form10q_q3fy09.htm




 UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549

FORM 10-Q
(Mark One)
 
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
   
For the quarterly period ended October 31, 2008
 
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 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)

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   x          No   o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer  o
 
Accelerated filer  x
 
Non-Accelerated filer  o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
 
Yes   o          No   x

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

35,563,940 Common Shares as of November 30, 2008









 


BLYTH, INC.

INDEX
   
Page
 
       
Part I.   Financial Information
   
       
Item 1.
Financial Statements (Unaudited):
   
       
 
3
 
       
 
4-5
 
       
 
6
 
       
 
7
 
       
 
8-21
 
       
Item 2.
 
22-29
 
       
Item 3.
30-31
 
       
Item 4.
32
 
       
Part II.   Other Information
   
       
Item 1.
33
 
       
Item 1A.
33-34
 
       
Item 2.
35
 
       
Item 3.
35
 
       
Item 4.
35
 
       
Item 5.
36
 
       
Item 6.
36
 
       
       
 
37
 
       



 
2


           
Item I.   FINANCIAL STATEMENTS
           
BLYTH, INC. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED BALANCE SHEETS
 
             
   
October 31,
   
January 31,
 
   
2008
   
2008
 
(In thousands, except share and per share data)
 
(Unaudited)
       
ASSETS
           
Current assets:
           
Cash and cash equivalents
  $ 62,409     $ 163,021  
Short-term investments
    9,650       30,375  
Accounts receivable, less allowance for doubtful receivables of $2,554 and $2,006 respectively
    65,699       35,054  
Inventories
    172,180       132,585  
Prepaid expenses
    18,749       20,134  
Other current assets
    30,414       11,834  
Deferred income taxes
    39,505       36,841  
       Total current assets
    398,606       429,844  
Property, plant and equipment, at cost:
               
   Less accumulated depreciation of $213,440 and $214,874, respectively
    124,754       140,021  
Other assets:
               
Investments
    15,426       22,315  
Goodwill
    15,678       31,854  
Other intangible assets, net of accumulated amortization of $10,434 and $9,250, respectively
    20,503       31,500  
Deposits and other assets
    11,019       11,888  
       Total other assets
    62,626       97,557  
       Total assets
  $ 585,986     $ 667,422  
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Current liabilities:
               
Current maturities of long-term debt
  $ 39,421     $ 928  
Accounts payable
    45,814       55,167  
Accrued expenses
    76,649       78,045  
Dividends payable
    9,604       -  
Income taxes payable
    11,525       10,926  
       Total current liabilities
    183,013       145,066  
Deferred income taxes
    23,197       29,563  
Long-term debt, less current maturities
    107,906       157,887  
Other liabilities
    35,989       35,838  
Commitments and contingencies
    -       -  
Stockholders' equity:
               
Preferred stock - authorized 10,000,000 shares of $0.01 par value; no shares issued
    -       -  
Common stock - authorized 100,000,000 shares of $0.02 par value;
               
issued 50,932,836 shares and 50,922,460 shares, respectively
    1,019       1,018  
Additional contributed capital
    140,079       138,163  
Retained earnings
    473,892       522,328  
Accumulated other comprehensive income
    19,869       25,444  
Treasury stock, at cost, 15,368,896 shares and 14,557,351 shares, respectively
    (398,978 )     (387,885 )
       Total stockholders' equity
    235,881       299,068  
       Total liabilities and stockholders' equity
  $ 585,986     $ 667,422  
The accompanying notes are an integral part of these financial statements.
 
