**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington D.C. 20549**

 

**FORM10-Q/A**
| **(Mark One)** | **(Amendment No. 2)**                                                                               |
|----------------|-----------------------------------------------------------------------------------------------------|
|           |
| **ý**     | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF  1934**  |
| ** **     | ** **                                                                                          |
| ** **     | **For the quarterly period ended April 30, 2003**                                              |
| ** **     | ** **                                                                                          |
| **or**         |
|           |                                                                                                |
| **o**          | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF  1934** |
|                |                                                                                                     |  |

 

**For the transition period from                 to                  **

 

**Commission file number 1-13026**

 

**BLYTH, INC.**

(Exact name of registrant as specified in itscharter)

 

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

 

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

### ** **

**(203) 661-1926**

(Registrant’s telephone number, includingarea code)

 

#### **Not Applicable**

(Former name, former address and formerfiscal year, if changed since last report)

 

Indicate by check mark whether the registrant (1)has filed all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for suchshorter 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  o                                                 No  ý                                              SeeItem 5 of Part II.  

 

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

Yes  ý                                                 No  o

 

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

 

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

 

 

----

 

**Explanatory Note**

 

As of January 31, 2004, we revised our reportingsegments based on Statement of Financial Accounting Standards No. 131, “Disclosuresabout Segments of an Enterprise and Related Information”. This revision ofsegments had the related effect of requiring changes in our reporting units forpurposes of goodwill impairment reviews under Statement of Financial AccountingStandards No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”),retroactive to the February 1, 2002 adoption date. This resulted in theneed to perform impairment reviews of several additional reporting units as of February 1,2002 and each subsequent year–end balance sheet date. These impairment reviewsindicated the need to record additional impairment charges as of the February 1,2002 adoption of SFAS 142. 

 

On August 4, 2004, we filed amendments on Form 10–Q/Arestating our Consolidated Financial Statements for the interim periods ended April 30,July 31, and October 31, 2003 to reflect these changes. Ourpredecessor independent public accountants had performed the reviews that wewere required to have performed by Section 10–01(d) of Regulation S–X ofour Consolidated Financial Statements as included in our Quarterly Reports onForm 10–Q as initially filed for the interim periods ended April 30, July 31,and October 31, 2003. The amendments filed on Form 10-Q/A were filed afterour termination of our predecessor independent public accountants. TheConsolidated Financial Statements included in our amended quarterly reportswere not reviewed by any independent public accountant, and such amendedquarterly reports are therefore not considered fully compliant with therequirements of the Exchange Act and the rules and regulations of theCommission. We have had preliminary discussions with and plan to re-engage ourpredecessor independent public accountants to perform such a review, and wepresently expect those reviews to be completed by our predecessor independentpublic accountants prior to January 31, 2005, although there can be noassurance that they will be able to do so. We do not expect that the reviews ofour amended quarterly reports will require any change to the ConsolidatedFinancial Statements.

 

We are filing this amendment to our fiscal 2004 10-Q/Afiling for the period ended April 30, 2003 to reflect the fact that thefinancial information included in this report was not reviewed by anyindependent public accountant. At the appropriate time, we intend to file anadditional amendment to this amended report to reflect the completion of thereview.

 

The staff of the Commission may take the position thatbecause certain information relating to our Quarterly Reports for fiscal 2004has not been reviewed by any independent public accountants prior to filing asrequired by Section 10–01(d) of Regulation S–X, we would not be viewed ashaving made all required filings until the reports are amended to reflect therequired review, and even then that the filings were not filed timely. If so,we would be ineligible to use Forms S–2 and S–3 to register securities (oramend an existing registration statement) until all required reports under theExchange Act have been timely filed for the 12 months prior to the filing ofthe registration statement or amendment. While ineligibility to use Form S–2 orS–3 would involve additional expense should we need to file or amend aregistration statement, we do not view ineligibility as having a materialadverse effect on our access to capital resources. Second, the safe harbor fromregistration contained in Rule 144 under the Securities Act of 1933 may beunavailable to our executive officers, directors and other affiliates wishingto sell our securities. We have instructed such persons not to resellsecurities in reliance upon Rule 144 until otherwise advised. As aprecautionary matter, to be consistent with these instructions, on the coverpage of this filing, we have checked the box that indicates that we have not madeall filings required in the last 90 days.

 

2

----

 

**Item 4.** Controls andProcedures

** **

(a) Evaluation of disclosure controls andprocedures.

 

Ourmanagement, with the participation of our principal executive officer and ourprincipal financial officer, evaluated the effectiveness of our disclosurecontrols and procedures (as defined in Securities Exchange Act of 1934 (“ExchangeAct”) Rules 13a-15(e) or 15d-15(e)) as of the end of the period covered by thisquarterly report as required by paragraph (b) of Exchange Act Rules 13a-15 or15d-15.  Based upon this evaluation, ourprincipal executive officer and our principal financial officer have concludedthat our disclosure controls and procedures are effective as of the end of theperiod covered by this quarterly report, except for the matters set forth inthe Explanatory Note to this quarterly report and Item 5 of Part II of thisquarterly report.

