YANKEE CANDLE CO INC, 424B3, 1999-07-01

YANKEE CANDLE CO INC
424B3, 1999-07-01
MISCELLANEOUS MANUFACTURING INDUSTRIES

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<PAGE>
Filed Pursuant to Rule 424(b)(3)
Registration No. 333-76397
PROSPECTUS

12,500,000 SHARES

[LOGO]

THE YANKEE CANDLE COMPANY, INC.

COMMON STOCK

-----------------

THE YANKEE CANDLE COMPANY, INC. IS OFFERING 6,000,000 SHARES AND THE SELLING
STOCKHOLDERS ARE OFFERING 6,500,000 SHARES. FOR INFORMATION RELATING TO THE
SELLING STOCKHOLDERS, SEE "PRINCIPAL AND SELLING STOCKHOLDERS" ON PAGE 54. THIS
IS OUR INITIAL PUBLIC OFFERING AND NO PUBLIC MARKET CURRENTLY EXISTS FOR OUR
SHARES.

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OUR COMMON STOCK HAS BEEN APPROVED FOR LISTING ON THE NEW YORK STOCK EXCHANGE
UNDER THE SYMBOL "YCC."

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INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 7.

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PRICE $18 A SHARE

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<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS YANKEE CANDLE STOCKHOLDERS
------------------ ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
PER SHARE....................... $18.00 $1.17 $16.83 $16.83
TOTAL........................... $225,000,000 $14,625,000 $100,980,000 $109,395,000
</TABLE>

THE SECURITIES AND EXCHANGE COMMISSION AND STATE SECURITIES REGULATORS HAVE NOT
APPROVED OR DISAPPROVED THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

OUR SELLING STOCKHOLDERS HAVE GRANTED THE UNDERWRITERS THE RIGHT TO PURCHASE UP
TO AN ADDITIONAL 1,875,000 SHARES TO COVER OVER-ALLOTMENTS. MORGAN STANLEY & CO.
INCORPORATED EXPECTS TO DELIVER THE SHARES TO PURCHASERS ON JULY 7, 1999.

-------------------

MORGAN STANLEY DEAN WITTER

GOLDMAN, SACHS & CO.

MERRILL LYNCH & CO.

JULY 1, 1999
<PAGE>
[PICTURES OF PRODUCTS]

EDGAR ARTWORK DESCRIPTIONS

Outside Pull-Out of Prospectus:
Caption: A Sampling of Yankee Candle-Registered Trademark- Product Lines
Six pictures of a full line of Yankee Candle-Registered Trademark- products
featuring the Macintosh-Registered Trademark- fragrance.

Upper left hand corner:
Caption: Experience the Fragrance

- Picture showing jar candles, scented candles in decorative glass jars of
22 oz., 14.5 oz. and 3.7 oz. sizes. The picture also includes a "peel
and sniff" scent label featuring Macintosh-Registered Trademark- apple
fragrance.

Upper right hand corner:
Caption: Samplers-Registered Trademark-
Picture showing an assortment of votive candles.

Middle right:
Caption: Wax Potpourri Tarts-Registered Trademark-

- Picture showing an assortment of scented wax without wicks that releases
its fragrance when melted and warmed in a potpourri pot.

Lower left hand corner:
Caption: Scented Pillars

- Picture showing three sizes of grooved scented pillars.

Lower center:
Caption: Scented Tapers

- Picture showing three sizes of scented tapers.

Lower right hand corner:
Caption: Scented Tea Lights

- Picture showing an assortment of small, colored and scented candles in
clear cups.

Inside Pull-Out of Prospectus:
Caption: Yankee Candle-Registered Trademark- Retail Locations

Top:
Caption: Flagship Store, South Deerfield, Massachusetts

- View of our flagship retail store.

Middle left:

- View of retail store.

Middle right:

- View of retail store.

Bottom:
Caption: Yankee Candle-Registered Trademark- Vertical Display System for
Wholesale Dealers

- View of our 12-foot hutch.

Inside Front Cover of Prospectus:
Caption: Yankee Candle-Registered Trademark- Distribution Points

- Map of distribution points, indicating (1) wholesale sites, (2) current
retail sites and (3) signed/negotiated leases for new retail sites for
1999.
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
Prospectus Summary............................... 1
Risk Factors..................................... 7
Use of Proceeds.................................. 11
Dividend Policy.................................. 11
Certain Information.............................. 12
Capitalization................................... 13
Dilution......................................... 14
Selected Financial and Other Data................ 15
Unaudited Pro Forma Consolidated Condensed
Financial Statements........................... 17
Management's Discussion and Analysis of Financial
Condition and Results of Operations............ 23

Business of Yankee Candle........................ 33
Management....................................... 44
Principal and Selling Stockholders............... 54
Description of the Credit Agreement.............. 56
Description of Capital Stock..................... 57
Shares Eligible for Future Sale.................. 60
United States Federal Tax Considerations for
Non-United States Holders...................... 61
Underwriters..................................... 65
Legal Matters.................................... 69
Experts.......................................... 69
Where You Can Find More Information.............. 70
Index to Consolidated Financial
Statements..................................... F-1
</TABLE>

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The Yankee Candle Company, Inc. was incorporated in Massachusetts in 1976.
Our principal executive offices are located at 102 Christian Lane, Whately,
Massachusetts 01093 and our telephone number at that address is (413) 665-8306.
Our World Wide Web site address is www.yankeecandle.com. The information in the
website is not incorporated by reference.

-------------------

You should rely only on the information contained in this prospectus. We
have not authorized anyone to provide you with information different from that
contained in this prospectus. We and the selling stockholders are offering to
sell, and seeking offers to buy, shares of common stock only in jurisdictions
where offers and sales are permitted. The information contained in this
prospectus is accurate only as of the date of this prospectus, regardless of the
time of delivery of this prospectus or of any sale of common stock.
-------------------

Until July 26, 1999, all dealers that buy, sell or trade Yankee Candle's
common stock, whether or not participating in this offering, may be required to
deliver a prospectus. This delivery requirement is in addition to the dealers'
obligation to deliver a prospectus when acting as underwriters and with respect
to their unsold allotments or subscriptions.

i
<PAGE>
PROSPECTUS SUMMARY

THIS SUMMARY HIGHLIGHTS THE MOST IMPORTANT FEATURES OF THIS OFFERING AND THE
INFORMATION CONTAINED ELSEWHERE IN THIS PROSPECTUS. THIS SUMMARY IS NOT COMPLETE
AND DOES NOT CONTAIN ALL OF THE INFORMATION THAT YOU SHOULD CONSIDER BEFORE
INVESTING IN OUR COMMON STOCK. YOU SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY,
ESPECIALLY THE RISKS OF INVESTING IN OUR COMMON STOCK DISCUSSED UNDER "RISK
FACTORS."

WE ARE OFFERING 6,000,000 SHARES OF OUR COMMON STOCK AND THE SELLING
STOCKHOLDERS ARE OFFERING 6,500,000 SHARES OF OUR COMMON STOCK IN THIS OFFERING.
THIS IS OUR INITIAL PUBLIC OFFERING. WE WILL RECEIVE FROM THIS OFFERING AN
ESTIMATED $97.5 MILLION OF NET PROCEEDS, AFTER DEDUCTING UNDERWRITING DISCOUNTS
AND COMMISSIONS AND EXPENSES INCURRED IN CONNECTION WITH THIS OFFERING. THESE
NET PROCEEDS WILL BE USED TO REPAY OUTSTANDING INDEBTEDNESS. THE SELLING
STOCKHOLDERS WILL RECEIVE IN THE AGGREGATE AN ESTIMATED $109.4 MILLION OF NET
PROCEEDS, AFTER DEDUCTING UNDERWRITING DISCOUNTS AND COMMISSIONS.

YANKEE CANDLE

We are the leading designer, manufacturer, wholesaler and retailer of
premium scented candles in the growing giftware industry. We have a 30-year
history of offering our distinctive products and marketing them as affordable
luxuries and consumable gifts. Our current products are available in up to 150
fragrances and include a wide variety of jar candles,
Samplers-Registered Trademark-, pillars, tapers and other candle products,
marketed primarily under our trade names Housewarmer-Registered Trademark- and
Country Kitchen-Registered Trademark-, as well as a wide range of candle
accessories.

We sell our candles through our wholesale customers who have approximately
12,000 gift store locations nationwide and through our rapidly expanding retail
base of 85 company-owned and operated stores in 26 states as of June 30, 1999.
Our 90,000 square foot flagship store in South Deerfield, Massachusetts attracts
an estimated 2.5 million visitors a year. We also sell our products through our
direct mail catalogs, Internet website (www.yankeecandle.com), international
distributors and our distribution center located in the United Kingdom.

We have experienced 27% annual revenue growth over the last five years and,
in 1998, our sales reached $184.5 million. We believe our strong growth is based
on the high quality of our products, the efficiency of our manufacturing
operations and the strength of our retail and wholesale sales capabilities.

Michael Kittredge founded our business in 1969, when he was just seventeen
years old, by making his first candle in his family kitchen. He grew the
business steadily and, together with our dedicated management team, has built
Yankee Candle into a leader in the premium scented candle market. Most of our
current senior managers have been with us for 17 years. In April 1998, Yankee
Candle was recapitalized and two partnerships affiliated with Forstmann Little &
Co. and Yankee Candle management became the owners of a 90% equity interest.
Since the 1998 recapitalization, we have reinvested our capital to actively
pursue our wholesale and retail growth strategies. To facilitate this growth, we
have added several key employees, expanded our production capacity, upgraded our
warehouse management and information systems, and opened our distribution center
in the United Kingdom.

INDUSTRY OVERVIEW

We operate in the rapidly growing scented candle segment of the giftware
industry. Independent industry sources estimate that:

- the domestic giftware industry has grown on average 12% per year since the
early 1990's to reach $47 billion in 1997,

- the domestic market for candles has grown on average 10 to 15% per year
since the early 1990's to reach $2.1 billion in 1998, and

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- the scented candle segment, in which we compete, represents the fastest
growing part of the candle and home fragrancing industry.

The scented candle market is expected to continue to grow based on favorable
consumer trends including increased purchases for home decor and gifts and the
year-round usage of scented candles as an affordable luxury.

OUR COMPETITIVE STRENGTHS

WE HAVE A STRONG BRAND IDENTITY AS THE LEADING PREMIUM CANDLE COMPANY WITH A
LOYAL CUSTOMER BASE. Since 1993 we have consistently been ranked number one in
sales in the domestic candle category and in the top two for product re-orders
across all giftware categories by GiftBeat, a giftware industry newsletter. We
also had 74% of our retail customers rank us as better than other candle brands
according to Unity Marketing.

WE HAVE A WELL-ESTABLISHED, NATIONAL WHOLESALE CUSTOMER BASE. Our brand
name, the popularity and profitability of our merchandise and our successful
product display system have made us the top-selling product for many of our
wholesale customers, 65% of whom have been our customers for over five years.

WE HAVE A DEMONSTRATED ABILITY TO CARRY OUT OUR RETAIL EXPANSION. Our strong
wholesale presence and nationally recognized brand have enabled us to
successfully roll-out our retail stores. All but one of our retail stores have
been profitable beginning in their first year of operation. As of June 30, 1999,
we had 85 retail stores in 26 states. Since 1996 we have experienced 38% annual
growth in retail sales and comparable store growth of over 16%.

WE DESIGN, MANUFACTURE AND DISTRIBUTE OUR OWN PRODUCTS. This enables us to
ensure the highest quality products, prompt delivery to our wholesale customers
and retail stores and high margins, all of which give us a significant advantage
over our competitors.

OUR CHAIRMAN AND SENIOR MANAGEMENT HAVE A COMBINED 80 YEARS OF EXPERIENCE IN
THE CANDLE INDUSTRY AND OVER 90 YEARS OF EXPERIENCE IN THE RETAIL SECTOR. Three
of our top four executives have each been with Yankee Candle for 17 years and
many of our key managers in manufacturing, site selection and product
development have tenures of over 15 years with our company.

OUR GROWTH STRATEGY

WE PLAN TO RAPIDLY EXPAND OUR RETAIL STORE BASE. As of June 30, 1999, we
have opened 23 stores in 1999 and we plan to open approximately 17 additional
stores by the end of the year. We believe that the transferability of our
retailing format, our proven record of successfully opening new stores, our
continuing investment in training and management information systems and our
focus on high visibility retail locations in premium malls all contribute to our
ability to rapidly and successfully expand our retail stores.

WE PLAN TO CONTINUE TO GROW OUR SALES THROUGH OUR WHOLESALE DISTRIBUTION
CHANNEL. We are committed to continuing to grow our wholesale business, which
grew by over 22% annually over the last three years. We plan to add new
locations, increase the average order size and re-order frequency of our
existing customers and invest significant capital in new promotional programs,
improved telemarketing systems and enhanced customer service.

WE PLAN TO EXPAND OUR INTERNATIONAL SALES. We currently sell our products
through international distributors and, in June 1998, we established our own
European wholesale subsidiary in order to take advantage of the $1 billion
European candle market.

WE PLAN TO EXPAND OUR DIRECT MAIL CATALOG AND INTERNET OPERATIONS. We expect
our sales to grow through our direct mail catalog and Internet website as a
result of demographic and lifestyle changes in the consumer population.

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WE PLAN TO CONTINUE TO INTRODUCE NEW PRODUCTS. As a product and market
innovator in the premium scented candle segment of the giftware industry, we
maintain a strong in-house product design and development team and plan to
introduce 12 new fragrances and several new candle lines in 1999.

THE 1998 RECAPITALIZATION AND THE REORGANIZATION IN CONNECTION WITH THIS
OFFERING

In April 1998, we completed a recapitalization of Yankee Candle. As a result
of the 1998 recapitalization and a reorganization occurring in connection with
this offering, the Forstmann Little partnerships will own approximately 85% of
our common stock and directors, officers and employees of Yankee Candle,
including Michael Kittredge, will own the balance immediately prior to the
closing of this offering. After giving effect to this offering, the Forstmann
Little partnerships will own 66.1% of our common stock and the other existing
stockholders will own 11.0%.

3
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THE OFFERING

<TABLE>
<S> <C>
Common stock offered by:
Yankee Candle................. 6,000,000 shares
The selling stockholders...... 6,500,000 shares
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Total....................... 12,500,000 shares
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Common stock to be outstanding
after the offering............ 54,498,629 shares

Use of proceeds................. The net proceeds to Yankee Candle from the offering are
estimated to be approximately $97.5 million. We will use the
net proceeds from the offering, together with proceeds of
$220 million from a new credit facility and available cash,
to redeem $320 million aggregate principal amount of Yankee
Candle's outstanding subordinated debentures.

NYSE symbol..................... YCC
</TABLE>

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Unless we specifically state otherwise, the information in this prospectus
does not take into account the sale of up to 1,875,000 shares of common stock
which the underwriters have the option to purchase from the selling stockholders
to cover over-allotments.

The number of shares of our common stock that will be outstanding
immediately after the offering listed above includes 53,150 shares of common
stock, or 68,482 shares if the over-allotment option is exercised, which are
expected to be issued in connection with the offering upon exercise of
outstanding stock options and which shares will be sold in the offering. At the
closing of the offering, the number will not include 501,371 shares issuable
upon the exercise of additional outstanding stock options, with a weighted
average exercise price of $5.59.

4
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SUMMARY CONSOLIDATED FINANCIAL AND OTHER DATA

Before the recapitalization on April 27, 1998, Yankee Candle was an S
Corporation for federal and state income tax purposes. As a result, our taxable
earnings were taxed directly to our then existing sole stockholder. Since the
1998 recapitalization, Yankee Candle has been a C Corporation subject to federal
and state income taxes.

The data set forth for the following items assumes that Yankee Candle was
subject to federal and state income taxes and was taxed as a C Corporation at
the effective tax rates that would have applied for all periods:

- pro forma provision (benefit) for income taxes,

- pro forma net income (loss), and

- pro forma earnings per share (basic and diluted).

Pro forma statement of operations data, as adjusted for the 1998
recapitalization, the refinancing of the subordinated debentures and the
offering, also gives effect to the 1998 recapitalization, the refinancing and
the offering as if they had occurred on January 1, 1998. The balance sheet data,
as adjusted for the refinancing and the offering, gives effect to the
refinancing and the offering as if they had occurred on December 31, 1998.

<TABLE>
<CAPTION>
THREE THIRTEEN
YEAR ENDED DECEMBER 31, MONTHS WEEKS
------------------------------- ENDED ENDED
1996 1997 1998 MARCH 31, 1998 APRIL 3, 1999
--------- --------- --------- --------------- -------------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENT OF OPERATIONS DATA:
Net sales........................................... $ 112,199 $ 144,103 $ 184,477 $ 35,313 $ 46,590
Cost of goods sold.................................. 53,207 62,069 79,105 16,400 20,804
--------- --------- --------- ------- -------------
Gross profit........................................ 58,992 82,034 105,372 18,913 25,786
Selling expenses.................................... 23,244 26,935 30,546 7,480 8,509
General and administrative expenses................. 21,687 27,031 19,753 4,006 6,213
Bonus related to the 1998 recapitalization.......... -- -- 61,263 -- --
--------- --------- --------- ------- -------------
Income (loss) from operations....................... 14,061 28,068 (6,190) 7,427 11,064
Interest income..................................... (165) (151) (219) (48) (290)
Interest expense.................................... 1,913 2,154 16,268 369 5,768
Other (income) expense.............................. 221 334 737 (11) (44)
--------- --------- --------- ------- -------------
Income (loss) before provision for income taxes..... 12,092 25,731 (22,976) 7,117 5,630
Provision for income taxes.......................... 410 1,360 9,656 -- 2,252
--------- --------- --------- ------- -------------
Net income (loss)................................... $ 11,682 $ 24,371 $ (32,632) $ 7,117 $ 3,378
--------- --------- --------- ------- -------------
--------- --------- --------- ------- -------------
Historical basic earnings per share................. $ 0.12 $ 0.25 $ (0.51) $ 0.07 $ 0.07
--------- --------- --------- ------- -------------
--------- --------- --------- ------- -------------
Historical diluted earnings per share............... $ 0.12 $ 0.25 $ (0.51) $ 0.07 $ 0.07
--------- --------- --------- ------- -------------
--------- --------- --------- ------- -------------

Pro forma provision (benefit) for income taxes...... 4,830 10,686 (8,731) 2,704
Pro forma net income (loss)......................... $ 7,262 $ 15,045 $ (14,245) $ 4,413
--------- --------- --------- -------
--------- --------- --------- -------
Pro forma basic earnings per share.................. $ 0.07 $ 0.15 $ (0.22) $ 0.05
--------- --------- --------- -------
--------- --------- --------- -------
Pro forma diluted earnings per share................ $ 0.07 $ 0.15 $ (0.22) $ 0.05
--------- --------- --------- -------
--------- --------- --------- -------
Weighted average basic shares outstanding........... 98,005 98,005 64,458 98,005 46,821
--------- --------- --------- ------- -------------
--------- --------- --------- ------- -------------
Weighted average diluted shares outstanding......... 98,005 98,005 64,458 98,005 48,826
--------- --------- --------- ------- -------------
--------- --------- --------- ------- -------------

PRO FORMA STATEMENT OF OPERATIONS DATA, AS ADJUSTED
FOR THE 1998 RECAPITALIZATION, THE REFINANCING AND
THE OFFERING:
Net income.......................................... $ 23,326 $ 4,351
Interest expense.................................... 16,933 4,147
Basic earnings per common share..................... $ 0.33 $ 0.08
--------- -------------
--------- -------------
Diluted earnings per common share................... $ 0.33 $ 0.08
--------- -------------
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Weighted average basic shares outstanding........... 70,458 52,821
--------- -------------
--------- -------------
Weighted average diluted shares outstanding......... 71,146 54,826
--------- -------------
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</TABLE>

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<TABLE>
<CAPTION>
THIRTEEN
YEAR ENDED DECEMBER 31, THREE MONTHS WEEKS
------------------------------- ENDED ENDED
1996 1997 1998 MARCH 31, 1998 APRIL 3, 1999
--------- --------- --------- --------------- -------------
<S> <C> <C> <C> <C> <C>
(DOLLARS IN THOUSANDS)

OTHER DATA:
Number of retail stores (at period end)............ 34 47 62 49 67
Comparable store growth............................ 18.4% 16.4% 16.5% 15.2% 17.9%
Gross profit margin................................ 52.6% 56.9% 57.1% 53.6% 55.4%
Adjusted EBITDA margin(1)(2)(3).................... 24.5% 29.2% 32.1% 23.8% 26.7%
Depreciation and amortization...................... $ 3,094 $ 3,581 $ 4,662 $ 981 $ 1,305
Capital expenditures............................... 10,076 9,173 9,433 1,604 4,242

CASH FLOW DATA:
EBITDA(1).......................................... $ 16,934 $ 31,315 $ (2,865) $ 8,419 $ 12,209
Adjusted EBITDA(2)................................. 27,451 42,139 59,251 8,408 12,448
Net cash flows from operating activities........... 17,230 30,035 (11,578) 7,156 1,345
Net cash flows from investing activities........... (10,987) (9,961) (9,305) (1,265) (3,933)
Net cash flows from financing activities........... (9,112) (13,541) 43,917 (10,637) (271)
</TABLE>

<TABLE>
<CAPTION>
AS OF APRIL 3,
1999
AS ADJUSTED FOR
AS OF DECEMBER 31, AS OF THE REFINANCING
------------------------------- APRIL 3, AND THE
1996 1997 1998 1999 OFFERING
--------- --------- --------- --------- ---------------
<S> <C> <C> <C> <C> <C>
(IN THOUSANDS)

BALANCE SHEET DATA:
Cash and cash equivalents.............................. $ 844 $ 7,377 $ 30,411 $ 27,560 $ 20,260
Working capital (excluding cash and cash
equivalents)......................................... 1,817 (12,487) 493 4,079 6,237
Total assets........................................... 59,550 73,096 275,345 284,700 279,164
Total debt............................................. 12,045 25,264 320,000 320,000 220,000
Total stockholders' equity (deficit)................... 37,180 34,791 (68,591) (65,216) 29,248
- ------------------------------
<FN>
(1) EBITDA represents earnings before interest, income taxes, depreciation and amortization. For this purpose,
amortization does not include amortization of deferred financing costs of $600 in 1998 and $204 for the
thirteen weeks ended April 3, 1999, which amounts are included in interest expense. EBITDA is presented because
it is a widely accepted financial indicator used by certain investors and analysts to analyze and compare
companies on the basis of operating performance. EBITDA as presented may not be comparable to similarly titled
measures reported by other companies since not all companies necessarily calculate EBITDA in an identical
manner and therefore is not necessarily an accurate means of comparison between companies. EBITDA is not
intended to represent cash flows for the period or funds available for management's discretionary use nor has
it been represented as an alternative to operating income as an indicator of operating performance and should
not be considered in isolation or as a substitute for measures of performance prepared in accordance with
generally accepted accounting principles.
(2) Adjusted EBITDA reflects adjustments to eliminate (a) the bonus of $61,263 in 1998 related to the 1998
recapitalization, (b) other (income) expense, (c) non-cash stock based compensation, and (d) compensation and
benefits, net of current annual compensation and benefits of $338, paid to the former sole stockholder of the S
Corporation of $10,296 and $10,490 for 1996 and 1997, respectively. The comparable amounts for 1994 and 1995 of
$8,354 and $7,156, respectively, are not reflected above but are included in the adjusted EBITDA calculation in
"Selected Financial and Other Data." Adjusted EBITDA does not reflect adjustments to eliminate commissions paid
through March 1998 to independent manufacturer representatives, which were replaced by a direct sales force.
See "Management's Discussion and Analysis of Financial Condition and Results of Operations" for further
discussion.
(3) Adjusted EBITDA margin reflects adjusted EBITDA as a percentage of net sales.
</FN>
</TABLE>

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RISK FACTORS

INVESTING IN OUR COMMON STOCK WILL PROVIDE YOU WITH AN EQUITY OWNERSHIP
INTEREST IN YANKEE CANDLE. THE VALUE OF YOUR INVESTMENT MAY INCREASE OR
DECREASE. YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING FACTORS BEFORE DECIDING TO
INVEST IN SHARES OF OUR COMMON STOCK.

