5% for the thirteen weeks ended
March 29, 2008. The increase in wholesale gross profit rate was the result of the impact of price increases initiated on selected products during the first and third quarters of fiscal 2008 which, assuming no elasticity, contributed
approximately 2.0%. The favorable impact of the price increases were offset in part by decreased productivity in supply chain operations of 1.0%, increased marketing and promotional activity of 0.6% and decreased profitability in our new product
ventures of 0.3%.

SELLING EXPENSES

Selling expenses
decreased 2.0% to $48.5 million for the thirteen weeks ended April 4, 2009 from $49.5 million for the thirteen weeks ended March 29, 2008. 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 were 38.5% and 35.1% for the thirteen weeks ended April 4, 2009 and March 29, 2008,
respectively.

Retail Selling Expenses

Retail selling
expenses decreased 2.4% to $40.1 million for the thirteen weeks ended April 4, 2009 from $41.1 million for the thirteen weeks ended March 29, 2008. These expenses relate to payroll, occupancy, advertising and other store operating costs,
as well as preopening costs, which are expensed as incurred. As a percentage of retail sales, retail selling expenses were 57.1% and 56.5% for the thirteen weeks ended April 4, 2009 and March 29, 2008, respectively. The decrease in
selling expense dollars was primarily related to a reduction in labor related expenses to offset the impact of our decreased comparable store sales. The increase in selling expenses as a percentage of sales was primarily due to the de-leveraging of
selling expenses as a result of decreased comparable store sales.

Wholesale Selling Expenses

Wholesale selling expenses decreased 1.2% to $8.3 million for the thirteen weeks ended April 4, 2009 from $8.4 million for the thirteen weeks ended March 29,
2008. These expenses relate to payroll, advertising and other operating costs. As a percentage of wholesale sales, wholesale selling expenses were 15.1% and 12.3% for the thirteen weeks ended April 4, 2009 and March 29, 2008, respectively.
The increase in selling expenses as a percentage of sales was primarily due to the de-leveraging of selling expenses as a result of decreased sales to domestic wholesale locations in operation prior to March 29, 2008, including the loss of
Linens N Things.

GENERAL AND ADMINISTRATIVE EXPENSES

General and administrative expenses, which consist primarily of personnelrelated costs, including senior management, accounting, information systems, management incentive programs and costs that are not readily allocable to either the
retail or wholesale operations, increased 3.5% to $14.9 million for the thirteen weeks ended April 4, 2009 from $14.4 million for the thirteen weeks ended March 29, 2008. As a percentage of sales, general and administrative expenses were
11.9% and 10.2% for the thirteen weeks ended April 4, 2009 and March 29, 2008, respectively. The increase in general and administrative expense in dollars and as a percentage of sales was partially driven by an increase in the management
incentive plan expense assuming a full payout in 2009 versus a partial payout in 2008.



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RESTRUCTURING CHARGE

During
the first quarter of fiscal 2008, the Company initiated a restructuring plan designed to close three underperforming Illuminations stores and move the Illuminations corporate headquarters from Petaluma, California to the Companys South
Deerfield, Massachusetts headquarters. In connection with this restructuring plan, a charge of $1.5 million was recorded during the thirteen weeks ended March 29, 2008. Included in the restructuring charge was $0.6 million related to lease
termination costs, $0.5 million related to non-cash fixed assets write-offs and other costs, and $0.4 million in employee related costs. As of March 29, 2008 the three underperforming stores have been closed. The Company anticipates no further
accruals related to this restructuring.

During the fourth quarter of 2008, the Company initiated a restructuring plan involving the closing of the
Companys remaining 28 Illuminations retail stores and the discontinuance of the related Illuminations consumer direct business, the closing of one underperforming Yankee Candle retail store, and limited reductions in the Companys
corporate and administrative workforce. As of April 30, 2009, the Company had closed all but one of the Illuminations stores. In connection with this restructuring plan, a charge of $2.4 million was recorded during the thirteen weeks ended
April 4, 2009. Included in the first quarter 2009 restructuring charge was $1.4 million related to occupancy related costs, primarily consisting of lease termination costs, $0.3 million related to other costs and $0.7 million primarily related
to employee severance costs. The Company currently expects the total charge related to the restructuring plan to be approximately $18.0 million to $22.0 million including the $12.4 million and $2.4 million recorded in the fourth quarter 2008 and
first quarter 2009, respectively. The majority of these additional costs relate to lease termination costs that will be incurred during the second quarter of 2009. The lease related to the Illuminations corporate headquarters in Petaluma, California
expires in March 2013. This lease will be paid through March 2013 unless the Company is able to structure a buyout agreement with the landlord.

The
following is a summary of restructuring charge activity for the thirteen weeks ended April 4, 2009 (in thousands):



|                  |  |                             |       |                                    |   |            |                           |   |                 |   |  |   |     |   |  |   |    
|----------------- |  | --------------------------- | ----- | ---------------------------------- | - | ---------- | ------------------------- | - | --------------- | - |  | - | --- | - |  | - | ---
|                  |  | Accrued as ofJanuary 3,2009 |       | Thirteen Weeks Ended April 4, 2009 |   |            | Accrued as ofApril 4,2009
|                  |  |                             |       | Expense                            |   | Costs Paid |                           |   | Non-CashCharges |   |  |  
|Occupancy related |  | $                           | 1,041 |                                    | $ | 1,381      |                           | $ | (2,020          | ) |  | $ | 96  |   |  | $ | 498
|Employee related  |  |                             |      |                                    |   | 761        |                           |   | (537            | ) |  |   |    |   |  |   | 224
|Other             |  |                             | 25    |                                    |   | 273        |                           |   | (30             | ) |  |   | (34 | ) |  |   | 234
|                  |  |                             |       |                                    |   |            |                           |   |                 |   |  |   |     |   |  |   |    
|Total             |  | $                           | 1,066 |                                    | $ | 2,415      |                           | $ | (2,587          | ) |  | $ | 62  |   |  | $ | 956
|                  |  |                             |       |                                    |   |            |                           |   |                 |   |  |   |     |   |  |   |    

OTHER EXPENSE, NET

Other expense, net was $23.1 million for the thirteen weeks ended April 4, 2009 compared to $23.7 million for the thirteen weeks ended March 29, 2008. The primary component of this expense was interest expense, which was $21.7
million and $23.8 million for the thirteen weeks ended April 4, 2009 and March 29, 2008, respectively. The decrease in interest expense was primarily due to a decrease in our average daily debt outstanding during the period coupled with a
decrease in our borrowing rates.