 

(b) Changes in internal control overfinancial reporting.

 

There was no change in our internal control over financial reportingidentified in connection with the evaluation required by paragraph (d) ofExchange Act Rules 13a-15 or 15d-15 that occurred during our last fiscalquarter that has materially affected, or is reasonably likely to materiallyaffect, our internal control over financial reporting.

 

3

----

 

**PART II.**  OTHER INFORMATION 

** **

**Item 5.**           Other Information

** **

As of January 31,2004, we revised our reporting segments based on Statement of FinancialAccounting Standards No. 131, “Disclosures about Segments of an Enterprise andRelated Information”. This revision of segments had the related effect ofrequiring changes in our reporting units for purposes of goodwill impairmentreviews under Statement of Financial Accounting Standards No. 142, “Goodwilland Other Intangible Assets” (“SFAS 142”), retroactive to the February 1,2002 adoption date. This resulted in the need to perform impairment reviews ofseveral additional reporting units as of February 1, 2002 and eachsubsequent year–end balance sheet date. These impairment reviews indicated theneed to record additional impairment charges as of the February 1, 2002adoption of SFAS 142. 

 

On August 4,2004, we filed amendments on Form 10–Q/A restating our Consolidated FinancialStatements for the interim periods ended April 30, July 31, and October 31,2003 to reflect these changes. Our predecessor independent public accountantshad performed the reviews that we were required to have performed by Section 10–01(d)of Regulation S–X of our Consolidated Financial Statements as included in ourQuarterly Reports on Form 10–Q as initially filed for the interim periods endedApril 30, July 31, and October 31, 2003. The amendments filed onForm 10-Q/A were filed after our termination of our predecessor independentpublic accountants. The Consolidated Financial Statements included in ouramended quarterly reports were not reviewed by any independent publicaccountant, and such amended quarterly reports are therefore not consideredfully compliant with the requirements of the Exchange Act and the rules andregulations of the Commission. We have had preliminary discussions with andplan to re-engage our predecessor independent public accountants to performsuch a review, and we presently expect those reviews to be completed by ourpredecessor independent public accountants prior to January 31, 2005,although there can be no assurance that they will be able to do so. We do notexpect that the reviews of our amended quarterly reports will require anychange to the Consolidated Financial Statements.

 

We are filing thisamendment to our fiscal 2004 10-Q/A filing for the period ended April 30,2003 to reflect the fact that the financial information included in this reportwas not reviewed by any independent public accountant. At the appropriate time,we intend to file an additional amendment to this amended report to reflect thecompletion of the review.

 

The staff of theCommission may take the position that because certain information relating toour Quarterly Reports for fiscal 2004 has not been reviewed by any independentpublic accountants prior to filing as required by Section 10–01(d) ofRegulation S–X, we would not be viewed as having made all required filingsuntil the reports are amended to reflect the required review, and even thenthat the filings were not filed timely. If so, we would be ineligible to useForms S–2 and S–3 to register securities (or amend an existing registrationstatement) until all required reports under the Exchange Act have been timelyfiled for the 12 months prior to the filing of the registration statement oramendment. While ineligibility to use Form S–2 or S–3 would involve additionalexpense should we need to file or amend a registration statement, we do notview ineligibility as having a material adverse effect on our access to capitalresources. Second, the safe harbor from registration contained in Rule 144under the Securities Act of 1933 may be unavailable to our executive officers,directors and other affiliates wishing to sell our securities. We haveinstructed such persons not to resell securities in reliance upon Rule 144until otherwise advised. As a precautionary matter, to be consistent with theseinstructions, on the cover page of this filing, we have checked the box thatindicates that we have not made all filings required in the last 90 days.

 

The Company isincluding the following cautionary statement in this Report to make applicable,and to take advantage of, the safe harbor provisions of the Private SecuritiesLitigation Reform Act of 1995 for any forward-looking statements made by, or onbehalf of, the Company.  Forward-lookingstatements include statements concerning plans, objectives, goals, strategies,future events or performance and underlying assumptions and other statements,which are other than statements of historical facts.  From time to time, the Company and itsrepresentatives may publish or otherwise make available forward-looking statementsof this nature.  All such 

 

4

----

 

forward-lookingstatements, whether written or oral, and whether made by or on behalf of theCompany, are expressly qualified by the following cautionary statements.  Forward-looking statements involve risks anduncertainties, which could cause actual results or outcomes to differmaterially from those expressed in the forward-looking statements.  Such forward-looking statements are expectedto be based on various assumptions, many of which are based, in turn, uponfurther assumptions.  There can be noassurance that management’s expectations, beliefs or projections will occur orbe achieved or accomplished.  In additionto other factors and matters discussed elsewhere in this Report and in theCompany’s other public filings and statements, the following are importantfactors that, in the view of the Company, could cause actual results to differmaterially from those discussed in the Company’s forward-lookingstatements.  The Company disclaims anyobligation to update any forward-looking statements, or the following factors,to reflect events or circumstances after the date of this Report.

