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SECURITIES AND EXCHANGE COMMISSIONWASHINGTON D.C. 20549

FORM 10-Q

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

FOR THE QUARTER ENDED OCTOBER 31, 2002

Commission file number 1-13026

BLYTH, INC.(Exact name of registrant as specified in its charter)

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, including area code)

Not Applicable(Former name, former address and former fiscal 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 the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes  ý    No  o

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

46,047,682 Common Shares as of November 30, 2002

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BLYTH, INC.    INDEX

|                     |                        |                                                                                       | Page 
|-------------------- | ---------------------- | ------------------------------------------------------------------------------------- | -----
|Form 10-Q Cover Page | 1                     
|Form 10-Q Index      | 2                     
|Part I.              | Financial Information: |                                                                                      
|                     | Item 1.                | Financial Statements (Unaudited):                                                     |      
|                     |                        | Consolidated Balance Sheets                                                           | 3    
|                     |                        | Consolidated Statements of Earnings                                                   | 4,5  
|                     |                        | Consolidated Statements of Stockholders' Equity                                       | 6    
|                     |                        | Consolidated Statements of Cash Flows                                                 | 7    
|                     |                        | Notes to Consolidated Financial Statements                                            | 8- 14
|                     | Item 2.                | Management's Discussion and Analysis of Financial Condition and Results of Operations | 15-20
|                     | Item 3.                | Quantitative and Qualitative Disclosures About Market Risk                            | 21   
|                     | Item 4.                | Controls and Procedures                                                               | 22   
|Part II.             | Other Information      |                                                                                      
|                     | Item 1.                | Legal Proceedings                                                                     | 23   
|                     | Item 2.                | Changes in Securities                                                                 | 23   
|                     | Item 3.                | Defaults upon Senior Securities                                                       | 23   
|                     | Item 4.                | Submission of Matters to a Vote of Security Holders                                   | 23   
|                     | Item 5.                | Other Information                                                                     | 23-25
|                     | Item 6.                | Exhibits and Reports on Form 8-K                                                      | 25-26
|Signatures           | 27                    
|Certifications       | 28-29                 
|                     |                        |                                                                                       |      

2

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Part I.    FINANCIAL INFORMATION

Item 1.    FINANCIAL STATEMENTS

BLYTH, INC. AND SUBSIDIARIES  CONSOLIDATED BALANCE SHEETS

|                                                                                                                            |                                                                      | October 31,
2002 |         | January 31,
2002 |  
|--------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------- | ---------------- | ------- | ---------------- | -
|
|
|ASSETS                                                                                                                      |                                                                      |                  |         |                  |  
|Current assets:                                                                                                             |                                                                      |                  |         |                  |  
|Cash and cash equivalents                                                                                                   |                                                                      | $                | 37,303  |                  | $
|Accounts receivable, less allowance for doubtful receivables of $4,698 and $2,804, respectively                             |                                                                      |                  | 180,724 |                  |  
|Inventories                                                                                                                 |                                                                      |                  | 214,127 |                  |  
|Prepaid and other                                                                                                           |                                                                      |                  | 10,399  |                  |  
|Deferred income taxes                                                                                                       |                                                                      |                  | 20,289  |                  |  
|                                                                                                                            |                                                                      |                  |         |                  |  
|                                                                                                                            | Total current assets                                                 |                  |         | 462,842          |  
|                                                                                                                            |                                                                      |                  |         |                  |  
|Property, plant and equipment, at cost:                                                                                     |                                                                      |                  |         |                  |  
|                                                                                                                            | Less accumulated depreciation of $181,021 and $157,666, respectively |                  |         | 245,262          |  
|Other assets:                                                                                                               |                                                                      |                  |         |                  |  
|Investment                                                                                                                  |                                                                      |                  | 3,452   |                  |  
|Excess of cost over fair value of assets acquired                                                                           |                                                                      |                  | 147,137 |                  |  
|Deposits and other assets                                                                                                   |                                                                      |                  | 17,383  |                  |  
|                                                                                                                            |                                                                      |                  |         |                  |  
|                                                                                                                            |                                                                      |                  | 167,972 |                  |  
|                                                                                                                            |                                                                      |                  |         |                  |  
|                                                                                                                            | Total assets                                                         |                  | $       | 876,076          |  
|                                                                                                                            |                                                                      |                  |         |                  |  
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                        |                                                                      |                  |         |                  |  
|Current liabilities:                                                                                                        |                                                                      |                  |         |                  |  
|Bank lines of credit                                                                                                        |                                                                      | $                | 40,335  |                  | $
|Current maturities of long-term debt                                                                                        |                                                                      |                  | 4,105   |                  |  
|Accounts payable                                                                                                            |                                                                      |                  | 58,734  |                  |  
|Accrued expenses                                                                                                            |                                                                      |                  | 57,170  |                  |  
|Dividend payable                                                                                                            |                                                                      |                  | 5,086   |                  |  
|Income taxes                                                                                                                |                                                                      |                  | 1,547   |                  |  
|                                                                                                                            |                                                                      |                  |         |                  |  
|                                                                                                                            | Total current liabilities                                            |                  |         | 166,977          |  
|                                                                                                                            |                                                                      |                  |         |                  |  
|Deferred income taxes                                                                                                       |                                                                      |                  | 24,477  |                  |  
|Long-term debt,less current maturities                                                                                      |                                                                      |                  | 165,276 |                  |  
|Other Liabilities                                                                                                           |                                                                      |                  | 6,306   |                  |  
|Commitments and contingencies                                                                                               |                                                                      |                  |        |                  |  
|Stockholders' equity:                                                                                                       |                                                                      |                  |         |                  |  
|Preferred stockauthorized 10,000,000 shares of $0.01 par                                                                   |                                                                      |                  |         |                  |  
|                                                                                                                            | value; no shares issued and outstanding                              |                  |         |                 |  
|Common stockauthorized 100,000,000 shares of $0.02 par value; issued 49,687,282 shares and 49,509,776 shares, respectively |                                                                      |                  | 994     |                  |  
|Additional contributed capital                                                                                              |                                                                      |                  | 101,178 |                  |  
|Retained earnings                                                                                                           |                                                                      |                  | 500,923 |                  |  
|Accumulated other comprehensive loss                                                                                        |                                                                      |                  | (8,501  | )                |  
|Treasury stock, at cost, 3,444,200 shares and 2,630,900 shares, respectively                                                |                                                                      |                  | (81,554 | )                |  
|                                                                                                                            |                                                                      |                  |         |                  |  
|                                                                                                                            | Total stockholders' equity                                           |                  |         | 513,040          |  
|                                                                                                                            |                                                                      |                  |         |                  |  
|                                                                                                                            | Total liabilities and stockholders' equity                           |                  | $       | 876,076          |  
|                                                                                                                            |                                                                      |                  |         |                  |  

The accompanying notes are an integral part of these financial statements.

3

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BLYTH, INC. AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF EARNINGS  (Unaudited)

|                                                                             |                                                                                      | Nine months ended October 31 |        
|---------------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | ---------------------------- | -------
|
|
|Net sales                                                                    |                                                                                      | $                            | 908,098
|Cost of goods sold                                                           |                                                                                      |                              | 453,271
|                                                                             |                                                                                      |                              |        
|                                                                             | Gross profit                                                                         |                              |        
|                                                                             |                                                                                      |                              |        
|Selling                                                                      |                                                                                      |                              | 252,958
|Administrative                                                               |                                                                                      |                              | 85,330 
|Amortization of goodwill                                                     |                                                                                      |                              |       
|                                                                             |                                                                                      |                              |        
|                                                                             |                                                                                      |                              | 338,288
|                                                                             |                                                                                      |                              |        
|                                                                             | Operating profit                                                                     |                              |        
|Other expense (income):                                                      |                                                                                      |                              |        
|                                                                             | Interest expense                                                                     |                              |        
|                                                                             | Interest income and other                                                            |                              |        
|                                                                             | Equity in earnings of investees                                                      |                              |        
|                                                                             |                                                                                      |                              |        
|                                                                             |                                                                                      |                              | 10,513 
|                                                                             |                                                                                      |                              |        
|                                                                             | Earnings before income taxes and cumulative effect of change in accounting principle |                              |        
|Income tax expense                                                           |                                                                                      |                              | 39,442 
|                                                                             |                                                                                      |                              |        
|                                                                             | Earnings before cumulative effect of change in accounting principle                  |                              |        
|Cummulative effect of change in accounting principle, net of taxes of $2,887 |                                                                                      |                              | (4,515 
|                                                                             |                                                                                      |                              |        
|                                                                             | Net earnings                                                                         |                              | $      
|                                                                             |                                                                                      |                              |        
|Basic:                                                                       |                                                                                      |                              |        
|                                                                             | Earnings per common share before cumulative effect of change in accounting principle |                              | $      
|                                                                             | Cumulative effect of change in accounting principle                                  |                              |        
|                                                                             |                                                                                      |                              |        
|                                                                             |                                                                                      | $                            | 1.34   
|Weighted average number of shares outstanding                                |                                                                                      |                              | 46,306 
|                                                                             |                                                                                      |                              |        
|Diluted:                                                                     |                                                                                      |                              |        
|                                                                             | Earnings per common share before cumulative effect of change in accounting principle |                              | $      
|                                                                             | Cumulative effect of change in accounting principle                                  |                              |        
|                                                                             |                                                                                      |                              |        
|                                                                             |                                                                                      | $                            | 1.33   
|                                                                             | Weighted average number of shares outstanding                                        |                              |        
|                                                                             |                                                                                      |                              |        