WE MAY NOT BE ABLE TO GROW OUR BUSINESS AS PLANNED.

We intend to continue to pursue a business strategy of increasing sales and
earnings by expanding our retail and wholesale operations both in the United
States and internationally. Our retail growth strategy depends in large part on
our ability to open new stores in both existing and new geographic markets.
Since we are planning to open more stores each year than we have in the past, we
may not be able to achieve our planned growth or sustain our financial
performance. Our ability to implement our growth strategy successfully will also
be dependent in part on factors beyond our control, including changes in
consumer preferences and in our competitive environment. Our ability to
anticipate changes in the candle and giftware industries, and identify industry
trends will be critical factors in our ability to remain competitive.

We expect that, as we grow, it will become more difficult to maintain our
growth rate. We cannot assure you that we will continue to grow at a rate
comparable to our historic growth rate or that our historic financial
performance will continue as we grow.

WE FACE SIGNIFICANT COMPETITION IN THE GIFTWARE INDUSTRY, WHICH COULD ADVERSELY
AFFECT OUR FUTURE OPERATING RESULTS, FINANCIAL CONDITION AND LIQUIDITY AND OUR
ABILITY TO CONTINUE TO GROW OUR BUSINESS.

We compete generally for the disposable income of consumers with other
producers in the $47 billion giftware industry. The giftware industry is highly
competitive with a large number of both large and small participants. Our
products compete with other scented and unscented candle products and with other
gifts within a comparable price range, like boxes of candy, flowers, wine, fine
soap and related merchandise. Our retail stores compete with franchised candle
store chains, specialty candle stores and gift and houseware retailers. Some of
our competitors are part of large, diversified companies which have greater
financial resources and a wider range of product offerings than we do. This
competitive environment could adversely affect our future revenues and profits,
financial condition and liquidity and our ability to continue to grow our
business.

WE INCURRED INDEBTEDNESS IN CONNECTION WITH OUR 1998 RECAPITALIZATION, AND
SERVICING OUR INDEBTEDNESS COULD REDUCE FUNDS AVAILABLE TO GROW OUR BUSINESS.

We incurred approximately $330 million of indebtedness in connection with
the 1998 recapitalization, of which $200 million was used to repurchase common
stock from Michael Kittredge. After the application of the proceeds of this
offering, we will have long-term debt of $220 million on a pro forma basis as of
April 3, 1999. Although we believe that our cash flow from operations and our
available financing should be sufficient to meet our anticipated requirements
for growing our business and servicing our debt, our level of indebtedness could
reduce funds available to grow our business in the future.

OUR SUCCESS DEPENDS ON OUR SENIOR EXECUTIVE OFFICERS, THE LOSS OF WHOM COULD
DISRUPT OUR BUSINESS.

Our success is substantially dependent upon the retention of our senior
executive officers. We do not have employment agreements with any of our senior
executive officers, except our Chief Financial Officer. If our senior executive
officers become unable or unwilling to participate in the business of Yankee
Candle, our future business and financial performance could be materially
affected.

BECAUSE WE ARE NOT A DIVERSIFIED COMPANY AND ARE DEPENDENT UPON ONE INDUSTRY, WE
HAVE LESS FLEXIBILITY IN REACTING TO UNFAVORABLE CONSUMER TRENDS, ADVERSE
ECONOMIC CONDITIONS OR BUSINESS CYCLES.

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THE LOSS OF OUR MANUFACTURING FACILITY WOULD DISRUPT OUR OPERATIONS.

We rely exclusively on our manufacturing facility in Whately, Massachusetts
to produce our candle products. Because most of our machinery is designed or
customized by us to manufacture our products and because we have strict quality
control standards for our products, the loss of our manufacturing facility, due
to natural disaster or otherwise, would materially affect our operations.
Although our manufacturing facility is adequately insured, we believe it would
take a minimum of nine months to replace the plant and machinery to a level
equivalent to their current level of production and quality control standards.

WE MAY EXPERIENCE A DECLINE IN OUR RETAIL COMPARABLE STORE SALES, WHICH COULD
CAUSE THE PRICE OF OUR COMMON STOCK TO DROP.

Our comparable store sales from our retail business have contributed
significantly to our overall sales growth. Our retail comparable store sales
could be adversely impacted by competition or our inability to execute our
business strategy. If our retail comparable store sales declined for any reason,
we could experience a loss in our revenues and income, which could lower the
price of our common stock.

SEASONAL AND QUARTERLY FLUCTUATIONS IN OUR BUSINESS COULD AFFECT THE MARKET FOR
OUR COMMON STOCK.

Our revenues and operating results vary from quarter to quarter. We have
historically realized higher revenues and operating income in our fourth
quarter, particularly in our retail business which is becoming a larger portion
of our sales. We believe that this has been due primarily to an increase in
giftware industry sales during the holiday season of the fourth quarter. As a
result of this seasonality, we believe that quarter to quarter comparisons of
our operating results are not necessarily meaningful and that these comparisons
cannot be relied upon as indicators of future performance. In addition, we may
also experience quarterly fluctuations in our revenues and income depending on
how many new retail stores we open in a particular quarter. These quarterly
fluctuations that we may report in the future may not match the expectations of
market analysts and investors. This could cause the trading price of our common
stock to fluctuate.

WE ARE CONTROLLED BY FORSTMANN LITTLE AND OUR MANAGEMENT, WHOSE INTERESTS MAY
CONFLICT WITH THOSE OF OTHER STOCKHOLDERS.

Following the offering, the Forstmann Little partnerships and our management
will together own approximately 77.1% of our outstanding common stock and will
continue to control us. Accordingly, they will be able to:

- elect our entire board of directors,

- control our management and policies, and

- determine, without the consent of our other stockholders, the outcome of
any corporate transaction or other matter submitted to our stockholders
for approval, including mergers, consolidations and the sale of all or
substantially all of our assets.

They will also be able to prevent or cause a change in control of Yankee
Candle and will be able to amend our Articles of Organization and By-Laws at any
time. The interests of the Forstmann Little partnerships and our management also
may conflict with the interests of the other holders of common stock.

OUR STOCK PRICE MAY FLUCTUATE SIGNIFICANTLY AFTER THE OFFERING AND YOU COULD
LOSE A SIGNIFICANT PART OF YOUR INVESTMENT AS A RESULT.

Prior to this offering, there has been no public market for our common
stock. Our common stock has been approved for listing on the NYSE. We do not
know how the common stock will trade in the future. The initial public offering
price has been determined through negotiations among the underwriters, the

8
<PAGE>
selling stockholders and us. You may not be able to resell your shares at or
above the initial public offering price due to fluctuations in the market price
of our common stock. These fluctuations may result from a number of factors,
including:

- the perceived prospects of Yankee Candle,

- changes in our operating results,

- differences between our actual financial and operating results and those
expected by investors and research analysts,

- changes in research analysts' recommendations or projections, and

- changes in market conditions of the candle and giftware industries.

In addition, the stock market in general has experienced extreme volatility
that often has been unrelated to the operating performance of particular
companies. These broad market and industry fluctuations may adversely affect the
trading price of our common stock, regardless of our actual operating
performance.

EXISTING STOCKHOLDERS MAY SELL THEIR COMMON STOCK, WHICH COULD ADVERSELY AFFECT
THE MARKET PRICE OF OUR COMMON STOCK.

Sales of a substantial number of shares of common stock into the public
market after this offering, or the perception that these sales could occur,
could materially and adversely affect our stock price. As of April 3, 1999 and
giving effect to the reorganization and the offering, there were 54,498,629
shares of common stock outstanding. After the offering, persons who currently
hold common stock will be entitled to register their common stock under the
Securities Act of 1933 at our expense. We have granted to the Forstmann Little
partnerships six demand rights to cause us to file a registration statement
under the Securities Act covering resales of the 36,001,700 shares of common
stock to be held by them after this offering. These shares, along with shares
held by others who can participate in the registrations, will represent 77.1% of
our outstanding common stock following this offering. The Forstmann Little
partnerships have no present intent to exercise their demand registration
rights, although they retain the right to do so. These shares may also be sold
under Rule 144 of the Securities Act, depending on their holding period and
subject to significant restrictions in the case of shares held by persons deemed
to be affiliates of Yankee Candle.

PROVISIONS IN OUR CORPORATE DOCUMENTS AND MASSACHUSETTS LAW COULD DELAY OR
PREVENT A CHANGE IN CONTROL OF YANKEE CANDLE.

Our Articles of Organization and By-Laws may discourage, delay or prevent a
merger or acquisition involving Yankee Candle that our stockholders may consider
favorable, by:

- authorizing the issuance of preferred stock, the terms of which may be
determined at the sole discretion of the board of directors,

- providing for a classified board of directors, with staggered three-year
terms, and

- establishing advance notice requirements for nominations for election to
the board of directors or for proposing matters that can be acted on by
stockholders at meetings.

Massachusetts law may also discourage, delay or prevent someone from
acquiring or merging with us. For a description you should read "Description of
Capital Stock."

9
<PAGE>
YEAR 2000 FAILURES MAY ADVERSELY IMPACT OUR OPERATIONS.

Our business could be adversely affected by information technology issues
related to the Year 2000. The Year 2000 issue is a broad business issue, whose
impact extends beyond traditional computer hardware and software to possible
failure of our plant systems, as well as to third parties. If any of our systems
are not Year 2000 compliant or if our customers or suppliers fail to achieve
Year 2000 compliance, we may experience the following adverse consequences:

- our customers may be unable to place orders with us due either to our
system failures or to those of our customers,

- we may be unable to bill our customers and maintain adequate production
scheduling, inventory cost accounting and other elements of our business
that are dependent upon computer systems, and

- we may be unable to deliver our products on a timely basis.

The ability of third parties with whom we do business to address adequately
their Year 2000 issues is outside our control. For a description of our Year
2000 compliance efforts you should read "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Year 2000 Compliance."

PURCHASERS OF OUR COMMON STOCK WILL EXPERIENCE SUBSTANTIAL DILUTION IN THE NET
TANGIBLE BOOK VALUE PER SHARE OF THEIR INVESTMENT.

The initial public offering price per share exceeds our net tangible book
value per share. As a result of this offering, our pro forma net tangible book
value per share as of April 3, 1999 will increase to $0.59, resulting in an
immediate increase in net tangible book value of $1.94 per share to existing
stockholders and an immediate dilution of $17.41 per share to new investors
purchasing shares of common stock in this offering. You may incur additional
dilution if holders of options to purchase common stock, whether currently
outstanding or subsequently granted, exercise their options following the
offering.

THIS PROSPECTUS INCLUDES FORWARD-LOOKING STATEMENTS WHICH COULD DIFFER FROM
ACTUAL FUTURE RESULTS.

This prospectus includes forward-looking statements. Statements that are
predictive in nature, that depend upon or refer to future events or conditions
or that include the words "expects," "anticipates," "intends," "plans,"
"believes," "estimates," "thinks" and similar expressions are forward-looking
statements. These statements involve known and unknown risks, uncertainties and
other factors, including the factors described above, that may cause our actual
results and performance to be materially different from any future results or
performance expressed or implied by these forward-looking statements. Although
we believe that these statements are based upon reasonable assumptions, we
cannot assure you that our goals will be achieved. These forward-looking
statements are made as of the date of this prospectus, and we assume no
obligation to update or revise them or provide reasons why actual results may
differ.

10
<PAGE>
USE OF PROCEEDS

The net proceeds to Yankee Candle from the sale of the 6,000,000 shares of
common stock offered, after deducting estimated expenses and underwriting
discounts and commissions of $10.5 million, are estimated to be approximately
$97.5 million. We will use these net proceeds, together with $220 million of
bank borrowings under a new credit facility and available cash, to redeem $320
million aggregate principal amount of Yankee Candle's outstanding subordinated
debentures evidenced by its 6 3/4% Series A Debentures due May 31, 2009, 6 3/4%
Series B Debentures due May 31, 2010 and 6 3/4% Series C Debentures due May 31,
2011. After the application of the net proceeds of the offering and additional
bank borrowings, none of these subordinated debentures will remain outstanding.

The indebtedness under the subordinated debentures was incurred in
connection with the 1998 recapitalization. The sources and uses of funds in
connection with the 1998 recapitalization were as follows (in thousands):

<TABLE>
<S> <C>
Sources of funds from the 1998 recapitalization:
Proceeds to Yankee Candle from subordinated debentures........ $ 320,000
Proceeds from credit facility ($2,500 at closing)............. 10,145
---------
Total sources............................................. $ 330,145
---------
---------
Uses of funds:
Redemption of shares of common stock from Michael Kittredge... $ 200,019
Repayment of existing indebtedness to third parties........... 49,313
Special bonuses............................................... 61,263
Transaction fees and expenses................................. 19,550
---------
Total uses................................................ $ 330,145
---------
---------
</TABLE>

See "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and "Management--Relationships and Transactions between Yankee
Candle and its Officers, Directors, 5% Beneficial Owners and their Family
Members."

Yankee Candle will not receive any proceeds from the sale of common stock in
the offering by the selling stockholders. In connection with the offering,
approximately 16 of our directors, officers and employees are expected to
exercise stock options to purchase, in the aggregate, 53,150 shares of common
stock from Yankee Candle for an aggregate exercise price of approximately $0.2
million. All of those shares are expected to be sold by selling stockholders in
the offering.

DIVIDEND POLICY

Yankee Candle does not intend to pay any cash dividends in the foreseeable
future but instead intends to retain earnings, if any, for the future operation
and expansion of the business. Any determination to pay dividends in the future
will be at the discretion of the board of directors and will be dependent upon
results of operations, financial condition, contractual restrictions,
restrictions imposed by applicable law and other factors deemed relevant by the
board of directors. In addition, Yankee Candle's new credit agreement will limit
its ability to declare or pay cash dividends on the common stock. See
"Description of the Credit Agreement." Future indebtedness may also prohibit or
restrict Yankee Candle's ability to pay dividends and make distributions to
stockholders.

11
<PAGE>
CERTAIN INFORMATION

All information in this prospectus relating to the number of shares of our
common stock or options is based upon information as of April 3, 1999, as
adjusted to reflect a reorganization in connection with this offering as
described in "Description of Capital Stock."

This prospectus includes statistical data regarding the candle and giftware
industries which was obtained from industry publications, including reports
generated by Unity Marketing, Kline & Company, Inc. and GiftBeat. These industry
organizations generally indicate that they have obtained information from
sources believed to be reliable, but do not guarantee the accuracy and
completeness of their information. While we believe these industry publications
to be reliable, we have not independently verified their data.

12
<PAGE>
CAPITALIZATION

The following table sets forth our pro forma debt and capitalization as of
April 3, 1999, and as adjusted to give effect to the refinancing and this
offering.

<TABLE>
<CAPTION>
AS ADJUSTED FOR
THE REFINANCING
ACTUAL AND THE OFFERING
----------- -------------------
<S> <C> <C>
(IN THOUSANDS)
Long-term debt:
6 3/4% subordinated debentures.......................................... $ 320,000 $ --
Term loan............................................................... -- 150,000
Revolving credit loan................................................... -- 70,000
----------- ----------
Total long-term debt.................................................. 320,000 220,000

Stockholders' equity (deficit):
Common stock, par value $.01 per share, 300,000,000 shares authorized,
48,445,479 shares outstanding, actual; 54,498,629 shares outstanding,
pro forma............................................................. 980 1,041
Additional paid-in capital.............................................. 127,433 225,072
Treasury stock.......................................................... (212,988) (212,988)
Retained earnings....................................................... 22,524 19,288
Capital subscription receivable......................................... (815) (815)
Unearned stock compensation............................................. (2,239) (2,239)
Accumulated other comprehensive income.................................. (111) (111)
----------- ----------
Total stockholders' equity (deficit).................................. (65,216) 29,248
----------- ----------

Total capitalization................................................ $ 254,784 $ 249,248
----------- ----------
----------- ----------
</TABLE>

Our actual capitalization as of April 3, 1999 reflects the April 27, 1998
transaction in which we were recapitalized. Pursuant to this recapitalization,
we borrowed approximately $320 million under subordinated debentures, which were
used in addition to other funds, in order to:

- redeem a portion of our common stock held by our then sole stockholder for
approximately $200 million,

- pay transaction fees and expenses, including financing fees, of
approximately $19.6 million,

- repay existing indebtedness of $49.3 million, and

- pay bonuses of $61.3 million related to this transaction to certain of our
senior employees, primarily Mr. Parry, Mr. Harry Flood, Ms. Gail Flood,
Mr. Williams, Ms. Nancy Spanbauer and Ms. Ann Morrisey.

The subordinated debentures are divided into three equal series, due on May
31, 2009, May 31, 2010 and May 31, 2011. The subordinated debentures provide for
an interest rate of 6 3/4% and provide for interest to be paid semi-annually.

We entered into a credit agreement with a consortium of banks at the time of
the 1998 recapitalization that provided for a $60 million revolving credit
facility. There were no borrowings under this facility at April 3, 1999.

13
<PAGE>
DILUTION

At April 3, 1999, we had a pro forma net tangible book deficit of $(65.5)
million or $(1.35) per share of common stock. Pro forma net tangible book value
per share is determined by dividing our tangible net book value (total tangible
assets less total liabilities) by the total number of shares of common stock
outstanding. After giving effect to the sale of the 6,000,000 shares of common
stock offered by us in this offering at an initial public offering price of
$18.00 per share, and after deducting estimated underwriting discounts and
commissions and offering expenses payable by us, our adjusted net tangible book
value would have been approximately $32.0 million, or $0.59 per share of common
stock. This represents an immediate increase in net tangible book value of $1.94
per share to existing stockholders and an immediate dilution of $17.41 per share
to new investors purchasing shares of common stock in the offering. The
following table illustrates this dilution on a per share basis:

<TABLE>
<S> <C> <C>
Assumed initial public offering price per share............. $ 18.00
Pro forma net tangible book deficit per share before the
offering................................................ $ (1.35)
Increase in pro forma net tangible book value per share
attributable to new investors........................... 1.94
---------
Pro forma net tangible book value per share after the
offering................................................ 0.59
---------
Dilution per share to new investors....................... $ 17.41
---------
---------
</TABLE>

The following table sets forth, on a pro forma basis as of April 3, 1999,
the number of shares of common stock purchased from us, the total consideration
paid and the average price per share paid by our existing stockholders and to be
paid by new investors in the offering at an initial public offering price of
$18.00, and before deduction of estimated underwriting discounts and commissions
and offering expenses payable by us:

<TABLE>
<CAPTION>
SHARES PURCHASED (1) TOTAL CONSIDERATION AVERAGE
------------------------- --------------------------- PRICE PER
NUMBER PERCENT AMOUNT PERCENT SHARE
------------ ----------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Existing stockholders................................ 48,498,629 89.0% $180,263,000 62.5% $ 3.72
New investors........................................ 6,000,000 11.0 108,000,000 37.5 18.00
------------ ----- -------------- -----
Total.......................................... 54,498,629 100.0% $288,263,000 100.0%
------------ ----- -------------- -----
------------ ----- -------------- -----
- ------------------------
<FN>
(1) Does not reflect the sale of 6,500,000 shares of common stock by the selling stockholders in the offering.
</FN>
</TABLE>

This table assumes the purchase of 53,150 shares of common stock by
optionholders pursuant to existing option agreements for an aggregate option
exercise price of $0.2 million.

After giving effect to the reorganization but prior to the closing of this
offering, the total number of our stockholders will be 24.

Sales by the selling stockholders in the offering will reduce the number of
shares of common stock held by existing stockholders to 41,998,629 or
approximately 77.1% of the total number of shares of common stock outstanding
after the offering and will increase the number of shares of common stock held
by new investors to 12,500,000 or approximately 22.9% of the total number of
shares of common stock outstanding after the offering.

14
<PAGE>
SELECTED FINANCIAL AND OTHER DATA

You should read the selected historical financial and other data below in
conjunction with the "Consolidated Financial Statements" and the "Unaudited Pro
Forma Consolidated Condensed Financial Statements" and the accompanying notes to
each. You should also read "Management's Discussion and Analysis of Financial
Condition and Results of Operations." The historical financial data as of
December 31, 1997 and 1998 and for the years ended December 31, 1996, 1997 and
1998 have been derived from the audited consolidated financial statements and
the accompanying notes included elsewhere in this prospectus. The historical
financial data as of December 31, 1994, 1995 and 1996 and for the years ended
December 31, 1995 and 1994 have been derived from audited financial statements
for the corresponding period, which are not contained in this prospectus. The
historical financial data as of April 3, 1999 and for the three months ended
March 31, 1998 and for the thirteen weeks ended April 3, 1999 have been derived
from the unaudited interim condensed consolidated financial statements and the
accompanying notes included elsewhere in this prospectus.

- pro forma provision (benefit) for income taxes,

- pro forma net income (loss), and

- pro forma earnings per share (basic and diluted).

EBITDA, adjusted EBITDA and adjusted EBITDA margin are defined in footnotes
(1), (2) and (3) to "Summary Consolidated Financial and Other Data."