BENEFIT FROM INCOME TAXES

The benefit from income taxes for the thirteen weeks ended April 4, 2009 was $8.1 million compared to $4.9 million for the thirteen weeks ended March 29, 2008. The effective tax rates for the thirteen weeks ended April 4,
2009 and March 29, 2008 were 41.3% and 38.3% respectively. The increase in the effective tax rate for the thirteen weeks ended April 4, 2009 compared to the thirteen weeks ended March 29, 2008 is primarily related to lower projected
full year pre-tax income in the current year and reduced domestic production activities tax deductions in the current year.

LIQUIDITY AND CAPITAL
RESOURCES

Our senior secured credit facility (the Credit Facility) consists of a $650.0 million 7year senior term loan facility
(Term Facility) and a 6year $125.0 million senior secured revolving credit facility (Revolving Facility). All borrowings under the Credit Facility bear interest at a rate per annum equal to an applicable margin, plus,
at the Companys option, (i) the higher of (x) the prime rate (as set forth on the British Banking Association Telerate Page 5) and (y) the federal funds effective rate, plus one-half percent (0.50%) per annum or (ii) the
Eurodollar rate, and resets periodically. In addition to paying interest on outstanding principal under the senior secured credit facility, the Company is required to pay a commitment fee to the lenders in respect of unutilized loan commitments at a
rate of 0.50% per annum. The senior secured term loan facility matures on February 6, 2014 and the senior secured revolving credit facility matures on February 6, 2013.

As a result of concerns about the stability of the financial and credit markets and the strength of counterparties during this challenging global macroeconomic environment, many financial institutions have reduced,
and in some instances ceased to provide, funding to borrowers. In our case, Lehman Commercial Paper, Inc. (LCP), one of the lenders under our $125.0 million Revolving Facility, and who also serves as the Administrative Agent thereunder,
of the Revolving Facility declared bankruptcy in September 2008. LCPs share of the Revolving Facility was 12% or $15.0 million of the total funds available under our Revolving Facility. As a result of the bankruptcy, our ability to draw upon
that portion of the Revolving Facility has been reduced. To date, we have not secured substitute financing. If we are unable to secure additional or substitute funding from other parties, our Revolving Facility would be effectively reduced from
$125.0 million to $110.0 million. As of April 4, 2009, there were no borrowings outstanding under our Revolving Facility.

As of April 4, 2009,
the Company had outstanding letters of credit of $1.5 million, leaving $108.5 million in availability under the Revolving Facility, excluding the $15.0 million applicable to LCP. As of April 4, 2009, we were in compliance with all covenants
under the Credit Facility.

We have an interest rate swap agreement to hedge a portion of the cash flows associated with the Credit Facility. The agreement
has a total notional value of $415.0 million. The $415.0 million notional value amortizes over the life of the swap. The interest rate swap agreement effectively converts approximately 60% of the outstanding amount under the Credit Facility, which
is floatingrate debt, to a fixedrate by having the Company pay fixedrate amounts in exchange for the receipt of the amount of the floatingrate interest payments.

In addition, we have a second interest rate swap agreement to hedge an additional portion of the cash flows associated with the Credit Facility. The agreement has a total notional value of $100.0 million. The $100.0
million notional value increases on March 31, 2010 to approximately $397.0 million and then amortizes over the remaining life of the swap. The interest rate swap agreement effectively converts approximately 15% of the outstanding amount under
the Credit Facility, which is floatingrate debt, to a fixedrate by having the Company pay fixedrate amounts in exchange for the receipt of the amount of the floatingrate interest payments.

All obligations under the Credit Facility are guaranteed by the Parent and each of the Companys existing and future domestic subsidiaries. In addition, the senior
secured credit facility is secured by first priority perfected liens on all of the Companys capital stock and substantially all of the Companys existing and future material assets and the existing and future material assets of the
Companys guarantors, except that only up to 66% of the voting capital stock of the first tier foreign subsidiaries and 100% of the nonvoting capital stock of such foreign subsidiaries will be pledged in favor of the senior secured credit
facility and each of the guarantors assets.



22



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##### Table of Contents

The Credit Facility permits all or any portion of the loans outstanding to be prepaid at any time and commitments to be
terminated in whole or in part at our option without premium or penalty. The Company is required to repay amounts borrowed under the Term Facility in equal quarterly installments in an aggregate annual amount equal to one percent (1.0%) of the
original principal amount of the Term Facility with the balance being payable on the maturity date of the Term Facility.

Subject to certain exceptions,
the Credit Facility requires that 100% of the net proceeds from certain asset sales, casualty insurance, condemnations and debt issuances, and 50% (subject to step downs) from excess cash flow, as defined, for each fiscal year must be used to pay
down outstanding borrowings. The calculation to determine if the Company has excess cash flow per the Credit Facility is prepared on an annual basis at the end of each fiscal year. As of April 4, 2009, we had excess cash flow, as defined in the
Credit Facility, of $31.7 million. This amount is classified as short-term debt on the accompanying consolidated balance sheet and was paid on April 13, 2009 to further reduce our outstanding borrowings. Of the $31.7 million excess cash flow
payment, approximately $21.0 million was paid with internally generated cash with the remainder generated through our Revolving Facility.