The accompanying notes are an integral part of these financial statements.

4

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BLYTH, INC. AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF EARNINGS  (Unaudited)

|                                       |                                          | Three months ended
October 31, |                                              
|-------------------------------------- | ---------------------------------------- | ------------------------------ | ---------------------------------------------
|
|
|Net sales                              |                                          | $                              | 362,181                                      
|Cost of goods sold                     |                                          |                                | 189,694                                      
|                                       |                                          |                                |                                              
|                                       | Gross profit                             |                                |                                              
|                                       |                                          |                                |                                              
|Selling                                |                                          |                                | 89,316                                       
|Administrative                         |                                          |                                | 31,197                                       
|Amortization of goodwill               |                                          |                                |                                             
|                                       |                                          |                                |                                              
|                                       |                                          |                                | 120,513                                      
|                                       |                                          |                                |                                              
|                                       | Operating profit                         |                                |                                              
|Other expense (income):                |                                          |                                |                                              
|                                       | Interest expense                         |                                |                                              
|                                       | Interest income and other                |                                |                                              
|                                       | Equity in (earnings) losses of investees |                                |                                              
|                                       |                                          |                                |                                              
|                                       |                                          |                                | 3,448                                        
|                                       |                                          |                                |                                              
|                                       | Earnings before income taxes             |                                |                                              
|Income tax expense                     |                                          |                                | 18,052                                       
|                                       |                                          |                                |                                              
|                                       | Net earnings                             |                                | $                                            
|                                       |                                          |                                |                                              
|Basic: Net earnings per common share   |                                          | $                              | 0.66                                         
|                                       |                                          |                                | Weighted average number of shares outstanding
|                                       |                                          |                                |                                              
|Diluted: Net earnings per common share |                                          | $                              | 0.65                                         
|                                       |                                          |                                |                                              
|                                       |                                          |                                |                                              

The accompanying notes are an integral part of these financial statements.

5

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BLYTH, INC. AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY  (Unaudited)

|                                                                                   |  | October 31, | 
|---------------------------------------------------------------------------------- |  | ----------- | 
|
|
|
|
|For the nine months ended October 31, 2001:                                        |  |             | 
|Balance, January 31, 2001                                                          |  | 49,431,576  | 
|Net earnings for the period                                                        |  |             | 
|Foreign currency translation adjustments                                           |  |             | 
|Reclassification adjustments for gains included in net income
(net of tax of $737) |  |             | 
|Unrealized holding gains on certain investments
(net of tax of $17)                |  |             | 
|Net loss on cash flow hedging instruments (net of tax of $24)                      |  |             | 
|                                                                                   |  |             | 
|Comprehensive income                                                               |  |             | 
|Common stock issued in connection with exercise
of stock options                   |  | 36,200      | 
|Dividends                                                                          |  |             | 
|Treasury stock purchases                                                           |  |             | 
|                                                                                   |  |             | 
|Balance, October 31, 2001                                                          |  | 49,467,776  | 
|                                                                                   |  |             | 
|For the nine months ended
October 31, 2002:                                        |  |             | 
|Balance, October 31, 2002:                                                         |  | 49,509,776  | 
|Net earnings for the period                                                        |  |             | 
|Foreign currency translation adjustments                                           |  |             | 
|Unrealized holding losses on certain investments
(net of tax of $26)               |  |             | 
|Net loss on cash flow hedging instruments (net of tax of $303)                     |  |             | 
|                                                                                   |  |             | 
|Comprehensive income                                                               |  |             | 
|Common stock issued in connection with exercise
of stock options                   |  | 177,506     | 
|Tax benefit from stock options                                                     |  |             | 
|Dividends                                                                          |  |             | 
|Treasury stock purchases                                                           |  |             | 
|                                                                                   |  |             | 
|Balance, October 31, 2002                                                          |  | 49,687,282  | 
|                                                                                   |  |             | 

The accompanying notes are an integral part of these financial statements.

6

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BLYTH, INC. AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF CASH FLOWS  (Unaudited)

|                                                 |                                                                                      | Nine months ended
October 31,                                    |                                                    
|------------------------------------------------ | ------------------------------------------------------------------------------------ | ---------------------------------------------------------------- | ---------------------------------------------------
|
|
|Cash flows from operating activities:            |                                                                                      |                                                                  |                                                    
|                                                 | Net earnings                                                                         |                                                                  | $                                                  
|                                                 | Adjustments to reconcile net earnings to net cash used in operating activities:      |                                                                  |                                                    
|                                                 |                                                                                      | Cummulative effect of change in accounting principle, net of tax |                                                    
|                                                 |                                                                                      | Depreciation and amortization                                    |                                                    
|                                                 |                                                                                      | Tax benefit from stock options                                   |                                                    
|                                                 |                                                                                      | Deferred income taxes                                            |                                                    
|                                                 |                                                                                      | Equity in earnings of investees                                  |                                                    
|                                                 |                                                                                      | Gain on sales of long-term investment                            |                                                    
|                                                 | Changes in operating assets and liabilities, net of effect of business acquisitions: |                                                                  |                                                    
|                                                 |                                                                                      | Accounts receivable                                              |                                                    
|                                                 |                                                                                      | Inventories                                                      |                                                    
|                                                 |                                                                                      | Prepaid and other                                                |                                                    
|                                                 |                                                                                      | Deposits and other assets                                        |                                                    
|                                                 |                                                                                      | Accounts payable                                                 |                                                    
|                                                 |                                                                                      | Accrued expenses                                                 |                                                    
|                                                 |                                                                                      | Other liabilities                                                |                                                    
|                                                 |                                                                                      | Income taxes                                                     |                                                    
|                                                 |                                                                                      |                                                                  |                                                    
|                                                 |                                                                                      |                                                                  | Total adjustments                                  
|                                                 |                                                                                      |                                                                  |                                                    
|                                                 |                                                                                      |                                                                  | Net cash used in operating activities              
|                                                 |                                                                                      |                                                                  |                                                    
|Cash flows from investing activities:            |                                                                                      |                                                                  |                                                    
|                                                 | Purchases of property, plant and equipment                                           |                                                                  |                                                    
|                                                 | Proceeds from sales of long-term investment                                          |                                                                  |                                                    
|                                                 | Purchase of businesses, net of cash acquired                                         |                                                                  |                                                    
|                                                 |                                                                                      |                                                                  |                                                    
|                                                 |                                                                                      |                                                                  | Net cash used in investing activities              
|                                                 |                                                                                      |                                                                  |                                                    
|Cash flows from financing activities:            |                                                                                      |                                                                  |                                                    
|                                                 | Proceeds from issuance of common stock                                               |                                                                  |                                                    
|                                                 | Purchases of treasury stock                                                          |                                                                  |                                                    
|                                                 | Borrowings from bank line of credit                                                  |                                                                  |                                                    
|                                                 | Repayments on bank line of credit                                                    |                                                                  |                                                    
|                                                 | Borrowings on long-term debt                                                         |                                                                  |                                                    
|                                                 | Repayments on long-term debt                                                         |                                                                  |                                                    
|                                                 | Dividends paid                                                                       |                                                                  |                                                    
|                                                 |                                                                                      |                                                                  |                                                    
|                                                 |                                                                                      |                                                                  | Net cash provided by (used in) financing activities
|                                                 |                                                                                      |                                                                  |                                                    
|                                                 |                                                                                      |                                                                  | Net decrease in cash and cash equivalents          
|Cash and cash equivalents at beginning of period |                                                                                      |                                                                  | 130,633                                            
|                                                 |                                                                                      |                                                                  |                                                    
|Cash and cash equivalents at end of period       |                                                                                      | $                                                                | 37,303                                             
|                                                 |                                                                                      |                                                                  |                                                    
|Non-cash investing and financing activities:     |                                                                                      |                                                                  |                                                    
|                                                 | Cash dividend declared, $0.11 per share in 2002 and $0.10 in 2001                    |                                                                  | $                                                  

