**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington D.C. 20549**

 

**FORM10-Q/A**

**(Amendment No. 1)**

 
| **(Mark One)** | ** ** |
|----------------|------------|

 
| **ý** | **QUARTERLY  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**  |
|------------|-----------------------------------------------------------------------------------------------|
|       | ** **                                                                                    |
|       | **For the quarterly period ended July 31, 2004**                                              |
|       | ** **                                                                                    |
|       | **or**                                                                                        |
|       | ** **                                                                                    |
| **o**      | **TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934** |

 

**For the transition period from                  to                 **

 

**Commission file number 1-13026**

 

**BLYTH, INC.**

(Exact name of registrant as specified in itscharter)

 

| **DELAWARE**                                                                                                                                          | ** ** | **36-2984916**                     |
|-------------------------------------------------------------------------------------------------------------------------------------------------------|------------|------------------------------------|
| (State or other jurisdiction of  incorporation or organization)                                                                                       | ** ** | (IRS Employer Identification  No.) |
| ** **                                                                                                                                            | ** ** | ** **                         |
| **One East Weaver Street, Greenwich,  Connecticut 06831**                                                                                        |
| (Address of principal executive  offices)                 (Zip  Code) |
| ** **                                                                                                                                            | ** ** | ** **                         |
| **(203) 661-1926**                                                                                                                                    |
| (Registrant’s telephone number, 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 theSecurities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2)has been subject to such filing requirements for the past 90 days.

Yes o               No ý            See Item 5 of Part II.

 

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

Yes ý               No o

 

Indicate the number of sharesoutstanding of each of the issuer’s classes of common stock, as of the latestpracticable date.

 

**40,901,011 CommonShares as of August 31, 2004**

** **

 

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**Explanatory Note**

 

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

 

On August 4, 2004,we filed amendments on Form 10–Q/A restating our Consolidated FinancialStatements for the interim periods ended April 30, July 31, and October 31,2003 to reflect these changes. Our predecessor independent public accountantshad performed the reviews that we were required to have performed by Section 10–01(d)of Regulation S–X of our Consolidated Financial Statements as included in ourQuarterly Reports on Form 10–Q as initially filed for the interim periods endedApril 30, July 31, and October 31, 2003. The amendments filed on Form 10-Q/Awere filed after our termination of our predecessor independent publicaccountants. The Consolidated Financial Statements included in our amendedquarterly reports were not reviewed by any independent public accountant, andsuch amended quarterly reports are therefore not considered fully compliant withthe requirements of the Exchange Act and the rules and regulations of theCommission. In addition, because the financial statements as of April 30, July31, and October 31, 2003 and for the periods then ended as set forth in ourQuarterly Reports for the periods ended April 30, July 31, and October 31, 2004have not been the subject of such a review, these Quarterly Reports on Form 10–Qare also not considered to be compliant with the Exchange Act and the rules andregulations of the Commission. We have had preliminary discussions with andplan to re-engage our predecessor independent public accountants to performsuch a review, and we presently expect those reviews to be completed by ourpredecessor independent public accountants prior to January 31, 2005, althoughthere can be no assurance that they will be able to do so. We do not expectthat the reviews of our amended quarterly reports or our quarterly reportsfiled in fiscal 2005 will require any change to the Consolidated FinancialStatements.

 

Deloitte &Touche LLP, our current independent public accountants, have performed thereview required by Section 10–01(d) of Regulation S–X of our CondensedConsolidated Financial Statements for all interim periods in fiscal 2005 (butnot for any periods in fiscal 2004) as included in our quarterly reports forthe interim periods ended April 30, July 31, and October 31, 2004.

 

We are filing thisamendment to our fiscal 2005 10-Q filing for the period ended July 31, 2004 toreflect the fact that the financial information for fiscal 2004 included inthis report was not reviewed by any independent public accountant. At theappropriate time, we intend to file an additional amendment to this amendedreport to reflect the completion of the review.

