---

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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 JULY 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.

46,316,982 Common Shares as of August 31, 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:                                                                 |                                                 |      
|                                  |                                                                                                  | 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                                                                     |                                                 | 24-25
|                                  | Item 6.    Exhibits and Reports on Form 8-K                                                      |                                                 | 26   
|Signatures                        |                                                                                                  | 27                                             
|Certifications                    |                                                                                                  | 28                                             

2

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Part I. FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

BLYTH, INC. AND SUBSIDIARIES        CONSOLIDATED BALANCE SHEETS

|                                                                                                                            |                                                                      | July 31,
2002                              |         | January 31,
2002 |        
|--------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------- | ------------------------------------------ | ------- | ---------------- | -------
|
|
|ASSETS                                                                                                                      |                                                                      |                                            |         |                  |        
|Current assets:                                                                                                             |                                                                      |                                            |         |                  |        
|Cash and cash equivalents                                                                                                   |                                                                      | $                                          | 54,972  |                  | $      
|Accounts receivable, less allowance for doubtful receivables of $4,105 and $2,804, respectively                             |                                                                      |                                            | 110,296 |                  |        
|Inventories                                                                                                                 |                                                                      |                                            | 229,641 |                  |        
|Prepaid and other                                                                                                           |                                                                      |                                            | 17,355  |                  |        
|Deferred income taxes                                                                                                       |                                                                      |                                            | 20,583  |                  |        
|                                                                                                                            |                                                                      |                                            |         |                  |        
|                                                                                                                            |                                                                      | Total current assets                       |         |                  | 432,847
|                                                                                                                            |                                                                      |                                            |         |                  |        
|Property, plant and equipment, at cost:                                                                                     |                                                                      |                                            |         |                  |        
|                                                                                                                            | Less accumulated depreciation of $172,800 and $157,666, respectively |                                            |         | 248,818          |        
|Other assets:                                                                                                               |                                                                      |                                            |         |                  |        
|Investments                                                                                                                 |                                                                      |                                            | 3,382   |                  |        
|Excess of cost over fair value of assets acquired                                                                           |                                                                      |                                            | 147,032 |                  |        
|Deposits and other assets                                                                                                   |                                                                      |                                            | 12,318  |                  |        
|                                                                                                                            |                                                                      |                                            |         |                  |        
|                                                                                                                            |                                                                      |                                            | 162,732 |                  |        
|                                                                                                                            |                                                                      |                                            |         |                  |        
|                                                                                                                            |                                                                      | Total assets                               |         | $                | 844,397
|                                                                                                                            |                                                                      |                                            |         |                  |        
|LIABILITIES AND STOCKHOLDERS' EQUITY                                                                                        |                                                                      |                                            |         |                  |        
|Current liabilities:                                                                                                        |                                                                      |                                            |         |                  |        
|Bank lines of credit                                                                                                        |                                                                      | $                                          | 40,035  |                  | $      
|Current maturities of long-term debt                                                                                        |                                                                      |                                            | 7,268   |                  |        
|Accounts payable                                                                                                            |                                                                      |                                            | 53,509  |                  |        
|Accrued expenses                                                                                                            |                                                                      |                                            | 46,344  |                  |        
|Income taxes                                                                                                                |                                                                      |                                            | 1,249   |                  |        
|                                                                                                                            |                                                                      |                                            |         |                  |        
|                                                                                                                            |                                                                      | Total current liabilities                  |         |                  | 148,405
|                                                                                                                            |                                                                      |                                            |         |                  |        
|Deferred income taxes                                                                                                       |                                                                      |                                            | 24,197  |                  |        
|Long-term debt,less current maturities                                                                                      |                                                                      |                                            | 175,488 |                  |        
|Other liabilities                                                                                                           |                                                                      |                                            | 6,056   |                  |        
|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 49,659,482 shares and 49,509,776 shares, respectively |                                                                      |                                            | 993     |                  |        
|Additional contributed capital                                                                                              |                                                                      |                                            | 100,680 |                  |        
|Retained earnings                                                                                                           |                                                                      |                                            | 475,535 |                  |        
|Accumulated other comprehensive loss                                                                                        |                                                                      |                                            | (8,298  | )                |        
|Treasury stock, at cost, 3,343,000 shares and 2,630,900 shares, respectively                                                |                                                                      |                                            | (78,659 | )                |        
|                                                                                                                            |                                                                      |                                            |         |                  |        
|                                                                                                                            |                                                                      | Total stockholders' equity                 |         |                  | 490,251
|                                                                                                                            |                                                                      |                                            |         |                  |        
|                                                                                                                            |                                                                      | Total liabilities and stockholders' equity |         | $                | 844,397
|                                                                                                                            |                                                                      |                                            |         |                  |        