The Credit
Facility contains a financial covenant which requires that we maintain at the end of each fiscal quarter, commencing with the quarter ended January 3, 2009 through the quarter ending October 3, 2009, a consolidated total secured debt (net
of cash and cash equivalents not to exceed $30.0 million) to consolidated EBITDA ratio of no more than 4.00 to 1.00. As of April 4, 2009, the Companys actual secured leverage ratio was 3.24 to 1.00, as calculated in accordance with the
Credit Facility. As of April 4, 2009, total secured debt was approximately $579.5 million (net of $20.6 million in cash). Under the Credit Facility, EBITDA is defined as net income plus, interest, taxes, depreciation and amortization, further
adjusted to add back extraordinary, unusual or non-recurring losses, non-cash stock option expense, fees and expenses related to the Transaction, fees and expenses under the Management Agreement with our equity sponsor, restructuring charges or
reserves, as well as other non-cash charges, expenses or losses, and further adjusted to subtract extraordinary, unusual or non-recurring gains, other non-cash income or gains, and certain cash contributions to our common equity. Set forth below is
a reconciliation of Consolidated Adjusted EBITDA, as calculated under the Credit Facility, to EBITDA and net loss for the four quarters ended April 4, 2009 (in thousands):



|                                                                          |  |   |          |  
|------------------------------------------------------------------------- |  | - | -------- | -
|Net loss                                                                  |  | $ | (412,955 | )
|Income tax benefit                                                        |  |   | (24,963  | )
|Interest expense, net (excluding amortization of deferred financing fees) |  |   | 88,326   |  
|Depreciation and amortization                                             |  |   | 46,751   |  
|                                                                          |  |   |          |  
|EBITDA                                                                    |  |   | (302,841 | )
|Equity-based compensation expense                                         |  |   | 866      |  
|Restructuring charges                                                     |  |   | 14,797   |  
|Goodwill and intangible asset impairments                                 |  |   | 462,616  |  
|Fees paid pursuant to management agreement                                |  |   | 1,500    |  
|Other non-cash expense                                                    |  |   | 1,882    |  
|                                                                          |  |   |          |  
|Consolidated Adjusted EBITDA under the Credit Facility                    |  | $ | 178,820  |  
|                                                                          |  |   |          |  

The Credit Facility also contains certain other limitations on the Companys and certain of the
Companys restricted subsidiaries, as defined in the credit agreement related to our Credit Facility, ability to incur additional debt, guarantee other obligations, grant liens on assets, make investments or acquisitions, dispose of
assets, make optional payments or modifications of other debt instruments, pay dividends or other payments on capital stock, engage in mergers or consolidations, enter into sale and leaseback transactions, enter into arrangements that restrict the
Companys ability to pay dividends or grant liens and engage in transactions with affiliates.

The Consolidated Adjusted EBITDA ratio is a material
component of the Credit Facility. Non-compliance with the maximum Consolidated Adjusted EBITDA ratio could prevent us from borrowing under our Revolving Facility and would result in a default under the credit agreement related to our Credit
Facility. If there were an event of default under the credit agreement related to our Credit Facility that was not cured or waived, the lenders under our Credit Facility could cause all amounts outstanding under our Credit Facility to be due and
payable immediately, which would have a material adverse effect on our financial position and cash flows.

Cash Flows and Funding of our Operations

The Companys cash includes interest-bearing and non-interest bearing accounts. The Company maintains cash balances at several financial institutions.
Cash as of April 4, 2009 of $20.6 million decreased by $110.0 million compared to $130.6 million as of January 3, 2009. Cash used in operating activities was $34.8 million. Cash used in operating activities includes total payments of $6.1
million of taxes, primarily related to fiscal 2008, and cash paid for interest of $32.2 million.

Net cash used in investing activities was $5.2 million
for the thirteen weeks ended April 4, 2009 and was used for the purchase of property and equipment, primarily related to new stores. Net cash used by financing activities was $70.0 million for the thirteen weeks ended April 4, 2009 and was
used to pay down borrowings under the Revolving Facility.

We fund our operations through a combination of internally generated cash from operations and
from borrowings under the Credit Facility. Our primary uses of cash are working capital requirements, new store expenditures, new store inventory purchases and debt service requirements. We anticipate that cash generated from operations together
with amounts available under the Credit Facility will be sufficient to meet our future working capital requirements, new store expenditures, new store inventory purchases and debt service obligations as they become due over the next twelve months.
However, our ability to fund future operating expenses and capital expenditures and our ability to make scheduled payments of interest on, to pay principal on or refinance indebtedness and to satisfy any other present or future debt obligations will
depend on future operating performance which will be affected by general economic, financial and other factors beyond our control. In addition, borrowings under our Credit Facility are dependent upon our continued compliance with the financial and
other covenants contained therein.

Due to the seasonality of the business, we do not generate positive cash flow from operations through the first three
quarters of our fiscal year. As such, we draw on the revolver portion of our Credit Facility during these times to fund operations. In the fourth quarter, these borrowings are typically repaid in full using cash generated from operations during the
fourth quarter holiday season. We typically reach our peak borrowings of approximately $90.0 million during the latter part of the third quarter. However, due to the extreme disruption in the financial markets during the latter half of 2008 and the
volatility of the economic environment as a whole, we strategically held our cash and did not repay our borrowings under our Revolving Facility as of January 3, 2009. We repaid $70.0 million in borrowings under our Revolving Facility during the
first quarter of 2009.