The accompanying notes are an integral part of these financial statements

7

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BLYTH, INC. AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Unaudited)

1.    Basis of Presentation

The Company operates in two business segmentsthe Candles & Home Fragrance segment and the Creative Expressions segment (formerly Creative
Expressions and Foodservice). The Company has operations both inside and outside the United States and sells its products worldwide.

The
Candles & Home Fragrance segment designs, manufactures and markets an extensive line of products including scented candles, potpourri and other fragranced products, and
markets a broad range of related candle accessories, as well as tabletop illumination products and chafing fuel. These products are sold direct to the consumer under the PartyLite® brand,
to retailers in the premium and specialty retail channels under the Colonial Candle of Cape Cod®, Colonial at HOME®, Carolina®, and Kate's brands, in
the mass retail channel under the Florasense®, Ambria, and FilterMate® brands and to the Foodservice industry under the Sterno®, Ambria,
and HandyFuel® brand names. In Europe, these products are also sold under the Colonial, Ambria, Carolina Designs, Gies, Liljeholmens, and Wax Lyrical brands.

The
Creative Expressions segment designs, sources or manufactures and markets a broad range of complementary specialty products for the consumer market, including home
décor and giftware products under the CBK brand and seasonal and paper-related products under the JMC Impact® and Midwest of Cannon Falls® brand
names.

The
consolidated financial statements include the accounts of the Company, and its direct and indirect subsidiaries. All significant intercompany accounts and transactions have been
eliminated. Investments in companies which are not majority owned or controlled are reported using the equity method and are recorded in other assets. Certain of the Company's subsidiaries operate on
a 52 or 53-week fiscal year ending on the Saturday closest to January 31. European operations maintain a calendar year accounting
period, which is consolidated with the Company's fiscal period. In the opinion of management, the accompanying unaudited consolidated financial statements include all normal recurring accruals
necessary for fair presentation of the Company's consolidated financial position at October 31, 2002 and the consolidated results of its operations and cash flows for the nine-month
periods ended October 31, 2002 and 2001. These interim statements should be read in conjunction with the Company's consolidated financial statements for the year ended January 31, 2002,
as set forth in the Company's Annual Report on Form 10-K. Operating results for the nine months ended October 31, 2002 are not necessarily indicative of the results that may
be expected for the year ending January 31, 2003.

2.    New Accounting Pronouncements

In November 2001, the Emerging Issues Task Force issued EITF Issue No. 01-09, "Accounting for Consideration Given by a Vendor to a
Customer/Reseller", which addresses the accounting for consideration given by a vendor to a customer including both a reseller of the vendor's products and an entity that purchases the vendor's
products from a reseller. EITF 01-09 also codifies and reconciles related guidance issued by the EITF including EITF Issue No. 00-25, "Vendor Income Statement
Characterization of Consideration Paid to a Reseller of the Vendor's Products", and EITF Issue No. 00-14, "Accounting for Certain Sales Incentives". Effective February 1,
2002, the company adopted EITF 01-09, EITF 00-14 and EITF 00-25. These statements require that the Company classify certain sales incentives as a reduction of net
sales rather than selling expense. Prior year amounts have been reclassified to conform with the current year presentation. The effect of the adoption of these issues reduced both net sales and
operating expenses for the three and nine month periods ended October 31, 2001 by $5.8 million and $13.5 million, respectively. The adoption of such requirements had no impact on
net earnings.

8

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In
June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets". Under SFAS No. 142, goodwill is no longer subject to amortization; however,
goodwill is subject to an assessment for impairment using a two-step fair value based test, the first step of which must be performed at least annually, or more frequently if events or
circumstances indicate that goodwill might be impaired. The first step compares the fair value of a reporting unit to its carrying amount, including goodwill. If the carrying amount of the reporting
unit exceeds its fair value, the second step is performed. The second step compares the carrying amount of the goodwill to the fair value of the goodwill. If the fair value of goodwill is less than
the carrying amount, an impairment loss is reported as a reduction to goodwill and a charge to operating expense, except at the transition date, when the loss is reflected as a cumulative effect of a
change in accounting principle.

As
of January 31, 2002, Blyth's Consolidated Balance Sheets reflected approximately $112.3 million in goodwill net of accumulated amortization, including
$31.4 million related to the Candles & Home Fragrance segment businesses, other than The Sterno Group, $42.2 million related to The Sterno Group and
$38.7 million related to the Creative Expressions segment businesses. The Company adopted SFAS 142, effective February 1, 2002. In accordance with the new standard, Blyth ceased
amortization of
goodwill and performed an assessment for impairment of its goodwill. As a result of the impairment review, Blyth reduced the carrying value of the goodwill related to its acquisition of the
Sterno® brand in 1997 by $7.4 million. The fair value of The Sterno Group was determined through an independent valuation utilizing market comparable analysis, as well as discounted
cash flow models reflecting the expected range of future cash flow outcomes over the life of the model. These cash flows were discounted to January 31, 2002 using a risk-adjusted
discount rate. The impairment of The Sterno Group's goodwill, which was recorded as a cumulative effect of a change in accounting principle, had the effect of reducing net income by
$4.5 million (after tax) or $0.10 per share. The carrying amount of goodwill on the Company's Consolidated Balance Sheet increased approximately $34.8 million, from $112.3 million
at January 31, 2002 to $147.1 million at October 31, 2002. The change in goodwill is primarily the result of the acquisition of CBK (See Note 3), which increased goodwill
by approximately $39.4 million together with an increase in goodwill resulting from a foreign currency translation adjustment of approximately $2.8 million, and the previously discussed
impairment charge, which decreased goodwill by $7.4 million.

The
following table sets forth Blyth's net income and earnings per share for the three and nine month periods ended October 31, 2002 and 2001, respectively, and is adjusted to
exclude 2001

9

---

amortization expense related to goodwill that is no longer being amortized and to reflect the cumulative effect of a change in accounting principle related to the adoption of SFAS 142.

|                                                                            |  | Three months ended
October 31, |        | Nine months ended
October 31,
|--------------------------------------------------------------------------- |  | ------------------------------ | ------ | -----------------------------
|
|
|Earnings before cumulative effect of change in accounting principle         |  | $                              | 30,474 |                              
|Goodwill amortization, net of taxes of $500 and $1,248                      |  |                                |       |                              
|Cumulative effect of change in accounting principle, net of taxes of $2,887 |  |                                |       |                              
|                                                                            |  |                                |        |                              
|Adjusted net income                                                         |  | $                              | 30,474 |                              
|                                                                            |  |                                |        |                              
|Basic earnings per common share:                                            |  |                                |        |                              
|Earnings before cumulative effect of change in accounting principle         |  | $                              | 0.66   |                              
|Goodwill amortization, net of taxes                                         |  |                                |       |                              
|Cumulative effect of change in accounting principle, net of taxes           |  |                                |       |                              
|                                                                            |  |                                |        |                              
|Adjusted net income                                                         |  | $                              | 0.66   |                              
|                                                                            |  |                                |        |                              
|Diluted earnings per common share:                                          |  |                                |        |                              
|Earnings before cumulative effect of change in accounting principle         |  | $                              | 0.65   |                              
|Goodwill amortization, net of taxes                                         |  |                                |       |                              
|Cumulative effect of change in accounting principle, net of taxes           |  |                                |       |                              
|                                                                            |  |                                |        |                              
|Adjusted net income                                                         |  | $                              | 0.65   |                              
|                                                                            |  |                                |        |                              

In
August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". This standard is effective for fiscal years
beginning after December 15, 2001 and addresses financial accounting and reporting for the impairment of long-lived assets. We do not expect that implementation of this standard
will have a significant impact on our financial statements.