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)

|                                                                            |                                                                                      | Six months ended July 31 |        
|--------------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | ------------------------ | -------
|
|
|Net sales                                                                   |                                                                                      | $                        | 545,917
|Cost of goods sold                                                          |                                                                                      |                          | 263,577
|                                                                            |                                                                                      |                          |        
|                                                                            | Gross profit                                                                         |                          |        
|                                                                            |                                                                                      |                          |        
|Selling                                                                     |                                                                                      |                          | 163,642
|Administrative                                                              |                                                                                      |                          | 54,133 
|Amortization of goodwill                                                    |                                                                                      |                          |       
|                                                                            |                                                                                      |                          |        
|                                                                            |                                                                                      |                          | 217,775
|                                                                            |                                                                                      |                          |        
|                                                                            | Operating profit                                                                     |                          |        
|Other expense (income):                                                     |                                                                                      |                          |        
|                                                                            | Interest expense                                                                     |                          |        
|                                                                            | Interest income and other                                                            |                          |        
|                                                                            | Equity in loss of investee                                                           |                          |        
|                                                                            |                                                                                      |                          |        
|                                                                            |                                                                                      |                          | 7,065  
|                                                                            |                                                                                      |                          |        
|                                                                            | Earnings before income taxes and cumulative effect of change in accounting principle |                          |        
|Income tax expense                                                          |                                                                                      |                          | 21,390 
|                                                                            |                                                                                      |                          |        
|                                                                            | Earnings before cumulative effect of change in accounting principle                  |                          |        
|Cumulative 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                                  |                          |        
|                                                                            |                                                                                      |                          |        
|                                                                            |                                                                                      | $                        | 0.68   
|                                                                            | Weighted average number of shares outstanding                                        |                          |        
|                                                                            |                                                                                      |                          |        
|Diluted:                                                                    |                                                                                      |                          |        
|                                                                            | Earnings per common share before cumulative effect of change in accounting principle |                          | $      
|                                                                            | Cumulative effect of change in accounting principle                                  |                          |        
|                                                                            |                                                                                      |                          |        
|                                                                            |                                                                                      | $                        | 0.68   
|                                                                            | 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 July 31 |        
|------------------------ | --------------------------------------------- | -------------------------- | -------
|
|
|Net sales                |                                               | $                          | 268,021
|Cost of goods sold       |                                               |                            | 130,689
|                         |                                               |                            |        
|                         | Gross profit                                  |                            |        
|                         |                                               |                            |        
|Selling                  |                                               |                            | 75,235 
|Administrative           |                                               |                            | 28,440 
|Amortization of goodwill |                                               |                            |       
|                         |                                               |                            |        
|                         |                                               |                            | 103,675
|                         |                                               |                            |        
|                         | Operating profit                              |                            |        
|Other expense (income):  |                                               |                            |        
|                         | Interest expense                              |                            |        
|                         | Interest income and other                     |                            |        
|                         | Equity in (earnings)loss of investee          |                            |        
|                         |                                               |                            |        
|                         |                                               |                            | 3,711  
|                         |                                               |                            |        
|                         | Earnings before income taxes                  |                            |        
|Income tax expense       |                                               |                            | 11,140 
|                         |                                               |                            |        
|                         | Net earnings                                  |                            | $      
|                         |                                               |                            |        
|Basic:                   |                                               |                            |        
|                         | Net earnings per common share                 |                            | $      
|                         | Weighted average number of shares outstanding |                            |        
|                         |                                               |                            |        
|Diluted:                 |                                               |                            |        
|                         | Net earnings per common share                 |                            | $      
|                         | Weighted average number of shares outstanding |                            |        
|                         |                                               |                            |        