We review and forecast our cash flow on a daily basis for the current year and on a quarterly basis for the upcoming year to ensure
we have adequate liquidity to fund our business. We believe that we will, for the foreseeable future, be able to meet our debt service obligations, fund our working capital requirements, fund our capital expenditures and be in compliance with our
covenants under our Credit Facility.



23



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##### Table of Contents

|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------

Our
market risks relate primarily to changes in interest rates. At April 4, 2009, we had $600.1 million of floating rate debt and $513.0 million of fixed rate debt. For fixed rate debt, interest rate changes affect the fair market value, but do not
impact earnings or cash flows. Conversely for floating rate debt, interest rate changes do not affect the fair market value but do impact future earnings and cash flows, assuming other factors are held constant. The $600.1 million outstanding under
our Credit Facility bears interest at variable rates. All borrowings under the Credit Facility bear interest at a rate per annum equal to an applicable margin, plus, at the Companys option, (i) the higher of (a) the prime rate (as
set forth on the British Banking Association Telerate Page 5) and (b) the federal funds effective rate, plus one-half percent (0.50%) per annum or (ii) the Eurodollar rate, and resets periodically. As of April 4, 2009, the weighted
average combined interest rate on the senior secured term loan facility and senior secured revolving credit facility was 3.19%. This Credit Facility is intended to fund operating needs. Because this Credit Facility bears a variable interest rate
based on market indices, our results of operations and cash flows will be exposed to changes in interest rates. Based on April 4, 2009 borrowing levels, a 1.00% increase or decrease in current market interest rates would have the effect of
causing an approximately $6.0 million additional annual pretax charge or credit to the statement of operations.

The variable nature of our
obligations under the Credit Facility creates interest rate risk. In order to mitigate this risk we have entered into certain interest rate swaps. In February 2007, we entered into an interest rate swap agreement in the notional amount of $415.0
million to hedge floating rate debt for the period between February 14, 2007 and March 30, 2010. The $415.0 million notional value amortizes over the life of the swap. The swap, which is with a highly rated counterparty, is treated as a
cash flow hedge for accounting purposes and on which we pay a fixed rate of 5.095% and receive LIBOR from the counterparty. In February 2008, we entered into a second interest rate swap agreement in the notional value of $100.0 million,
effective March 31, 2008. The $100.0 million notional value increases on March 31, 2010 to approximately $397.0 million and then amortizes over the remaining life of the swap. The swap, which is with a highly rated counterparty, is treated
as a cash flow hedge for accounting purposes and on which we pay a fixed rate of 3.347% and receive LIBOR from the counterparty.

We buy a variety of raw
materials for inclusion in our products. The only raw material that is considered to be of a commodity nature is wax. Wax is a petroleum based product. Its market price has not historically fluctuated with the movement of oil prices and has instead
generally moved with inflation. However, in the past several years the price of wax has increased at a rate significantly above the rate of inflation. Future increases in wax prices could have an adverse affect on our cost of goods sold and could
lower our margins.



|Item 4T. | Controls and Procedures
|-------- | -----------------------

Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer, evaluated the effectiveness of our disclosure controls
and procedures as of April 4, 2009. The term disclosure controls and procedures, as defined in Rules 13a15(e) and 15d15(e) under the Securities Exchange Act of 1934, or Exchange Act, means controls and other procedures
of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the
SECs rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange
Act is accumulated and communicated to the companys management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls
and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and
procedures. Based on the evaluation of our disclosure controls and procedures as of April 4, 2009, our chief executive officer and chief financial officer concluded that, as of such date, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

No change in our internal control over financial reporting (as defined in Rules 13a15(f) and 15d15(f) under the Exchange Act) occurred during the fiscal quarter ended April 4, 2009 that has materially affected, or is
reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER
INFORMATION



|Item 1. | Legal Proceedings
|------- | -----------------

There have been no material changes from the
legal proceedings discussed in the Companys Annual Report on Form 10-K.



|Item 1A. | Risk Factors
|-------- | ------------

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 to factors generally affecting the political, economic and competitive conditions in the United States and abroad, such
factors include those set forth below. Investors should consider the following factors before investing in our Company.

The current economic conditions
and uncertain future outlook, including the credit and liquidity crisis in the financial markets and the continued deterioration in consumer confidence and spending, may continue to negatively impact our business and results of operations.

As widely reported, financial and credit markets in the United States and globally have been experiencing unprecedented levels of volatility and
disruption in recent months, which has resulted in, among other things, severely diminished liquidity and credit availability and a widespread reduction in business activity and consumer spending and confidence. In 2008 and the first quarter of
2009, these economic conditions negatively impacted our business and our results of operations. Any continuation or further deterioration in the current economic conditions, or any prolonged global, national or regional recession, may materially
adversely affect our results of operations and financial condition.

These economic developments affect businesses such as ours in a number of ways. The
current adverse market conditions, including the tightening of credit in financial markets, negatively impacts the discretionary spending of our consumers and may result in a decrease in sales or demand for our products. Similarly, these conditions
may negatively impact the financial and operating condition of our wholesale customer base, or their ability to obtain credit, either of which in turn could cause them to reduce or delay their purchases of our products and increase our exposure to
losses from bad debts. Similarly, these conditions could also increase the likelihood that one or more of our wholesale customers may file for bankruptcy or similar protection from creditors, which also may result in a loss of sales and increase our
exposure to bad debt.



24



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From a financing perspective, we believe that we currently have sufficient liquidity to support the ongoing activities of
our business, service our existing debt and invest in future growth opportunities. While the existing conditions have therefore not currently impacted our ability to finance our operations, the continuation or further deterioration of the
unprecedented instability and tightening of the credit markets may adversely affect our ability to access the credit market and to obtain any additional financing or refinancing on satisfactory terms or at all.