In
June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". This standard addresses financial accounting and reporting
for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs incurred in a Restructuring)". This standard is effective for exit or disposal activities that are initiated after
December 31, 2002.

3.    Business Acquisitions

On April 11, 2001, the Company acquired Midwest of Cannon Falls, Inc., ("Midwest"), a leading creative expressions company in the decorative
products and giftware industry for approximately $61.0 million in cash. The excess of the purchase price over the estimated fair value of the net assets acquired approximated
$25.4 million. The results of operations of Midwest have been included in the Consolidated Statements of Earnings of the Company since April 11, 2001. For segment reporting purposes
Midwest is included in the Creative Expressions segment. Amortization ceased on February 1, 2002, upon adoption of the new goodwill accounting rules under SFAS 142 as described in
Note 2.

10

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On
May 10, 2002, the Company purchased all of the interests in CBK, Ltd., LLC ("CBK"), a designer and marketer of premium everyday giftware and home décor,
for approximately $51.0 million in cash.The excess of the purchase price over the estimated fair value of the net assets acquired approximated
$39.4 million, which will be deductible for income tax purposes over 15 years. The results of operations of CBK are included in the Consolidated Statements of Earnings of the Company
since May 11, 2002. For segment reporting purposes CBK is included in the Creative Expressions segment.

The
following unaudited pro forma summary financial information summarizes the estimated combined results of operations of the Company and CBK assuming that the acquisition of CBK had
taken place on February 1, 2001. The unaudited pro forma combined results of operations were prepared on the basis of information provided to the Company by the former management of CBK and no
representation is made by the Company with respect to the accuracy of such information. The pro forma combined results of operations reflect adjustments for interest income, additional depreciation
based on the fair market value of CBK's property, plant and equipment and income tax expense.

|                                                                                         |  | Three months ended
October 31, |         | Nine months ended
October 31,
|---------------------------------------------------------------------------------------- |  | ------------------------------ | ------- | -----------------------------
|
|
|Net sales                                                                                |  | $                              | 362,181 |                              
|Earnings before cumulative effect of change in accounting principle                      |  |                                | 30,474  |                              
|Net earnings                                                                             |  |                                | 30,474  |                              
|Basic:                                                                                   |  |                                |         |                              
|Earnings per common share before the cumulative effect of change in accounting principle |  | $                              | 0.66    |                              
|Net earnings per common share                                                            |  |                                | 0.66    |                              
|Diluted:                                                                                 |  |                                |         |                              
|Earnings per common share before the cumulative effect of change in accounting principle |  | $                              | 0.65    |                              
|Net earnings per common share                                                            |  |                                | 0.65    |                              

The
unaudited pro forma combined results of operations are not necessarily indicative of, and do not purport to represent, what the Company's results of operations or financial condition
actually would have been had the acquisition been made as of February 1, 2001.

4.    Inventories

The components of inventory consist of the following (in thousands):

October 31, 2002

January 31, 2002Raw materials

$
30,929

$
35,142Work in procress


600


1,994Finished goods


182,598


144,704$
214,127

$
181,840


11

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5.    Earnings per Share

The components of basic and diluted earnings per share are as follows (in thousands):

|                                                      |                                  | Three months
Ended
October 31,
2002 |        | Nine months
Ended
October 31,
2002 |   | Three months
Ended
October 31,
2001 |        | Nine months
Ended
October 31,
2001
|----------------------------------------------------- | -------------------------------- | ----------------------------------- | ------ | ---------------------------------- | - | ----------------------------------- | ------ | ----------------------------------
|Net earnings                                          |                                  | $                                   | 30,474 |                                    | $ | 62,069                              |        | $                                 
|                                                      |                                  |                                     |        |                                    |   |                                     |        |                                   
|Weighted average number of common shares outstanding: |                                  |                                     |        |                                    |   |                                     |        |                                   
|                                                      | Basic                            |                                     |        | 46,299                             |   |                                     | 46,306 |                                   
|                                                      | Dilutive effect of stock options |                                     |        | 303                                |   |                                     | 283    |                                   
|                                                      |                                  |                                     |        |                                    |   |                                     |        |                                   
|Weighted average number of common shares outstanding: |                                  |                                     |        |                                    |   |                                     |        |                                   
|                                                      | Diluted                          |                                     |        | 46,602                             |   |                                     | 46,589 |                                   
|                                                      |                                  |                                     |        |                                    |   |                                     |        |                                   

As
of October 31, 2002 and 2001, options to purchase 38,313 and 223,144 shares of common stock, respectively, are not included in the computation of earnings per share because the
effect would be antidilutive.

6.    Unusual Charges

At January 31, 2002, the Company had approximately $3.2 million of restructuring accruals included in the Consolidated Balance Sheet, of which
$1.5 million related to lease obligations, and $1.7 million
related to severance costs. Due to a sublease contract that resulted in a reversal of $0.5 million of lease obligations and payments made during the nine-month period ended
October 31, 2002, approximately $0.5 million of lease obligations were remaining on the balance sheet at October 31, 2002. The lease obligations continue through the third quarter
of fiscal 2004. Substantially all severance costs were paid as of October 31, 2002.

7.    Segment Information

The Company operates in two business segmentsthe Candles & Home Fragrance segment and the Creative Expressions segment (formerly Creative
Expressions and Foodservice). Effective February 1, 2002 the Foodservice business, represented by The Sterno Group, is now reported as part of the Candles & Home Fragrance segment to
which it is more closely aligned. All periods presented have been restated to reflect this change in reporting. CBK, acquired in May 2002, is included in the Creative Expressions segment. The
Company has operations both inside and outside the United States and sells its products in the Candles & Home Fragrance segment worldwide. The majority of sales in the Creative Expressions
segment are domestically based.

In
the segment summary table below, earnings represent net sales less operating expenses directly related to the business segments and corporate expenses allocated to the business
segments. Other

12

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expense includes interest expense, interest income and equity in earnings of investees, which are not allocated to the business segments.

|                                                                         |                          | Three months ended
October 31, |        | Nine months ended
October 31, |        
|------------------------------------------------------------------------ | ------------------------ | ------------------------------ | ------ | ----------------------------- | -------
|
|
|Net Sales                                                                |                          |                                |        |                               |        
|                                                                         | Candles & Home Fragrance |                                | $      | 267,905                       |        
|                                                                         | Creative Expressions     |                                |        | 94,276                        |        
|                                                                         |                          |                                |        |                               |        
|                                                                         |                          | Total                          |        | $                             | 362,181
|Earnings                                                                 |                          |                                |        |                               |        
|                                                                         | Candles & Home Fragrance |                                | $      | 32,032                        |        
|                                                                         | Creative Expressions     |                                |        | 19,942                        |        
|                                                                         |                          |                                |        |                               |        
|                                                                         |                          |                                | 51,974 |                               |        
|                                                                         | Other expense            |                                |        | (3,448                        | )      
|                                                                         |                          |                                |        |                               |        
|Earnings before income taxes and cummulative effect of accounting change |                          | $                              | 48,526 |                               | $      
|                                                                         |                          |                                |        |                               |        

8.    Contingencies

On April 22, 2002, the Company and its wholly-owned subsidiary, Endar Corp., commenced a legal action against Ennio Racinelli and Dynamic
Designs, Inc. (a new corporation that was formed by Mr. Racinelli and his wife) and others in the Superior Court of the State of California, in which the Company and Endar have alleged,
among other things, that Mr. Racinelli, the former President of Endar, has breached certain of his contractual and other obligations to the Company by, among other things, engaging in a
business competitive with Endar, soliciting customers and employees of Endar and appropriating confidential information from Endar. In their complaint, the Company and Endar seek, among other things,
an award for compensatory and general damages in excess of $25 million and injunctive relief. As expected, on June 3, 2002, Mr. Racinelli and the other defendants filed an answer,
which denies the Company's and Endar's allegations, and a Cross-Complaint against Endar and the Company. The Cross-Complaint alleges, among other things, that the Company and Endar have breached
certain of their contractual obligations to Mr. Racinelli, have intentionally interfered with the
prospective economic advantage of Mr. Racinelli and Dynamic Designs, have defamed Mr. Racinelli, and have engaged in conduct that is alleged to be violative of the California Business
and Professions Code. In the Cross-Complaint, Mr. Racinelli, Dynamic Designs and the other cross-complainants seek, among other things, an award of damages in an amount of not less than
$50 million, a trebling of such damages pursuant to the California Business and Professions Code, declaratory relief, injunctive relief and punitive damages. The Company believes that it and
Endar have meritorious defenses to all of the claims that have been asserted against them in the Cross-Complaint. The Company is unable to predict the outcome of this case and accordingly no expense,
except for attorney's fees paid to date, has been recorded for this case. However, in the opinion of the Company the results of this case will not have a material effect on its results of operations,
financial condition or cash flows.