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)

|                                                                     |                      | Common stock |  |   |     |  |   | Treasury stock |  | Accumulated
other
comprehensive
income (loss) |         |   |           
|-------------------------------------------------------------------- | -------------------- | ------------ |  | - | --- |  | - | -------------- |  | --------------------------------------------- | ------- | - | ----------
|
|
|
|For the six months ended
July 31, 2001:                              |                      |              |  |   |     |  |   |                |  |                                               |         |   |           
|Balance, January 31, 2001                                            |                      | 49,431,576   |  | $ | 989 |  | $ | 96,912         |  | $                                             | 390,447 |   | (2,356,800
|Net earnings for the period                                          |                      |              |  |   |     |  |   |                |  |                                               | 28,554  |   |           
|Foreign currency translation adjustments                             |                      |              |  |   |     |  |   |                |  |                                               |         |   |           
|Unrealized holding gains on certain investments (net of tax of $17)  |                      |              |  |   |     |  |   |                |  |                                               |         |   |           
|Net gain on cash flow hedging instruments (net of tax of $101)       |                      |              |  |   |     |  |   |                |  |                                               |         |   |           
|                                                                     |                      |              |  |   |     |  |   |                |  |                                               |         |   |           
|Comprehensive income                                                 |                      |              |  |   |     |  |   |                |  |                                               |         |   |           
|Common stock issued in connection with exercise of stock options     |                      | 21,200       |  |   |     |  |   | 272            |  |                                               |         |   |           
|Dividends                                                            |                      |              |  |   |     |  |   |                |  |                                               | (4,707  | ) |           
|Treasury stock purchases                                             |                      |              |  |   |     |  |   |                |  |                                               |         |   | (26,800   
|                                                                     |                      |              |  |   |     |  |   |                |  |                                               |         |   |           
|Balance, July 31, 2001                                               |                      | 49,452,776   |  | $ | 989 |  | $ | 97,184         |  | $                                             | 414,294 |   | (2,383,600
|                                                                     |                      |              |  |   |     |  |   |                |  |                                               |         |   |           
|For the six months ended July 31, 2002:                              |                      |              |  |   |     |  |   |                |  |                                               |         |   |           
|Balance, January 31, 2002                                            |                      | 49,509,776   |  | $ | 990 |  | $ | 97,879         |  | $                                             | 449,038 |   | (2,630,900
|Net earnings for the period                                          |                      |              |  |   |     |  |   |                |  |                                               | 31,595  |   |           
|Foreign currency translation adjustments                             |                      |              |  |   |     |  |   |                |  |                                               |         |   |           
|Unrealized holding losses on certain investments (net of tax of $20) |                      |              |  |   |     |  |   |                |  |                                               |         |   |           
|Net loss on cash flow hedging instruments (net of tax of $253)       |                      |              |  |   |     |  |   |                |  |                                               |         |   |           
|                                                                     |                      |              |  |   |     |  |   |                |  |                                               |         |   |           
|                                                                     | Comprehensive income |              |  |   |     |  |   |                |  |                                               |         |   |           
|Common stock issued in connection with exercise of stock options     |                      | 149,706      |  |   | 3   |  |   | 2,490          |  |                                               |         |   |           
|Tax benefit from stock options                                       |                      |              |  |   |     |  |   | 311            |  |                                               |         |   |           
|Dividends                                                            |                      |              |  |   |     |  |   |                |  |                                               | (5,098  | ) |           
|Treasury stock purchases                                             |                      |              |  |   |     |  |   |                |  |                                               |         |   | (712,100  
|                                                                     |                      |              |  |   |     |  |   |                |  |                                               |         |   |           
|Balance, July 31, 2002                                               |                      | 49,659,482   |  | $ | 993 |  | $ | 100,680        |  | $                                             | 475,535 |   | (3,343,000
|                                                                     |                      |              |  |   |     |  |   |                |  |                                               |         |   |           

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)

|                                                 |                                                                                      | Six months ended July 31                           |                                                    
|------------------------------------------------ | ------------------------------------------------------------------------------------ | -------------------------------------------------- | ---------------------------------------------------
|
|
|Cash flows from operating activities:            |                                                                                      |                                                    |                                                    
|                                                 | Net earnings                                                                         |                                                    | $                                                  
|                                                 | Adjustments to reconcile net earnings to net cash used in operating activities:      |                                                    |                                                    
|                                                 |                                                                                      | Cumulative effect of accounting change, net of tax |                                                    
|                                                 |                                                                                      | Depreciation and amortization                      |                                                    
|                                                 |                                                                                      | Tax benefit from stock options                     |                                                    
|                                                 |                                                                                      | Deferred income taxes                              |                                                    
|                                                 |                                                                                      | Equity in loss of investee                         |                                                    
|                                                 |                                                                                      | 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 of 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       |                                                                                      | $                                                  | 54,972                                             
|                                                 |                                                                                      |                                                    |                                                    

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 in both segments worldwide.