We are unable to predict the likely duration and severity of the ongoing disruption in financial markets and adverse economic conditions in the United States and other
countries, nor are we able to predict the long-term impact of these conditions on our operations.

Counterparties to our secured credit facility and
interest rate swaps may not be able to fulfill their obligations due to disruptions in the global financial and credit markets.

As a result of
concerns about the stability of the financial and credit markets and the strength of counterparties during this challenging global macroeconomic environment, many financial institutions have reduced, and in some instances ceased to provide, funding
to borrowers. In our case, Lehman Commercial Paper, Inc. (LCP), one of the lenders under our $125.0 million Revolving Facility and who also serves as the Administrative Agent under the Credit Facility declared bankruptcy in September
2008. LCPs share of the Revolving Facility was 12% or $15.0 million of the total funds available to us under the Revolving Facility. As a result of the bankruptcy, our ability to draw upon that portion of the Revolving Facility has been
reduced. To date, we have not secured substitute financing. If we are unable to secure additional or substitute funding from other parties, our Revolving Facility would be effectively reduced from $125.0 million to $110.0 million. Based upon
information available to us, we have no indication that other financial institutions syndicated under our Revolving Facility would be unable to fulfill their commitments to us. However, if additional counterparties were to become unable to fulfill
those obligations, that may adversely affect our results of operations, financial condition and liquidity.

Additionally, we have entered into interest
rate swap agreements to hedge the variability of interest payments associated with our Credit Facility. We may be exposed to losses in the event of nonperformance by counterparties on these instruments. Continued turbulence is the global credit
markets and the U.S. economy may adversely affect our results of operations and financial condition.

We have been required to recognize a pre-tax,
non-cash impairment charge related to goodwill and other intangible assets, and we may be required to recognize additional impairment charges against goodwill or intangible assets in the future.

At April 4, 2009, the net carrying value of our goodwill and intangible assets totaled approximately $643.8 million and $305.4 million respectively. Our amortizing
intangible assets are subject to impairment testing in accordance with SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets, and our non-amortizing goodwill and tradenames are subject to impairment tests in
accordance with SFAS No. 142, Goodwill and Intangible Assets. We review the carrying value of our intangible assets and goodwill for impairment whenever events or circumstances indicate that their carrying value may not be
recoverable, at least annually for our goodwill and tradnames. Significant negative industry or economic trends, including disruptions to our business, unexpected significant changes or planned changes in the use of our intangible assets, and
mergers and acquisitions could result in an impairment charge for any of our intangible assets, goodwill or other long-lived assets. We completed our annual impairment testing of goodwill and indefinite-lived intangible assets as of November 1,
2008. As a result of these analyses we recorded impairment charges of $375.2 million and $87.4 million related to our goodwill and tradenames, respectively during the fourth quarter ended January 3, 2009.

In the impairment analyses we used certain estimates and assumptions, including a combination of market-based and income-based approaches, each of which were weighted at
50% for the impairment test performed as of November 1, 2008. The market-based approach estimates fair value by applying multiples of potential earnings, such as EBITDA and revenue, of publicly traded comparable companies. We believe this
approach is appropriate because it provides a fair value using multiples from companies with operations and economic characteristics similar to our reporting units. The income-based approach is based on projected future debt-free cash flow that is
discounted to present value using factors that consider the timing and risk of the future cash flows. We believe this approach is appropriate because it provides a fair value estimate based upon the reporting units expected long-term operations and
cash flow performance. The income-based approach is based on future projections of operating results and cash flows. These projections are discounted to present value using a weighted average cost of capital for market participants, who are
generally thought to be industry participants. The future projections are based on both past performance and the projections and assumptions used in our current operating plan. Such assumptions are subject to change as a result of changing economic
and competitive conditions and could result in additional impairment charges. Further, if the economic market conditions continue to worsen and our estimated future discounted cash flows decrease further we may incur additional impairment charges.
Additional impairment charges related to our goodwill, tradenames or other intangible assets could have a significant impact on our financial position and results of operations.

Our substantial indebtedness could have a material adverse effect on our financial condition and operations.

After
giving effect to the Merger and related use of proceeds, we have a substantial amount of debt, which requires significant interest and principal payments. Subject to the limits contained in the indentures governing our senior notes and our senior
subordinated notes and our senior secured credit facility, we may be able to incur additional debt from time to time, including drawing on our senior secured revolving credit facility, to finance working capital, capital expenditures, investments or
acquisitions, or for other purposes. If we do so, the risks related to our business associated with our high level of debt could intensify. Specifically, our high level of debt could have important consequences to the holders of the notes, including
the following:



| |  |  | making it more difficult for us to satisfy our obligations with respect to the notes and our other debt;
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | requiring us to dedicate a substantial portion of our cash flow from operations to debt service payments on our and our subsidiaries debt, which would reduce
the funds available for working capital, capital expenditures, acquisitions and other general corporate purposes;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | limiting our flexibility in planning for, or reacting to, changes in the industry in which we operate;
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | placing us at a competitive disadvantage compared to any of our less leveraged competitors;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | increasing our vulnerability to both general and industryspecific adverse economic conditions; and
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate requirements and
increasing our cost of borrowing.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

We and/or our subsidiaries may be able to incur substantial additional debt in the future in addition
to our notes and our senior secured credit facility. The addition of further debt to our current debt levels could intensify the leveragerelated risks that we now face.



25



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##### Table of Contents

Our debt agreements contain restrictions on our ability to operate our business and to pursue our business strategies,
and our failure to comply with these covenants could result in an acceleration of our repayment terms.