15
<PAGE>

<TABLE>
<CAPTION>
THIRTEEN
YEAR ENDED DECEMBER 31, THREE MONTHS WEEKS
----------------------------------------------------- ENDED ENDED
1994 1995 1996 1997 1998 MARCH 31, 1998 APRIL 3, 1999
--------- --------- --------- --------- --------- --------------- -------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>

STATEMENT OF OPERATIONS DATA:
Net sales......................... $ 69,848 $ 94,777 $ 112,199 $ 144,103 $ 184,477 $ 35,313 $ 46,590
Cost of goods sold................ 32,758 45,724 53,207 62,069 79,105 16,400 20,804
--------- --------- --------- --------- --------- ------- -------------
Gross profit...................... 37,090 49,053 58,992 82,034 105,372 18,913 25,786
Selling expenses.................. 14,227 19,789 23,244 26,935 30,546 7,480 8,509
General and administrative
expenses........................ 15,165 15,450 21,687 27,031 19,753 4,006 6,213
Bonus related to the 1998
recapitalization................ -- -- -- -- 61,263 -- --
--------- --------- --------- --------- --------- ------- -------------
Income (loss) from operations..... 7,698 13,814 14,061 28,068 (6,190) 7,427 11,064
Interest income................... (43) (49) (165) (151) (219) (48) (290)
Interest expense.................. 818 1,824 1,913 2,154 16,268 369 5,768
Other (income) expense............ (46) 1,168 221 334 737 (11) (44)
--------- --------- --------- --------- --------- ------- -------------
Income (loss) before provision for
income taxes.................... 6,969 10,871 12,092 25,731 (22,976) 7,117 5,630
Provision for income taxes........ 190 316 410 1,360 9,656 -- 2,252
--------- --------- --------- --------- --------- ------- -------------
Net income (loss)................. $ 6,779 $ 10,555 $ 11,682 $ 24,371 $ (32,632) $ 7,117 $ 3,378
--------- --------- --------- --------- --------- ------- -------------
--------- --------- --------- --------- --------- ------- -------------
Historical basic earnings per
share........................... $ 0.07 $ 0.11 $ 0.12 $ 0.25 $ (0.51) $ 0.07 $ 0.07
--------- --------- --------- --------- --------- ------- -------------
--------- --------- --------- --------- --------- ------- -------------
Historical diluted earnings per
share........................... $ 0.07 $ 0.11 $ 0.12 $ 0.25 $ (0.51) $ 0.07 $ 0.07
--------- --------- --------- --------- --------- ------- -------------
--------- --------- --------- --------- --------- ------- -------------

Pro forma provision (benefit) for
income taxes.................... 2,411 4,115 4,830 10,686 (8,731) 2,704
Pro forma net income (loss)....... $ 4,558 $ 6,756 $ 7,262 $ 15,045 $ (14,245) $ 4,413
--------- --------- --------- --------- --------- -------
--------- --------- --------- --------- --------- -------
Pro forma basic earnings per
share........................... $ 0.05 $ 0.07 $ 0.07 $ 0.15 $ (0.22) $ 0.05
--------- --------- --------- --------- --------- -------
--------- --------- --------- --------- --------- -------
Pro forma diluted earnings per
share........................... $ 0.05 $ 0.07 $ 0.07 $ 0.15 $ (0.22) $ 0.05
--------- --------- --------- --------- --------- -------
--------- --------- --------- --------- --------- -------
Weighted average basic shares
outstanding..................... 98,005 98,005 98,005 98,005 64,458 98,005 46,821
--------- --------- --------- --------- --------- ------- -------------
--------- --------- --------- --------- --------- ------- -------------
Weighted average diluted shares
outstanding..................... 98,005 98,005 98,005 98,005 64,458 98,005 48,826
--------- --------- --------- --------- --------- ------- -------------
--------- --------- --------- --------- --------- ------- -------------

OTHER DATA:
Number of retail stores (at period
end)............................ 14 26 34 47 62 49 67
Gross profit margin............... 53.1% 51.8% 52.6% 56.9% 57.1% 53.6% 55.4%
Adjusted EBITDA margin............ 24.7% 24.4% 24.5% 29.2% 32.1% 23.8% 26.7%
Depreciation and amortization..... $ 1,195 $ 2,186 $ 3,094 $ 3,581 $ 4,662 $ 981 $ 1,305
Capital expenditures.............. 13,585 10,845 10,076 9,173 9,433 1,604 4,292

CASH FLOW DATA:
EBITDA............................ $ 8,939 $ 14,832 $ 16,934 $ 31,315 $ (2,865) $ 8,419 $ 12,209
Adjusted EBITDA................... 17,247 23,156 27,451 42,139 59,251 8,408 12,448
Net cash flows from operating
activities...................... 7,664 9,298 17,230 30,035 (11,578) 7,156 1,345
Net cash flows from investing
activities...................... (13,285) (11,214) (10,987) (9,961) (9,305) (1,265) (3,933)
Net cash flows from financing
activities...................... 2,985 3,944 (9,112) (13,541) 43,917 (10,637) (271)

BALANCE SHEET DATA (AS OF END OF
PERIOD):
Cash and cash equivalents......... $ 1,684 $ 3,713 $ 844 $ 7,377 $ 30,411 $ 27,560
Working capital (excluding cash
and cash equivalents)........... 3,247 4,977 1,817 (12,487) 493 4,079
Total assets...................... 38,932 56,397 59,550 73,096 275,345 284,700
Total debt........................ 11,441 18,018 12,045 25,264 320,000 320,000
Total stockholders' equity
(deficit)....................... 19,545 28,623 37,180 34,791 (68,591) (65,216)
</TABLE>

16
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

The following unaudited pro forma consolidated condensed financial
statements have been derived by the application of pro forma adjustments to our
historical consolidated financial statements included elsewhere in this
prospectus. The unaudited pro forma consolidated condensed statement of
operations for the thirteen week period ended April 3, 1999 and the year ended
December 31, 1998 give effect to the 1998 recapitalization, the refinancing of
the subordinated debentures and the offering as if the transactions were
consummated on January 1, 1999 and January 1, 1998, respectively. The unaudited
pro forma consolidated condensed balance sheet as of April 3, 1999 gives effect
to the refinancing and the offering as if the transactions had occurred on April
3, 1999. The pro forma adjustments are described in the accompanying notes to
the unaudited pro forma consolidated condensed balance sheet and to the
unaudited pro forma consolidated condensed statement of operations.

The unaudited pro forma consolidated condensed financial statements should
not be considered indicative of actual results that would have been achieved had
the 1998 recapitalization, the refinancing and the offering been consummated on
the dates or for the period indicated and do not purport to indicate balance
sheet data or results of operations as of any future date or for any future
period. The unaudited pro forma consolidated condensed financial statements
should be read in conjunction with our historical consolidated financial
statements and the notes thereto included elsewhere in this prospectus.

UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998

<TABLE>
<CAPTION>
ADJUSTMENTS
FOR THE 1998
RECAPITALIZATION,
THE REFINANCING
ACTUAL AND THE OFFERING PRO FORMA
-------- --------------------- ---------
<S> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Net sales.................................................................. $184,477 $184,477
Cost of sales.............................................................. 79,105 79,105
-------- ---------
Gross profit............................................................. 105,372 105,372
Operating Expenses:
Selling expenses......................................................... 30,546 30,546
General and administrative expenses...................................... 19,753 19,753
Bonus related to the recapitalization.................................... 61,263 (61,263)(1) --
-------- ---------
Income (loss) from operations.............................................. (6,190) 55,073
Other (income) expense:
Interest income............................................................ (219) (219)
Interest expense........................................................... 16,268 665(2) 16,933
Other expense.............................................................. 737 737
-------- ---------
Income (loss) before provision for income taxes............................ (22,976) 37,622
Pro forma provision (benefit) for income taxes............................. (8,731) 23,027(3) 14,296
-------- ---------
Pro forma net income (loss)................................................ $(14,245) $ 23,326(4)
-------- ---------
-------- ---------
Pro forma basic earnings (loss) per common share........................... $ (0.22) $ 0.33
-------- ---------
-------- ---------
Pro forma diluted earnings (loss) per common share......................... $ (0.22) $ 0.33
-------- ---------
-------- ---------
Weighted average basic shares outstanding.................................. 64,458 70,458
-------- ---------
-------- ---------
Weighted average diluted shares outstanding................................ 64,458 71,146
-------- ---------
-------- ---------
</TABLE>

17
<PAGE>
The pro forma financial data shown above have been derived by the
application of pro forma adjustments to Yankee Candle's historical consolidated
statement of operations for the year ended December 31, 1998. Our pro forma
presentation reflects the 1998 recapitalization, the concurrent conversion of
Yankee Candle from an S Corporation to a C Corporation for federal income tax
purposes, the refinancing of the subordinated debentures and the offering. The
adjustments have been applied to derive the pro forma consolidated statement of
operations as if the transactions had occurred on January 1, 1998 and include
only those adjustments that were or are directly attributable to the
transactions and that are anticipated to have a continuing impact. Material
non-recurring charges that resulted directly from the 1998 recapitalization and
the refinancing have been excluded from the pro forma presentation.

(1) To eliminate the bonus related to the 1998 recapitalizaton........................ $(61,263)
---------
---------
(2) To adjust interest expense to reflect the following:
(a) Interest expense on the 6 3/4% subordinated debentures; no such
interest expense has been included, giving effect to the repayment of
the 6 3/4% subordinated debentures with the proceeds from the
refinancing and the offering........................................... $ --
(b) Interest expense on the $150,000 term loan and $70,000 revolving credit
loan under the new credit facility, as if the refinancing had occurred
on January 1, 1998, at an assumed weighted average interest rate of
6.6%................................................................... 14,520
(c) Interest expense on working capital borrowings......................... 569
(d) Amortization of deferred financing costs giving effect to the 1998
recapitalization and the refinancing as if they had occurred on January
1, 1998................................................................ 1,209
(e) Facility fee on the new credit facility................................ 271
---------
Pro forma interest expense............................................. 16,569
Historical interest expense (including interest on the 6 3/4%
subordinated debentures and amortization of deferred financing
costs)................................................................. (15,904)
---------
Total adjustment....................................................... $ 665
---------
---------
A 0.125% increase or decrease in the assumed weighted average interest
rate with respect to the new credit facility would change pro forma
interest expense by $275. Pro forma net income would change by $171.

(3) To adjust the pro forma provision for income taxes for the tax effect of the
above-noted pro forma adjustments, which aggregated $60,598, at the 38% effective
marginal income tax rate in effect for 1998....................................... $ 23,027

(4) Pro forma net income (loss) does not include an extraordinary loss of
approximately $3,416, representing a $5,510 non-cash charge less the associated
income tax benefit of $2,094, resulting from the write-off of deferred financing
costs related to the 6 3/4% subordinated debentures. This amount will be charged
to earnings in the quarter in which the 6 3/4% subordinated debentures are repaid.
</TABLE>

18
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF OPERATIONS
FOR THE THIRTEEN WEEKS ENDED APRIL 3, 1999

<TABLE>
<CAPTION>
ADJUSTMENTS
RELATING TO THE
REFINANCING AND THE
ACTUAL OFFERING PRO FORMA
---------- ------------------- -----------
<S> <C> <C> <C>
(IN THOUSANDS, EXCEPT PER SHARE DATA)
Net sales............................................................ $ 46,590 $ 46,590

Cost of sales........................................................ 20,804 20,804
---------- -----------

Gross profit....................................................... 25,786 25,786

Operating Expenses:
Selling expenses................................................... 8,509 8,509
General and administrative expenses................................ 6,213 6,213
Transaction related bonuses........................................ -- --
---------- -----------

Income from operations............................................... 11,064 11,064

Other (income) expense:
Interest income.................................................... (290) (290)
Interest expense................................................... 5,768 (1,621)(1) 4,147
Other expense, net................................................. (44) (44)
---------- -----------

Income before provision for income taxes............................. 5,630 7,251

Provision for income taxes........................................... 2,252 648(2) 2,900
---------- -----------

Net income......................................................... $ 3,378 $ 4,351
---------- -----------
---------- -----------

Basic earnings per common share...................................... $ 0.07 $ 0.08
---------- -----------
---------- -----------
Diluted earnings per common share.................................... $ 0.07 $ 0.08
---------- -----------
---------- -----------
Weighted average basic shares outstanding............................ 46,821 52,821
---------- -----------
---------- -----------
Weighted average diluted shares outstanding.......................... 48,826 54,826
---------- -----------
---------- -----------
</TABLE>

The pro forma financial data shown above have been derived by the
application of pro forma adjustments to our historical consolidated statement of
operations for the thirteen weeks ended April 3, 1999. Our pro forma
presentation reflects the refinancing of the subordinated debentures and the
offering. Such adjustments have been applied to derive the pro forma
consolidated statement of operations as if such transactions occurred on January
1, 1999 and include only those adjustments that were or are directly
attributable to the transactions and that are anticipated to have a continuing
impact. Material

19
<PAGE>
non-recurring charges which resulted directly from the refinancing have been
excluded from the pro forma presentation.

<TABLE>
<S> <C> <C> <C>
(1) To adjust interest expense to reflect the following:
(a) Interest expense on the 6 3/4% subordinated debentures; no such interest
expense has been included, giving effect to the repayment of the 6 3/4%
subordinated debentures with the proceeds from the refinancing and the
offering................................................................ $ --
(b) Interest expense on the $150,000 term loan and $70,000 revolving credit
loan under the new credit facility, as if the refinancing had occurred
on January 1, 1999, at an assumed weighted average interest rate of
6.6%.................................................................... 3,630
(c) Amortization of deferred financing costs giving effect to the
refinancing as if it had occurred on January 1, 1999.................... 302
(d) Facility fee on the new credit facility................................. 75
---------
Pro forma interest expense.............................................. 4,007
Historical interest expense............................................. (5,628)
---------
Total adjustment........................................................ $ (1,621)
---------
---------
A 0.125% increase or decrease in the assumed weighted average interest
rate with respect to the new credit facility would change pro forma
interest expense by $69. Pro forma net income would change by $27.

(2) To adjust the pro forma provision for income taxes for the tax effect of the above-
noted pro forma adjustment at the 40% effective marginal income tax rate in effect
for 1999........................................................................... $ 648

(3) Pro forma net income does not include an extraordinary loss of approximately
$3,236, representing a $5,394 non-cash charge less the associated income tax
benefit of $2,158, that results from the write-off of deferred financing costs
related to the 6 3/4% subordinated debentures. This amount will be charged to
earnings in the thirteen week period in which the 6 3/4% subordinated debentures
are repaid.
</TABLE>

20
<PAGE>
UNAUDITED PRO FORMA CONSOLIDATED CONDENSED BALANCE SHEET
AS OF APRIL 3, 1999

<TABLE>
<CAPTION>
ADJUSTMENTS
FOR
THE REFINANCING
AND THE
ACTUAL OFFERING PRO FORMA
-------- --------------- ---------
<S> <C> <C> <C>
(IN THOUSANDS)
ASSETS
Current Assets:
Cash and cash equivalents................................................ $ 27,560 $ (7,300)(1) $ 20,260
Accounts receivable...................................................... 10,299 10,299
Inventory................................................................ 19,688 19,688
Prepaid expenses and other current assets................................ 1,395 1,395
Deferred tax assets...................................................... 1,542 2,158(5) 3,700
-------- --------------- ---------
Total current assets................................................... 60,484 (5,142) 55,342
Property, plant and equipment (net)........................................ 51,413 51,413
Marketable securities...................................................... 618 618
Classic vehicles........................................................... 874 874
Deferred financing costs................................................... 6,362 (394)(2) 5,968
Deferred tax assets........................................................ 164,474 164,474
Other assets............................................................... 475 -- 475
-------- --------------- ---------
Total assets........................................................... $284,700 $ (5,536) $279,164
-------- --------------- ---------
-------- --------------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable......................................................... $ 13,337 $ -- $ 13,337
Accrued interest......................................................... 7,398 7,398
Accrued payroll.......................................................... 4,259 4,259
Other accrued liabilities................................................ 3,851 3,851
-------- --------------- ---------
Total current liabilities.............................................. 28,845 28,845
Deferred compensation obligation........................................... 1,071 1,071
Subordinated debentures.................................................... 320,000 (320,000)(3) --
Term loan.................................................................. -- 150,000(3) 150,000
Revolving credit loan...................................................... -- 70,000(3) 70,000
-------- --------------- ---------
Total liabilities...................................................... 349,916 (100,000) 249,916
Stockholders' equity (deficit):
Common stock............................................................. 980 61(4) 1,041
Additional paid-in capital............................................... 127,433 97,639(4) 225,072
Treasury stock........................................................... (212,988) (212,988)
Retained earnings........................................................ 22,524 (3,236)(5) 19,288
Capital subscription receivable.......................................... (815) (815)
Unearned stock compensation.............................................. (2,239) -- (2,239)
Accumulated other comprehensive income................................... (111) (111)
-------- --------------- ---------
Total stockholders' equity (deficit)................................... (65,216) 94,464 29,248
-------- --------------- ---------
Total liabilities and stockholders' equity (deficit)................... $284,700 $ (5,536) $279,164
-------- --------------- ---------
-------- --------------- ---------
</TABLE>

21
<PAGE>
<TABLE>
<S> <C> <C> <C>
The pro forma consolidated financial data shown above have been derived by the application of pro forma
adjustments to the Company's historical consolidated balance sheet as of April 3, 1999. Our pro forma presentation
reflects the refinancing of the subordinated debentures and the offering. The adjustments have been applied to the
pro forma consolidated financial statements as if the transactions had occurred on January 1, 1999 and include only
those adjustments that are directly attributable to the transactions.

(1) Sources and uses of cash from the offering are as follows:
</TABLE>

<TABLE>
<S> <C>
Sources of funds:
Proceeds to Yankee Candle from this offering.................... $ 108,000
Exercise of stock options....................................... 200
New borrowings in connection with the refinancing:
Term loan..................................................... 150,000
Revolving credit loan......................................... 70,000
---------
Total sources............................................... $ 328,200
---------
---------
Uses of funds:
Repayment of subordinated debentures............................ $ 320,000
Deferred financing costs........................................ 5,000
Estimated offering fees and expenses............................ 10,500
---------
Total uses.................................................. 335,500
---------
---------
Net adjustment to cash...................................... $ (7,300)
---------
---------
</TABLE>

(2) To reflect the write-off of $5,394 deferred financing costs associated with
the repayment of the 6 3/4% subordinated debentures and to reflect deferred
financing costs of $5,000 related to the refinancing.

(3) To reflect the repayment of the 6 3/4% subordinated debentures with the
proceeds of the refinancing and the offering.

(4) To reflect the proceeds of the offering of $97,500, net of estimated
expenses of $10,500 and stock option exercises of $200.

(5) To reflect the extraordinary loss of approximately $3,236, representing a
$5,394 non-cash charge less the associated tax benefit of $2,158, that
results from the write-off of deferred financing costs related to the
repayment of the 6 3/4% subordinated debentures.

22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS

OVERVIEW

We are the leading designer, manufacturer, wholesaler and retailer of
premium scented candles in the growing giftware industry. We have experienced
strong sales growth with net sales increasing to $184.5 million in 1998 from
$69.8 million in 1994, a compound annual growth rate of over 27%. The following
discussion provides further information regarding our two primary distribution
channels, performance measures and quarterly operating results.

THE WHOLESALE CHANNEL

Our wholesale distribution strategy targets small, independent,
credit-worthy gift store retailers. We distribute our products through our
extensive wholesale customer base which has approximately 12,000 gift store
locations throughout the United States. Our wholesale base is broad with no
individual buying group accounting for more than 2% of our sales. Accordingly,
there is little likelihood of a concentration of credit risk with any individual
account.

In 1997, we began our transition from a sales force of independent
manufacturer representatives to an in-house direct sales force. We completed
this process in early 1998. We believe that the conversion to an in-house sales
force has strengthened our competitive position by allowing us to communicate
directly with our customers and better serve them through enhanced inventory
management, order accuracy, response time, marketing and display programs. It
has also enabled us to reduce costs.

From 1996 to 1998, sales from our wholesale division grew from $69.3 million
to $103.3 million, a compound annual growth rate of 22%.

RETAIL STORES

Our retail stores are an important and fast growing distribution channel and
represent an increasing percentage of our total sales. We have increased our
retail locations over the past three years from 26 stores on January 1, 1996 to
62 stores on December 31, 1998, and believe that we have significant future
expansion opportunities. Prior to 1998, our store base was concentrated
primarily in the northeastern United States, and during 1998 we successfully
opened stores in eight states: Arizona, Colorado, Georgia, Florida, Kansas,
Michigan, Virginia and Texas. As of June 30, 1999, 61 of our stores were located
in malls and 24 were in non-mall locations in a total of 26 states.

Our stores, excluding the South Deerfield store, averaged 1,643 square feet
as of December 31, 1998. In 1998, our retail stores that were open for the full
year achieved average sales per square foot of over $650 and sales per selling
square foot were approximately 25% higher. Moreover, our retail stores generated
comparable store sales growth of 18.4% in 1996, 16.4% in 1997 and 16.5% in 1998.

From 1996 to 1998, sales from our retail division, which includes our retail
store, catalog and Internet operations, grew from $42.9 million to $81.2
million, a compound annual growth rate of 38%.

PERFORMANCE MEASURES

We measure the performance of our retail and wholesale segments through an
operating margin calculation, which specifically identifies not only gross
profit on the sales of products through the two channels but also costs and
expenses specifically identifiable to a given segment. Accordingly, the cost of
our in-house direct sales force, and, in the past, the cost of independent
manufacturer representatives, devoted to our wholesale channel are included in
the calculation of this channel's operating margin. In addition, the cost of
employees dedicated to retail site selection, store management, employee
training and many other retail specific activities are allocated to the retail
division.

23
<PAGE>
FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

We have experienced, and may experience in the future, fluctuations in our
quarterly operating results. There are numerous factors that can contribute to
these fluctuations; however, the principal factors are seasonality and new store
openings.

SEASONALITY. We have historically realized higher revenues and operating
income in our fourth quarter, particularly in our retail business which is
becoming a larger portion of our sales. We believe that this has been due
primarily to an increase in giftware industry sales during the holiday season of
the fourth quarter. The table below shows a breakdown of our 1996, 1997 and 1998
sales by quarter. We anticipate our sales will continue to be seasonal in
nature.

<TABLE>
<CAPTION>
SALES BREAKDOWN BY QUARTER
------------------------------------------
Q1 Q2 Q3 Q4
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
1996............................. 19.2% 17.1% 24.0% 39.7%
1997............................. 18.3% 17.5% 23.9% 40.3%
1998............................. 19.1% 15.7% 23.6% 41.6%
</TABLE>

NEW STORE OPENINGS. The timing of our new store openings may also have an
impact on our quarterly results. First, we incur certain one-time expenses
related to opening each new store. These expenses, which consist primarily of
salaries, supplies and marketing costs, average approximately $15,000 per store
and are expensed as incurred. Second, most store expenses vary proportionately
with sales, but there is a fixed cost component. This typically results in lower
store profitability when a new store opens because new stores generally have
lower sales than mature stores. Due to both of these factors, during periods
when new store openings as a percentage of the base are higher, operating profit
may decline in dollars and/or as a percentage of sales. As the store base
matures, the fixed cost component of selling expenses is spread over an
increased level of sales, resulting in a decrease in selling and other expenses
as a percentage of sales.

RESULTS OF OPERATIONS

THIRTEEN WEEKS ENDED APRIL 3, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31,
1998

NET SALES. Net sales increased 32.0% to $46.6 million for the thirteen
weeks ended April 3, 1999 from $35.3 million for the three months ended March
31, 1998. This growth was achieved by increasing the number of our retail stores
from 49 at March 31, 1998 to 67 at April 3, 1999, and increasing sales in
existing retail stores and to wholesale customers.

Wholesale sales increased 24.9% to $29.6 million for the thirteen weeks
ended April 3, 1999 from $23.7 million for the three months ended March 31,
1998. This growth was achieved primarily by increasing sales to existing
customers, adding new wholesale accounts and initiating sales through our new
European distribution center. We believe that wholesale sales growth has been
and will continue to be positively impacted by our increased promotional
spending, the addition of new wholesale locations and the transition from
independent manufacturer representatives to an in-house direct sales force.

Retail sales increased 46.6% to $17.0 million for the thirteen weeks ended
April 3, 1999 from $11.6 million for the three months ended March 31, 1998. This
growth was achieved through the addition of 18 new stores, and increased sales
in existing stores. Comparable store sales increased 17.9% over the first
quarter in 1998. There were 48 stores included in our comparable store base at
the end of the thirteen weeks ended April 3, 1999, and one of these stores was
included for less than the full period.

GROSS PROFIT. Gross profit increased 36.5% to $25.8 million for the
thirteen weeks ended April 3, 1999 from $18.9 million for the three months ended
March 31, 1998. This increase was primarily attributable to the increase in
sales. As a percentage of sales, gross profit increased to 55.4% for the
thirteen weeks ended April 3, 1999 from 53.5% for the three months ended March
31, 1998. We began to make significant

24
<PAGE>
investments in our manufacturing operations in 1998 and anticipate the favorable
benefits in 1999 and future years.

SELLING EXPENSES. Selling expenses increased 13.3% to $8.5 million for the
thirteen weeks ended April 3, 1999 from $7.5 million for the three months ended
March 31, 1998. These expenses are related to both our wholesale and retail
operations and consist of payroll, advertising, occupancy and other operating
costs. Excluding the commission paid to independent manufacturer
representatives, selling expenses increased 57.4% to $8.5 million for the
thirteen weeks ended April 3, 1999 from $5.4 million for the three months ended
March 31, 1998. As a percentage of sales, selling expenses excluding commissions
paid to independent manufacturer representatives were 18.2% for the thirteen
weeks ended April 3, 1999 and 15.3% for the three months ended March 31, 1998.
The increase in selling expense in dollars and as a percentage of sales was
primarily related to investment in wholesale promotional programs, costs
associated with our new European distribution center and the continued growth in
the number of retail stores we operated from 49 as of March 31, 1998 to 67 as of
April 3, 1999.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses,
which consist primarily of personnel-related costs incurred in the
administration of support functions, increased 55.0% to $6.2 million for the
thirteen weeks ended April 3, 1999 from $4.0 million for the three months ended
March 31, 1998. As a percentage of sales, general and administrative expenses
increased to 13.3% for the thirteen weeks ended April 3, 1999 from 11.3% for the
three months ended March 31, 1998. This increase was primarily caused by
investments in building our organizational infrastructure and $0.6 million of
consulting expenses.