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

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 accruals necessary for fair presentation of the Company's consolidated financial position
at July 31, 2002 and the consolidated results of its operations and cash flows for the six-month periods ended July 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 six months ended July 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 six month periods ended July 31, 2001

8

---

by $4.0 million and $7.7 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 discounted to 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 $34.7 million, from $112.3 million at January 31, 2002 to $147.0 million at July 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 $2.7 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 six month periods ended July 31, 2002 and 2001, respectively, and is adjusted to exclude
2001 amortization

9

---

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 July 31, |        | Six months ended July 31,
|--------------------------------------------------------------------------- |  | --------------------------- | ------ | -------------------------
|
|
|Earnings before cumulative effect of change in accounting principle         |  | $                           | 18,806 |                          
|Goodwill amortization, net of taxes of $380 and $748                        |  |                             |       |                          
|Cumulative effect of change in accounting principle, net of taxes of $2,887 |  |                             |       |                          
|                                                                            |  |                             |        |                          
|Adjusted net income                                                         |  | $                           | 18,806 |                          
|                                                                            |  |                             |        |                          
|Basic earnings per common share:                                            |  |                             |        |                          
|Earnings before cumulative effect of change in accounting principle         |  | $                           | 0.41   |                          
|Goodwill amortization, net of taxes                                         |  |                             |       |                          
|Cumulative effect of change in accounting principle, net of taxes           |  |                             |       |                          
|                                                                            |  |                             |        |                          
|Adjusted net income                                                         |  | $                           | 0.41   |                          
|                                                                            |  |                             |        |                          
|Diluted earnings per common share:                                          |  |                             |        |                          
|Earnings before cumulative effect of change in accounting principle         |  | $                           | 0.40   |                          
|Goodwill amortization, net of taxes                                         |  |                             |       |                          
|Cumulative effect of change in accounting principle, net of taxes           |  |                             |       |                          
|                                                                            |  |                             |        |                          
|Adjusted net income                                                         |  | $                           | 0.40   |                          
|                                                                            |  |                             |        |                          

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

10

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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.

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 July 31, |         | Six months ended July 31,
|---------------------------------------------------------------------------------------- |  | --------------------------- | ------- | -------------------------
|
|
|Net sales                                                                                |  | $                           | 270,040 |                          
|Earnings before cumulative effect of change in accounting principle                      |  |                             | 18,832  |                          
|Net earnings                                                                             |  |                             | 18,832  |                          
|Basic:                                                                                   |  |                             |         |                          
|Earnings per common share before the cumulative effect of change in accounting principle |  | $                           | 0.41    |                          
|Net earnings per common share                                                            |  |                             | 0.41    |                          
|Diluted:                                                                                 |  |                             |         |                          
|Earnings per common share before the cumulative effect of change in accounting principle |  | $                           | 0.40    |                          
|Net earnings per common share                                                            |  |                             | 0.40    |                          

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.

11

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4.    Inventories

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

July 31, 2002

January 31, 2002Raw materials

$
37,113

$
35,142Work in process


2,364


1,994Finished goods


190,164


144,704$
229,641

$
181,840


5.    Earnings per Share

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

|                                                      |                                  | Three Months
Ended July 31,
2002 |        | Six Months
Ended July 31,
2002 |   | Three Months
Ended July 31,
2001 |        | Six Months
Ended July 31,
2001
|----------------------------------------------------- | -------------------------------- | -------------------------------- | ------ | ------------------------------ | - | -------------------------------- | ------ | ------------------------------
|Net earnings                                          |                                  | $                                | 18,806 |                                | $ | 31,595                           |        | $                             
|                                                      |                                  |                                  |        |                                |   |                                  |        |                               
|Weighted average number of common shares outstanding: |                                  |                                  |        |                                |   |                                  |        |                               
|                                                      | Basic                            |                                  |        | 46,330                         |   |                                  | 46,310 |                               
|                                                      | Dilutive effect of stock options |                                  |        | 380                            |   |                                  | 281    |                               
|                                                      |                                  |                                  |        |                                |   |                                  |        |                               
|Weighted average number of common shares outstanding: |                                  |                                  |        |                                |   |                                  |        |                               
|                                                      | Diluted                          |                                  |        | 46,710                         |   |                                  | 46,591 |                               
|                                                      |                                  |                                  |        |                                |   |                                  |        |                               