 

Risk of Inability to Maintain SalesGrowth Rate

 

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

 

Risks Associated with InternationalSales and Foreign-Sourced Products

 

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

 

Ability to Respond to IncreasedProduct Demand

 

The Company’sability to meet future product demand in all of its business segments willdepend upon its success in (1) bringing new production and distributioncapacity on line in a timely manner, (2) improving its ability to forecastproduct demand and fulfill customer orders promptly, (3) improving customerservice-oriented management information systems and (4) training, motivatingand managing new employees.  The failureof any of the above could result in a material adverse effect on our financialresults.

 

5

----

 

Risk of Shortages of Raw Materials

 

Certain rawmaterials could be in short supply due to capacity, availability, a change inrequirements, weather or other factors, including supply disruptions due toproduction or transportation delays. Such shortages have not had and are not presently expected to have amaterial adverse effect on the Company’s operations.  While the price of crude oil is only one ofseveral factors impacting the price of petroleum wax, it is possible thatrecent fluctuations in oil prices may have a material adverse affect on thecost of petroleum-based products used in the manufacture or transportation ofour products, particularly in the Direct Selling and Wholesale segments.

 

Dependence on Key CorporateManagement Personnel

 

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

 

Risk of Increased Competition

 

Our business ishighly competitive both in terms of pricing and new product introductions.  The worldwide market for home expressionsproducts is highly fragmented with numerous suppliers serving one or more ofthe distribution channels served by the Company.  In addition, the Company competes for directselling consultants with other direct selling companies.  Because there are relatively low barriers toentry in all of our business segments, the Company may face increasedcompetition from other companies, some of which may have substantially greaterfinancial or other resources than those available to us.  Competition includes companies sellingcandles manufactured at low cost outside of the United States.  Moreover, certain competitors focus on a singlegeographic or product market and attempt to gain or maintain market sharesolely on the basis of price.

 

# **Risks Related toInformation Technology Systems**

# ** **

Our informationtechnology systems are dependent on global communications providers, telephonesystems, hardware, software and other aspects of Internet infrastructure thathave experienced significant system failures and outages in the past.  Our systems are susceptible to outages due tofire, floods, power loss, telecommunications failures, break-ins and similarevents.  Despite the implementation ofnetwork security measures, the Company’s systems are vulnerable to computerviruses, break-ins and similar disruptions from unauthorized tampering withCompany systems.  The occurrence of theseor other events could disrupt or damage our information technology systems andinhibit internal operations, the ability to provide customer service or theability of customers or sales personnel to access the Company’s informationsystems.

 

6

----

 

**Item 6.****          ****Exhibits**

 

a)              Exhibits

 
|   | 31.1   |   | Certification  of Chairman, and Chief Executive Officer pursuant to Rule 13a-14(a) under the  Securities Exchange Act of 1934.      |
|--------|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------|
|   |   |   |                                                                                                                                |
|   | 31.2   |   | Certification  of Vice President and Chief Financial Officer pursuant to Rule 13a-14(a)  under the Securities Exchange Act of 1934. |
|   |   |   |                                                                                                                                |
|   | 32.1   |   | Certification of Chairman and Chief Executive Officer pursuant to  Section 906 of the Sarbanes-Oxley Act of 2002.              |
|   |   |   |                                                                                                                                |
|   | 32.2   |   | Certification of Vice President and Chief Financial Officer pursuant  to Section 906 of the Sarbanes-Oxley Act of 2002.        |

 

7

----

 

**SIGNATURES**

** **

**Pursuant to the requirements of the Securities Exchange Act of 1934,the registrant has duly caused this report to be signed on its behalf by theundersigned thereunto duly authorized.**

 
|   |                   |   | BLYTH, INC.                                |
|--------|------------------------|--------|--------------------------------------------|
|   |                   |   |                                       |
|   |                   |   |                                       |
| Date:  | December 16, 2004 |   | By:                                        | /s/  Robert B. Goergen |   |
|   |                   |   | Robert B. Goergen                          |
|   |                   |   | Chairman and Chief Executive Officer       |
|   |                   |   |                                       |
|   |                   |   |                                       |
|   |                   |   |                                       |
| Date:  | December 16, 2004 |   | By:                                        | /s/  Robert H. Barghaus |   |
|   |                   |   | Robert H. Barghaus                         |
|   |                   |   | Vice President and Chief Financial Officer |

 

8

----