INCOME (LOSS) FROM OPERATIONS. Income from continuing operations increased
50.0% to $11.1 million for the thirteen weeks ended April 3, 1999 from $7.4
million for the three months ended March 31, 1998. This increase was primarily
due to higher sales and the elimination of commissions paid to independent
manufacturer representatives.

OPERATING MARGINS. Operating margins for our wholesale operations were
$12.8 million or 43.2% of wholesale sales for the thirteen weeks ended April 3,
1999 compared to $8.4 million or 35.4% of wholesale sales for the three months
ended March 31, 1998. The wholesale operating margin increase was primarily
attributable to higher sales and to the elimination of commissions paid to
independent manufacturer representatives. Operating margins for retail
operations were $2.8 million or 16.5% of retail sales for the thirteen weeks
ended April 3, 1999 compared to $1.5 million or 12.9% of sales for the three
months ended March 31, 1998. The retail operating margin increase was primarily
attributable to higher sales and lower selling expenses as a percentage of
sales.

NET OTHER INCOME (EXPENSE). Net other expense was $5.4 million for the
thirteen weeks ended April 3, 1999 compared to $0.3 million for the three months
ended March 31, 1998. The primary component of the expense was interest expense
which was $5.8 million for the thirteen weeks ended April 3, 1999 and $0.4
million for the three months ended March 31, 1998. In connection with the
recapitalization, we borrowed in 1998 $320.0 million which resulted in
significantly higher interest expense in 1999.

INCOME TAXES. The income tax provision for the thirteen weeks ended April
3, 1999 was $2.3 million. For the three months ended March 31, 1998, we were an
S corporation and were only required to pay taxes at the state level. We did not
record an income tax provision for the three months ended March 31, 1998 because
we knew we would report a pre-tax loss as an S corporation on a year to date
basis through the 1998 recapitalization date. This pre-tax loss was caused
principally by the bonus charge described under "--Bonus related to 1998
recapitalization."

NET INCOME. Net income for the thirteen weeks ended April 3, 1999 was $3.4
million as compared to $7.1 million for the three months ended March 31, 1998.
If the net income for the three months ended March 31, 1998 were restated to
reflect pro forma income taxes, net income would have been $4.4 million.

25
<PAGE>
Stronger sales and operating margins in the thirteen weeks ended April 3, 1999
were offset by substantial increases in comparative amounts of interest expense.

DECEMBER 31, 1998 COMPARED TO DECEMBER 31, 1997

NET SALES. Net sales increased 28.0% to $184.5 million in 1998 from $144.1
million in 1997. This growth was achieved by increasing the number of our retail
stores, from 47 to 62, and increasing sales in existing retail stores and to
wholesale customers.

Wholesale sales increased 21.7% to $103.3 million in 1998 from $84.9 million
in 1997. This growth was achieved primarily by increasing sales to existing
customers. We believe that wholesale sales growth has been and will continue to
be positively impacted by our increased promotional spending, the addition of
new wholesale locations and the transition from independent manufacturer
representatives to an in-house direct sales force.

Retail sales increased 37.2% to $81.2 million in 1998 from $59.2 million in
1997. This growth was achieved through the addition of 15 new stores, and
increased sales in existing stores. Comparable store sales increased 16.5% over
the corresponding period in 1997. There were 47 stores included in our
comparable store base at the end of 1998, and 13 of these stores were included
for less than a full year.

GROSS PROFIT. Gross profit increased 28.5% to $105.4 million in 1998 from
$82.0 million in 1997. This increase was almost entirely attributable to the
increase in sales. As a percentage of sales, gross profit was relatively
consistent from year to year, increasing slightly to 57.1% in 1998 from 56.9% in
1997. We began to make significant investments in our manufacturing operations
in 1998 and anticipate favorable benefits from these investments in 1999 and
future years.

SELLING EXPENSES. Selling expenses increased 13.4% to $30.5 million in 1998
from $26.9 million in 1997. These expenses are related to both our wholesale and
retail operations and consist of payroll, advertising, occupancy and other
operating costs. Excluding the commission paid to independent manufacturer
representatives, selling expenses increased 44.7% to $28.5 million in 1998 from
$19.7 million in 1997 to support our direct sales efforts on the wholesale side
of our business as well as our new retail stores. As a percentage of sales,
selling expenses, excluding commissions paid to independent manufacturer
representatives, were 15.4% in 1998 and 13.7% in 1997. The increase in selling
expense in dollars and as a percentage of sales was primarily related to
investment in our in-house direct wholesale sales force and to the continued
growth in the number of our retail stores, which increased from 47 in 1997 to 62
in 1998.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses,
which consist primarily of personnel-related costs incurred in support
functions, decreased 26.7% to $19.8 million in 1998 from $27.0 million in 1997.
The decrease is entirely attributable to a decrease in compensation paid to the
former sole stockholder. Excluding this compensation, general and administrative
expenses increased 22.2% to $19.8 million, or 10.7% of sales, in 1998 from $16.2
million, or 11.2% of sales, in 1997. This increase was primarily caused by
post-recapitalization consulting expenses of $1.8 million related to our systems
and growth strategy, and to investments in building our organizational
infrastructure. We also had non-cash compensation expenses of $116,000 in 1998
related to certain share and option awards and expect to have non-cash
compensation expenses of $1.1 million and $677,000 in 1999 and 2000,
respectively.

BONUS RELATED TO 1998 RECAPITALIZATION. Bonus payments are reflected as a
separate cost within operating expenses and totaled $61.3 million. These
payments were made to selected members of management and were wholly related to
the 1998 recapitalization and are non-recurring in nature.

INCOME (LOSS) FROM OPERATIONS. Due to the non-recurring bonus charge, we
incurred a loss from operations of $6.2 million for 1998. This compares to
income from operations of $28.1 million in 1997. Excluding the non-recurring
bonus charge, we would have reported operating income of $55.1 million in 1998.

26
<PAGE>
OPERATING MARGINS. Operating margins for our wholesale operations were
$45.1 million or 43.7% of wholesale sales in 1998 compared to $31.2 million or
36.7% of wholesale sales in 1997. The wholesale operating margin increase was
primarily attributable to the expense savings realized from the transition from
independent manufacturer representatives to an in-house direct sales force.
Operating margins for retail operations were $23.3 million or 28.7% of retail
sales in 1998 compared to $18.1 million or 30.6% of retail sales in 1997. The
retail operating margin decrease was primarily attributable to the lower
operating margin contribution rate of our 15 new stores during their early
maturation period.

NET OTHER INCOME (EXPENSE). Net other expense was $16.8 million in 1998
compared to $2.3 million in 1997. The primary component of this expense was
interest expense which was $16.3 million in 1998 and $2.2 million in 1997. In
connection with the 1998 recapitalization, we borrowed $320.0 million, which
resulted in significantly higher interest expense in 1998.

INCOME TAXES. The income tax provision for 1998 was $9.7 million despite
our pre-tax loss. This contrasts to a provision of $1.4 million on significant
financial statement profits in 1997. We were an S corporation until the 1998
recapitalization and were only required to pay taxes at the state level. All
other income taxes were paid directly by our sole stockholder. In 1998, we
reported a pre-tax loss because of the bonus charge described above under
"--Bonus related to 1998 recapitalization." Our sole stockholder received the
benefit of that deduction. Starting in May 1998 we were taxed as a regular
corporation. The tax provision of $9.7 million applies to pre-tax income from
the date of the 1998 recapitalization to the end of the year.

NET INCOME. The net loss for 1998 was $32.6 million, which included the
$61.3 million non-recurring bonus charge for which no tax benefit could be
realized. Excluding this charge, net income for 1998 would have been $28.7
million. If the 1997 net income of $24.4 million were restated to reflect pro
forma income tax, net income for 1997 would have been $15.0 million.

DECEMBER 31, 1997 COMPARED TO DECEMBER 31, 1996

NET SALES. Net sales increased 28.4% to $144.1 million in 1997 from $112.2
million in 1996. This growth was achieved by increasing the number of retail
stores, from 34 to 47, increasing sales in existing retail stores and to
wholesale customers and an increase in prices of approximately 2%.

Wholesale sales increased 22.5% to $84.9 million in 1997 from $69.3 million
in 1996. This growth was achieved primarily through increased sales to existing
customers. We believe that wholesale sales growth was positively impacted by a
rebound from severe weather problems in the midwestern and southern United
States in 1996 which restrained dealer retail volume in 1996, increased
marketing activities in 1997 and the decision to discontinue the services of
independent manufacturer representatives, which stimulated commission-based
sales at the end of 1997.

Retail sales increased 38.0% to $59.2 million in 1997 from $42.9 million in
1996. This growth was achieved through the addition of 13 new stores and
increased sales in existing stores. Comparable store sales increased 16.4% over
the corresponding period in 1996. There were 34 stores included in our
comparable store base at the end of 1997, and eight of these stores were
included for less than a full year.

GROSS PROFIT. Gross profit increased 39.0% to $82.0 million, or 56.9% of
sales, in 1997 from $59.0 million or 52.6% of sales in 1996. The increase in
gross profit dollars was primarily due to the increase in sales. The increase in
gross profit margin was primarily due to the increase in retail sales as a
percentage of total sales, improved manufacturing efficiency compared to 1996
and the previously mentioned increase in prices. Retail sales achieve a higher
gross profit than wholesale sales, so an increase in retail sales as a
percentage of total sales increased the gross profit dollars and margin.

SELLING EXPENSES. Selling expenses increased 15.9% to $26.9 million in 1997
from $23.2 million in 1996. These expenses are related to both our wholesale and
retail operations and consist of payroll,

27
<PAGE>
advertising, occupancy and other operating costs. These expenses also included
commissions paid to independent manufacturer representatives. We commenced the
transition from independent manufacturer representatives to an in-house direct
sales force in 1997. Excluding the commissions paid to independent manufacturer
representatives, selling expenses increased 36.8% to $19.7 million in 1997 from
$14.4 million in 1996. As a percentage of sales, selling expenses excluding
commissions paid to independent manufacturer representatives were 13.7% in 1997
and 12.8% in 1996. The increase in selling expense in dollars and as a
percentage of sales was primarily related to continued growth in the number of
retail stores we operated from 34 in 1996 to 47 in 1997.

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative expenses,
which consist primarily of personnel-related costs incurred in support
functions, increased 24.4% to $27.0 million in 1997 from $21.7 million in 1996.
Excluding compensation paid to the former sole stockholder, general and
administrative expenses would have increased to 11.2% of sales in 1997 from 9.9%
of sales in 1996 as we continued to invest in our support infrastructure.

OPERATING MARGINS. Operating margins for our wholesale operations were
$31.2 million or 36.7% of wholesale sales in 1997 compared to $18.5 million or
26.7% of wholesale sales in 1996. The wholesale operating margin increase was
achieved due to the previously discussed increase in sales, improvement in gross
margin rate and spreading of selling expenses over a larger sales base.
Operating margins for retail operations were $18.1 million or 30.6% of retail
sales in 1997 compared to $13.2 million or 30.7% of retail sales in 1996.

NET OTHER INCOME (EXPENSE). Net other expense was $2.3 million in 1997
compared to $2.0 million in 1996. The primary component of the expense was
interest expense, which was $2.2 million in 1997 and $1.9 million in 1996.

INCOME TAX. The income tax provision for 1997 was $1.4 million compared to
a tax provision of $410,000 in 1996. Both of these amounts constitute less than
5% of pre-tax income in each year. We were an S corporation in both 1997 and
1996. Therefore, we were only taxable at the state level and there were no
federal income taxes that we had to recognize.

NET INCOME. Net income increased 108.5% to $24.4 million in 1997 from $11.7
million in 1996. This increase was due to a significant increase in revenue
combined with improved gross margin and lower selling expenses.

LIQUIDITY AND CAPITAL RESOURCES

We have consistently generated positive cash flow from operations, excluding
the $61.3 million non-recurring bonus charge in 1998. This positive cash flow
has been sufficient, in the past, to allow us to grow our business. In 1996,
1997 and the first four months of 1998, Yankee Candle was an S Corporation. Any
excess cash was distributed to the sole stockholder either in the form of
compensation or S Corporation distributions. Those outflows totaled
approximately $13.8 million in 1996, $37.6 million in 1997 and $17.5 million in
1998, with the 1998 outflows occurring in the first four months. We believe
that, in the future, the absence of those distributions will facilitate our
expansion plans as we plan to invest our free cash flow in the business.

Cash flow from operations totaled $17.2 million, $30.0 million and $(11.6)
million in the years ended December 31, 1996, 1997 and 1998, respectively, and
$7.2 million and $1.3 million for the three months ended March 31, 1998 and
thirteen weeks ended April 3, 1999, respectively. We believe that the liquidity
provided by our operating cash flow can be better understood by reference to
Yankee Candle's adjusted EBITDA. Adjusted EBITDA reflects the elimination of
various items, unrelated to our fundamental operating cash flow, from EBITDA.
These items include the one-time special bonus paid at the time of the 1998
recapitalization and the significant amounts of compensation and benefits, net
of current annual

28
<PAGE>
compensation and benefits, paid to the sole stockholder in years and periods
prior to the 1998 recapitalization. It also eliminates non-cash stock based
compensation and other income/expense items, which generally include gains or
losses from sales of fixed assets and other discretionary non-operating cash
flow items. Adjusted EBITDA totaled $27.5 million, $42.1 million and $59.3
million in the years ended December 31, 1996, 1997 and 1998, respectively, and
$8.4 million and $12.4 million for the three months ended March 31, 1998 and
thirteen weeks ended April 3, 1999, respectively.

The 1998 recapitalization resulted in a step up in basis of our assets for
tax purposes of approximately $462.0 million. This step up will reduce our
future taxes by approximately $175.7 million. On an annual basis, this results
in tax savings of approximately $11.7 million per year for the next 15 years
assuming sufficient income to realize the full benefit of this deduction.

Our capital expenditures in 1998 were $9.4 million and for the thirteen
weeks ended April 3, 1999 totalled $4.2 million. In 1998, the funds were spent
primarily to open 15 new retail stores, and invest in information systems and
new manufacturing equipment to increase our production volume and the efficiency
of our shipping operations. Our expenditures for the thirteen weeks ended April
3, 1999 related to the opening of five new retail stores and additional
expenditures related to enhancing our manufacturing and distribution operations.
The average capital expenditure for each new retail store was approximately
$250,000. Total capital expenditures in 1996 and 1997 were relatively consistent
with 1998 at $10.1 million and $9.2 million, respectively. There were 13 store
openings in 1997 and eight store openings in 1996.

We anticipate that capital expenditures in 1999 will total approximately
$22.0 million. These funds will primarily be spent to open 40 new retail stores,
open a new distribution center in the western region of the United States, to
better support our wholesale customers and expanding retail store base and to
invest in new manufacturing equipment and information systems.

In connection with the 1998 recapitalization, we borrowed $320.0 million by
issuing 6 3/4% subordinated debentures and entered into an agreement to borrow
under a $60.0 million revolving credit facility. These borrowings were used
primarily to redeem our stock and pay one-time bonuses in connection with the
1998 recapitalization. Interest payments under the subordinated debentures were
the primary reason for our increased interest expenses. At December 31, 1998 and
at April 3, 1999, there were no borrowings under the revolving credit facility.

We plan to refinance all of our existing debt with the proceeds of this
offering and approximately $220.0 million of borrowings under a new $300.0
million credit facility expected to be entered into prior to the consummation of
this offering. We will have an extraordinary loss of approximately $3.2 million,
representing a $5.4 million non-cash charge less the associated income tax
benefit of $2.2 million, that results from the write-off of deferred financing
costs related to the repayment of our 6 3/4% subordinated debentures. This
amount will be charged to earnings in the quarter in which the debt is repaid.
See "Description of the Credit Agreement."

We believe that cash flow from operations and funds available under our new
credit facility will be sufficient for our working capital needs, planned
capital expenditures and debt service obligations for at least the next twelve
months.

IMPACT OF INFLATION

We do not believe inflation has a significant impact on our operations. The
prices of our products have not varied based on the movement of the consumer
price index. The majority of our material and labor costs are not materially
affected by inflation.

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<PAGE>
FUTURE ACCOUNTING PRONOUNCEMENTS

We are required to adopt the provision of Statement of Financial Accounting
Standards No. 133 "Accounting for Derivative Instruments and Hedging Activities"
beginning January 1, 2000. This accounting standard requires us to identify
derivative financial statements according to a complex definition and account
for these instruments at fair value. We are beginning to assess the impact of
this accounting standard on our financial statements, but, at this time, we do
not expect it to have a material impact on our financial statements.

YEAR 2000 COMPLIANCE

Many existing computer programs use only two digits to identify a year in
the date field. These programs were designed and developed without considering
the impact of the upcoming change in the century. If not corrected, many
computer applications could fail or create erroneous results by or at the Year
2000. The Year 2000 issue affects virtually all companies and organizations.

We have established a project team to coordinate and address Year 2000
issues. This team is focusing its efforts on three areas:

- information systems software and hardware,

- facilities and distribution equipment, and

- third-party relationships.

We have implemented a systematic program to identify the areas where we
believe we are exposed to Year 2000 issues. Key information systems that have
been identified as critical to our operations include:

- inventory systems, including tracking inventory through the manufacturing
process and facilitating the picking of orders;

- order entry and accounts receivable systems, which allow us to enter
orders from our customers, bill our customers and track amounts owing from
them;

- Masterpiece application systems, which control our general ledger,
purchasing and accounts payable activities;

- a catalog system, which allows us to conduct catalog operations;

- a payroll system; and

- network systems, including our internal network and office suite of
products.

Our program with regard to information systems consists of three phases:

- an assessment phase which takes inventory of all major information and
non-information systems;

- a remediation phase which fixes Year 2000 issues identified in the
assessment phase; and

- a testing phase which tests the systems on a stand-alone and integrated
basis and, where applicable, completes final remediation.

30
<PAGE>

<TABLE>
<CAPTION>
ANTICIPATED/ACTUAL
ASSESSMENT REMEDIATION ANTICIPATED
SYSTEM COMMENTS COMPLETION DATE COMPLETION TESTING COMPLETION
- ------------------------ -------------------------- ------------------ ------------------ ------------------
<S> <C> <C> <C> <C>
Inventory systems New programs; written with May 1999 May 1999 September 1999
four digits or purchased
and certified by vendors
as Year 2000 compliant
Order entry and accounts
receivable Combination of new January 1999 January 1999 September 1999
programs and legacy
programs

Masterpiece applications Certified by vendor as January 1999 January 1999 August 1999
Year 2000 compliant

Catalog system In-house application January 1999 January 1999 September 1999
written in four digits

Payroll system Payroll services provided September 1998 April 1999 April 1999
by third party service
bureau that has
certified Year 2000
compliance

Network Certified by vendor as April 1999 October 1999 October 1999
Year 2000 compliant or
patches to be provided
</TABLE>

Certifications have been requested and received from all software and
hardware vendors that are integral to the above-described systems.

Year 2000 exposures have been anticipated by our information systems
department over the last five years. Over that time period, virtually all of our
internally developed systems described above have been rewritten. In addition,
new hardware has been purchased. These changes are part of our on-going program
to improve our information systems. Our information systems budget has therefore
not had a separate Year 2000 component. Rather, Year 2000 remediation has been a
part of our improvement strategy. Therefore, we have not had to defer any
information technology projects due to our Year 2000 efforts. Only in the latter
part of fiscal 1998 has a separate budget line item been identified for our Year
2000 efforts. Our identified expenditures with regard to this effort have been
less than $10,000 for each of the last two quarters. We anticipate incurring an
additional $150,000 in costs through year end to complete our remediation and
testing efforts. These specific costs are being expensed as incurred.

The non-information systems, which may be affected by the Year 2000 issue,
include our equipment control systems including large tank monitors and candle
making machinery as well as internal building systems. We plan to test our
facilities and manufacturing and distribution equipment during our annual
shutdown in June 1999.

We have approximately 60 vendors that are integral to our business. It is
our intention to circulate letters to these vendors and to others by the end of
June 1999, requesting that they confirm their Year 2000 compliance status.
Because we have so little concentration of sales with any one customer, there
are very few customers to whom we intend to circulate a letter.

We have not experienced any Year 2000 related problems to date; therefore,
we have not lost any revenues.

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<PAGE>
We believe that a worst case Year 2000 scenario for us would involve a
complete failure in the basic infrastructure of the United States. In
particular, should shipping services such as UPS, RPS and common carriers fail,
we would be unable to obtain raw materials to produce our products and would be
unable to ship our products to customers and retail locations. Similarly, if
utility providers failed to provide electricity and other basic services, we
would be unable to produce or sell our products.

Based on our assessment efforts to date and barring the worst case scenario
described above, we do not believe that the Year 2000 issue will have a material
adverse effect on our financial condition or results of operations. We believe
that we will have the ability to process transactions, whether they involve
paying our employees, procuring material from vendors or invoicing our
customers, using our existing data processing systems. We believe that our
manufacturing processes are not subject to substantial Year 2000 risk because,
if a piece of equipment fails because of a date dependency, alternative product
routing within our plant can be made.

Our ability to obtain raw materials is dependent on third parties. While we
do have primary vendors for our raw materials we believe that the materials
being provided are readily available from other vendors. Therefore, should a
specific vendor fail because of a Year 2000 compliance issue, the materials
being delivered by this vendor can be readily replaced. Our substantial network
of wholesale accounts and our growing number of retail locations have led us to
conclude that exposures in our ultimate sales channels are not material.

For the above reasons, no contingency plan has been developed. In the event
final testing of our information systems applications prove difficult, our
internal non-information systems fail in their June 1999 testing, or responses
from key vendors indicate significant non-compliance exposures, we will
reconsider developing a contingency plan. This plan may include increasing
production near the year end to provide additional inventory to counteract any
plant or third party-related disruptions.

Our assessment of our Year 2000 compliance is based on numerous assumptions
about future events, including third party Year 2000 compliance plans and other
factors. However, we cannot guarantee that this assessment is correct and actual
results could differ materially from those anticipated.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our market risks relate primarily to changes in interest rates. We bear this
risk in two specific ways. First, we have debt outstanding. At the end of 1998,
we had $320.0 million of debt in the form of three series of 6 3/4% subordinated
debentures. Because this borrowing had a fixed interest rate, neither our
statement of operations nor our cash flows had exposures to changes in interest
rates. Our revolving credit facility, which had average borrowings of $7.6
million during 1998 and was zero at the end of the year had a variable interest
rate, which exposed our statement of operations and cash flows to changes in
interest rates. It is our intention, through this offering and through the
proceeds of a new $300.0 million bank facility, to repay the subordinated
debentures. Because the new facility will carry a variable interest rate pegged
to market indices, our statement of operations and our cash flows will be
exposed to changes in interest rates. This facility is intended to fund
operating needs if necessary.

The second component of interest rate risk involves the short-term
investment of excess cash. This risk impacts fair values, earnings and cash
flows. Excess cash is primarily invested in overnight repurchase agreements
backed by U.S. Government securities. These are considered to be cash
equivalents and are shown that way on our balance sheet. Our average balance in
such securities was approximately $4.5 million over the past year. Earnings from
these cash equivalents totaled $173,000 for the year ended December 31, 1998.

We buy a variety of raw materials for inclusion in our products. The only
raw material that we consider to be of a commodity nature is wax. Wax is a
petroleum-based product. However, its market price has not historically
fluctuated with the movement of oil prices. Rather, over the past five years wax
prices have moved with inflation.

At this point in time, our operations outside of the United States are
immaterial. Accordingly, we are not exposed to substantial risks arising from
foreign currency exchange rates.

