**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**WashingtonD.C. 20549**

 

**FORM 10-Q/A**

**(AmendmentNo. 2)**

 

**(Mark One)**

 

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

 

## **For the quarterlyperiod ended July 31, 2003**

## ** **

**or**

 

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

 

**For thetransition period from                       to                       **

 

**Commissionfile number 1-13026**

 

**BLYTH, INC.**

(Exact name of registrant asspecified 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 addressand former fiscal year, if changed since last report)

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section 13or 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 suchreports), and (2) has been subject to such filing requirements for the past 90days.

Yes o       Noý            SeeItem 5 of Part II.

 

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

Yes ý       Noo

 

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

 

**45,521,877Common Shares as of August 29, 2003**

 

 

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**Explanatory Note**

 

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

 

On August 4, 2004, we filed amendments on Form 10–Q/A restatingour Consolidated Financial Statements for the interim periods ended April 30,July 31, and October 31, 2003 to reflect these changes. Ourpredecessor independent public accountants had performed the reviews that wewere required to have performed by Section 10–01(d) of Regulation S–X ofour Consolidated Financial Statements as included in our Quarterly Reports onForm 10–Q as initially filed for the interim periods ended April 30, July 31,and October 31, 2003. The amendments filed on Form 10-Q/A were filed afterour termination of our predecessor independent public accountants. TheConsolidated Financial Statements included in our amended quarterly reportswere not reviewed by any independent public accountant, and such amendedquarterly reports are therefore not considered fully compliant with the requirementsof the Exchange Act and the rules and regulations of the Commission. We havehad preliminary discussions with and plan to re-engage our predecessorindependent public accountants to perform such a review, and we presentlyexpect those reviews to be completed by our predecessor independent publicaccountants prior to January 31, 2005, although there can be no assurancethat they will be able to do so. We do not expect that the reviews of ouramended quarterly reports will require any change to the Consolidated FinancialStatements.

 

We are filing this amendment to our fiscal 2004 10-Q/A filing for theperiod ended July 31, 2003 to reflect the fact that the financialinformation included in this report was not reviewed by any independent publicaccountant. At the appropriate time, we intend to file an additional amendmentto this amended report to reflect the completion of the review.

 

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

 

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**Item 4.** Controls andProcedures

 

(a) Evaluationof disclosure controls and procedures.

 

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

 

(b) Changes ininternal control over financial reporting.

 

There was no change in our internal controlover financial reporting identified in connection with the evaluation requiredby paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred duringour last fiscal quarter that has materially affected, or is reasonably likelyto materially affect, our internal control over financial reporting.

 

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**PART II.**  OTHER INFORMATION

** **

**Item5.**    Other Information

** **

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

 

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

 

We are filing this amendment to our fiscal 2004 10-Q/A filing for theperiod ended July 31, 2003 to reflect the fact that the financialinformation included in this report was not reviewed by any independent publicaccountant. At the appropriate time, we intend to file an additional amendmentto this amended report to reflect the completion of the review.

 

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

 

The Company is including the following cautionary statement in thisReport to make applicable, and to take advantage of, the safe harbor provisionsof the Private Securities Litigation Reform Act of 1995 for any forward-lookingstatements made by, or on behalf of, the Company.  Forward-looking statements include statementsconcerning plans, objectives, goals, strategies, future events or performanceand underlying assumptions and other statements, which are other thanstatements of historical facts.  Fromtime to time, the Company and its representatives may publish or otherwise makeavailable forward-looking statements of this nature.  All such

 

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

 

Risk of Inability to Maintain Sales Growth Rate

 