As
of July 31, 2002 and 2001, options to purchase 40,468 and 171,944 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 charges 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 six month period ended July 31, 2002, approximately $0.6 million of lease obligations and $0.2 million of severance costs were remaining on the
balance sheet at July 31, 2002. The lease obligation continues through the third quarter of fiscal 2004 and the remaining severance costs will be paid by the end of fiscal 2003.

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

12

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

|                                                                                     |                          | Three months ended July 31, |        | Six months ended July 31, |        
|------------------------------------------------------------------------------------ | ------------------------ | --------------------------- | ------ | ------------------------- | -------
|
|
|Net Sales                                                                            |                          |                             |        |                           |        
|                                                                                     | Candles & Home Fragrance |                             | $      | 209,410                   |        
|                                                                                     | Creative Expressions     |                             |        | 58,611                    |        
|                                                                                     |                          |                             |        |                           |        
|                                                                                     |                          | Total                       |        | $                         | 268,021
|                                                                                     |                          |                             |        |                           |        
|Earnings                                                                             |                          |                             |        |                           |        
|                                                                                     | Candles & Home Fragrance |                             | $      | 23,330                    |        
|                                                                                     | Creative Expressions     |                             |        | 10,327                    |        
|                                                                                     |                          |                             |        |                           |        
|                                                                                     |                          |                             | 33,657 |                           |        
|                                                                                     | Other expense            |                             |        | (3,711                    | )      
|                                                                                     |                          |                             |        |                           |        
|Earnings before income taxes and cumulative effect of change in accounting principle |                          | $                           | 29,946 |                           | $      
|                                                                                     |                          |                             |        |                           |        

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

13

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the outcome of this case and accordingly, no expense for this case has been recorded. 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

As of July 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 July 31, 2002) minus 1%, subject to various covenants. At July 31, 2002,
CBK was in compliance with such covenants. At July 31, 2002, approximately $21.2 million (including $2.2 million of outstanding letters of credit) was outstanding at a weighted
average interest rate of 3.75%.

At
July 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 2.04% at July 31, 2002.

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 August 5, 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 August 5, 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 July 31, 2002, approximately $16.8 million (including $4.2 million
of outstanding letters of credit) was outstanding under the prior $135 million 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 the closing of the new Credit Facility, letters of credit outstanding under the prior credit facility, in the aggregate
amount of $4.2 million, were either continued under the new Credit Facility or continued outside of the new Credit Facility.

At
July 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
July 31, 2002 approximately $4.6 million of letters of credit were outstanding under this credit line.

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 $42.8 million, or 8.5%, to $545.9 million in the first six months of fiscal 2003 from $503.1 million in the first six
months of fiscal 2002. Net sales in the second quarter ended July 31, 2002, increased $22.4 million, or 9.1% to $268.0 million compared with $245.6 million a year earlier.
The primary factors affecting net sales in the second quarter of fiscal 2003 versus last year were the increase in PartyLite sales of approximately 8%, the inclusion of sales of CBK since its
acquisition on May 10, 2002, and the decrease of approximately 14% in premium brand sales in North America discussed below. Excluding the effect of the acquisition of CBK, net sales in the
quarter ended July 31, 2002 increased approximately 1% compared to the same period a year earlier.