 
 
3



 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
(Unaudited)
 
Nine months ended October 31 (In thousands, except per share data)
 
2008
   
2007
 
Net sales
  $ 737,439     $ 791,107  
Cost of goods sold
    337,751       383,868  
    Gross profit
    399,688       407,239  
Selling
    282,203       273,122  
Administrative and other
    93,019       99,351  
Goodwill and other intangibles impairment
    45,851       -  
    Total operating expense
    421,073       372,473  
    Operating (loss) profit
    (21,385 )     34,766  
Other expense (income):
               
     Interest expense
    7,419       10,933  
     Interest income
    (3,252 )     (6,003 )
     Foreign exchange and other
    6,007       334  
     Total other expense
    10,174       5,264  
     (Loss) earnings before income taxes and minority interest
    (31,559 )     29,502  
Income tax (benefit) expense
    (2,900 )     7,940  
     (Loss) earnings before minority interest
    (28,659 )     21,562  
Minority interest
    88       81  
Net (loss) earnings
  $ (28,747 )   $ 21,481  
Basic:
               
Net (loss) earnings per common share
  $ (0.80 )   $ 0.55  
Weighted average number of shares outstanding
    35,937       39,183  
Diluted:
               
Net (loss) earnings per common share
  $ (0.80 )   $ 0.54  
Weighted average number of shares outstanding
    35,937       39,525  
The accompanying notes are an integral part of these financial statements.
 

4

BLYTH, INC. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
(Unaudited)
 
Three months ended October 31 (In thousands, except per share data)
 
2008
   
2007
 
Net sales
  $ 250,805     $ 285,869  
Cost of goods sold
    118,555       141,704  
    Gross profit
    132,250       144,165  
Selling
    95,838       100,477  
Administrative and other
    29,971       33,247  
Goodwill and other intangibles impairment
    45,851       -  
    Total operating expense
    171,660       133,724  
    Operating (loss) profit
    (39,410 )     10,441  
Other expense (income):
               
     Interest expense
    2,547       3,587  
     Interest income
    (897 )     (1,953 )
     Foreign exchange and other
    1,770       485  
     Total other expense
    3,420       2,119  
     (Loss) earnings before income taxes and minority interest
    (42,830 )     8,322  
Income tax (benefit) expense
    (9,948 )     1,717  
     (Loss) earnings before minority interest
    (32,882 )     6,605  
Minority interest
    30       28  
Net (loss) earnings
  $ (32,912 )   $ 6,577  
Basic:
               
Net (loss) earnings per common share
  $ (0.93 )   $ 0.17  
Weighted average number of shares outstanding
    35,564       38,748  
Diluted:
               
Net (loss) earnings per common share
  $ (0.93 )   $ 0.17  
Weighted average number of shares outstanding
    35,564       39,067  
The accompanying notes are an integral part of these financial statements.
 

5


BLYTH, INC. AND SUBSIDIARIES
 
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 
(Unaudited)
 
 
                                   
                           
Accumulated
       
         
Additional
               
Other
       
   
Common
   
Contributed
   
Retained
   
Treasury
   
Comprehensive
       
(In thousands)   
Stock
   
Capital
   
Earnings
   
Stock
   
Income (Loss)
   
Total
 
                                     
For the Nine months ended October 31, 2007:
                               
Balance, February 1, 2007
  $ 1,013     $ 129,367     $ 534,897     $ (323,714 )   $ 22,130     $ 363,693  
FIN 48 adoption adjustment
                    (2,769 )                     (2,769 )
Adjusted balance, February 1, 2007
    1,013       129,367       532,128       (323,714 )     22,130       360,924  
Net earnings for the period
                    21,481                       21,481  
Foreign currency translation  adjustments
                                    7,294       7,294  
Net unrealized gain on certain investments
                                         
    (net of tax $208)
                                    340       340  
Net loss on cash flow hedging instruments
                                         
    (net of tax of $859)
                                    (1,595 )     (1,595 )
      Comprehensive income
                                            27,520  
Common stock issued in connection with
                                         
     long-term incentive plan
    6       7,073                               7,079  
Common stock cancelled in connection with
                                         
     long-term incentive plan
    (1 )                                     (1 )
Tax benefit from stock options
            303                               303  
Amortization of unearned compensation
      947                               947  
Dividends
                    (20,865 )                     (20,865 )
Treasury stock purchases
                            (35,185 )             (35,185 )
Balance, October 31, 2007
  $ 1,018     $