The credit agreement governing our senior
secured credit facility and the indentures governing our notes contain, and agreements governing future debt issuances may contain, covenants that restrict our ability to finance future operations or capital needs, to respond to changing business
and economic conditions or to engage in other transactions or business activities that may be important to our growth strategy or otherwise important to us. The credit agreement and the indentures restrict, among other things, our ability and the
ability of our subsidiaries to:



| |  |  | incur additional debt;
| | - |  | ----------------------



| |  |  | pay dividends or make other distributions on our capital stock or repurchase our capital stock or subordinated indebtedness;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | make investments or other specified restricted payments;
| | - |  | --------------------------------------------------------



| |  |  | create liens;
| | - |  | -------------



| |  |  | sell assets and subsidiary stock;
| | - |  | ---------------------------------



| |  |  | enter into transactions with affiliates; and
| | - |  | --------------------------------------------



| |  |  | enter into mergers, consolidations and sales of substantially all assets.
| | - |  | -------------------------------------------------------------------------

In addition, the credit agreement related to our senior secured credit facility requires us to satisfy a senior secured leverage ratio and to repay outstanding borrowings under such facility with proceeds we receive
from certain sales of property or assets and specified future debt offerings. We cannot assure you that we will be able to maintain compliance with such covenants in the future and, if we fail to do so, that we will be able to obtain waivers from
the lenders and/or amend the covenants.

Any breach of the covenants in the credit agreement or the indentures could result in a default of the obligations
under such debt and cause a default under other debt. If there were an event of default under the credit agreement related to our senior secured credit facility that was not cured or waived, the lenders under our senior secured credit facility could
cause all amounts outstanding with respect to the borrowings under our senior secured credit facility to be due and payable immediately. Our assets and cash flow may not be sufficient to fully repay borrowings under our senior secured credit
facility and our obligations under the notes if accelerated upon an event of default. If, as or when required, we are unable to repay, refinance or restructure our indebtedness under, or amend the covenants contained in, our senior secured credit
facility, the lenders under our senior secured credit facility could institute foreclosure proceedings against the assets securing borrowings under our senior secured credit facility.

We may not be able to generate sufficient cash flows to meet our debt service obligations.

Our ability to make
payments on and to refinance our indebtedness and to fund planned capital expenditures depends on our ability to generate cash from our future operations. This, to a certain extent, is subject to general economic, financial, competitive,
legislative, regulatory and other factors that are beyond our control. Our business may not generate sufficient cash flow from operations, or future borrowings under our senior secured credit facility, or from other sources, may not be available to
us in an amount sufficient, to enable us to repay our indebtedness or to fund our other liquidity needs, including capital expenditure requirements. If we cannot service our indebtedness, we may have to take actions such as selling assets, seeking
additional equity or reducing or delaying capital expenditures, strategic acquisitions, investments or alliances. Our senior secured credit facility and the indentures governing the notes restrict our ability to sell assets and use the proceeds from
such sales. Additionally, we may not be able to refinance any of our indebtedness on commercially reasonable terms, or at all. If we cannot service our indebtedness, it could impede the implementation of our business strategy or prevent us from
entering into transactions that would otherwise benefit our business.

The interests of our controlling stockholders may conflict with the interests of
the noteholders.

Private equity funds managed by Madison Dearborn indirectly own substantially all of our common stock. The interests of these funds
as equity holders may conflict with the interests of the noteholders. The controlling stockholders may have an incentive to increase the value of their investment or cause us to distribute funds to the detriment of our financial condition and affect
our ability to make payments on the outstanding notes. In addition, these funds have the power to elect a majority of our Board of Directors and appoint new officers and management and, therefore, effectively control many other major decisions
regarding our operations. Three of our directors are employed by Madison Dearborn. Additionally, our controlling stockholders are in the business of making investments in companies and may, from time to time, acquire and hold interests in businesses
that compete directly or indirectly with us. Our controlling stockholders may also pursue acquisition opportunities that may be complementary to our business and, as a result, those acquisition opportunities may not be available to us.

If we fail to grow our business as planned, our future operating results may suffer. It will be difficult to maintain our historical growth rates.

We intend to continue to pursue a long-term business strategy of increasing sales and earnings by expanding our retail and wholesale operations both in the United
States and internationally. However, our ability to grow these businesses in the short-term, including during 2009, may be negatively impacted by the current economic conditions. Our ability to implement our long-term growth strategy successfully
will also be dependent in part on several factors beyond our control, including consumer preferences, and the competitive environment in the markets in which we compete, and we may not be able to achieve our planned growth or sustain our financial
performance. Our ability to anticipate changes in the candle, home fragrance and giftware industries, and identify industry trends, will be critical factors in our ability to remain competitive.

We expect that 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. Over the past several years, 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 and profitability
could be adversely affected. In addition, as we expand our wholesale business into new channels of trade that we believe to be appropriate, sales in some of these new channels may, for competitive reasons within the channels, generate lower margins
than do our existing wholesale sales. Similarly, as we continue to broaden our product offerings in order to meet consumer demand, we may do so in part by adding products that have lower product margins than those of our core candle products.

We may be unable to continue to open new stores successfully.

Our retail strategy depends in large part on our ability to successfully open new stores in both existing and new geographic markets. For our strategy to be successful, we must identify and lease favorable store sites on favorable economic
terms, hire and train managers and associates and adapt management and operational systems to meet the needs of our expanded operations. These tasks may be difficult to accomplish successfully and any changes in the availability of suitable real
estate locations on acceptable terms could adversely impact our retail growth. If we are unable to open new stores as quickly as planned, then our future sales and profits could be materially adversely affected. Even if we succeed in opening new
stores, these new stores may not achieve the same sales or profit levels as our existing stores. Also, our retail strategy includes opening new stores in markets where we already have a presence so we can take advantage of economies of scale in
marketing, distribution



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and supervision costs, or the opening of new malls or centers in the market. However, these new stores may result in the loss of sales in existing stores in
nearby areas, thereby negatively impacting our comparable store sales. A decrease in our retail comparable store sales will have an adverse impact on our cash flows and earnings. This is due to the fact that a significant portion of our expenses are
comprised of fixed costs, such as lease payments, and our ability to decrease expenses in response to negative comparable store sales is limited in the short term. If comparable store sales decline it will negatively impact earnings. Our retail
strategy also depends upon our ability to successfully renew the expiring leases of our profitable existing stores. If we are unable to do so at planned levels and upon favorable economic terms, then our future sales and profits could be negatively
affected.