Net
sales in the Candles and Home Fragrance segment increased $2.4 million, or 1.2%, to $209.4 million in the second quarter ended July 31, 2002, compared with
$207.0 million in the same period last year. As previously mentioned, Blyth's direct selling channel business, PartyLite, increased sales approximately 8% in the second quarter versus the prior
year, which follows a 10% sales increase in the first 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 premium channel business decreased approximately 14% in the quarter ended
July 31, 2003 compared to the prior year period reflecting a combination of factors that include lower attendance at summer gift shows, cautious buying by our retail customers, and
disappointing reception to our new product introductions. Blyth's mass channel business in North America increased sales by approximately 6% in the second quarter of fiscal 2003 compared to the prior
year, driven in part by increased sales to Wal-Mart, our largest customer. In Blyth's European wholesale businesses, net sales increased approximately 7% in the premium channel but
decreased approximately 4% in the mass channel during the second quarter of fiscal 2003 versus
last year's second quarter. Net sales of The Sterno Group, Blyth's foodservice business, increased slightly in the second quarter of fiscal 2003 compared to the same period last year, however the
overall hospitality industry has not yet fully recovered from the events of September 11, 2001.

Net
sales in the Creative Expressions segment, which now includes CBK, increased $20.0 million to $58.6 million in the quarter ended July 31, 2002, compared to
$38.6 million in the prior year period. Most of this increase in net sales was attributable to the inclusion of sales made by CBK since its acquisition on May 10, 2002. The remaining
increase in this segment was a result of net sales increases of approximately 7% and 4% for Midwest and JMC Impact respectively in the second quarter of fiscal 2003 versus the prior year period.

Gross Profit

Gross profit increased $30.8 million, or 12.2%, from $251.5 million in the first six months of fiscal 2002 to $282.3 million in the first six
months of fiscal 2003. Gross profit margin increased from 50.0% for the first six months of fiscal 2002 to 51.7% for the first six months of fiscal 2003. Gross profit in the second quarter ended
July 31, 2002 increased $20.3 million, or 17.4%, from $117.0 million for the quarter ended July 31, 2001 to $137.3 million. Gross profit margin increased from 47.6%
for the quarter ended July 31, 2001 to 51.2% for the quarter ended July 31, 2002.The increase in gross profit margin in the second
quarter of fiscal 2003 versus fiscal 2002 is attributable in part to a mix shift in sales to higher gross margin products in the current year and in part to the $6.3 million unusual inventory
provision recorded in the second quarter of fiscal 2002. Excluding the inventory provision

15

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recorded in fiscal 2002, the gross profit margin as a percent of sales increased approximately 1% in the second quarter of fiscal 2003 versus the same period last year.

Selling Expense

Selling expense increased $11.6 million, or 7.6%, from $152.0 million in the first six months of fiscal 2002, when selling expense was 30.2% of net
sales, to $163.6 million in the first six months of fiscal 2003, or 30.0% of net sales. Selling expense increased $4.6 million, or 6.5%, from $70.6 million in the quarter ended
July 31, 2001, when selling expense was 28.8% of net sales, to $75.2 million in the quarter ended July 31, 2002, or 28.1% of net sales. The decrease in selling expense as a
percent of sales, which occurred in the second quarter of fiscal 2003, relates to productivity gains and cost controls, which were partially offset by a shift in sales mix among businesses, and the
inclusion of CBK.

Administrative Expense

Administrative expense increased $6.3 million, or 13.2%, from $47.8 million in the first six months of fiscal 2002, when administrative expense was
9.5% of net sales, to $54.1 million in the first six months of fiscal 2003, or 9.9% of net sales. Administrative expense increased $5.4 million, or 23.5%, from $23.0 million in
the quarter ended July 31, 2001, when administrative expense was 9.4% of net sales, to $28.4 million in the quarter ended July 31, 2002, or 10.6% of net sales. The increase in
administrative expense as a percent of sales, which occurred in the second quarter of fiscal 2003 is attributable to the second quarter being our lowest sales quarter of the year and to the inclusion
of a $0.8 million impairment on a closed European facility recorded in the second quarter of fiscal 2003.

Amortization

There was no goodwill amortization recorded in the first six months of fiscal 2003 compared to $2.0 million in the same period 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 $15.0 million, or 30.2%, to $64.6 million in the six months ended July 31, 2002 compared with $49.6 million
a year earlier. Operating profit in the second quarter ended July 31, 2002 increased $11.4 million, or 51.1%, to $33.7 million compared to $22.3 million in the same period
last year.The increase in operating profit in the quarter ended July 31, 2002 versus the same period the prior year was primarily a result of
the inclusion of CBK since its acquisition in May 2002, an increase in PartyLite's operating profit as a result of its sales increase and the impact of the inventory provision recorded in the
second quarter of fiscal 2002, discussed above under the heading "Gross Profit".