9.    Debt

On August 5, 2002, the Company replaced its prior $135 million credit facility with a new $200 million unsecured revolving credit facility
having a three year term (the "Credit Facility"). The Company has the ability to increase the Credit Facility, under certain circumstances, by an additional $50 million. The Credit Facility may
be used for seasonal working capital needs, general corporate purposes and funding for strategic acquisitions. The Credit Facility contains, among other provisions,

13

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requirements for maintaining certain financial ratios and limitations on certain payments. At October 31, 2002, the Company was in compliance with such covenants. Amounts outstanding under the
Credit Facility bear interest, at the Company's option, at JPMorgan Chase Bank's prime rate (4.75% at October 31, 2002) or at the Eurocurrency rate plus a credit spread ranging from 0.525% to
1.5%, calculated on the basis of a combination of the Company's senior unsecured long-term debt rating and the Company's usage of the Credit Facility. On October 31, 2002,
approximately $3.1 million of letters of credit were outstanding under the Credit Facility. Borrowings under the prior credit facility were paid in full, using cash on hand, simultaneously with
the closing of the new Credit Facility on August 5, 2002.

As
of October 31, 2002, CBK had an available secured line of credit of $23.0 million with PNC Financial Services Group, Inc., maturing in July 2003. Amounts
outstanding under the line of credit bear interest at the bank's prime rate (4.75% at October 31, 2002) minus 1%, subject to various covenants. At October 31, 2002, CBK was in compliance
with such covenants. At October 31, 2002, approximately $8.0 million (including $1.1 million of outstanding letters of credit) was outstanding at a weighted average interest rate
of 3.75%.

At
October 31, 2002, CBK had $4.8 million of long-term debt outstanding under an Industrial Revenue Bond ("IRB"), which matures on January 1, 2025. The
bond is backed by an irrevocable letter of credit issued by the National Bank of Canada. The amount outstanding under the IRB bears interest at short-term floating rates for a weighted
average interest rate of 2.05% at October 31, 2002.

14

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Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

RESULTS OF OPERATIONS:

Net Sales

Net sales increased $91.7 million, or 11.2%, to $908.1 million in the first nine months of fiscal 2003 from $816.4 million in the first nine
months of fiscal 2002. Net sales in the quarter ended October 31, 2002, increased $48.9 million, or 15.6% to $362.2 million compared with $313.3 million for the same period
a year earlier. The primary factors affecting net sales in the third quarter of fiscal 2003 versus the same period last year were the increase in PartyLite sales of approximately 9%, the inclusion of
sales of CBK acquired on May 10, 2002, the 18% sales increase in the North American mass market and the 17% sales increase in The Sterno Group. Excluding the effect of the acquisition of CBK,
net sales in the quarter ended October 31, 2002 increased approximately 8% compared to the same period a year earlier.

Net
sales in the Candles & Home Fragrance segment increased $23.6 million, or 9.7%, to $267.9 million in the third quarter ended October 31, 2002, compared
with $244.3 million in the same period last year. As previously mentioned, Blyth's direct selling channel business, PartyLite, increased sales approximately 9% in the third quarter versus the
same period in the prior year, which follows an 8% sales increase in the second quarter of fiscal 2003. PartyLite's increased sales are reflective of the positive impact of improved new products,
catalog presentation, leadership development tools and increases in the number of independent sales consultants. Net sales in Blyth's North American mass channel business increased approximately 18%
in the quarter ended October 31, 2002 compared to the prior year period, driven in part by increased sales to Wal-Mart, our largest customer. Net sales in Blyth's North American and
European premium channel businesses in the third quarter of fiscal 2003 were essentially equal to the same period the prior year. In Blyth's European mass channel, net sales increased approximately 9%
during the third quarter of fiscal 2003 versus last year's third quarter. Net sales of The Sterno Group, Blyth's foodservice business, increased 17% in the third quarter of fiscal
2003 compared to the same period last year, as the business rebounded from the events of September 11, 2001.

Net
sales in the Creative Expressions segment, which now includes CBK, increased $25.3 million to $94.3 million in the quarter ended October 31, 2002, compared to
$69.0 million in the prior year period. Most of this increase in net sales was attributable to the inclusion of sales made by CBK, which was acquired on May 10, 2002. Net sales for the
third quarter of fiscal 2003 in the premium channel in this segment, represented by Midwest, increased approximately 5% while JMC Impact our mass channel business experienced a net sales decrease of
approximately 1%, both versus the prior year period.

Gross Profit

Gross profit increased $50.5 million, or 12.5%, from $404.3 million in the first nine months of fiscal 2002 to $454.8 million in the first
nine months of fiscal 2003. Gross profit margin increased 49.5% for the first nine months of fiscal 2002 to 50.1% for the first nine months of fiscal 2003. Gross profit in the quarter ended
October 31, 2002 increased $19.7 million, or 12.9%, from $152.8 million for the quarter ended October 31, 2001 to $172.5 million. Gross profit margin decreased from
48.8% for the quarter ended October 31, 2001 to 47.6% for the quarter ended October 31, 2002.The decrease in gross profit margin in the
third quarter of fiscal 2003 versus fiscal 2002 is attributable primarily to the increased sales in the North American and European mass channels, which typically have margins below the corporate
average.

15

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Selling Expense

Selling expense increased $19.2 million, or 8.2%, from $233.8 million in the first nine months of fiscal 2002, when selling expense was 28.6% of net
sales, to $253.0 million in the first nine months of fiscal 2003, or 27.9% of net sales. Selling expense increased $7.6 million, or 9.3%, from $81.7 million in the quarter ended
October 31, 2001, when selling expense was 26.1% of net sales, to $89.3 million in the quarter ended October 31, 2002, or 24.7% of net sales. The decrease in selling expense as a
percentage of sales that occurred in the third quarter of fiscal 2003 when compared to the same period the prior year, relates primarily to the higher percentage of sales in the mass channel for which
selling expenses, as a percentage of net sales, are relatively lower.

Administrative Expense

Administrative expense increased $12.7 million, or 17.5%, from $72.6 million in the first nine months of fiscal 2002, when administrative expense
was 8.9% of net sales, to $85.3 million in the first nine months of fiscal 2003, or 9.4% of net sales. Administrative expense increased $6.5 million, or 26.3%, from $24.7 million
in the quarter ended October 31, 2001, when administrative expense was 7.9% of net sales, to $31.2 million in the quarter ended October 31, 2002, or 8.6% of net sales. The
increase in administrative expense which occurred in the third quarter of fiscal 2003 is primarily attributable to the inclusion of CBK, the accrual of bonuses that were not accrued or paid last year,
increased spending on information technology and an ongoing commitment to research and development.

Amortization

There was no goodwill amortization recorded in the first nine months of fiscal 2003 compared to $3.4 million in the same period in the prior year. This
decrease is a result of the Company's adoption of SFAS No. 142, "Goodwill and Other Intangible Assets", which calls for among other things the cessation of goodwill amortization (See
Note 2 to the Consolidated Financial Statements).

Operating Profit

Operating profit increased $21.9 million, or 23.2%, to $116.5 million in the nine months ended October 31, 2002 compared with
$94.6 million for the same period a year earlier. Operating profit in the quarter ended October 31, 2002 increased $7.0 million, or 15.6%, to $52.0 million compared to
$45.0 million in the same period last year.The increase in operating profit in the quarter ended October 31, 2002 versus the same period
in the prior year was primarily due to an increase in PartyLite's operating profit as a result of its sales increase and to the inclusion of CBK.