 

The staff of theCommission may take the position that because certain information relating toour prior fiscal year in our Quarterly Reports for fiscal 2004 and 2005 has notbeen reviewed by any independent public accountants prior to filing as requiredby Section 10–01(d) of Regulation S–X, we would not be viewed as having madeall required filings until the reports are amended to reflect the requiredreview, and even then that the filings were not filed timely. If so, we wouldbe ineligible to use Forms S–2 and S–3 to register securities (or amend anexisting registration statement) until all required reports under the ExchangeAct have been timely filed for the 12 months prior to the filing of theregistration statement or amendment. While ineligibility to use Form S–2 or S–3would involve additional expense should we need to file or amend a registrationstatement, we do not view ineligibility as having a material adverse effect onour access to capital resources. Second, the safe harbor from registrationcontained in Rule 144 under the Securities Act of 1933 may be unavailable toour executive officers, directors and other affiliates wishing to sell oursecurities. We have instructed such persons not to resell securities inreliance upon Rule 144 until otherwise advised. As a precautionary matter, tobe consistent with these instructions, on the cover page of this filing, wehave checked the box that indicates that we have not made all filings requiredin the last 90 days.

 

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**Item 4.** Controls andProcedures

 

(a) Evaluation of disclosure controls andprocedures.

 

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

 

(b) Changes in internal control overfinancial reporting.

 

There was nochange in our internal control over financial reporting identified inconnection with the evaluation required by paragraph (d) of Exchange Act Rules13a-15 or 15d-15 that occurred during our last fiscal quarter that hasmaterially affected, or is reasonably likely to materially affect, our internalcontrol 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 on Statement of FinancialAccounting Standards No. 131, “Disclosures about Segments of an Enterprise andRelated Information”. This revision of segments had the related effect ofrequiring changes in our reporting units for purposes of goodwill impairmentreviews under Statement of Financial Accounting Standards No. 142, “Goodwilland Other Intangible Assets” (“SFAS 142”), retroactive to the February 1, 2002adoption date. This resulted in the need to perform impairment reviews ofseveral additional reporting units as of February 1, 2002 and each subsequentyear–end balance sheet date. These impairment reviews indicated the need torecord additional impairment charges as of the February 1, 2002 adoption ofSFAS 142.

 

On August 4, 2004,we filed amendments on Form 10–Q/A restating our Consolidated FinancialStatements for the interim periods ended April 30, July 31, and October 31,2003 to reflect these changes. Our predecessor independent public accountantshad performed the reviews that we were required to have performed by Section 10–01(d)of Regulation S–X of our Consolidated Financial Statements as included in ourQuarterly Reports on Form 10–Q as initially filed for the interim periods endedApril 30, July 31, and October 31, 2003. The amendments filed on Form 10-Q/Awere filed after our termination of our predecessor independent publicaccountants. The Consolidated Financial Statements included in our amendedquarterly reports were not reviewed by any independent public accountant, andsuch amended quarterly reports are therefore not considered fully compliantwith the requirements of the Exchange Act and the rules and regulations of theCommission. In addition, because the financial statements as of April 30, July31, and October 31, 2003 and for the periods then ended as set forth in ourQuarterly Reports for the periods ended April 30, July 31, and October 31, 2004have not been the subject of such a review, these Quarterly Reports on Form 10–Qare also not considered to be compliant with the Exchange Act and the rules andregulations of the Commission. We have had preliminary discussions with andplan to re-engage our predecessor independent public accountants to performsuch a review, and we presently expect those reviews to be completed by ourpredecessor independent public accountants prior to January 31, 2005, althoughthere can be no assurance that they will be able to do so. We do not expectthat the reviews of our amended quarterly reports or our quarterly reportsfiled in fiscal 2005 will require any change to the Consolidated FinancialStatements.

 

Deloitte &Touche LLP, our current independent public accountants, have performed thereview required by Section 10–01(d) of Regulation S–X of our CondensedConsolidated Financial Statements for all interim periods in fiscal 2005 (butnot for any periods in fiscal 2004) as included in our quarterly reports forthe interim periods ended April 30, July 31, and October 31, 2004.

 

We are filing thisamendment to our fiscal 2005 10-Q filing for the period ended July 31, 2004 toreflect the fact that the financial information for fiscal 2004 included inthis report was not reviewed by any independent public accountant. At theappropriate time, we intend to file an additional amendment to this amendedreport to reflect the completion of the review.