32
<PAGE>
BUSINESS OF YANKEE CANDLE

We sell our candles through our wholesale customers who have approximately
12,000 gift store locations nationwide and through our rapidly expanding retail
base of 85 company-owned and operated stores in 26 states as of June 30, 1999.
Our 90,000 square foot flagship store in South Deerfield, Massachusetts offers a
unique retail and entertainment experience and is a major tourist destination,
attracting an estimated 2.5 million visitors a year. We also sell our products
through our direct mail catalogs, Internet website at www.yankeecandle.com,
international distributors and our distribution center located in the United
Kingdom.

Michael Kittredge founded our business in 1969 when he was just seventeen
years old, by making his first candle in his family kitchen. He grew the
business steadily and, together with our dedicated management team, has built
Yankee Candle into a leader in the premium scented candle market. Most of our
current senior managers have been with us for 17 years. In April 1998, Yankee
Candle was recapitalized and the Forstmann Little partnerships and Yankee Candle
management became the owners of a 90% equity interest. Since the 1998
recapitalization, we have reinvested our capital to actively pursue our
wholesale and retail growth strategies. To facilitate this growth, we have added
several key employees, expanded our production capacity, upgraded our warehouse
management and information systems, and opened our distribution center in the
United Kingdom.

INDUSTRY OVERVIEW

We operate in the rapidly growing scented candle segment of the giftware
industry. Unity Marketing, an independent market research firm specializing in
the giftware industry, estimates that the domestic giftware industry has grown
on average 12% per year since the early 1990's to reach $47 billion in 1997.
Industry sources also estimate that the domestic market for candles has grown on
average 10 to 15% per year since the early 1990's to reach $2.1 billion in 1998,
according to Unity Marketing. The scented candle segment, in which we compete,
represents the fastest growing part of the candle and home fragrancing industry.
Based on a report by Kline & Company, an international consulting firm, the
retail market for scented candles in 1997 was estimated to be $1.5 billion.

The scented candle market is expected to continue to grow based on the
following positive industry factors:

- Favorable consumer trends, including the aging of baby boomers and
increased spending on home decor. Consumers are drawn to candles because
they create a relaxing home environment.

- Consumers are increasingly buying candles as an attractive gift item.
According to Unity Marketing, 77% of candle customers bought candles as
gifts in 1998.

- Consumers are increasingly burning candles year round because of their
affordable prices and broad range of scents and styles.

We believe consumers are becoming increasingly sophisticated about the
quality and fragrance of candles they purchase. According to Unity Marketing,
the prime consumer market for candles are women

33
<PAGE>
between the ages of 25 and 54 with annual household incomes of over $25,000. We
believe that 85% of our candle consumers are women and that men represent a
growing and undeveloped consumer market segment.

OUR COMPETITIVE STRENGTHS

WE HAVE A STRONG BRAND IDENTITY AS THE LEADING PREMIUM CANDLE COMPANY WITH A
LOYAL CUSTOMER BASE.

We have long been recognized as the leading brand in the premium scented
candle market. We have been ranked number one in sales since 1993 in the
domestic candle category by GiftBeat, a giftware industry newsletter. We have
also been consistently ranked in the top two for product re-orders across all
giftware categories during the same period by GiftBeat. Our Country
Kitchen-Registered Trademark- and Housewarmer-Registered Trademark- lines were
introduced in 1974 and 1987, respectively, and contributed to making Yankee
Candle the leading brand in the premium scented candle market. Our high quality
products use premium fragrance oils and highly-refined paraffin wax, and create
long-lasting enjoyment and strong customer loyalty. We reinforce our brand
identity with our decorative product packaging and labeling, realistic
fragrances, clearly recognizable display cases and frequent trade advertising.
We believe that we have high consumer satisfaction, with 74% of our retail
customers ranking Yankee Candle as better than other candle brands, according to
a recent Unity Marketing study. Our customers also spend more on candles, with
over 60% of our customers purchasing more than $50 of candles in 1998 while only
18% of national customers spent that amount on candles. We believe that the
Yankee Candle brand name will continue to serve as a strong platform for
launching new product lines and product extensions.

WE HAVE A WELL-ESTABLISHED, NATIONAL WHOLESALE CUSTOMER BASE.

We distribute Yankee Candle products through our extensive wholesale
customer base which has approximately 12,000 gift store locations nationwide and
provides us with a strong presence throughout the United States. As a result of
our brand name, the popularity and profitability of our merchandise and our
successful product display system, we are the top selling product for many of
our wholesale accounts. Our wholesale customers are extremely loyal, with over
65% of them having been customers for over five years. Our wholesale base is
also broad, with no individual wholesale buying group accounting for more than
2% of our total sales. We market our wholesale products through our own direct
sales force which enhances our customer communication and enables us to better
serve our customers through superior order accuracy and response times.

WE HAVE A DEMONSTRATED ABILITY TO CARRY OUT OUR RETAIL EXPANSION.

Our strong wholesale presence and nationally recognized brand have enabled
us to successfully roll-out our own retail stores. As of June 30, 1999, we had
85 retail stores located in 26 states. We have experienced 38% annual growth in
retail sales since 1996 and, in 1998, our retail division generated over $80
million in sales. As shown below, our stores have enjoyed strong comparable
store growth of over 16% for the last three years.

<TABLE>
<CAPTION>
COMPARABLE STORE GROWTH
- -------------------------------
1996 1997 1998
- --------- --------- ---------
<S> <C> <C>
18.4% 16.4% 16.5%
</TABLE>

Our retail stores are primarily located in high-end malls and, to a lesser
extent, strip centers and tourist destinations and are designed with a
distinctive and consistent "Yankee Candle" appearance. In 1998, our retail
stores achieved average sales per square foot of over $650. All but one of our
retail stores have been profitable beginning in their first year of operation.
To support our retail stores, we have made significant investments in
infrastructure, training and information systems. As a result of these
investments,

34
<PAGE>
we opened nine stores from September 30 to December 31, 1998. This is a store
opening rate comparable to our plan to open approximately 40 new stores in 1999.

WE DESIGN, MANUFACTURE AND DISTRIBUTE OUR OWN PRODUCTS.

We design, develop and manufacture our candle products and control their
distribution. This enables us to ensure the highest quality products, prompt
delivery to our wholesale customers and retail stores and high margins. In
addition, our retail network allows us to control our brand image and
positioning and conduct extensive product testing. By first testing our products
at our retail stores, we can ensure that only our best-selling products are
distributed nationwide to our wholesale customers. We believe that our ability
to manufacture and distribute our own products provides us with a significant
advantage over our competitors.

OUR SENIOR MANAGEMENT TEAM HAS SIGNIFICANT EXPERIENCE IN THE CANDLE
INDUSTRY.

Our chairman and senior management have a combined 80 years of experience in
the candle industry and over 90 years of experience in the retail sector. Our
President and Chief Executive Officer, as well as our Senior Vice President of
Retail Operations and Senior Vice President of Wholesale Operations, have each
been with Yankee Candle for 17 years. During this time, our senior management
has established a record of strong and consistent growth in sales and operating
profit. In addition to our senior management team, our key managers in
manufacturing, site selection and product development have significant
experience in the candle industry, many with tenures of over 15 years with
Yankee Candle. We believe that the strong commitment of all our employees will
allow us to continue to execute our strategy and grow our business.

OUR GROWTH STRATEGY

WE PLAN TO RAPIDLY EXPAND OUR RETAIL STORE BASE.

We believe that we have substantial opportunities for growth by expanding
our retail store base. As of June 30, 1999, we have already opened 23 new stores
and we plan to open approximately 17 additional stores by the end of the year,
which we expect will increase our retail presence to approximately 30 states. We
believe that we have a highly successful retail store format that reinforces our
brand awareness, generates strong sales per square foot and can be readily
transferred to new markets. Our distinctive store design is flexible and can be
reconfigured to accommodate a variety of location types. Once we take possession
of the premises, it generally takes 60 days to open a store. In opening new
stores, we will continue to target high visibility retail locations in premium
malls with strong demographics and high sales per square foot. We believe that
the transferability of our retailing format, our record of successfully opening
new stores and our continuing investment in training, management information
systems, distribution centers and other operating support infrastructure,
provide us with a strong foundation for rapid expansion. We plan to have 85% of
our 40 new 1999 stores open by the end of the third quarter, and we expect the
balance to open by the end of November 1999.

WE PLAN TO CONTINUE TO GROW OUR SALES THROUGH OUR WHOLESALE DISTRIBUTION
CHANNEL.

Our nationwide wholesale base of independent gift store retailers represents
a large and stable source of sales growth. Over the last three years, our
wholesale business grew by over 22% annually and, in 1998, accounted for
approximately 56% of our total sales. We are committed to continuing to grow our
wholesale business and are investing significant capital in new promotional
programs, improved telemarketing systems and enhanced customer service. We
expect to grow our wholesale sales by adding new locations, while increasing the
average order size and re-order frequency of our existing customers. We are
targeting new and underdeveloped domestic markets, particularly in the south and
west. We also believe that our existing wholesale customers are favorably
impacted by our retail expansion. By further

35
<PAGE>
increasing our brand awareness, our retail stores expand our markets and
increase overall sales of our products in both our wholesale and retail
divisions.

WE PLAN TO EXPAND OUR INTERNATIONAL SALES.

We are predominately a U.S. business but have long-term international
expansion opportunities. We currently sell our products through international
distributors. In addition, we established our own European wholesale subsidiary
in June 1998 and began product shipments in January 1999. The European candle
market is currently a $1 billion industry and presents an important opportunity
for our long-term growth.

WE PLAN TO EXPAND OUR DIRECT MAIL CATALOG AND INTERNET OPERATIONS.

We market our products through our direct mail catalogs and our Internet
website at www.yankeecandle.com. In 1998, our direct mail business, which is a
part of our retail division, grew by over 60% and generated over $2 million of
sales. Our website, which was introduced in 1996 and was upgraded for retail
transactions in 1997, began generating revenues in late 1997. We continually
upgrade our website and catalog offerings in order to provide existing and new
customers with convenient purchase options. We expect both of these businesses
to continue to grow over the next several years as a result of demographic and
lifestyle changes in the consumer population, including the aging of the baby
boomers, decreased shopping time and the need for shopping convenience.

WE PLAN TO CONTINUE TO INTRODUCE NEW PRODUCTS.

Yankee Candle has a long history as a product and market innovator in the
premium scented candle segment of the giftware industry. We have a strong
in-house product design and development team and plan to continue to invest in
new products and packaging. We are able to successfully launch new product lines
by first testing products at our retail stores. In 1999, we plan to introduce 12
new fragrances, six of which were introduced in January. In addition to new
fragrances, we recently introduced in our retail stores a FINE FRAGRANCES candle
line with frosted-glass packaging, and an aromatherapy candle line. Both of
these products are designed to appeal to existing customers and to attract new
customers. We will continue to use our strong brand name and our significant
manufacturing and distribution capabilities to successfully introduce new
products.

PRODUCTS

We develop and introduce new products and fragrances throughout the year. We
currently offer over 1,000 SKU's of Yankee Candle manufactured products. Most of
our products are marketed under the trade names
Housewarmer-Registered Trademark- and Country Kitchen-Registered Trademark- and
include the following product styles:

- Jar Candles--scented candles in decorative glass jars; available in 22
oz., 14.5 oz. and 3.7 oz. sizes.

- Samplers-Registered Trademark---votive candles for sampling different
fragrances.

- Scented Tapers--the oldest candle style, dipped more than 30 times.

- Scented Ionic-Registered Trademark-Pillars (grooved).

- Standard Pillars (smooth)--both scented and unscented.

- Wax Potpourri Tarts-Registered Trademark---scented wax without wicks that
releases its fragrance when melted and warmed in a potpourri pot.

- Scented Tea Lights--small, colored and scented candles in clear cups made
for home fragrancing.

- Tart-Registered Trademark-Warmers--white unscented candles in aluminum
cups made for potpourri pots.

36
<PAGE>
- Kindle Candles-Registered Trademark---unscented wax in a paper cup for use
in a fireplace or campfire as a firestarter.

These candle products are available in a wide range of fragrances and
colors. We currently maintain approximately 150 fragrances in our retail stores,
with our 54 best-selling fragrances available nationwide to our wholesale
customers. In addition to distinctive fragrances, we promote our brand through
consistent product packaging and labeling. The Yankee Candle name is typically
embossed on the top of our glass containers and is clearly displayed on every
product label. We also package our products in attractive gift baskets and
holders for sale in our retail stores. We offer glassware accessories and other
candle-related accessories at our retail stores in a variety of sizes and
shapes.

We seek to maintain a moderate price of under $20.00 for almost all of our
products in order to reinforce our customers' perception of our products as
highly affordable. As a result, our retail prices range from $0.89 for Wax
Potpourri Tarts-Registered Trademark- to $19.50 for 22 oz. jar candles. Since
1995, we have only increased our prices, on average, by 2.1% per year. We had no
price increase in 1998 and implemented a 2.3% price increase in January 1999.

RETAIL STORES

Our retail stores are an important and fast growing distribution channel and
represent an increasing percentage of our overall sales. From 1996 to 1998,
sales from our retail division, which includes our retail stores, catalog and
Internet operations, have grown at a compound annual rate of 38% from $42.9
million in 1996 to $81.2 million in 1998 and increased from 38% to 44% of our
total sales. Moreover, Yankee Candle retail stores generated comparable store
growth of 18.4% in 1996, 16.4% in 1997 and 16.5% in 1998. In 1998, our retail
stores achieved average sales per square foot of over $650.

As of June 30, 1999, we had 85 retail stores in 26 states and expect to open
approximately 17 stores during the rest of 1999. By the end of 1999, we expect
to have a retail presence in approximately 30 states. Yankee Candle has
established a strong retail presence in the northeast and is rapidly expanding
nationwide. In opening new stores we target new retail locations in highly
visible areas in premium malls and, to a lesser extent, strip centers and
tourist destinations. Of our 85 retail stores, 61 are located in malls and 24
are located in non-malls. Since we opened our flagship retail store in 1983, we
have closed only one location, which was profitable when closed. All but one of
our retail stores have been profitable in their first year of operation.

We design each of our retail stores with a warm, home-like atmosphere to
attract customers and provide a convenient shopping experience. Each store has
candle displays sorted by color, fragrance type and product category. Our store
design uses rich wood and other traditional elements to convey a high quality
image that complements our product and company identity. The display fixtures
hold sufficient inventory to support fast turning sales at peak season. The
target size of our retail stores is 1,500 to 2,000 square feet, with an average
size of approximately 1,650 square feet. Our retail stores typically offer
Yankee Candle products in 150 fragrances, including our 54 most popular
fragrances. A typical retail store has 1,000 SKU's of candles and 350 SKU's of
candle accessories.

Superior customer service and a knowledgeable employee base are key elements
of our retail strategy. We emphasize formal employee training, particularly with
respect to product quality, candle manufacturing and the heritage of Yankee
Candle. We also have a well-developed, 14-day training program for managers and
assistant managers and an 8-hour training program for sales associates. Our high
customer service standards are an integral part of our ongoing success. Each
store is responsible for implementing and maintaining these customer service
standards.

YANKEE CANDLE'S FLAGSHIP STORE

Our flagship store is the world's largest candle and Christmas store with
over 90,000 square feet of retail and entertainment space. This store promotes
Yankee Candle's image and culture and is an

37
<PAGE>
important testing ground for our new product introductions. The store carries
over 24,000 SKU's of gift items supplied by over 750 vendors, and generates
approximately 65% of its revenues from the sale of Yankee Candle products.
Located in South Deerfield, Massachusetts, this store is a major tourist
destination, attracting an estimated 2.5 million visitors annually. The store
provides visitors with a total shopping and entertainment experience and
includes the Yankee Candlemaking Museum, the Yankee Candle Car Museum and a
240-seat restaurant.

DIRECT MAIL CATALOG AND INTERNET

As part of our retail division, we market our products through our direct
mail catalogs and Internet website. We expect both businesses to grow over the
next several years as a result of demographic and lifestyle changes in the
consumer population, including the aging of baby boomers, decreased shopping
time and a need for shopping convenience. In 1998, our direct mail business grew
by over 60% and generated over $2 million of sales. Our direct mail catalog
features all wholesale products and promotes the Deerfield flagship store as a
destination. We typically send out five to six catalogs per year. We believe
there are significant opportunities to grow the catalog business by adding
additional products and accessories, increasing our telephone hours and
expanding our mailing list. Our catalog is currently only sent to our existing
customers. We have the potential to rent or purchase lists from third parties.

We introduced our website in 1996 and upgraded it for retail transactions in
1997. The website, www.yankeecandle.com, offers browsers the opportunity to
preview the Deerfield store, learn more about Yankee Candle's history and
purchase on-line the same range of products available to our wholesale accounts.
The website began generating revenues in late 1997 and is expected to grow as we
continue to invest in website design and navigation features and explore banner
advertising and cross marketing opportunities with e-commerce and giftware
Internet service providers.

WHOLESALE DISTRIBUTION

Our wholesale strategy focuses on a nationwide base of small, independent
and credit-worthy gift store retailers. The wholesale business is a critical
part of our growth strategy and lays the foundation for the successful expansion
of our retail business by establishing a national brand. From 1996 to 1998,
sales from our wholesale accounts have grown at a compound annual rate of 22%
from $69.3 million in 1996 to $103.3 million in 1998, and changed from 62% to
56% of our total sales. Our wholesale customers currently have approximately
12,000 gift store locations nationwide and are located in all 50 states. In
1998, the northeast region accounted for 30% of domestic wholesale revenues, the
midwest 35%, the south 21% and the west 14%. As a result of our strong brand
name, the popularity and profitability of our products and our emphasis on
customer service, our wholesale customers are extremely loyal with over 65% of
them having been customers for over five years. No individual wholesale buying
group accounts for more than 2% of our total sales and almost 90% of our
wholesale accounts are located in non-mall locations. We are targeting future
wholesale locations in new and underdeveloped markets, particularly in the
southern and western United States.

We have developed a successful approach to wholesale distribution which has
established Yankee Candle as the top selling brand for many of our wholesale
customers. We actively seek to increase the average size and frequency of
wholesale orders through our innovative product display system, promotional
programs, new products and telemarketing initiatives. We promote a "Shop Within
A Shop" display system to our wholesale customers which presents our products
vertically by fragrance and horizontally by color in a distinctive wood hutch.
Yankee Candle recommends that dealers invest in an 8- to 12-foot display system
which holds $5,300 to $8,000 of Yankee Candle products at suggested retail
prices. This display system maximizes sales and profitability by providing
strong visual impact, shopping and restocking ease, and optimum space
efficiency. We have also implemented a number of promotional programs to
increase the square footage dedicated to Yankee Candle products as well as the
breadth of Yankee Candle products offered by our wholesale customers. For
example, we promote a FRAGRANCE OF THE MONTH program,

38
<PAGE>
with featured fragrance suggestions for each month. This program encourages
dealers to increase their re-order schedule to 12 times per year and implement a
customer promotion that has already proven successful in our retail stores. The
promotion encourages consumers to try different fragrances and return to the
stores more frequently in order to buy the FRAGRANCE OF THE MONTH. In addition
to specific promotions, we advise our wholesale customers on an ongoing basis
regarding product knowledge, display suggestions, promotional ideas and
geographical consumer preferences.

We have a selective dealer approval process, designed to create consistent
nationwide standards for all Yankee Candle dealers. As a result of our high
credit standards for dealers, we had bad debt expense of only 0.18% of wholesale
sales in 1998.

We use a dedicated in-house direct sales force to service our wholesale
accounts. In 1998, we eliminated our network of independent manufacturer
representatives and completed a major shift to a direct sales force. This has
enabled Yankee Candle to gain greater control over the sales process, to provide
customers with better and more accurate information, faster order turn-around
and improved customer service, and to create more consistent merchandising
nationwide and reduce costs.

INTERNATIONAL OPERATIONS

We intend to expand internationally. We currently sell products through
international distributors and our distribution center in the United Kingdom. In
June 1998, we established Yankee Candle Europe, our European subsidiary, and
hired the former managing director of one of the largest United Kingdom candle
manufacturers to lead our international expansion program. In addition, we
opened a new 27,000 square foot distribution center in Bristol, England and
product shipments began in January 1999. We currently sell our products directly
to stores in the United Kingdom and sell through distributors in Austria,
Benelux, Denmark, Germany, Norway, Sweden and Switzerland.

NEW PRODUCT DEVELOPMENT

We have a long history as a product and market innovator in the premium
candle segment of the giftware industry. We have a strong in-house product
design and development team comprised of artists, fragrance specialists,
designers, packagers and buyers who work collaboratively to design new products
that are attractive to customers and can be manufactured cost-effectively. New
products are typically developed in less than a year. In January 1999, we
introduced six new fragrances: Berry Bramble-TM-, Mountain Lake-TM-, Storm
Watch-TM-, Vineyard-TM-, Lemon Lime and Hydrangea. We plan to introduce six
additional new fragrances during the remainder of 1999. In addition, we recently
introduced a FINE FRAGRANCES candle line with frosted-glass packaging, and an
aromatherapy candle line. Other new product ideas include new product sizes, new
packaging and variations of existing fragrances.

PRODUCT MANUFACTURING

Approximately 90% of our sales are generated by products we manufacture at
our 294,000 square foot facility in Massachusetts. As a manufacturer, we are
able to closely monitor the quality of our products and control our production
costs. We believe this is an important competitive advantage as it enables us to
ensure high quality products and maintain affordable pricing.

Our products are manufactured using filled, molded, extruded, compressed or
dipped manufacturing methods. The majority of our products are filled products
which are produced by pouring colored, scented liquid wax into a glass container
with a wick. Pillars are made by extrusion, in which wax is pressed around a
wick through a die. Tapers are produced through a dipping process and
Tarts-Registered Trademark- and Samplers-Registered Trademark- are made by
compression.

Yankee Candle uses high quality fragrances, premium-grade, highly refined
paraffin waxes, and superior wicks and dyes to create premium products. Our
manufacturing processes are designed to ensure

39
<PAGE>
the highest quality and quantity of candle fragrance, wick quality and
placement, color, fill level, shelf life and burn rate. We are continuously
engaged in efforts to maximize our quality and minimize our costs by using
efficient production and distribution methods and technological advancements.

SUPPLIERS

We maintain strong, established relationships with our principal fragrance
and petroleum-based wax suppliers. We believe we use the highest-quality
suppliers in our industry and maintain back-up suppliers who are able to provide
services and materials of similar quality. We have been in the business of
manufacturing premium scented candles for many years and are therefore
knowledgeable about the different levels of quality of raw materials used in
manufacturing candles. We have developed, jointly with our suppliers, several
proprietary fragrances, which are exclusive to Yankee Candle. Raw materials used
in the manufacturing process, including wax, glassware, hutches and packaging
materials are readily available from multiple sources at comparable prices. In
1998, no single supplier represented 10% or more of our total supply purchases,
except for ARC International which provided us with glassware and represented
14% of our total supply purchases.

ORDER PROCESSING AND DISTRIBUTION

We currently have two warehouse and distribution facilities located within a
four mile radius in Deerfield and Whately, Massachusetts, and one warehouse and
distribution center in Bristol, England for products shipped to Europe. We
intend to open another facility in the fall of 1999 in Salt Lake City, Utah for
the warehousing and distribution of products to our retail stores and wholesale
accounts located in the western United States. This facility is expected to be
100,000 square feet in size.

We utilize computer systems to maintain efficient order processing from the
time a product enters the system through shipping and ultimate payment
collection from customers. We implemented uniform computer and communication
software systems allowing for on-line information access between our
headquarters and retail stores. We upgraded our information systems in 1998 to
further improve order processing and enhance inventory management and accuracy.
As part of these upgrades, we adopted a software package that allows us to
forecast demand for our products and efficiently plan our production schedules.
We also implemented a pick-to-light system which allows Yankee Candle employees
at our warehouse to receive information directly from the order collection
center and quickly identify, by way of blinking lights, the products and
quantity necessary for a particular order. To accurately track shipments and
provide better service to customers, we also use handheld optical scanners and
bar coded labels. We believe this software for the processing and shipment of
orders from the warehouse greatly improves our overall customer service through
enhanced order accuracy and reduced turnaround time.