Interest Income and Other

Interest income and other decreased approximately $3.9 million in the first nine months of fiscal 2003 when compared to the same period in the prior year.
Interest income and other decreased approximately $.5 million in the quarter ended October 31, 2002 when compared to same period in the prior year. The decrease for the nine month period
ended October 31, 2002 when compared to the same period the previous year was primarily due to a gain on sales of marketable securities held for investment in fiscal 2002 of $3.8 million
that was not repeated in fiscal 2003.

Income Taxes

Income tax expense increased $7.2 million, from $32.2 million in the first nine months of fiscal 2002, to $39.4 million in the first nine
months of fiscal 2003. Income tax expense increased $2.8 million, from $15.3 million in the quarter ended October 31, 2001, to $18.1 million in the quarter ended

16

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October 31, 2002. This increase is due to the increased earnings in fiscal 2003. The effective tax rate remained approximately 37.2%, the same as the prior year.

Cumulative Effect of Change in Accounting Principle

As a result of adopting SFAS No. 142, "Goodwill and Other Intangible Assets", the Company recorded a one-time charge of $7.4 million
pre-tax, $4.5 million net of income taxes, on February 1, 2002, which is reflected as the cumulative effect of a change in accounting principle (See Note 2 to the
Consolidated Financial Statements).

Net Earnings

As a result of the foregoing, earnings before the cumulative effect of change in accounting principle increased $12.2 million, or 22.4%, from
$54.4 million for the nine months ended October 31, 2001 to $66.6 million for the nine months ended October 31, 2002. Net earnings after the cumulative effect of change in
accounting principle increased $7.7 million, or 14.2%, from $54.4 million in the first nine months of fiscal 2002 to $62.1 million in the first nine months of fiscal 2003. Net
earnings increased $4.6 million, or 17.8%, from $25.9 million in the third quarter of fiscal 2002 to $30.5 million in the third quarter of fiscal 2003.

Basic
earnings per share before the cumulative effect of change in accounting principle, based upon the weighted average number of shares outstanding for the nine months ended
October 31, 2002, were $1.44, an increase of $0.28, or 24.1% compared to $1.16 for the nine months ended October 31, 2001. Basic net earnings per share after the cumulative effect of
change in accounting principle, based upon the weighted average number of shares outstanding for the nine months ended October 31, 2002, were $1.34, an increase of $0.18, compared to $1.16 for
the nine months ended October 31, 2001. Basic earnings per share for the quarter ended October 31, 2002, were $0.66 an increase of $0.11, or 20.0% compared to $0.55 for the three months
October 31, 2001. Diluted earnings per share before the cumulative effect of change in accounting principle, based upon the potential dilution that could occur if options to issue common stock
were exercised, were $1.43 for the nine months ended October 31, 2002 compared to $1.15 for the same period the prior year. The cumulative effect of change in accounting principle on diluted
earnings per share equaled $0.10. Diluted net earnings per share after the cumulative effect of change in accounting principle, based upon the potential dilution that could occur if options to issue
common stock were exercised, were $1.33 for the nine months ended October 31, 2002, compared to $1.15 for the same period the prior year. Diluted earnings per share
were $0.65 for the quarter ended October 31, 2002, compared to $0.55 for the same period last year, an increase of $0.10, or 18.2%.

Liquidity and Capital Resources

Compared to January 31, 2002, when inventory levels are typically at the lowest point of the fiscal year, inventory increased $32.3 million, from
$181.8 million to $214.1 million at October 31, 2002. This increase is due to normal seasonal build and to the acquisition of CBK. Excluding CBK, inventory at October 31,
2002, decreased $25.3 million compared to October 31, 2001, due to inventory control efforts corporate-wide. Accounts receivable increased $96.9 million, from
$83.8 million at the end of fiscal 2002 to $180.7 million at October 31, 2002. This increase is normal given the increased holiday season sales. Accounts payable and accrued
expenses increased $11.8 million, to $115.9 million at October 31, 2002 compared to $104.1 million at year-end. When compared to October 31, 2001,
accounts payable and accrued expenses increased $23.8 million primarily due to more favorable payment terms with certain vendors, increased expense accruals and the inclusion of CBK.

Capital
expenditures for property, plant and equipment were approximately $11.4 million in the nine months ended October 31, 2002 compared to $11.3 million in the
prior year period. Capital expenditures consisted primarily of investments in information technology and upgrades of equipment

17

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and facilities. The Company expects total capital spending to be in the range of $13.0 - $16.0 million for fiscal 2003.

On
August 5, 2002, the Company replaced its prior $135 million credit facility with a new $200 million unsecured revolving credit facility having a three year term
(the "Credit Facility"). The Company has the ability to increase the Credit Facility, under certain circumstances, by an additional $50 million. The Credit Facility may be used for seasonal
working capital needs, general corporate purposes and funding for strategic acquisitions. The Credit Facility contains, among other provisions, requirements for maintaining certain financial ratios
and limitations on certain payments. At October 31, 2002, the Company was in compliance with such covenants. Amounts outstanding under the Credit Facility bear interest, at the Company's
option, at JPMorgan Chase Bank's prime rate (4.75% at October 31, 2002) or at the Eurocurrency rate plus a credit spread ranging from 0.525% to 1.5%, calculated on the basis of a combination of
the Company's senior unsecured long-term debt rating and the Company's usage of the Credit Facility. On October 31, 2002, approximately $3.1 million of letters of credit were
outstanding under the Credit Facility. Borrowings under the prior credit facility were paid in full, using cash on hand, simultaneously with the closing of the new Credit Facility on August 5,
2002.

At
October 31, 2002, the Company had a total of $15.0 million available under an uncommitted bank line of credit with LaSalle Bank NA, which matures in June 2003.
Amounts outstanding under the line of credit bear interest at short-term fixed rates. No amounts were outstanding under the uncommitted line of credit at October 31, 2002.

At
October 31, 2002, the Company had a total of $10.0 million available under an uncommitted line of credit with Bank of America to be used for letters of credit. At
October 31, 2002, approximately $3.1 million of letters of credit were outstanding under this credit line.

As
of September 30, 2002, The Gies Group ("Gies") had available lines of credit of approximately $35.9 million of which approximately $18.6 million was outstanding.
The amounts outstanding under the lines of credit bear interest at a weighted average rate of 4.34% at September 30, 2002. The lines of credit are renewed annually.

Colony
Gift Corporation Limited ("Colony") has a short-term revolving credit facility with Barclays Bank ("Barclays"), which matures on June 20, 2003, pursuant to
which Barclays has agreed to provide a revolving credit facility in an amount of up to $23.5 million, collateralized by certain of Colony's assets. As of September 30, 2002, Colony had
borrowings under the credit facility of approximately $14.8 million, at a weighted average interest rate of 4.71%.

As
of October 31, 2002, CBK had an available secured line of credit of $23.0 million with PNC Financial Services Group, Inc., maturing in July 2003. Amounts
outstanding under the line of credit bear interest at the bank's prime rate (4.75% at October 31, 2002) minus 1%, subject to various covenants. At October 31, 2002, CBK was in compliance
with such covenants. At October 31, 2002, approximately $8.0 million (including $1.1 million of outstanding letters of credit) was outstanding at a weighted average interest rate
of 3.75%.

At
October 31, 2002, CBK had $4.8 million of long-term debt outstanding under an Industrial Revenue Bond ("IRB"), which matures on January 1, 2025. The
bond is backed by an irrevocable letter of credit issued by the National Bank of Canada. The amount outstanding under the IRB bears interest at short-term floating rates for a weighted
average interest rate of 2.05% at October 31, 2002.

Net
cash used in operating activities amounted to $5.9 million for the nine months ended October 31, 2002 compared to $39.0 million used in operating activities for
the nine months ended October 31, 2001. The increase in cash flow from operations compared to the prior year is primarily a result of improved payment terms with vendors, increases in accrued
expenses and increased earnings, which were partially offset by seasonal increases in inventory.

18

---

On
April 4, 2002, the Company's Board of Directors authorized the Company to repurchase up to 2,000,000 additional shares of its common stock bringing the total authorization to
6,000,000 shares. Since January 31, 2002, the Company has purchased an additional 813,300 shares on the open market
for a total cost of $18.6 million, bringing the cumulative total purchased shares to 3,444,200 as of October 31, 2002, for a total cost of approximately $81.6 million. The
acquired shares are held as common stock in treasury at cost.