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 and retailers in the giftware industry. The giftware industry is highly competitive with a large number of both large and small participants and relatively low barriers to
entry.

Our products compete with other scented and unscented candle, home fragrance 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 primarily with specialty candle retailers and a variety of other retailers including department stores, gift stores and national specialty
retailers that carry candles along with personal care items, giftware and houseware. In addition, while we focus primarily on the premium scented candle segment, scented and unscented candles are also sold outside of that segment by a variety of
retailers, including mass merchandisers. In our wholesale business, we compete with numerous manufacturers and importers of candles, home fragrance products and other home decor and gift items for the limited space available in our wholesale
customer locations for the display and sale of such products to consumers. 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. Many of our
competitors source their products from low cost manufacturers outside of the United States. 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 periods of significant economic volatility and disruption such as the one we are currently experiencing, or during other economic downturns or 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 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 primarily 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, or are unable to attract and retain the talent required for our business,
our business could be disrupted and our financial performance could suffer.

Our success is in part 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. In addition, as our business grows in size and complexity we
must be able to continue to attract, develop and retain qualified personnel sufficient to allow us to adequately manage and grow our business. If we are unable to do so, our operating results could be negatively impacted. We cannot guarantee that we
will be able to attract and retain personnel as and when necessary in the future.

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 68% of our 2008 sales were
generated by products we manufactured 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, if our facilities
were destroyed 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 results of operations.

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. In addition, in anticipation of increased holiday sales activity, we incur certain significant incremental expenses, including the hiring
of a substantial number of temporary employees to supplement our existing workforce. 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, pricing and promotional activities of our competitors, 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, the opening nearby of new retail stores or wholesale locations, 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 analysts and investors. This could cause the price of the notes to decline.

Sustained interruptions in the supply of products from overseas may affect our operating results.

We source various
accessories and other products from Asia. A sustained interruption of the operations of our suppliers, as a result of economic difficulties, the impact of health epidemics, natural disasters such as the 2004 tsunami or other factors, could have an
adverse effect on our ability to receive timely shipments of certain of our products, which might in turn negatively impact our sales and operating results.



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Further increases in wax prices above the rate of inflation may negatively impact our cost of goods sold and margins.
Any shortages in refined oil supplies could impact our wax supply.

In the past several years, including 2007 and for most of 2008, significant
increases in the price of crude oil have adversely impacted our transportation and freight costs and have contributed to significant increases in the cost of various raw materials, including wax which is a petroleum-based product. This in turn
negatively impacts our cost of goods sold and margins. In addition, we believe that rising oil prices and corresponding increases in raw materials and transportation costs negatively impact not only our business but consumer sentiment and the
economy at large. Continued weakness in consumer confidence and the macro-economic environment could negatively impact our sales and earnings. Future significant increases in wax prices could have an adverse affect on our cost of goods sold and
could lower our margins.

In addition to the impact of increased wax prices, any shortages in refined oil supplies may impact our wax supply. For example,
in 2005, due to hurricanes in the Gulf Coast region and the closing and disruption of oil refineries located there significantly limited our ability to source wax and negatively impacted our operations. While we experienced no supply issues in 2008,
any future prolonged interruption or reduction in wax supplies could negatively impact our operations, sales and earnings.

The loss or significant
deterioration in the financial condition of a significant wholesale customer could negatively impact our sales and operating results.

A significant
deterioration in the financial condition of one of our major customers, or the loss of such a customer, could have a material adverse effect on our sales, profitability and cash flow to the extent that we are unable to offset any revenue losses with
additional revenue from existing customers or by opening new accounts. We continually monitor and evaluate the credit status of our customers and attempt to adjust trade and credit terms as appropriate. However, a bankruptcy filing by a key customer
could have a material adverse effect on our business, results of operations and financial condition. In this regard, for example, we note that on May 2, 2008 Linens N Things (Linens) filed a petition for reorganization under
Chapter 11 of the U.S. Bankruptcy Code. At the time of that filing we had an outstanding receivable balance due from Linens and are an unsecured creditor with respect to that receivable. We recorded a bad debt provision in the amount of $4.5 million
during the quarter ended June 28, 2008 with respect to the pre-petition receivable due from Linens. Linens is now in the process of liquidating its assets.

There are also various potential claims which may arise in connection with bankruptcy proceedings that, if filed and adversely decided, could potentially negatively impact our operating results and financial condition. For example, in
connection with the Linens bankruptcy we received a letter dated December 19, 2008 from counsel to Linens Holding Co. and its affiliates, which letter alleges that, pursuant to Sections 547 and 550 of the United States Bankruptcy Code, we are
required to return to Linens approximately $6.6 million in allegedly preferential transfers allegedly made to Yankee Candle during the 90-day period preceding the filing of the Linens bankruptcy cases. The letter also alleges that Yankee
Candle is required to pay to Linens approximately $1.3 million on account of credits allegedly earned but not redeemed by Linens prior to the filing of the Linens bankruptcy cases. The letter offered to settle these claims and threatened legal
action if settlement terms cannot be reached. We are currently evaluating these alleged claims with outside counsel. While we believe we have a number of strong potential defenses to all or a significant portion of these claims and plan to
vigorously contest any action brought by Linens, we cannot at this time predict what the outcome of this matter would be if legal action were to be pursued by Linens. If any matter were to be brought by Linens and were decided in a manner adverse to
us, it could materially adversely impact our results of operations.