Interest Income and Other

Interest income and other decreased approximately $3.4 million in the first six months of fiscal 2003 when compared to the prior year periods. Interest
income and other decreased $1.6 million in the quarter ended July 31, 2002 when compared to the second quarter of fiscal 2002. Such decreases are 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 $4.5 million, from $16.9 million in the first six months of fiscal 2002, to $21.4 million in the first six
months of fiscal 2003. Income tax expense increased $3.5 million, from

16

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$7.6 million in the quarter ended July 31, 2001, to $11.1 million in the quarter ended July 31, 2002. This increase is due to the increased earnings in fiscal 2003. The
effective tax rate remained at approximately 37.2%, the same as the prior year.

Cumulative Effect of Change in Accounting Principle

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, as a result of adopting SFAS No. 142, "Goodwill and Other Intangible Assets" (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 $7.5 million, or 26.2%, from
$28.6 million for the six months ended July 31, 2001 to $36.1 million for the six months ended July 31, 2002. Net earnings after the cumulative effect of change in
accounting principle increased $3.0 million, or 10.5%, from $28.6 million in the first six months of fiscal 2002 to $31.6 million in the first six months of fiscal 2003. Net
earnings increased $5.9 million, or 45.7%, from $12.9 million in the second quarter of fiscal 2002 to $18.8 million in the second 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 six months ended
July 31, 2002, were $0.78 an increase of $0.17, or 27.9% compared to $0.61 for the six months ended July 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 six months ended July 31, 2002, were $0.68, an increase of $0.07, compared to $0.61 for the six months
ended July 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 $0.78 compared to $0.60 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 $0.68,
compared to $0.60 for the same period the prior year.

Liquidity and Capital Resources

Compared to January 31, 2002, when inventory levels are typically at the lowest point of the fiscal year, inventory increased $47.8 million, from
$181.8 million to $229.6 million at July 31, 2002. This increase is due to normal seasonal build and to the acquisition of CBK. Excluding CBK, inventory at July 31, 2002,
decreased $21.0 million compared to the same period last year due to inventory control efforts corporate-wide. Accounts receivable increased $26.5 million, from
$83.8 million at the end of fiscal 2002 to $110.3 million at July 31, 2002. Excluding CBK, compared to the same period last year accounts receivable decreased $10.5 million
primarily due to a mix shift in sales. Accounts payable and accrued expenses decreased $4.2 million, to $99.9 million at July 31, 2002 compared to $104.1 million at
year-end. When compared to the prior year, accounts payable and accrued expenses increased $25.8 million primarily due to more favorable payment terms with certain vendors and the
inclusion of CBK.

Capital
expenditures for property, plant and equipment were approximately $9.6 million in the six months ended July 31, 2002 compared to $6.6 million in the prior
year period. Capital expenditures consisted primarily of investments in information technology and upgrades of equipment and facilities. The Company expects total capital spending of approximately
$20.0 million for fiscal 2003.

17

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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 August 5, 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 August 5, 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 July 31, 2002, approximately $16.8 million (including $4.2 million
of outstanding letters of credit) was outstanding under the prior $135 million 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 the closing of the new Credit Facility, letters of credit outstanding under the prior credit facility, in the aggregate
amount of $4.2 million, were either continued under the new Credit Facility or continued outside of the new Credit Facility

At
July 31, 2002, the Company had a total of $15.0 million available under an uncommitted bank line of credit with La Salle 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 July 31, 2002.

At
July 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
July 31, 2002 approximately $4.6 million of letters of credit were outstanding under this credit line.

As
of June 30, 2002, The Gies Group ("Gies") had available lines of credit of approximately $33.9 million of which approximately $9.5 million was outstanding. The
amounts outstanding under the lines of credit bear interest at a weighted average rate of 4.27% at June 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 $23.0 million, collateralized by certain of Colony's assets. As of June 30, 2002, Colony had
borrowings under the credit facility of approximately $11.5 million, at a weighted average interest rate of 4.67%.