On
September 5, 2002 the Company declared a cash dividend of $0.11 per share of the Company's common stock for the six months ended July 31, 2002. The dividend was payable
to shareholders of record as of November 1, 2002 and was paid on November 15, 2002.

Critical Accounting Policies

For a discussion of the Company's critical accounting policies see our Annual Report on Form 10-K for the fiscal year ended January 31,
2002.

Impact of Adoption of Recently Issued Accounting Standards

In November 2001, the Emerging Issues Task Force issued EITF Issue No. 01-09, "Accounting for Consideration Given by a Vendor to a
Customer/Reseller", which addresses the accounting for consideration given by a vendor to a customer, including both a reseller of the vendor's products and an entity that purchases the vendor's
products from a reseller. EITF 01-09 also codifies and reconciles related guidance issued by the EITF including EITF Issue No. 00-25, "Vendor Income Statement
Characterization of Consideration Paid to a Reseller of the Vendor's Products", and EITF Issue No. 00-14, "Accounting for Certain Sales Incentives". Effective February 1,
2002, the company adopted EITF 01-09, EITF 00-14 and EITF 00-25. These statements require that the Company classify certain sales incentives as a reduction of net
sales rather than selling expense. Prior year amounts have been reclassified to conform with the current year presentation. The effect of the adoption of these issues reduced both net sales and
operating expenses for the three and nine-month periods ended October 31, 2001 by $5.8 million and $13.5 million, respectively. The adoption of such requirements had
no impact on net earnings.

In
June 2001, the FASB issued SFAS No. 142, "Goodwill and Other Intangible Assets". Under SFAS No. 142, goodwill is no longer subject to amortization; however,
goodwill is subject to an assessment for impairment using a two-step fair value-based test, the first step of which must be performed at least annually, or more frequently if events or
circumstances indicate that goodwill might be impaired. The first step compares the fair value of a reporting unit to its carrying amount, including goodwill. If the carrying amount of the reporting
unit exceeds its fair value, the second step is performed. The second step compares the carrying amount of the goodwill to the fair value of the goodwill. If the fair value of goodwill is less than
the carrying amount, an impairment loss is reported as a reduction to goodwill and a charge to operating expense, except at the transition date, when the loss is reflected as a cumulative effect of a
change in accounting principle.

As
of January 31, 2002, Blyth's Consolidated Balance Sheets reflected approximately $112.3 million in goodwill net of accumulated amortization, including
$31.4 million related to the Candles & Home Fragrance segment businesses, other than The Sterno Group, $42.2 million related to The Sterno Group and
$38.7 million related to the Creative Expressions segment businesses. The company adopted SFAS 142, effective February 1, 2002. In accordance with the new standard, Blyth ceased
amortization of goodwill and performed an assessment for impairment of its goodwill. As a result of the impairment review, Blyth reduced the carrying value of the goodwill related to its acquisition
of the Sterno® brand in 1997 by $7.4 million. The fair value of The Sterno Group was determined through an independent valuation utilizing market comparable analysis, as well as
discounted cash flow models reflecting the expected range of future cash flow outcomes over the life of the model. These cash flows were

19

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discounted to January 31, 2002 using a risk-adjusted discount rate. The impairment of The Sterno Group's goodwill, which was recorded as a cumulative effect of a change in
accounting principle, had the effect of reducing net income by $4.5 million (after tax) or $0.10 per share. The carrying amount of goodwill on the Company's Consolidated Balance Sheet increased
approximately $34.8 million, from $112.3 million at January 31, 2002 to $147.1 million at October 31, 2002. The change in goodwill is primarily the result of the
acquisition of CBK (See Footnote 3), which increased goodwill by approximately $39.4 million together with an increase in goodwill resulting from a foreign currency translation
adjustment of approximately $2.8 million, and the previously discussed impairment charge, which decreased goodwill by $7.4 million.

In
August 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets". This standard is effective for fiscal years
beginning after December 15, 2001 and addresses financial accounting and reporting for the impairment of long-lived assets. We do not expect that implementation of this standard
will have a significant impact on our financial statements.

In
June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities". This standard addresses financial accounting and reporting
for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue No. 94-3, "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs incurred in a Restructuring)". This standard is effective for exit or disposal activities that are initiated after
December 31, 2002.

20

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Item 3.    Quantitative and Qualitative Disclosures About Market Risk

Market Risk

The Company has operations outside of the United States and sells its products worldwide. The Company's activities expose it to a variety of market risks,
including the effects of changes in foreign currency exchange rates, interest rates and commodity prices. These financial exposures are actively monitored and, where considered appropriate, managed by
the Company.

Interest Rate Risk

As of October 31, 2002 the Company is subject to interest rate risk on approximately $95.2 million of variable rate debt, including the subsidiary
debt of Gies, Colony Gift and CBK. Each 1.00% increase in the interest rate would impact pre-tax earnings by approximately $952,000 if applied to the total.

On
March 1, 2002, the Company entered into an interest rate swap agreement that matures on October 1, 2009, in relation to $50.0 million of Blyth's
$150.0 million outstanding 7.90% Senior Notes. The interest rate under the swap agreement is equal to the six-month LIBOR rate plus 2.65% (4.4% at October 1, 2002), with
interest payable semi-annually on April 1 and October 1. As the debt is a qualifying hedged item, the carrying value of the hedged portion was adjusted up by
$4.1 million at October 31, 2002, reflecting the fair market value of the derivative hedge.

Foreign Currency Risk

The Company uses forward foreign exchange contracts to hedge the impact of foreign currency fluctuations on certain committed capital expenditures, Canadian
intercompany payables and on certain
intercompany loans. The Company does not hold or issue derivative financial instruments for trading purposes.

With
regard to commitments for machinery and equipment in foreign currencies, upon payment of each commitment the underlying forward contract is closed and the corresponding gain or loss
is included in the measurement of the cost of the acquired asset. With regard to forward exchange contracts used to hedge Canadian intercompany payables, gain or loss on such hedges is recognized in
earnings in the period in which the underlying hedged transaction is settled. Gains or losses on foreign currency forward contracts related to intercompany loans are recognized currently through
income and generally offset the transaction gains or losses in the foreign currency cash flows which they are intended to hedge. If a hedging instrument is sold or terminated prior to maturity, gains
and losses are deferred until the hedged item is settled. However, if the hedged item is no longer likely to occur, the resultant gain or loss on the terminated hedge is recognized in earnings. For
consolidated financial statement presentation, net cash flows from such hedges are classified in the categories of the cash flow with the items being hedged.

The
following table provides information about the Company's foreign exchange forward contracts at October 31, 2002.

|                |  | U.S. Dollar
Notional Amount |        | Average
Contract Rate |      | Estimated
Fair Value |  
|--------------- |  | --------------------------- | ------ | --------------------- | ---- | -------------------- | -
|
|Canadian Dollar |  | $                           | 6,472  |                       | 1.58 |                      | $
|Euro            |  |                             | 27,672 |                       | 0.88 |                      |  
|Pound Sterling  |  |                             | 21,254 |                       | 1.50 |                      |  
|                |  |                             |        |                       |      |                      |  
|                |  | $                           | 55,398 |                       |      |                      | $
|                |  |                             |        |                       |      |                      |  

The
foreign exchange contracts outstanding as of October 31, 2002 have maturity dates ranging from November 2002 through April 2003.

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Item 4.    Controls and Procedures

Within
the 90 days prior to the date of this report, our principal executive officer and principal financial officer reviewed our disclosure controls and procedures. Following
such review we implemented minor changes, primarily to formalize and document certain procedures already in place. As of the date of this report, we, and our principal executive officer and principal
financial officer, believe that our disclosure controls and procedures are operating effectively as designed.

There
have been no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date that the Company
carried out its evaluation.