Given the current economic environment, there is an increased risk that additional
wholesale customers could be forced to declare bankruptcy or significantly reduce their operations or purchases from us. The loss of one or more significant wholesale customers, or a significant reduction in their operations, could materially
adversely impact our results of operations and financial condition.

The bankruptcy of General Growth Partners could have a significant impact on our
sales or operating results. The bankruptcy or significant deterioration of any of our major national retail landlords could have a material adverse affect on our sales and overall retail strategy.

The current economic downturn has significantly negatively impacted the commercial real estate sector, including large commercial and retail landlords. On April 16,
2009 one of our major national landlords, General Growth Properties, filed a petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code (11 U.S.C. § 101 et seq.). We have leases with GGP and its affiliates relating to 82 of
our 474 existing retail stores. At the time of the filing, we had unpaid tenant allowances due to us or pending from GGP in the amount of $0.3 million, and, while we intend to continue to seek the payment of these allowances within the limits of the
law, there is no certainty that we will be able to recover all or any part of this amount. We also have several pending agreements and ongoing negotiations with GGP regarding, among other things, new store leases, lease termination agreements and
lease renewals or modifications. There can be no assurance that these agreements will be finalized or that these negotiations will continue, and any delay or cessation may have an adverse impact on our business. As a result of the bankruptcy filing,
GGP may have or seek to exercise certain rights which could potentially negatively impact us, including without limitation the right to assume or reject all or any of our store leases. GGP may also pursue the sale or other disposition of the mall
properties in which our stores are located, which could adversely affect our leases. Moreover, if GGP or any buyer of GGPs properties is unable to continue to operate its malls in a first class condition and otherwise perform its obligations
as landlord, including without limitation its repair and maintenance obligations, then our sales and operating results in those malls could be adversely affected. While we intend to take steps to control and mitigate any adverse effects of the GGP
financial distress and bankruptcy, there can be no assurance that all significant impacts can be avoided.

If the current macro-economic conditions
continue or deteriorate further, additional commercial landlords may be similarly impacted which in turn could materially adversely impact our sales and operating results.

Other factors may also cause our actual results to differ materially from our estimates and projections.

In
addition to the foregoing, there are other factors which may cause our actual results to differ materially from our estimates and projections. Such factors include the following:



| |  |  | changes in the general economic conditions in the United States including, but not limited to, consumer debt levels, financial market performance, interest rates,
consumer sentiment, inflation, commodity prices, unemployment and other factors that impact consumer confidence and spending;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in levels of competition from our current competitors and potential new competition from both retail stores and alternative methods or channels of
distribution;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | loss of a significant vendor or prolonged disruption of product supply;
| | - |  | -----------------------------------------------------------------------



| |  |  | the successful introduction of new products and technologies in our product categories, including the frequency of such introductions, the level of consumer
acceptance of new products and technologies, and their impact on demand for existing products and technologies;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the impact of changes in pricing and profit margins associated with our sourced products or raw materials;
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | changes in income tax laws or regulations, or in interpretations of existing income tax laws or regulations;
| | - |  | ------------------------------------------------------------------------------------------------------------



| |  |  | adverse outcomes from significant litigation matters;
| | - |  | -----------------------------------------------------



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| |  |  | changes in the interpretation or enforcement of laws and regulations regarding our business or the sale of our products, or the ingredients contained in our
products; or the imposition of new or additional restrictions or regulations regarding the same;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in our ability to attract, retain and develop highly-qualified employees or changes in the cost or availability of a sufficient labor force to manage and
support our operations;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in our ability to meet objectives with regard to business acquisitions or new business ventures;
| | - |  | --------------------------------------------------------------------------------------------------------



| |  |  | the occurrence of severe weather events prohibiting or discouraging consumers from traveling to retail or wholesale locations;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | the disruption of global, national or regional transportation systems;
| | - |  | ----------------------------------------------------------------------



| |  |  | the occurrence of certain material events including natural disasters, acts of terrorism, the outbreak of war or other significant national or international events;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to react in a timely manner and maintain our critical business processes and information systems capabilities in a disaster recovery situation; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in our ability to manage our existing computer systems and technology infrastructures, and our ability to implement successfully new computer systems and
technology infrastructures.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|Item 2. | Unregistered Sales of Equity 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
|------- | --------



|     |  |                                                                                                                            
|---- |  | ---------------------------------------------------------------------------------------------------------------------------
|31.1 |  | Certification of Craig W. Rydin Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, dated May 13, 2009   
|     | 
|31.2 |  | Certification of Bruce L. Hartman Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934, dated May 13, 2009.
|     | 
|32.1 |  | Certification of Craig W. Rydin Pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, dated May 13, 2009.  
|     | 
|32.2 |  | Certification of Bruce L. Hartman Pursuant to Rule 13a-14(b) under the Securities Exchange Act of 1934, dated May 13, 2009.
|     | 
|99.1 |  | Form of 2009 Management Incentive Plan, filed herewith.                                                                    



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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 thereunto duly authorized.



|                   |  |                      |  |                                                                                                                 
|------------------ |  | -------------------- |  | ----------------------------------------------------------------------------------------------------------------
|                   |  | YANKEE HOLDING CORP.
|                   |  |                     
|Date: May 13, 2009 |  | By:                  |  | /s/ Bruce L. Hartman                                                                                            
|                   |  |                      |  | Bruce L. Hartman                                                                                                
|                   |  |                      |  | Executive Vice President, Chief Administrative Officer and Chief Financial Officer (Principal Financial Officer)
|                   |  |                      |  |                                                                                                                 



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