 

The staff of theCommission may take the position that because certain information relating toour prior fiscal year in our Quarterly Reports for fiscal 2004 and 2005 has notbeen reviewed by any independent public accountants prior to filing as requiredby Section 10–01(d) of Regulation S–X, we would not be viewed as having madeall required filings until the reports are amended to reflect the requiredreview, and even then that the filings were not filed timely. If so, we wouldbe ineligible to use Forms S–2 and S–3 to register securities (or amend anexisting registration statement) until all required reports under the ExchangeAct have been timely filed for the 12 months prior to the filing of theregistration statement or amendment. While ineligibility to use Form S–2 or S–3would involve additional expense should we need to file or amend a registrationstatement, we do not view ineligibility as having a material adverse effect onour access to capital resources. Second, the safe harbor from registrationcontained in Rule 144 under the Securities Act of 1933 may be unavailable toour executive officers, directors and other affiliates wishing to sell oursecurities. We have instructed such persons not to resell securities inreliance upon Rule 144 until otherwise advised. As a precautionary matter, tobe

 

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consistent withthese instructions, on the cover page of this filing, we have checked the boxthat indicates that we have not made all filings required in the last 90 days.

 

The Company isincluding the following cautionary statement in this Report to make applicable,and to take advantage of, the safe harbor provisions of the Private SecuritiesLitigation Reform Act of 1995 for any forward-looking statements made by, or onbehalf of, the Company.  Forward-lookingstatements include statements concerning plans, objectives, goals, strategies,future events or performance and underlying assumptions and other statements,which are other than statements of historical facts.  From time to time, the Company and itsrepresentatives may publish or otherwise make available forward-lookingstatements of this nature.  All suchforward-looking statements, whether written or oral, and whether made by or onbehalf of the Company, are expressly qualified by the following cautionary statements.  Forward-looking statements involve risks anduncertainties, which could cause actual results or outcomes to differmaterially from those expressed in the forward-looking statements.  Such forward-looking statements are expectedto be based on various assumptions, many of which are based, in turn, uponfurther assumptions.  There can be noassurance that management’s expectations, beliefs or projections will occur orbe achieved or accomplished.  In additionto other factors and matters discussed elsewhere in this Report and in theCompany’s other public filings and statements, the following are importantfactors that, in the view of the Company, could cause actual results to differmaterially from those discussed in the Company’s forward-looking statements.  The Company disclaims any obligation toupdate any forward-looking statements, or the following factors, to reflectevents 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 Company expectsfaster sales growth in its international market versus its United Statesmarket, 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 earningsresults can be negatively impacted by the worldwide economic environment,particularly the Canadian, United States and European economies. There can beno assurances that the Company’s financial results will not be materiallyadversely affected by these factors in the future.  The Company’s historical growth has been duein part to acquisitions and management continues to consider additionalstrategic acquisitions.  There can be noassurances that management will continue to identify suitable acquisitioncandidates, consummate acquisitions on terms favorable to the Company, financeacquisitions or successfully integrate acquired operations.

 

Risks Associated with International Sales andForeign-Sourced Products

 

Our internationalsales growth rate has outpaced our United States growth rate in recentyears.  Moreover, the Company sources aportion of its products in all of its business segments from independentmanufacturers in the Pacific Rim, Europe and Mexico.  For these reasons, we are subject to thefollowing risks associated with international manufacturing and sales:  fluctuations in currency exchange rates,economic or political instability, international public heath crises,transportation costs and delays, difficulty in maintaining quality control,

 

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restrictivegovernmental actions, nationalizations, the laws and policies of the UnitedStates, Canada and certain European countries affecting the importation ofgoods (including duties, quotas and taxes) and the trade and tax laws of othernations.

 

Ability to Respond to Increased Product Demand

 

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

 

Risk of Shortages of Raw Materials

 

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

 

Dependence on Key Corporate Management Personnel

 

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

 

Risk of Increased Competition

 

Our business ishighly competitive both in terms of pricing and new product introductions.  The worldwide market for home expressionsproducts is highly fragmented with numerous suppliers serving one or more ofthe distribution channels served by the Company.  In addition, the Company competes for directselling consultants with other direct selling companies.  Because there are relatively low barriers toentry in all of our business segments, the Company may face increasedcompetition from other companies, some of which may have substantially greaterfinancial or other resources than those available to us.  Competition includes companies

selling candlesmanufactured 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.

 

# **Risks Related toInformation Technology Systems**

 

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

 

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**Item 6.     Exhibits**

 

a)              Exhibits

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

 

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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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