The products sold by Yankee Candle in the United States are generally
shipped by United Parcel Service, Roadway Package Systems or other freight
carriers. We also lease a fleet of four trucks primarily used to ship products
to select company-owned retail stores. Our products are usually shipped to our
retail stores twice a week during the off-season and up to five times a week
during the holiday season. In 1998, our order lead time to our wholesale
customers, from order placement to shipment of goods, was typically three
business days during the first three calendar quarters and less than five
business days during the fourth quarter. During the first three quarters of
1998, we shipped 99.5% of all orders requested complete and over 92% complete in
the fourth quarter. We believe that our timely and accurate distribution is an
important differentiating factor for our customers. This belief is based on
numerous conversations between our management and sales force, on the one hand,
and our wholesalers and customers, on the other hand.

INTELLECTUAL PROPERTY

Yankee Candle has obtained 31 U.S. trademark registrations, including Yankee
Candle-Registered Trademark-, Country Kitchen-Registered Trademark-,
Housewarmer-Registered Trademark-, Samplers-Registered Trademark-, Wax Potpourri
Tarts-Registered Trademark- and Kindle Candles-Registered Trademark-, and has
pending 10

40
<PAGE>
trademark applications with respect to its products. Trademark registrations
allow us to use those trademarks on an exclusive basis in connection with our
products. If we continue to use our trademarks, and make all required filings
and payments, these trademarks can continue in perpetuity. We also register many
of our trademarks in foreign countries.

We believe that our trademarks are valuable assets and we intend to maintain
and renew our trademarks and their registrations and to vigorously defend them
against trademark infringement.

COMPETITION

We compete generally for the disposable income of consumers with other
producers in the giftware industry. The giftware industry is highly competitive
with a large number of both large and small participants. Yankee Candle products
compete with other scented and unscented candle products and with other gifts
within a comparable price range, like boxes of candy, flowers, wine, fine soap
and related merchandise. Yankee Candle's competitors distribute their products
through independent gift retailers, department stores, mass market stores and
mail order houses.

The candle market overall is highly fragmented. According to Unity
Marketing, 72% of all candle companies have less than $10 million in sales.
Premium market candle manufacturers include Colonial Candles, owned by Blyth
Industries, Inc., A.I. Root and Village Candle. The most important factors
affecting sales of candles are scent, price, burn quality, packaging, color and
shape.

Yankee Candle's retail store competitors include the franchised candle
chains Wicks n' Sticks and Candleman, although these two chains are also our
wholesale customers. Our other retail competition includes specialty candle
stores, as well as gift and houseware retailers.

We believe we are the leading premium scented candle company in the United
States and the only major candle company with a strong combination of
manufacturing, wholesale and retail operations. The principal bases of
competition for candles and other comparably priced giftware include brand
loyalty, quality, perceived value, design, product display, consumer appeal,
service and price. We believe our competitive position is enhanced by a variety
of factors, including our national premium brand image, high quality reputation
among consumers and retailers, distinctive retail stores, extensive wholesale
distribution base, knowledgeable employees, effective display and product
presentation, affordable pricing, our low cost, highly automated manufacturing
operations and strong and growing presence in both wholesale and retail
segments. Some of our competitors are part of large, diversified companies
having greater financial resources and a wider range of product offerings than
Yankee Candle.

EMPLOYEES

At June 30, 1999, we employed approximately 1,340 full-time employees and
550 part-time employees. All of these employees are non-union, and we believe
that our labor relations are good. We also use between 200 and 250 seasonal
workers hired through temporary employment agencies.

LEGAL PROCEEDINGS

We are involved from time to time in ordinary routine legal proceedings
relating to our business. We believe that none of these legal proceedings will
have a material adverse impact on our results of operations, cash flow or
financial condition.

ENVIRONMENTAL MATTERS

We are subject to various federal, state, local and foreign laws and
regulations governing the generation, storage, use, emission, discharge,
transportation and disposal of hazardous materials and the health and safety of
our employees. In addition, we are subject to environmental laws which may
require investigation and cleanup of any contamination at facilities we own or
operate or at third party waste

41
<PAGE>
disposal sites we use. These laws could impose liability even if we did not know
of, or were not responsible for, the contamination.

We have in the past and will in the future incur costs to comply with
environmental laws. We are not, however, currently aware of any costs or
liabilities relating to environmental matters, including any claims or actions
under environmental laws or obligations to perform any cleanups at any of our
facilities or any third party waste disposal sites, that are expected to have a
material adverse effect on our operations, cash flow or financial condition. It
is possible, however, that material environmental costs or liabilities may arise
in the future.

FACILITIES

Yankee Candle owns facilities totaling 537,600 square feet, located on 82
acres, within a four mile radius in Deerfield and Whately, Massachusetts, as
described in the table below:

<TABLE>
<CAPTION>
TYPE OF FACILITY LOCATION SIZE
- -------------------------------------------------------------------- -------------------------- ----------------
<S> <C> <C>
Manufacturing, wholesale distribution and offices Whately, Mass. 294,000 sq. ft.
Flagship retail store, car museum and restaurant South Deerfield, Mass. 90,000 sq. ft.
Retail warehouse and distribution center South Deerfield, Mass. 60,000 sq. ft.
Retail support South Deerfield, Mass 48,000 sq. ft.
Marketing and design building Whately, Mass. 16,000 sq. ft.
Employee health and fitness center South Deerfield, Mass. 12,000 sq. ft.
Retail offices South Deerfield, Mass. 11,000 sq. ft.
Wholesale telemarketing South Deerfield, Mass. 6,600 sq. ft.
</TABLE>

In addition, we have a 27,000 square foot leased distribution facility in
Bristol, England and plan to open a new 100,000 square foot leased distribution
facility in Salt Lake City, Utah in September 1999. We currently estimate that
we will spend approximately $1.5 million in connection with the opening of the
Salt Lake City facility.

We believe that these facilities are suitable and adequate and have
sufficient capacity to meet our current needs.

42
<PAGE>
Other than the South Deerfield flagship store and three smaller retail
locations, we lease our other retail stores. Initial store leases for mall
locations range from eight to ten years. For non-mall locations, most leases are
five years, with a five-year renewal option. Our retail stores are located in
the following states and cities:

ARIZONA
- -Glendale

CALIFORNIA
- -Montclair
- -Northridge
- -Redondo Beach
- -Riverside
- -Santa Ana

COLORADO
- -Denver
- -Littleton

CONNECTICUT
- -Avon
- -Danbury
- -Farmington
- -Manchester
- -Orange
- -Waterbury
- -Waterford

FLORIDA
- -Jacksonville
- -Orange Park
- -Orlando
- -Tampa

GEORGIA
- -Alpharetta

KANSAS
- -Overland Park

KENTUCKY
- -Florence

MAINE
- -Freeport
- -Kittery

MARYLAND
- -Annapolis
- -Baltimore (Whitemarsh)
- -Baltimore (Harbor Place)
- -Gaithersburg
- -Towson

MASSACHUSETTS
- -Boston
- -Cambridge
- -Holyoke
- -Hyannis
- -Lenox
- -Lynnfield
- -Natick
- -North Attleboro
- -Pembroke
- -Shrewsbury
- -South Deerfield
- -Stockbridge
- -Sturbridge
- -Taunton

MICHIGAN
- -Dearborn
- -Novi

MINNESOTA
- -Bloomington
- -Edina
NEVADA
- -Las Vegas

NEW HAMPSHIRE
- -Manchester
- -Nashua
- -North Conway

NEW JERSEY
- -Freehold
- -Jersey City
- -Paramus
- -Rockaway
- -Woodbridge

NEW YORK
- -Albany
- -Buffalo
- -Middletown
- -Poughkeepsie
- -Rochester
- -Saratoga
- -Staten Island
- -Syracuse
- -Westbury
- -West Nyack

NORTH CAROLINA
- -Greensboro
OHIO
- -Beavercreek
- -Columbus
- -Dublin

PENNSYLVANIA
- -King of Prussia
- -Philadelphia (Chestnut Hill)

RHODE ISLAND
- -Cranston
- -Newport

SOUTH CAROLINA
- -Columbia
- -Mount Pleasant
- -Myrtle Beach

TEXAS
- -Austin

VERMONT
- -Burlington
- -Manchester Center

VIRGINIA
- -Dulles
- -Norfolk
- -Richmond

WASHINGTON
- -Lynnwood
- -Seattle

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<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following sets forth information regarding the executive officers and
directors of Yankee Candle as of June 1, 1999:

<TABLE>
<CAPTION>
NAME AGE POSITION
- -------------------------------------------------- --- --------------------------------------------------
<S> <C> <C>
Michael J. Kittredge.............................. 47 Chairman of the Board and Director (Class II)
Michael D. Parry.................................. 47 President, Chief Executive Officer and Director
(Class III)
Robert R. Spellman................................ 51 Senior Vice President of Finance and Chief
Financial Officer
Gail M. Flood..................................... 40 Senior Vice President of Retail Operations
Stephen T. Williams............................... 48 Senior Vice President of Wholesale Operations
Theodore J. Forstmann............................. 59 Director (Class I)
Nicholas C. Forstmann............................. 52 Director (Class II)
Sandra J. Horbach................................. 38 Director (Class III)
Steven B. Klinsky................................. 43 Director (Class I)
Michael S. Ovitz.................................. 52 Director (Class I)
Ronald L. Sargent................................. 43 Director (Class II)
Emily Woods....................................... 38 Director (Class III)
</TABLE>

MICHAEL J. KITTREDGE is the Chairman of the Board. Mr. Kittredge is the
founder of Yankee Candle. He served as a Director until April 1998. Mr.
Kittredge was appointed a Director of Yankee Candle Holdings in July 1998 and
reappointed a Director of Yankee Candle in April 1999. He has been honored
several times by the United States Small Business Administration (S.B.A.), once
in 1985 as the winner of the "Entrepreneurial Success Award," and again in 1986
as the "Businessman of the Year" for Massachusetts and the New England region.
In 1996, Mr. Kittredge received USA Today's and Ernst & Young's Retail
Entrepreneur of the Year Award.

MICHAEL D. PARRY is a Director, the President and Chief Executive Officer.
Mr. Parry joined Yankee Candle in 1982 as General Manager, and was appointed
Vice President in January 1989 and President in July 1996. Mr. Parry has served
as a Director of Yankee Candle since May 1998 and a Director of Yankee Candle
Holdings since July 1998. He was promoted to his current position of Chief
Executive Officer in November 1998. Since 1989, he has been in charge of all of
our operations including general oversight of wholesale and retail activities
and manufacturing and distribution.

ROBERT R. SPELLMAN is the Senior Vice President of Finance and Chief
Financial Officer. Prior to joining Yankee Candle in November 1998, Mr. Spellman
was Senior Vice President of Finance of Staples, Inc. from 1988 through 1994,
and Chief Financial Officer of Star Markets Company, Inc. from 1994 through
1998.

GAIL M. FLOOD is the Senior Vice President of Retail Operations. Ms. Flood
joined Yankee Candle in 1982 as Retail Store Manager. Since 1988, she has been
in charge of our retail operations. She was appointed Vice President of Retail
Operations in July 1996, and promoted to her current position in November 1998.

STEPHEN T. WILLIAMS is the Senior Vice President of Wholesale Operations.
Mr. Williams joined Yankee Candle in 1982, and held a number of different
positions in a variety of areas including Production, Packaging and Shipping
prior to being appointed National Sales Manager in 1987. In July 1996, Mr.
Williams was made Vice President of Wholesale Operations, and was promoted to
Senior Vice President in November 1998. Since 1987, he has been in charge of our
wholesale operations.

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<PAGE>
THEODORE J. FORSTMANN has served as a Director of Yankee Candle Holdings
since July 1998 and a Director of Yankee Candle since April 1999. Mr. Forstmann
has been a general partner of FLC XXIX Partnership, L.P., the general partner of
Forstmann Little & Co., since he co-founded Forstmann Little & Co. in 1978. He
is Chairman of the Board and Chief Executive Officer of Gulfstream Aerospace
Corporation. Theodore J. Forstmann and Nicholas C. Forstmann are brothers.

NICHOLAS C. FORSTMANN has been a Director of Yankee Candle Holdings since
July 1998 and a Director of Yankee Candle since April 1999. He has been a
general partner of FLC XXIX Partnership, L.P. since he co-founded Forstmann
Little & Co. in 1978. He is also a director of Gulfstream Aerospace Corporation.

SANDRA J. HORBACH has been a Director of Yankee Candle Holdings since March
1998 and a Director of Yankee Candle since May 1998. She has been a general
partner of FLC XXIX Partnership, L.P. since 1993. She is also a director of
Gulfstream Aerospace Corporation.

STEVEN B. KLINSKY has been a Director of Yankee Candle Holdings since July
1998 and a Director of Yankee Candle since April 1999. He has been a general
partner of FLC XXIX Partnership, L.P. since December 1986.

MICHAEL S. OVITZ has been a Director of Yankee Candle Holdings since
November 1998 and a Director of Yankee Candle since April 1999. He is an
independent businessman and investor, and has been active in this capacity since
December 1996. In August 1998, Mr. Ovitz co-founded Artists Management Group, a
management/production/multi-media company. From October 1995 to December 1996,
Mr. Ovitz was President of The Walt Disney Company. From 1975 to 1995, Mr. Ovitz
served as chairman of Creative Artists Agency, which he co-founded. Mr. Ovitz is
also a director of Livent, Inc. and Gulfstream Aerospace Corporation.

RONALD L. SARGENT has been a Director of Yankee Candle since May 20, 1999.
Mr. Sargent has served as President and Chief Operating Officer of Staples, Inc.
since November 1998. Prior to that time, he served in various capacities since
joining Staples, Inc. in March 1989, including President--North American
Operations from October 1997 to November 1998, President--Staples Contract &
Commercial from June 1994 to October 1997, and Vice President--Staples Direct
and Executive Vice President--Contract & Commercial from September 1991 until
June 1994.

EMILY WOODS has been a Director of Yankee Candle Holdings since July 1998
and a Director of Yankee Candle since April 1999. She is the Chairman of J. Crew
Group, Inc., which she co-founded in 1983. She is also a director of Beringer
Wine Estates.

THE BOARD OF DIRECTORS

Yankee Candle's By-Laws provide for a classified board of directors
consisting of three classes. Each class will consist, as nearly as possible, of
one-third of the total number of directors constituting the entire board. The
term of the initial Class I directors will terminate on the date of the 2000
annual meeting of stockholders; the term of the initial Class II directors will
terminate on the date of the 2001 annual meeting of stockholders; and the term
of the initial Class III directors will terminate on the date of the 2002 annual
meeting of stockholders. Beginning in 2000, at each annual meeting of
stockholders, successors to the class of directors whose term expires at that
annual meeting will be elected for a three-year term and until their respective
successors are elected and qualified. A director may only be removed with cause
by the affirmative vote of the holders of a majority of the outstanding shares
of capital stock entitled to vote in the election of directors. The Forstmann
Little partnerships have a contractual right to elect two directors until they
no longer own any shares of Yankee Candle common stock.

Directors who are neither executive officers of Yankee Candle nor general
partners in the Forstmann Little partnerships have been granted options to
purchase common stock in connection with their election to the board of Yankee
Candle Holdings or Yankee Candle. Directors do not receive any fees for serving

45
<PAGE>
on Yankee Candle's board, but are reimbursed for their out-of-pocket expenses
arising from attendance at meetings of the board and committees. See "--Outside
Director Stock Options."

The board has three committees: Executive, Compensation and Audit. The
Executive Committee consists of Michael D. Parry, Theodore J. Forstmann and
Sandra J. Horbach. The Compensation Committee consists of Theodore J. Forstmann,
Sandra J. Horbach and Nicholas C. Forstmann. The Audit Committee consists of
Steven B. Klinsky, Ronald L. Sargent and Emily Woods.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The members of the Compensation Committee of Yankee Candle's Board of
Directors are Theodore J. Forstmann, Nicholas C. Forstmann and Sandra J.
Horbach, each of whom has served on the Committee since April 1999. Yankee
Candle did not have a Compensation Committee, or committee performing comparable
functions, in 1998. Since the 1998 recapitalization, all 1998 compensation
decisions for Yankee Candle executive officers were made by the Compensation
Committee of Yankee Candle Holdings Corp., consisting of Theodore J. Forstmann
and Sandra J. Horbach. Each of Theodore J. Forstmann, Nicholas C. Forstmann and
Sandra J. Horbach are general partners in partnerships affiliated with the
Forstmann Little partnerships. See "--Relationships and Transactions between
Yankee Candle and its Officers, Directors, 5% Beneficial Owners and their Family
Members" for a description of certain transactions between the Forstmann Little
partnerships and Yankee Candle in connection with the 1998 recapitalization.
None of the members of the Yankee Candle Holdings or the Yankee Candle
Compensation Committees have been officers or employees of Yankee Candle or its
subsidiaries.

EXECUTIVE COMPENSATION

The following table sets forth information with respect to compensation for
the year ended December 31, 1998 paid by us for services to each person who
served as our Chief Executive Officer during 1998 and our three other most
highly paid executive officers who were serving as executive officers at
December 31, 1998.

SUMMARY COMPENSATION TABLE (1)

<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------------------------
OTHER ANNUAL ALL OTHER
BASE SALARY BONUS COMPENSATION(4) COMPENSATION
----------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
Michael J. Kittredge
Chairman of the Board....................................... $342,000 $ -- $ -- $21,016(5)
Michael D. Parry
President and Chief Executive Officer....................... 216,539 76,502 -- (6)
Robert R. Spellman(2)
Senior Vice President of Finance and Chief Financial
Officer..................................................... 30,962(3) 11,500(3) -- 575,173(7)
Gail M. Flood
Senior Vice President of Retail Operations.................. 149,616 58,628 -- (6)
Stephen T. Williams
Senior Vice President of Wholesale Operations............... 139,616 55,000 -- (6)
</TABLE>

- ------------------------

(1) Yankee Candle does not have any executive officers other than those named in
the summary compensation table. Mr. Kittredge served as Yankee Candle's
Chief Executive Officer until November 1998.

(2) Mr. Spellman became an employee of Yankee Candle in November 1998.

46
<PAGE>
(3) Reflects the portion of Mr. Spellman's annual base salary and annual bonus
that he actually earned in 1998.

(4) Unless otherwise indicated, the aggregate amount of perquisites and other
personal benefits was less than $50,000 or 10% of the total of annual salary
and bonus reported for that named executive officer.

(5) Includes premiums of $1,016 paid for life insurance, and a matching
contribution of $20,000 under the Yankee Candle Company Executive Deferred
Compensation Plan.

(6) Includes a matching contribution of $20,000 under the Yankee Candle Company
Executive Deferred Compensation Plan for each of Messrs. Parry and Williams
and Ms. Flood, and a special bonus of $9,433,962 paid in connection with the
1998 recapitalization for each of Messrs. Parry and Williams and Ms. Flood,
and premiums paid for life insurance in the amounts of $582, $313 and $132
for Messrs. Parry and Williams and Ms. Flood, respectively.

(7) Includes premiums of $173 paid for life insurance, a one-time signing bonus
of $500,000 and a one-time payment of $75,000 paid in connection with a
bonus forfeited by Mr. Spellman upon separation of his prior employment.

OPTION GRANTS

None of the executive officers named in the summary compensation table have
options to purchase common stock, but each owns shares of common stock. See
"Principal and Selling Stockholders."

EMPLOYMENT AGREEMENT

On October 22, 1998, we entered into an employment agreement with Robert R.
Spellman. The following are the key terms of his employment agreement:

- employment as Senior Vice President and Chief Financial Officer,

- base salary of $230,000 per year,

- eligibility to receive a target bonus equal to 35% of base salary under
the executive bonus plan,

- right to purchase shares of common stock, and

- a one-time signing bonus of $500,000. If Mr. Spellman leaves voluntarily
or is terminated for cause prior to May 9, 2000, he must repay this
signing bonus.

YANKEE CANDLE HOLDINGS STOCK OPTION PLAN

The Yankee Candle Holdings Corp. Employee Stock Option Plan provides for the
granting of options to purchase shares of Class A common stock of Yankee Candle
Holdings to any employee of Yankee Candle Holdings or its subsidiaries. These
options are not intended to qualify as incentive stock options. The plan is
currently administered by the Compensation Committee of the board of directors
of Yankee Candle Holdings, which committee sets the terms and conditions of the
options. Options vest over a five year period. Options to purchase a total of
1,670 shares of Class A common stock were granted during the period from April
27, 1998 to April 3, 1999 at an exercise price of $1,038.46 per share. All of
these options were granted at fair value, except for options to purchase 320
shares which were granted in 1999 at less than fair value.

In connection with the liquidation of Yankee Candle Holdings prior to the
closing of the offering, the options to acquire Yankee Candle Holdings common
stock will become options to acquire Yankee Candle common stock on the same
terms as the existing options, other than changes to the exercise price and the
number of shares subject to options to preserve the economics of the existing
options. The options will be governed by The Yankee Candle Company, Inc.
Employee Stock Option Plan, which will be administered

47
<PAGE>
by the Compensation Committee of the board of Yankee Candle. The plan authorizes
the issuance of 488,565 shares of common stock with adjustments in the case of
changes in capitalization affecting the options. Assuming the conversion of all
outstanding Yankee Candle Holdings options into Yankee Candle options, options
to purchase 407,950 shares of common stock would have been granted to date under
the plan. The description below assumes that the liquidation has occurred and
that the options are exercisable for Yankee Candle common stock. See
"Description of Capital Stock."

STOCK OPTION AGREEMENTS. Options are granted pursuant to stock option
agreements. One-fifth of the options generally vest and become exercisable on
each of the first, second, third, fourth and fifth anniversaries of the grant
date. Unvested options expire on the date of the optionee's termination of
employment and vested options expire after the termination of employment as
described below.

Each option expires on the earliest of:

- the tenth anniversary of the date of grant,

- if the optionee's employment is terminated for any reason, including death
or disability of the optionee, the 60(th) day following the delivery of a
notice to the optionee by Yankee Candle, during which 60-day period the
optionee may exercise the vested portion of the option, and

- the exercise in full of the option.

These options are generally exercisable only by an optionee during the
optionee's lifetime and are not transferable.

The stock option agreements provide that Yankee Candle will notify the
optionee prior to a total sale or a partial sale. A total sale includes:

(1) the merger or consolidation of Yankee Candle into another corporation,
other than a merger or consolidation in which Yankee Candle is the
surviving corporation and which does not result in a capital
reorganization, reclassification or other change in the then outstanding
common stock,

(2) the liquidation of Yankee Candle,

(3) the sale to a third party of all or substantially all of Yankee Candle's
assets, or

(4) the sale to a third party of common stock, other than through one or
more public offerings;

but only if, in the case of the events described in (1), (2) and (4), the
Forstmann Little partnerships cease to own shares of the voting stock of the
business.

A partial sale means a sale by the Forstmann Little partnerships of all or a
portion of their shares of common stock, including through a public offering, to
a third party, other than a total sale. This offering constitutes a partial
sale.

The optionee may exercise options only for purposes of participating in the
partial sale, whether or not the options were otherwise exercisable, with
respect to the excess, if any, of:

- the number of shares with respect to which the optionee would be entitled
to participate in the partial sale under the stockholder's agreement
described below, over

- the number of shares previously issued upon exercise of the options and
not previously disposed of in a partial sale.

Upon receipt of a notice of a total sale, the optionee may exercise all or
part of the options, whether or not the options were otherwise exercisable.