The Company has experienced significant sales growth in pastyears.  While management expectscontinued growth, our future growth rate will likely be less than ourhistorical growth rate.  The Companyexpects faster sales growth in its international market versus its UnitedStates market, particularly in the Direct Selling and Wholesale segments.  The Company’s ability to increase salesdepends on numerous factors, including market acceptance of existing products,the successful introduction of new products, the increase in consumers’discretionary spending, the ability to recruit new independent salesconsultants, sourcing of raw materials and demand-driven increases inproduction and distribution capacity. Business in all of our segments is driven by consumer preferences.  Accordingly, there can be no assurances thatthe Company’s current or future products will maintain or achieve marketacceptance. Our sales and earnings results can be negatively impacted by theworldwide economic environment, particularly the Canadian, United States andEuropean economies. There can be no assurances that the Company’s financialresults will not be materially adversely affected by these factors in thefuture. The Company’s historical growth has been due in part to acquisitionsand management continues to consider additional strategic acquisitions.  There can be no assurances that managementwill continue to identify suitable acquisition candidates, consummateacquisitions on terms favorable to the Company, finance acquisitions or successfullyintegrate acquired operations.

 

Risks Associated with International Sales andForeign-Sourced Products

 

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

 

Ability to Respond to Increased Product Demand

 

The Company’s ability to meet future product demand in all of itsbusiness segments will depend upon its success in (1) bringing new productionand distribution capacity on line in a timely manner, (2) improving its abilityto forecast product demand and fulfill customer orders promptly, (3) improvingcustomer service-oriented management information systems and (4) training,motivating and managing new employees. The failure of any of the above could result in a material adverseeffect on our financial results.

 

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Risk of Shortages of Raw Materials

 

Certain raw materials could be in short supply due to capacity,availability, a change in requirements, weather or other factors, includingsupply disruptions due to production or transportation delays.  Such shortages have not had and are notpresently expected to have a material adverse effect on the Company’soperations.  While the price of crude oilis only one of several factors impacting the price of petroleum wax, it ispossible that recent fluctuations in oil prices may have a material adverseaffect on the cost of petroleum-based products used in the manufacture ortransportation of our products, particularly in the Direct Selling andWholesale segments.

 

Dependence on Key Corporate Management Personnel

 

Our success depends in part on the contributions of key corporatemanagement, including our Chairman and Chief Executive Officer, Robert B.Goergen.  The Company does not haveemployment contracts with any of its key corporate management personnel exceptMr. Goergen, nor does it maintain any key person life insurance policies.  The loss of any of the key corporatemanagement personnel could have a material adverse effect on the Company.

 

Risk of Increased Competition

 

Our business is highly competitive both in terms of pricing and newproduct introductions.  The worldwidemarket for home expressions products is highly fragmented with numeroussuppliers serving one or more of the distribution channels served by theCompany.  In addition, the Companycompetes for direct selling consultants with other direct sellingcompanies.  Because there are relativelylow barriers to entry in all of our business segments, the Company may faceincreased competition from other companies, some of which may havesubstantially greater financial or other resources than those available tous.  Competition includes companies sellingcandles manufactured at low cost outside of the United States.  Moreover, certain competitors focus on asingle geographic or product market and attempt to gain or maintain marketshare solely on the basis of price.

 

# **RisksRelated to Information Technology Systems**

# ** **

Our information technology systems are dependent on globalcommunications providers, telephone systems, hardware, software and otheraspects of Internet infrastructure that have experienced significant systemfailures and outages in the past.  Oursystems are susceptible to outages due to fire, floods, power loss,telecommunications failures, break-ins and similar events.  Despite the implementation of networksecurity measures, the Company’s systems are vulnerable to computer viruses,break-ins and similar disruptions from unauthorized tampering with Companysystems.  The occurrence of these orother events could disrupt or damage our information technology systems andinhibit internal operations, the ability to provide customer service or theability of customers or sales personnel to access the Company’s informationsystems.

 

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

 

a)     Exhibits

 

31.1         Certificationof Chairman, and Chief Executive Officer pursuant to Rule 13a-14(a) under theSecurities Exchange Act of 1934.

 

31.2         Certificationof Vice President and Chief Financial Officer pursuant to Rule 13a-14(a) underthe Securities Exchange Act of 1934.

 

32.1         Certificationof Chairman and Chief Executive Officer pursuant to Section 906 of theSarbanes-Oxley Act of 2002.

 

32.2         Certificationof Vice President and Chief Financial Officer pursuant to Section 906 ofthe Sarbanes-Oxley Act of 2002.

 

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**SIGNATURES**

 

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

 

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

 

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