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Part II.    OTHER INFORMATION

Item 1.    Legal Proceedings

On April 22, 2002, the Company and its wholly-owned subsidiary, Endar Corp., commenced a legal action against Ennio Racinelli and Dynamic
Designs, Inc. (a new corporation that was formed by Mr. Racinelli and his wife) and others in the Superior Court of the State of California, in which the Company and Endar have alleged,
among other things, that Mr. Racinelli, the former President of Endar, has breached certain of his contractual and other obligations to the Company by, among other things, engaging in a
business competitive with Endar, soliciting customers and employees of Endar and appropriating confidential information from Endar. In their complaint, the Company and Endar seek, among other things,
an award for compensatory and general damages in excess of $25 million and injunctive relief. As expected, on June 3, 2002, Mr. Racinelli and the other defendants filed an answer,
which denies the Company's and Endar's allegations, and a Cross-Complaint against Endar and the Company. The Cross-Complaint alleges, among other things, that the Company and Endar have breached
certain of their contractual obligations to Mr. Racinelli, have intentionally interfered with the prospective economic advantage of Mr. Racinelli and Dynamic Designs, have defamed
Mr. Racinelli, and have engaged in conduct that is alleged to be violative of the California Business and Professions Code. In the Cross-Complaint, Mr. Racinelli, Dynamic Designs and the
other cross-complainants seek, among other things, an award of damages in an amount of not less than $50 million, a trebling of such damages pursuant to the California Business and Professions
Code, declaratory relief, injunctive relief and punitive damages. The Company believes that it and Endar have meritorious defenses to all of the claims that have been asserted against them in the
Cross-Complaint. The Company is unable to predict the outcome of this case and accordingly no expense, except for attorney's fees paid to date, has been recorded for this case. However, in the opinion
of the Company the results of this case will not have a material effect on its results of operations, financial condition or cash flows.

Item 2.    Changes in Securities

None

Item 3.    Defaults upon Senior Securities

None

Item 4.    Submission of Matters to a Vote of Security Holders

None

Item 5.    Other Information

The Company is including the following cautionary statement in this Report to make applicable, and to take advantage of, the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995 for any forward-looking statements made by, or on behalf of, the Company. Forward-looking statements 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 its representatives
may publish or otherwise make available forward-looking statements of this nature. All such forward-looking statements, whether written or oral, and whether made by or on behalf of the Company, are
expressly qualified by the following cautionary statements. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those
expressed in the forward-looking statements. Such forward-looking statements are expected to be based on various assumptions, many of which are based, in turn, upon further assumptions.

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There
can be no assurance that management's expectations, beliefs or projections will occur or be achieved or accomplished. In addition to other factors and matters discussed elsewhere
in this Report and in the Company's other public filings and statements, the following are important factors that, in the view of the Company, couldcause actual results to differ materially from those
discussed in the Company's forward-looking statements. The Company disclaims any obligation 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 Growth Rate

The
Company has grown substantially in past years. While we expect continued growth, we expect that our future rate of growth will be less than our historical growth rate. In the
Candles & Home Fragrance segment we expect the international market to grow faster than the domestic market. The market for our Foodservice products has grown, but more slowly, and we expect it
will continue to do so. Our ability to continue to grow depends on several factors, including the following: market acceptance of existing products, the successful introduction of new products, our
ability to recruit new independent sales consultants, sourcing of raw materials, and increases in production and distribution capacity to meet demand. The Candles & Home Fragrance and Creative
Expressions industries are driven by consumer tastes. Accordingly, there can be no assurance that our existing or future products will maintain or achieve market acceptance. Our sales and earnings
results have recently been impacted negatively by a slowing of the United States economy as a whole and by a drop in consumer confidence at both the individual and retailer levels. There can be no
assurance that our sales and earnings results will not be materially adversely affected by these factors in the future. If the United States economy slows further and/or consumer confidence drops
further, our operating results may be materially adversely affected. During fiscal 2002, we have incurred certain one-time expenses in connection with the restructuring of our U.S. and
European consumer wholesale operations. While we expect these actions to position us more effectively for continued growth and profitability, there can be no assurance that we will achieve these
results. We expect that, as we grow, our rate of growth will be less than our historical growth rate. Our past growth in both the Candles & Home Fragrance segment and the Creative Expressions
segment has been due, in part, to acquisitions. We expect our future growth in the Candles & Home Fragrance segment to be primarily organic, with the possibility of selective acquisitions, and
we continue to pursue strategic acquisitions in certain areas of the Creative Expressions segment. There can be no assurance that we will be able to continue to identify suitable acquisition
candidates, to consummate acquisitions on terms favorable to the Company, to finance acquisitions or to integrate successfully acquired operations. In the future, acquisitions may contribute more to
the Company's overall sales growth rate than historically.

Ability to Respond to Increased Product Demand

In the past, our internal growth has required increases in personnel, expansion of production and distribution facilities, and enhancement of management
information systems. More recently, we have eliminated one of our facilities to address manufacturing over-capacity. Our ability to meet future demand for Candles & Home Fragrance
and Creative Expressions products will be dependent upon success in (1) training, motivating and managing new employees, (2) bringing new production and distribution capacity on line in
a timely manner, (3) improving management information systems in order to respond promptly to customer orders and (4) improving our ability to forecast anticipated product demand in
order to continue to fill customer orders promptly. If we are unable to meet future demand for products in a timely and efficient manner, our operating results could be materially adversely affected.

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Risks Associated with International Sales and Foreign-Sourced Products

Our international business has grown at a faster rate than sales in the United States in recent years. In addition, we source a portion of our candles,
accessories and decorative gift bags and seasonal décor from independent manufacturers in the Pacific Rim, Europe and Mexico. For these reasons we are subject to the following risks
inherent in foreign manufacturing and sales: fluctuations in currency exchange rates, economic and political instability, transportation delays, difficulty in maintaining quality control, restrictive
actions by foreign governments, nationalizations, the laws and policies of the United States affecting importation of goods (including duties, quotas and taxes) and trade and foreign tax laws.

Raw Materials

For certain raw materials, there may be temporary shortages due to weather or other factors, including disruptions in supply caused by raw material transportation
or production delays. Such raw material shortages have not previously had, and are not expected to have, a material adverse effect on the Company's operations.

Dependence on Key Management Personnel

Our success depends upon the contributions of key management personnel, particularly our Chairman, Chief Executive Officer and President, Robert B. Goergen. We do
not have employment contracts with any of our key management personnel except for Mr. Goergen, nor do we maintain any key person life insurance policies. Also, certain of our senior executives
have assumed new positions recently. The loss of any of the key management personnel or the inability of executives to perform their new positions could have a material adverse effect on the Company.

Competition

Our business is highly competitive, both in terms of price and new product introductions. The worldwide market for Candles & Home Fragrance and Creative
Expressions products is highly fragmented, with numerous suppliers serving one or more of the distribution channels served by the Company. Because there are relatively low barriers to entry to the
Candles & Home Fragrance and Creative Expressions industries, we may face increased future competition from other companies, some of which may have substantially greater financial and marketing
resources than those available to us. From time to time during the year-end holiday season, we compete with companies offering candles manufactured in foreign countries, particularly
China. In addition, certain competitors focus on a
particular geographic or single-product market and attempt to gain or maintain market share solely on the basis of price.

Item 6.    Exhibits and Reports on Form 8-K



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SIGNATURES

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

|                        | BLYTH, INC.
|----------------------- | -----------
|Date: December 16, 2002 | By:        
|Date: December 16, 2002 | By:        

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CERTIFICATIONS

I,
Robert B. Goergen, certify that:

1.    I
have reviewed this quarterly report on Form 10-Q of Blyth, Inc.;

2.    Based
on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.    Based
on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.    The
registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:



5.    The
registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent function):



6.    The
registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material
weaknesses.

|Date: December 16, 2002 |  | /s/ROBERT B. GOERGENRobert B. Goergen Chairman, Chief Executive Officer and President
|----------------------- |  | -------------------------------------------------------------------------------------

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CERTIFICATIONS

I,
Robert H. Barghaus, certify that:

1.    I
have reviewed this quarterly report on Form 10-Q of Blyth, Inc.;

2.    Based
on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements
made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;

3.    Based
on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial
condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;

4.    The
registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14 and 15d-14) for the registrant and we have:



5.    The
registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's
board of directors (or persons performing the equivalent function):



6.    The
registrant's other certifying officers and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other
factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material
weaknesses.

|Date: December 16, 2002 |  | /s/ROBERT H. BARGHAUSRobert H. Barghaus Vice President and Chief Financial Officer
|----------------------- |  | ----------------------------------------------------------------------------------

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