In connection with a total sale, Yankee Candle may redeem the unexercised
portion of the options in lieu of permitting the optionee to exercise the
options. Any unexercised portion of an option will terminate upon the completion
of a total sale, unless Yankee Candle provides for its continuation.

48
<PAGE>
In the event a total sale or partial sale is not completed, any option
exercised in connection with the sale will be exercisable only to the extent it
would have been exercisable if notice of the sale had not been given. The stock
option agreements provide that, if the Forstmann Little partnerships sell shares
of common stock in a bona fide arm's-length transaction, at the election of
Yankee Candle, an optionee may be required to

- proportionately exercise the optionee's options and to sell all of the
shares of common stock purchased under the exercise in the same
transaction and on the same terms as the shares sold by the Forstmann
Little partnerships, or, if unwilling to do so,

- forfeit the portion of the option required to be exercised.

The optionee has no independent right to require Yankee Candle to register
the shares of common stock underlying the options under the Securities Act.

The stock option agreements permit Yankee Candle to terminate all of an
optionee's options if the optionee engages in prohibited or competitive
activities.

The number and class of shares underlying, and the terms of, outstanding
options may be adjusted in the event of a merger, consolidation, stock split or
stock dividend.

STOCKHOLDER'S AGREEMENT. Upon exercise of an option under the plan, an
optionee is required to enter into a stockholder's agreement with Yankee Candle
in the form then in effect. The stockholder's agreement provides that,
generally, the shares issued upon exercise of the options may not be sold,
assigned or otherwise transferred. The description below summarizes the terms of
the form of the stockholder's agreement currently in effect.

If one or more partial sales result in the Forstmann Little partnerships
owning, in the aggregate, less than 20% of the then outstanding voting stock of
Yankee Candle, the stockholder is entitled to transfer his or her shares of
common stock free of the restrictions and rights contained in the stockholder's
agreement.

The stockholder's agreement provides that the stockholder may participate
proportionately in any sale by the Forstmann Little partnerships of all or a
portion of their shares of common stock to any person who is not a partner or
affiliate. In addition, the stockholder shall be entitled to, and may be
required to, participate proportionately in a public offering of shares of
common stock by the Forstmann Little partnerships, by selling the same
percentage of the stockholder's shares that the Forstmann Little partnerships
are selling of their shares. The sale of shares of common stock in this
transaction must be for the same price and otherwise on the same terms and
conditions as the sale by the Forstmann Little partnerships. If the Forstmann
Little partnerships sell or exchange all or a portion of their common stock in a
bona fide arm's-length transaction, the Forstmann Little partnerships may
require the stockholder to sell a proportionate amount of his or her shares for
the same price and on the same terms and conditions as the sale of common stock
by the Forstmann Little partnerships and, if stockholder approval of the
transaction is required, to vote his or her shares in favor of the sale or
exchange.

OUTSIDE DIRECTOR STOCK OPTIONS

Two directors, Mr. Michael Ovitz and Ms. Emily Woods, have options to
purchase shares of Class A common stock of Yankee Candle Holdings which were
granted pursuant to individual stock option agreements. The date of these
director option agreements and the date of grant, for Mr. Ovitz was November 30,
1998 and for Ms. Woods was June 26, 1998. Upon the liquidation of Yankee Candle
Holdings prior to the closing of this offering, these director options will
become options to acquire shares of Yankee Candle common stock on the same terms
as the existing options, other than the exercise price and number of shares
subject to option which will be adjusted to preserve the economics of the
existing options. Each of the director optionees will have options to purchase
48,857 shares of common stock at

49
<PAGE>
$4.25 per share. These options are not intended to qualify as incentive stock
options and were not issued pursuant to the plan.

One-third of the options generally becomes exercisable on each of the first,
second and third anniversaries of the date of the grant. Each option expires on
the earliest of:

- the tenth anniversary of the date of grant,

- 30 days after the date the director optionee ceases to serve as a director
of Yankee Candle, and

- the exercise in full of the option.

The director optionees may not sell or otherwise transfer their options.

The director option agreements provide that Yankee Candle will notify the
director optionees prior to a total sale or a partial sale. Upon receipt of a
notice of a partial sale, a director optionee may exercise his or her options
only for purposes of participating in the partial sale, whether or not the
options were otherwise exercisable, with respect to the excess, if any, of:

- the number of shares with respect to which the director optionee would be
entitled to participate in the partial sale under the director
stockholder's agreements described below, over

- the number of shares previously issued upon exercise of the options and
not previously disposed of in a partial sale.

Upon receipt of a notice of a total sale, a director optionee may exercise
all or part of the options, whether or not the options were otherwise
exercisable.

In connection with a total sale, Yankee Candle may redeem the unexercised
portion of the director optionee's options. Any unexercised portion of a
director optionee's options will terminate upon the completion of a total sale,
unless Yankee Candle provides for continuation of the options.

In the event a total sale or partial sale is not completed, any option which
a director optionee had exercised in connection with the sale will be
exercisable after the sale only to the extent it would have been exercisable if
notice of the sale had not been given. This offering constitutes a partial sale.

The director option agreements provide that, if the Forstmann Little
partnerships sell shares of common stock in a bona fide arm's-length
transaction, at the election of Yankee Candle, a director optionee may be
required to:

- proportionately exercise the director optionee's options and to sell all
of the shares of common stock purchased under the exercise in the same
transaction and on the same terms as the shares sold by the Forstmann
Little partnerships, or, if unwilling to do so,

- forfeit the portion of the option required to be exercised.

The director optionees have no independent right to require Yankee Candle to
register the shares of common stock underlying the options under the Securities
Act.

The number and class of shares underlying, and the terms of, outstanding
options may be adjusted in the event of a merger, consolidation, stock split or
stock dividend.

In addition, on June 30, 1999, Mr. Sargent was granted an option to purchase
shares of Class A common stock of Yankee Candle Holdings under an individual
option agreement. Upon the liquidation of Yankee Candle Holdings, these options
will become options to purchase 48,857 shares of common stock at the initial
public offering price per share. Mr. Sargent's options are immediately
exercisable.

DIRECTOR STOCKHOLDER'S AGREEMENTS. Upon exercise of a director option, a
director optionee is required to enter into a director stockholder's agreement
with Yankee Candle in the form then in effect. The form

50
<PAGE>
of director stockholder's agreement currently in effect is substantially the
same as the form of employee stockholder's agreement currently in effect.

STOCK AGREEMENTS

In connection with the recapitalization, 12 members of Yankee Candle
management were awarded the right to purchase, and actually purchased, stock of
Yankee Candle Holdings on April 27, 1998. In October 1998 an additional member
of management was awarded the right to purchase, and agreed to purchase, stock
of Yankee Candle Holdings. He purchased these shares in February 1999. These
members of management entered into stock agreements relating to these shares of
common stock of Yankee Candle Holdings. See "--Relationships and Transactions
between Yankee Candle and its Officers, Directors, 5% Beneficial Owners and
their Family Members."

After the liquidation of Yankee Candle Holdings prior to the closing of this
offering, the restrictions of the stock agreements will apply to the
stockholder's ownership of Yankee Candle common stock and, in connection with
the receipt of the Yankee Candle common stock, the stockholders will enter into
new stock agreements covering the Yankee Candle common stock with the same terms
as the original agreement except for adjustments that are necessary to preserve
the economics of the original stock agreements. The description below assumes
that the new stock agreements have been executed.

The stock agreements contain transfer provisions substantially similar to
those in the form of stockholder's agreement that the employee optionees and
director optionees must execute upon exercise of options under the plan.

Upon termination of employment, Yankee Candle has a right, at its option, to
purchase all of the unvested shares of common stock held by a stockholder. The
stock vests at a rate of 20% per year, beginning after one year. The
stockholders have no independent right to require Yankee Candle to register
their shares of common stock under the Securities Act.

THE YANKEE CANDLE 1999 STOCK OPTION AND AWARD PLAN

The board of directors of Yankee Candle adopted the 1999 Stock Option and
Award Plan in April 1999, and the stockholders approved it in June 1999. The
stock plan provides for the grant of incentive stock options intended to qualify
under Section 422 of the Internal Revenue Code and stock options which do not so
qualify, stock appreciation rights, restricted stock, performance units and
performance shares, phantom stock awards and share awards. Yankee Candle's and
its subsidiaries' eligible directors, officers, employees, including future
employees who have received written offers of employment, and consultants are
eligible to receive grants under the stock plan. The stock plan is designed to
comply with the requirements for "performance-based compensation" under Section
162(m) of the Internal Revenue Code, and the conditions for exemption from the
short-swing profit recovery rules under Rule 16b-3 under the Exchange Act.

The stock plan is administered by a committee that consists of at least two
nonemployee outside board members. The Compensation Committee of the board
currently serves as the committee. Generally, the committee has the right to
grant options and other awards to eligible individuals and to determine the
terms and conditions of options and awards, including the vesting schedule and
exercise price of options and awards. The stock plan authorizes the issuance of
5% of the outstanding shares of common stock determined on a fully diluted basis
as of April 15, 1999, with adjustments to give effect to our reorganization and
in the case of changes in capitalization affecting the options. For the purpose
of determining the number of outstanding shares, all shares issuable under the
plan are deemed outstanding.

The stock plan provides that the term of any option may not exceed ten
years, except in the case of the death of an optionee in which event the option
may be exercised for up to one year following the date of death even if it
extends beyond ten years from the date of grant. If a participant's employment,
or service

51
<PAGE>
as a director, is terminated following a change in control, any options or stock
appreciation rights become immediately and fully vested at that time and will
remain outstanding until the earlier of the six-month anniversary of termination
and the expiration of the option term.

THE YANKEE CANDLE 1999 EMPLOYEE STOCK PURCHASE PLAN

We adopted the 1999 Employee Stock Purchase Plan in June 1999. The stock
purchase plan provides our employees with the opportunity to purchase shares of
our common stock on the date of this offering at the initial public offering
price as part of our directed share program. After this offering, the plan
allows our employees to purchase additional shares of our common stock on the
NYSE at the then current market price. Employees who elect to participate in the
program will pay for these subsequent purchases with funds that we will withhold
from their paychecks.

RELATIONSHIPS AND TRANSACTIONS BETWEEN YANKEE CANDLE AND ITS OFFICERS,
DIRECTORS, 5% BENEFICIAL OWNERS AND THEIR FAMILY MEMBERS

On April 27, 1998, Yankee Candle recapitalized. Pursuant to the 1998
recapitalization, Yankee Candle redeemed approximately 500 shares of Yankee
Candle common stock owned by Michael Kittredge for an aggregate redemption price
of approximately $200.0 million. Mr. Kittredge also sold approximately 450
shares of Yankee Candle common stock to Yankee Candle Holdings Corp., a
corporation newly formed by the Forstmann Little partnerships and a group of
executives of Yankee Candle, for approximately $180.0 million. The 1998
recapitalization and related transactions were consummated pursuant to a
recapitalization agreement, dated as of March 25, 1998, between Forstmann Little
& Co. Subordinated Debt and Equity Management Buyout Partnership-VI, L.P., which
is one of the Forstmann Little partnerships, Yankee Candle Holdings, Yankee
Candle and Michael Kittredge. At the same time and as part of the 1998
recapitalization, Chandler's Restaurant, Inc., a subsidiary of Yankee Candle,
acquired the assets of the restaurant business located at Yankee Candle's South
Deerfield flagship retail location from Mr. Kittredge.

Immediately after the 1998 recapitalization, Yankee Candle Holdings owned
90% of Yankee Candle's common stock and Mr. Kittredge owned 10% of Yankee
Candle's common stock.

Yankee Candle financed the redemption of shares from Mr. Kittredge, the
repayment of existing indebtedness, the payment of the expenses of the 1998
recapitalization and one-time employee bonuses by borrowing $2.5 million under a
$60.0 million revolving credit facility and by issuing an aggregate of $320.0
million of subordinated debentures to Forstmann Little & Co. Subordinated Debt
and Equity Management Buyout Partnership-VI, L.P. That partnership immediately
distributed the subordinated debentures to its limited partners. The
subordinated debentures are divided into three equal series, due on May 31,
2009, May 31, 2010 and May 31, 2011. The subordinated debentures provide for an
interest rate of 6 3/4% and provide for interest to be paid semi-annually. As of
April 3, 1999, Yankee Candle had paid $12.8 million in interest. The
subordinated debentures may be prepaid by Yankee Candle at any time without
premium, penalty or any charge. Yankee Candle will prepay all of the
subordinated debentures with the proceeds of this offering, the proceeds of a
new credit facility and available cash.

The principal recipients of the one-time bonus aggregating $61.3 million
were Mr. Parry, Mr. Harry Flood, Ms. Gail Flood, Mr. Williams, Ms. Nancy
Spanbauer and Ms. Ann Morrisey.

Yankee Candle Holdings purchased shares of common stock from Mr. Kittredge
for approximately $180.0 million. This purchase was financed with the proceeds
from the sale of shares of Yankee Candle Holdings common stock to the Forstmann
Little partnerships and senior management of Yankee Candle, including Mr. Parry,
Ms. Flood, Mr. Williams and nine other persons.

On September 14, 1998, January 22, 1999 and January 26, 1999, Yankee Candle
Holdings repurchased shares of Yankee Candle Holdings common stock from
employees who resigned from Yankee Candle for

52
<PAGE>
an aggregate purchase price of $750,000. To finance the repurchases, Yankee
Candle Holdings borrowed funds from Yankee Candle pursuant to intercompany
notes.

As a result of an award in October 1998 to purchase stock, Mr. Spellman on
February 3, 1999 invested approximately $1.0 million in Yankee Candle Holdings
by purchasing shares of Yankee Candle Holdings common stock. Yankee Candle lent
Mr. Spellman $750,000 to help finance his investment. The loan to Mr. Spellman
carries an interest rate of 7%. The loan provides for full recourse to Mr.
Spellman and is secured. In addition, Mr. Spellman has entered into a pledge
agreement pledging, among other things, his shares of Yankee Candle Holdings
common stock. The loan will be secured by Mr. Spellman's shares of new Yankee
Candle common stock after the offering. The loan matures five years from the
date it was made and must be prepaid in full in circumstances which include a
termination of employment. In addition, Mr. Spellman must apply his after-tax
proceeds of a sale of common stock to reduce the principal amount of, and
accrued interest on, the loan.

Yankee Candle Holdings used the proceeds of Mr. Spellman's investment to
repay all outstanding intercompany notes and used the remainder to make a
capital contribution to Yankee Candle.

Mr. Harry Flood was our Chief Financial Officer until November 1998. In
connection with the 1998 recapitalization, he received a special bonus of
$9,433,962. His compensation in 1998, excluding the special bonus, was $236,212.
He is Ms. Flood's husband.

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<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth information regarding the beneficial
ownership of Yankee Candle's common stock immediately prior to the consummation
of this offering, giving effect to the reorganization occurring in connection
with this offering, and as adjusted to reflect the sale of the shares of common
stock pursuant to this offering. The table includes:

- each person who is known to Yankee Candle to be the beneficial owner of
more than 5% of the outstanding common stock,

- each other director of Yankee Candle,

- each other executive officer named in the summary compensation table,

- all directors and executive officers of Yankee Candle as a group, and

- the other selling stockholders participating in the offering.

Except as otherwise indicated, the persons or entities listed below have
sole voting and investment power with respect to all shares of common stock
beneficially owned by them, except to the extent their power may be shared with
a spouse.

<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO NUMBER OF OWNED AFTER
OFFERING (1) SHARES OFFERING (1)
------------------------- OFFERED -------------------------
NAME NUMBER PERCENT (1) NUMBER PERCENT
- ------------------------------------------------------ ------------ ----------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
5% STOCKHOLDERS:
Forstmann Little & Co. Equity Partnership-V,
L.P.(2)............................................. 25,038,949 51.7% 3,332,042 21,706,907 39.8%
Forstmann Little & Co. Subordinated Debt and Equity
Management Buyout Partnership-VI, L.P.(2)........... 16,489,064 34.0% 2,194,271 14,294,793 26.2%
Michael J. Kittredge.................................. 4,900,000 10.1% 652,064 4,247,936 7.8%
OTHER DIRECTORS:
Theodore J. Forstmann(2).............................. 41,528,013 85.7% 5,526,313 36,001,700 66.1%
Nicholas C. Forstmann(2).............................. 41,528,013 85.7% 5,526,313 36,001,700 66.1%
Steven B. Klinsky(2).................................. 41,528,013 85.7% 5,526,313 36,001,700 66.1%
Sandra J. Horbach(2).................................. 41,528,013 85.7% 5,526,313 36,001,700 66.1%
Michael D. Parry...................................... 544,614 1.1% 72,474 472,140 *
Michael S. Ovitz(3)................................... 60,624 * 13,703 46,920 *
Ronald L. Sargent(4).................................. 48,857 * -- 48,857 *
Emily Woods(5)........................................ 16,286 * -- 16,286 *
OTHER NAMED EXECUTIVE OFFICERS:
Gail M. Flood(6)...................................... 381,173 * 50,725 330,448 *
Robert R. Spellman.................................... 544,614 1.1% 72,474 472,140 *
Stephen T. Williams................................... 217,921 * 29,000 188,921 *
All Directors and Executive Officers as a Group (12
persons)............................................ 48,187,979 99.3% 6,409,551 41,778,428 76.6%
ADDITIONAL SELLING STOCKHOLDERS:
16 additional selling stockholders, each of whom is
selling less than 26,000 shares in the offering and
will beneficially own less than 1% of the
outstanding common stock after the offering......... 394,594 * 90,449 304,145 *
</TABLE>

- ------------------------

* The percentage of shares of common stock beneficially owned does not exceed
one percent of the outstanding shares of common stock.

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<PAGE>
(1) For purposes of this table, information as to the shares of common stock
assumes that the underwriters' over-allotment option is not exercised. In
addition, a person or group of persons is deemed to have "beneficial
ownership" of any shares of common stock when the person has the right to
acquire them within 60 days after the date of this prospectus. For purposes
of computing the percentage of outstanding shares of common stock held by
each person or group of persons named above, any shares which the person has
the right to acquire within 60 days after the date of this prospectus is
deemed to be outstanding but is not deemed to be outstanding for the purpose
of computing the percentage ownership of any other person. Each selling
stockholder other than the Forstmann Little partnerships has the right to
participate with the Forstmann Little partnerships in the offering and may
participate in the offering with respect to their options regardless of
whether they beneficially own the shares subject to the options for purposes
of this table.

(2) The general partner of Forstmann Little & Co. Equity Partnership-V, L.P., a
Delaware limited partnership ("Equity-V"), is FLC XXX Partnership, a New
York general partnership of which Messrs. Theodore J. Forstmann, Nicholas C.
Forstmann and Steven B. Klinsky, Ms. Sandra J. Horbach, Messrs. Thomas H.
Lister, Winston W. Hutchins and Erskine B. Bowles are general partners. The
general partner of Forstmann Little & Co. Subordinated Debt and Equity
Management Buyout Partnership-VI, L.P., a Delaware limited partnership
("MBO-VI"), is FLC XXIX Partnership, L.P., a New York limited partnership of
which Messrs. Theodore J. Forstmann, Nicholas C. Forstmann and Steven B.
Klinsky, Ms. Sandra J. Horbach, Messrs. Thomas H. Lister, Winston W.
Hutchins and Erskine B. Bowles are general partners. Accordingly, each of
the individuals named above, other than Mr. Lister, with respect to MBO-VI,
and Mr. Bowles, with respect to Equity-V and MBO-VI, for the reasons
described below, may be deemed the beneficial owners of shares owned by
MBO-VI and Equity-V and, for purposes of this table, beneficial ownership is
included. Mr. Lister, with respect to MBO-VI, and Mr. Bowles, with respect
to Equity-V and MBO-VI, do not have any voting or investment power with
respect to, or any economic interest in, the shares of common stock held by
MBO-VI or Equity-V; and, accordingly, Mr. Lister and Mr. Bowles are not
deemed to be the beneficial owners of these shares. Theodore J. Forstmann
and Nicholas C. Forstmann are brothers. FLC XXX Partnership is a limited
partner of Equity-V. None of the other limited partners in each of MBO-VI
and Equity-V is otherwise affiliated with Yankee Candle, or Forstmann Little
& Co. The address of Equity-V and MBO-VI is c/o Forstmann Little & Co., 767
Fifth Avenue, New York, New York 10153.

(3) Includes 6,501 shares subject to options which are currently exercisable.

(4) Represents 48,857 shares subject to options which are currently exercisable.

(5) Represents 16,286 shares subject to options which are currently exercisable
or exercisable within 60 days of the date of this prospectus.

(6) Does not include 190,586 shares beneficially owned before the offering and
165,224 shares beneficially owned after the offering by Harry Flood, Gail
Flood's husband.

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<PAGE>
DESCRIPTION OF THE CREDIT AGREEMENT

Concurrently with the closing of this offering, we expect to terminate our
existing revolving credit facility and enter into a new credit facility with a
syndicate of banks and other financial institutions led by The Chase Manhattan
Bank, as sole administrative agent, and Chase Securities Inc., as the sole and
exclusive lead arranger and sole book manager. The credit facility is expected
to consist of $150 million of term loans and a $150 million revolving credit
facility.

All of the term loans and the loans under the revolving credit facility will
bear interest, at our option, at either of the following rates:

(a) the highest of:

- the rate from time to time publicly announced by The Chase Manhattan
Bank in New York as its prime rate,

- the secondary market rate for three-month certificates of deposit from
time to time plus 1% and

- the federal funds rate from time to time plus 1/2 of 1%,

in each case plus an applicable margin which is

- .50% for the first six months after the closing of this offering, and

- after these first six months, based on a pricing grid depending on our
leverage ratio at that time; or

(b) a Eurodollar rate plus an applicable margin which is

- 1.50% for the first six months after the closing of this offering, and

- after these first six months, based on a pricing grid depending on our
leverage ratio at that time.

We will also pay a commitment fee for the daily average unused commitment
under the revolving credit facility. The commitment fee will be (a) 0.375% for
the first six months after the closing of this offering and (b) after this
period, based on a pricing grid depending on our specified leverage ratio at
that time. The commitment fee will be payable quarterly in arrears and upon the
final maturity of the revolving credit facility. In addition, we will pay fees
for each letter of credit issued under the credit facility.

Beginning December 31, 1999, term loans under the credit facility will
amortize in quarterly installments. The revolving credit facility will mature
five years after the closing of this offering.

The credit facility will be subject to mandatory prepayment with the net
proceeds of asset sales or additional indebtedness with specified exceptions.

The credit facility will contain covenants and provisions that restrict,
among other things, our ability to change the business we are conducting,
declare dividends, grant liens, incur additional indebtedness, exceed a
specified leverage ratio, fall below a minimum interest coverage ratio and make
capital expenditures. We expect to be in compliance with these covenants
immediately after the closing of this offering.

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<PAGE>
DESCRIPTION OF CAPITAL STOCK

OVERVIEW

Immediately before the closing of this offering, the capital structure of
Yankee Candle will be reorganized as follows:

- Yankee Candle Holdings will transfer all of its assets, consisting
principally of 449.9782 shares of Yankee Candle common stock, no par
value, to Yankee Candle in exchange for 43,545,479 shares of Yankee Candle
common stock, par value $.01 per share, and 554,521 options to purchase
Yankee Candle common stock on the same economic terms and conditions as
the Yankee Candle Holdings options,

- Yankee Candle Holdings will be liquidated, and all of the shares of Yankee
Candle common stock, and all of the options to purchase Yankee Candle
common stock received from Yankee Candle will be exchanged by the Yankee
Candle Holdings Class A common stockholders and option holders,
respectively, for all of the outstanding Yankee Candle Holdings Class A
common stock and all of the outstanding Yankee Candle Holdings options.
Immediately before the liquidation, all of the outstanding Yankee Candle
Holdings Class B common stock will be converted into Yankee Candle
Holdings Class A common stock based on a formula set forth in the
Certificate of Incorporation of Yankee Candle Holdings, and

- the remaining 49.9976 outstanding shares of Yankee Candle common stock, no
par value, will be exchanged for 4,900,000 shares of Yankee Candle common
stock par value $.01 per share.