At
June 30, 2002, Gies had various long-term debt agreements in multiple European currencies maturing in December 2002. The total amount outstanding as of
June 30, 2002 under the loan agreements was approximately $3.1 million, with variable interest rates ranging from 5.0% to 5.5%. The loans are collateralized by certain of Gies' real
estate.

As
of July 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 July 31, 2002) minus 1%, subject to various covenants. At July 31, 2002, CBK was in compliance with
such covenants. At July 31, 2002, approximately $21.2 million (including $2.2 million of outstanding letters of credit) was outstanding at a weighted average interest rate of
3.75%.

At
July 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 2.04% at July 31, 2002.

18

---

Net
cash used in operating activities amounted to $7.9 million for the six months ended July 31, 2002 compared to $41.2 million used in operating activities for the
six months ended July 31, 2001. The increase in cash flow from operations compared to the prior year is primarily a result of improved payment terms with vendors and increased earnings, which
were partially offset by seasonal increases in inventory.

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 712,100 shares on the open market for a total cost of $15.7 million, bringing the cumulative total
purchased shares to 3,343,000 as of July 31, 2002, for a total cost of approximately $78.7 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 is payable
to shareholders of record as of November 1, 2002 and will be 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 six month periods ended July 31, 2001 by $4.0 million and $7.7 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

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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 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 $34.7 million, from $112.3 million at January 31, 2002 to
$147.0 million at July 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 $2.7 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.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market Risk

The Company has operations both inside and 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, credit risk and commodity prices. These financial exposures are actively monitored and, where
considered appropriate, managed by the Company.

Interest Rate Risk

As of July 31, 2002 the Company is subject to interest rate risk on approximately $107.4 million of variable rate debt, including the subsidiary
debt of Gies, Colony Gift and CBK. Each 1.00% change in the interest rate would impact pre-tax earnings by approximately $1,074,000 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% (5.0% at April 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
$1.7 million at July 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, certain
inventory purchases, Canadian
intercompany purchases 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 and inventory in foreign currencies, the gain or loss is deferred in accumulated other comprehensive income(loss) ("OCI") and, 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 purchases, gain or loss on such hedges is deferred in OCI and recognized in earnings in the period in which the underlying hedged transaction
occurs. Gains or losses on foreign currency forward contracts related to intercompany loans are currently recognized through income and generally offset the transaction gains or losses in the foreign
currency cash flows that 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 into earnings immediately. 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 July 31, 2002.

|                |  | U.S. Dollar
Notional Amount |        | Average
Contract Rate |      | Estimated
Fair Value |  
|--------------- |  | --------------------------- | ------ | --------------------- | ---- | -------------------- | -
|
|Canadian Dollar |  | $                           | 2,823  |                       | 1.54 |                      | $
|Euro            |  |                             | 28,162 |                       | 0.88 |                      |  
|Pound Sterling  |  |                             | 7,702  |                       | 1.44 |                      |  
|                |  |                             |        |                       |      |                      |  
|                |  | $                           | 38,687 |                       |      |                      | $
|                |  |                             |        |                       |      |                      |  

The
foreign exchange contracts outstanding as of July 31, 2002 have maturity dates ranging from August 2002 through February 2003.

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Item 4.    Controls and Procedures

Since
September 5, 2002, the date of the last evaluation of the Company's internal controls, there have not been any significant changes in the Company's internal controls or in
other factors that could significantly affect the Company's internal controls subsequent to such 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 for this case has been recorded. 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

The following matters were voted upon at the Annual Meeting of Stockholders held on June 6, 2002, and received the votes set forth below:



For

Against

WithheldJohn W. Burkhart

42,474,325

0

482,863Philip Greer

42,434,030

0

523,158John E. Preschlack

42,480,413

0

476,775




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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.

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, could cause 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 Candle & 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 continues to slow and/or consumer confidence continues to drop, our operating results may be materially adversely affected. Recently, 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 Candle & Home Fragrance segment and the Creative Expressions segment has been due, in part, to acquisitions. We expect our future growth in the Candle & 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 overall Company's sales growth rate than historically.

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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 Candle & 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 facilities 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.

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. In particular, during fiscal year 2002, declining European currencies had a significant negative impact on our international sales results. If European currencies remain weak or
decline further, our operating results may be materially adversely affected.

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 Candle & 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
Candle & 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.

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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: | September 16, 2002 |  | By:        
|Date: | September 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;

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

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;

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

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