As a result of the liquidation of Yankee Candle Holdings, each share of
Yankee Candle Holdings Class B common stock will be exchanged for 188.5 shares
of Yankee Candle common stock and each share of Yankee Candle Holdings Class A
common stock will be exchanged for 244.3 shares of Yankee Candle common stock.

After this reorganization, Yankee Candle's authorized capital stock will
consist of 300,000,000 shares of common stock, $.01 par value per share, and
100,000,000 shares of preferred stock, $.01 par value per share.

After the reorganization, and before the closing of this offering, based on
share information as of April 3, 1999, there will be 48,498,629 shares of common
stock outstanding and no shares of preferred stock outstanding. Assuming the
exercise of all outstanding options, approximately 89% of these shares of common
stock would be owned by former Yankee Candle Holdings stockholders,
approximately 10% would be owned by Michael Kittredge and approximately 1% would
be owned by former Yankee Candle Holdings optionholders. After the closing of
this offering, there will be 54,498,629 shares of common stock outstanding.

After the closing of this offering, the Forstmann Little partnerships and
our management will beneficially own approximately 77.1% of the outstanding
common stock, 77.3% on a fully diluted basis. As long as the Forstmann Little
partnerships and our management continue to own in the aggregate more than 50%
of Yankee Candle's outstanding shares of common stock, they will collectively
have the power to

- elect the entire board of directors of Yankee Candle,

- determine, without the consent of Yankee Candle's other stockholders, the
outcome of any corporate transaction or other matter submitted to the
stockholders for approval, including mergers, consolidations and the sale
of all or substantially all of Yankee Candle's assets,

- prevent or cause a change in control of Yankee Candle, and

- approve substantially all amendments to our Articles of Organization and
By-Laws.

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The Forstmann Little partnerships have a contractual right to elect two
directors until such time as they no longer own any shares of Yankee Candle
common stock.

The following summary contains material information relating to provisions
of Massachusetts law and Yankee Candle's Articles of Organization and By-Laws.
The Articles of Organization and By-Laws are included as exhibits to the
registration statement of which this prospectus is a part.

COMMON STOCK

Holders of common stock are entitled to one vote for each share held on all
matters submitted to a vote of stockholders and do not have cumulative voting
rights. Accordingly, holders of a majority of the outstanding shares of common
stock entitled to vote in any election of directors may elect all of the
directors standing for election. Holders of common stock are entitled to receive
ratably the dividends, if any, as may be declared by the board of directors out
of legally available funds. Upon the liquidation, dissolution or winding-up of
Yankee Candle, holders of common stock are entitled to receive ratably the net
assets of Yankee Candle available for distribution after the payment of all
liabilities of Yankee Candle and the payment of any required amounts to the
holders of any outstanding preferred stock. Holders of common stock have no
preemptive, subscription, redemption or conversion rights. The outstanding
shares of common stock are, and the shares sold in this offering will be, when
issued and paid for, validly issued, fully paid and nonassessable. The rights,
preferences and privileges of holders of common stock are subject to, and may be
adversely affected by, the rights of holders of shares of any series of
preferred stock that Yankee Candle may designate and issue in the future.

PREFERRED STOCK

The board of directors is authorized, subject to any limitations prescribed
by law, without further stockholder approval, to establish from time to time one
or more classes or series of preferred stock covering up to an aggregate of
100,000,000 shares of preferred stock, and to issue shares of preferred stock.
Each class or series of preferred stock will cover the number of shares and will
have the preferences, voting powers, qualifications and special or relative
rights or privileges as is determined by the board of directors, which may
include, among others, dividend rights, liquidation preferences, voting rights,
conversion rights, preemptive rights and redemption rights.

The purpose of authorizing the board of directors to establish preferred
stock is to eliminate delays associated with a stockholders vote on the creation
of a particular class or series of preferred stock. The rights of the holders of
common stock will be subject to the rights of holders of any preferred stock
issued in the future. The issuance of preferred stock, while providing desirable
flexibility in connection with possible acquisitions and other corporate
purposes, could have the effect of discouraging, delaying or preventing an
acquisition of Yankee Candle at a price which many stockholders find attractive.
These provisions could also make it more difficult for stockholders of Yankee
Candle to effect corporate actions, including the election of directors. Yankee
Candle has no present plans to issue any shares of preferred stock.

ARTICLES OF ORGANIZATION, BY-LAWS AND MASSACHUSETTS LAW

Yankee Candle's Articles of Organization and By-Laws and Massachusetts law
contain specific provisions that could be deemed to have anti-takeover effects
that discourage, delay or prevent an acquisition of Yankee Candle and make it
more difficult for stockholders of Yankee Candle to effect corporate actions,
including the election of directors.

Massachusetts law provides that stockholders may take action without a
meeting only by the unanimous written consent of all stockholders entitled to
vote. Yankee Candle's By-Laws require Yankee Candle to call a special meeting of
stockholders only at the request of stockholders holding at least 50% of the
outstanding voting stock of Yankee Candle, or a lesser percentage as may be
required by law. Any

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stockholder who wishes to solicit requests to call a special meeting must comply
with the procedures specified in the By-Laws.

Yankee Candle's By-Laws provide that nominations for directors may not be
made by stockholders at any annual or special meeting of stockholders unless the
stockholder intending to make a nomination notifies Yankee Candle of the
nomination a specific number of days in advance of the meeting and furnishes to
Yankee Candle detailed information regarding the stockholder and the intended
nominee. The By-Laws also require advance notice of any proposal to be brought
by a stockholder before any annual or special meeting of stockholders and the
provision of detailed information to Yankee Candle regarding the stockholder and
the proposal.

Yankee Candle will be subject to the provisions of Section 50A of Chapter
156B of the Massachusetts General Laws following this offering, which requires
that Yankee Candle have a classified, also called staggered, board of directors.
This statute requires that the classified board consist of three classes, as
nearly equal in size as possible, and provides that directors may be removed
only for cause, as defined in the statute. Yankee Candle's By-Laws contain
provisions that implement a classified board of directors. See
"Management--Directors and Executive Officers."

Yankee Candle will be subject to the provisions of Chapter 110F of the
Massachusetts General Laws, an anti-takeover law, following this offering. In
general, this statute prohibits Yankee Candle from engaging in a "business
combination" with an "interested stockholder" for a period of three years after
the date of the transaction in which the person becomes an interested
stockholder, unless either:

- prior to that date, the board of directors approved either the business
combination or the transaction in which the person became an interested
stockholder,

- the interested stockholder acquires, in the transaction in which that
person becomes an interested stockholder, at least 90% of the outstanding
voting stock of Yankee Candle, excluding shares held by affiliates and
employee benefit plans of Yankee Candle, or

- the business combination is approved by the board of directors and by the
holders of two-thirds of the outstanding voting stock of Yankee Candle,
excluding shares held by the interested stockholder, voting at a meeting.

In general, an "interested stockholder" is a person who owns 5%, 15% in the
case of a person eligible to file a Schedule 13G under the Securities Exchange
Act with respect to those shares, or more of the outstanding voting stock of
Yankee Candle; or who is an affiliate or associate of Yankee Candle and was the
owner of 5%, 15% in the case of a person eligible to file a Schedule 13G, or
more of the outstanding voting stock within the prior three years. A "business
combination" generally includes a merger, consolidation, stock or asset sale,
and any other transaction with the interested stockholder resulting in a
financial benefit, except proportionately as a stockholder of Yankee Candle, to
the interested stockholder. Yankee Candle may at any time amend its Articles of
Organization or By-Laws, by a vote of the holders of a majority of its voting
stock, to elect not to be governed by Chapter 110F. An amendment would not be
effective for 12 months and would not apply to a business combination with any
person who became an interested stockholder prior to the date of the amendment.

Yankee Candle's By-Laws include a provision that excludes Yankee Candle from
the applicability of Chapter 110D of the Massachusetts General Laws. In general,
this statute provides that any stockholder who acquires 20% or more of the
outstanding voting stock of a corporation subject to this statute may not vote
that stock unless the disinterested stockholders of the corporation so
authorize. In addition, the statute permits a corporation to provide in its
Articles of Organization or By-Laws that the corporation may redeem for fair
value all of the shares acquired in a control share acquisition if the
interested stockholder does not deliver a control share acquisition statement or
if the interested stockholder delivers a control share acquisition statement but
the stockholders of the corporation do not authorize voting rights

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for those shares. The board of directors may amend the By-Laws at any time to
subject Yankee Candle to this statute prospectively.

Yankee Candle's Articles of Organization provide that transactions involving
the sale, lease or exchange of all or substantially all of Yankee Candle's
assets and the merger or consolidation of Yankee Candle with another corporation
may be authorized by vote of a majority of the outstanding voting stock, or if
there are two or more classes of voting stock, by a majority of each class,
rather than by two-thirds as is otherwise provided by Massachusetts law.

Yankee Candle's Articles of Organization provide that no director of Yankee
Candle shall be personally liable for monetary damages to Yankee Candle or to
its stockholders for a breach of fiduciary duty as a director. This provision
does not eliminate or limit liability:

- for any breach of the director's duty of loyalty to Yankee Candle or its
stockholders,

- for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law,

- under Section 61 or 62 of Chapter 156B of the Massachusetts General Laws,
dealing with liability for unauthorized distributions and loans to
corporate insiders, or

- for any transaction from which the director derived an improper personal
benefit.

Yankee Candle's Articles of Organization also provide for the
indemnification of Yankee Candle's directors and officers to the fullest extent
permitted by Massachusetts law, including under circumstances in which
indemnification would otherwise be discretionary. In addition, Yankee Candle has
entered into indemnity agreements with each of its directors and officers
providing similar benefits.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the common stock will be BankBoston,
NA, a Massachusetts banking corporation.

SHARES ELIGIBLE FOR FUTURE SALE

RULE 144 SECURITIES

Upon the consummation of the offering, Yankee Candle will have 54,498,629
shares of common stock outstanding. Of these shares, only the 12,500,000 shares
of common stock sold in the offering will be freely tradable without
registration under the Securities Act and without restriction by persons other
than "affiliates" of Yankee Candle. The 41,998,629 shares of common stock held
by the Forstmann Little partnerships and Yankee Candle's management after the
offering will be "restricted" securities under the meaning of Rule 144 under the
Securities Act and may not be sold in the absence of registration under the
Securities Act, unless an exemption from registration is available, including
exemptions pursuant to Rule 144 or Rule 144A under the Securities Act.

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this prospectus, a person who has beneficially owned shares of our
common stock for at least one year would be entitled to sell within any
three-month period a number of shares that does not exceed the greater of either
of the following:

- 1% of the number of shares of common stock then outstanding, which will
equal approximately the number of shares outstanding immediately after
this offering, or

- the average weekly trading volume of the common stock on the NYSE during
the four calendar weeks preceding the filing of a notice on Form 144 with
respect to that sale.

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Sales under Rule 144 are also subject to specific manner of sale provisions
and notice requirements and to the availability of current public information
about Yankee Candle.

Under Rule 144(k), a person who is not deemed to have been one of Yankee
Candle's "affiliates" at any time during the 90 days preceding a sale, and who
has beneficially owned the shares proposed to be sold for at least two years,
including the holding period of any prior owner other than an "affiliate," is
entitled to sell its shares without complying with the manner of sale, public
information, volume limitation or notice provisions of Rule 144. Therefore,
unless otherwise restricted, "144(k) shares" may be sold immediately upon the
completion of this offering. The sale of these shares, or the perception that
sales will be made, could adversely effect the price of Yankee Candle's common
stock after the offering because a greater supply of shares would be, or would
be perceived to be, available for sale in the public market.

Each of Yankee Candle, the selling stockholders and our directors and
executive officers have agreed that, without the prior written consent of Morgan
Stanley & Co. Incorporated on behalf of the underwriters, it will not, during
the period ended 180 days after the date of this prospectus, sell shares of
common stock or take related actions, subject to limited exceptions, all as
described under "Underwriters."

REGISTRATION RIGHTS

Yankee Candle and the Forstmann Little partnerships have entered into a
registration rights agreement, pursuant to which Yankee Candle has granted to
the Forstmann Little partnerships six demand rights to cause Yankee Candle to
file a registration statement under the Securities Act covering resales of all
shares of common stock held by the Forstmann Little partnerships, and to cause
the registration statement to become effective. The registration rights
agreement also grants "piggyback" registration rights permitting the Forstmann
Little partnerships to include its registrable securities in a registration of
securities by Yankee Candle. Under the agreement, Yankee Candle will pay the
expenses of these registrations.

In addition, pursuant to the stockholder's and subscription agreements,
Yankee Candle is granting "piggyback" registration rights to all of its
employees and directors who have purchased shares of common stock and/or that
have been awarded options to purchase shares of common stock. These registration
rights are exercisable only upon registration by Yankee Candle of shares of
common stock held by the Forstmann Little partnerships. The holders of common
stock entitled to these registration rights are entitled to notice of any
proposal to register shares held by the Forstmann Little partnerships and to
include their shares in Yankee Candle's registration. Yankee Candle will pay the
expenses of these piggyback registrations.

UNITED STATES FEDERAL TAX CONSIDERATIONS
FOR NON-UNITED STATES HOLDERS

The following is a general discussion of material U.S. federal income and
estate tax consequences of the ownership and disposition of our common stock
applicable to Non-U.S. Holders. A "Non-U.S. Holder" is a person other than:

- an individual who is a citizen or resident of the United States,

- a corporation, partnership or other entity created or organized in the
United States or under the laws of the United States or of any state,
other than a partnership treated as foreign for U.S. federal income tax
purposes,

- an estate whose income is includible in gross income for U.S. federal
income tax purposes regardless of source, and

- a trust subject to the primary supervision of a court within the United
States and the control of one or more U.S. persons.

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Generally, an individual may be treated as a resident alien, instead of a
non-resident alien, by being present in the United States for at least 31 days
in the calendar year and for a total of at least 183 days during a three-year
period ending in the current calendar year--counting for these purposes all of
the days present in the current year, one-third of the days present in the last
year, and one-sixth of the days present in the second-to-last year. Resident
aliens are subject to tax as if they were U.S. citizens.

This discussion does not consider:

- U.S. state and local or non-U.S. tax consequences,

- facts and circumstances that may be relevant to a particular Non-U.S.
Holder, including, if it is a partnership, the consequences of some
determinations being made at the partner level,

- the tax consequences to a Non-U.S. Holder's shareholders, partners or
beneficiaries,

- special tax rules that may apply to a Non-U.S. Holder that is, for
example, a bank, an insurance company, a dealer in securities or a trader
in securities that elects mark-to-market accounting treatment, or

- special tax rules that may apply when our common stock is held as part of
a "straddle," "hedge" or "conversion transaction."

The following discussion is based on provisions of the U.S. Internal Revenue
Code of 1986, as amended, applicable Treasury regulations, and administrative
and judicial interpretations as of the date of this prospectus, all of which may
change retroactively or prospectively. The following summary is for general
information. If you are a Non-U.S. Holder, you should consult a tax advisor on
the U.S. federal tax consequences of holding and disposing of our common stock,
as well as any tax consequences under the laws of any U.S. state or local or
non-U.S. taxing jurisdiction.

DIVIDENDS

Dividends paid to a Non-U.S. Holder of common stock generally will be
subject to withholding of U.S. federal income tax at a 30% rate or a lower rate
that an applicable income tax treaty may specify. Non-U.S. Holders should
consult their tax advisors on their entitlement to benefits under a relevant
income tax treaty.

Dividends that are effectively connected with a Non-U.S. Holder's conduct of
a trade or business in the U.S. are generally subject to U.S. federal income tax
on a net income basis at regular graduated rates, but are not generally subject
to the 30% withholding tax if the Non-U.S. Holder files the appropriate IRS form
with the payer. Any U.S. trade or business income received by a Non-U.S. Holder
that is a corporation may, under specific circumstances, be subject to an
additional "branch profits tax" at a 30% rate or a lower rate that an applicable
income tax treaty may specify.

Dividends paid prior to 2001 to an address in a foreign country are
presumed, absent actual knowledge to the contrary, to be paid to a resident of
that country for purposes of the withholding discussed above and for purposes of
determining the applicability of an income tax treaty rate. For dividends paid
after 2000:

- a Non-U.S. Holder of common stock that claims the benefit of an income tax
treaty rate generally will be required to satisfy applicable certification
and other requirements,

- in the case of common stock held by a foreign partnership, the
certification requirement will generally be applied to the partners of the
partnership, and the partnership will be required to provide a U.S.
taxpayer identification number and other information, and

- look-through rules will apply to tiered partnerships.

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A Non-U.S. Holder of common stock that is eligible for a reduced rate of
U.S. withholding tax under an income tax treaty may obtain a refund or credit of
any excess amounts withheld by filing an appropriate claim for a refund with the
IRS.

DISPOSITION OF COMMON STOCK

A Non-U.S. Holder generally will not be subject to U.S. federal income tax
in respect of gain recognized on a disposition of common stock unless:

- the gain is U.S. trade or business income, in which case the branch
profits tax may also apply to a corporate Non-U.S. Holder,

- the Non-U.S. Holder is an individual who holds the common stock as a
capital asset within the meaning of Section 1221 of the Internal Revenue
Code, is present in the United States for 183 or more days in the taxable
year of the disposition and meets other requirements,

- the Non-U.S. Holder is subject to tax under provisions of U.S. tax law
applicable to specific U.S. expatriates, or

- Yankee Candle is or has been a "U.S. real property holding corporation"
for U.S. federal income tax purposes at any time during the shorter of the
five-year period ending on the date of disposition and the Non-U.S.
Holder's holding period for the common stock.

The tax relating to stock in a "U.S. real property holding corporation" does
not apply to a Non-U.S. Holder whose holdings, actual and constructive, at all
times during the applicable period, amount to 5% or less of the common stock,
provided that the common stock is regularly traded on an established securities
market. Generally, a corporation is a "U.S. real property holding corporation"
if the fair market value of its "U.S. real property interests" equals or exceeds
50% of the sum of the fair market value of its worldwide real property interests
and its other assets used or held for use in a trade or business. Yankee Candle
believes that it has not been and is not, and does not anticipate becoming, a
"U.S. real property holding corporation" for U.S. federal income tax purposes.

FEDERAL ESTATES TAXES

Common stock owned or treated as owned by an individual who is a Non-U.S.
Holder at the time of death will be included in the individual's gross estate
for U.S. federal estate tax purposes and may be subject to U.S. federal estate
tax, unless an applicable estate tax treaty provides otherwise.

INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING TAX

Yankee Candle must report annually to the IRS and to each Non-U.S. Holder
the amount of the dividends paid to that holder and any tax withheld with
respect to those dividends. The information reporting requirements apply
regardless of whether withholding is required. Copies of the information returns
reporting those dividends and withholding may also be made available, under an
applicable income tax treaty or agreement, to the tax authorities in the
Non-U.S. Holder's country of residence.

Under specific circumstances, the IRS requires information reporting and
backup withholding at a rate of 31% on specific payments on common stock. Under
currently applicable law, Non-U.S. Holders of common stock generally will be
exempt from information reporting and backup withholding on dividends paid prior
to 2001 to an address outside the U.S. For dividends paid after 2000, however, a
Non-U.S. Holder of common stock that fails to certify its Non-U.S. Holder status
under applicable Treasury regulations may be subject to backup withholding at a
rate of 31% on payments of dividends.

The payment of the proceeds of the disposition of common stock by or through
the U.S. office of a broker generally will be subject to information reporting
and backup withholding at a rate of 31% unless the holder certifies its status
as a Non-U.S. Holder under penalties of perjury or otherwise establishes an

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exemption. The payment of the proceeds of the disposition by a Non-U.S. Holder
of common stock by or through a non-U.S. office of a non-U.S. broker will not be
subject to backup withholding or information reporting unless the non-U.S.
broker has particular U.S. relationships that make it a "U.S. related person."
In the case of the payment of proceeds from disposition of common stock by or
through a non-U.S. office of a broker that is a U.S. person or a "U.S. related
person," information reporting, but not backup withholding, on the payment
applies unless the broker has documentary evidence in its files that the holder
is a Non-U.S. Holder and that specific conditions are met or that the holder
otherwise is entitled to an exemption. For this purpose, a "U.S. related person"
is:

- a "controlled foreign corporation" for U.S. federal income tax purposes,

- a foreign person 50% or more of whose gross income from all sources for
the three-year period ending with the close of its taxable year preceding
the payment, or for that part of the period that the broker has been in
existence, is derived from activities that are effectively connected with
the conduct of a U.S. trade or business, or

- effective after 2000, a foreign partnership (A) at least 50% of the
capital or profits interest in which is owned by U.S. persons, or (B) that
is engaged in a U.S. trade or business.

Effective after 2000, backup withholding will apply to a payment of
disposition proceeds if the broker has actual knowledge that the holder is a
U.S. person. Non-U.S. Holders should consult their own tax advisors on the
application of information withholding and backup withholding to them.

Any amounts withheld under the backup withholding rules from a payment to a
Non-U.S. Holder will be refunded or credited against the holder's U.S. federal
income tax liability, if any, if the holder provides the required information to
the IRS.

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UNDERWRITERS

We intend to offer our common stock in the United States through a number of
U.S. underwriters as well as elsewhere through international managers. Under the
terms and subject to the conditions of the underwriting agreement dated the date
of this prospectus, the U.S. underwriters named below, for whom Morgan Stanley &
Co. Incorporated, Goldman, Sachs & Co. and Merrill Lynch, Pierce, Fenner & Smith
Incorporated are acting as U.S. representatives, and the international
underwriters named below, for whom Morgan Stanley & Co. International Limited,
Goldman Sachs International and Merrill Lynch International are acting as
international representatives, have severally agreed to purchase, and we and the
selling stockholders have severally agreed to sell to them, the respective
number of shares of our common stock set forth opposite the names of the
underwriters below:

<TABLE>
<CAPTION>
NUMBER OF
NAME SHARES
- ---------------------------------------------------------------------------------------------------- ------------
<S> <C>
U.S. underwriters:
Morgan Stanley & Co. Incorporated................................................................. 2,583,334
Goldman, Sachs & Co............................................................................... 2,583,333
Merrill Lynch, Pierce, Fenner & Smith
Incorporated............................................................................ 2,583,333
Advest, Inc....................................................................................... 75,000
Robert W. Baird & Co. Incorporated................................................................ 75,000
Banc of America Securities LLC.................................................................... 150,000
BancBoston Robertson Stephens Inc................................................................. 150,000
J.C. Bradford & Co................................................................................ 75,000
Burnham Securities Inc............................................................................ 75,000
Chase Securities Inc.............................................................................. 150,000
Dain Rauscher Wessels
a division of Dain Rauscher Incorporated........................................................ 75,000
Deutsche Bank Securities Inc...................................................................... 150,000
Donaldson, Lufkin & Jenrette Securities Corporation............................................... 150,000
A.G. Edwards & Sons, Inc.......................................................................... 150,000
First Union Capital Markets Corp.................................................................. 75,000
Hambrecht & Quist LLC............................................................................. 150,000
Edward D. Jones & Co., L.P........................................................................ 150,000
Raymond James & Associates, Inc................................................................... 75,000
Redwine & Company, Inc............................................................................ 75,000
Sanders Morris Mundy Inc.......................................................................... 75,000
Scotia Capital Markets (USA) Inc.................................................................. 75,000
Salomon Smith Barney.............................................................................. 150,000
Stephens Inc...................................................................................... 75,000
Tucker Anthony Cleary Gull........................................................................ 75,000
------------
Subtotal...................................................................................... 10,000,000
------------

International underwriters:
Morgan Stanley & Co. International Limited........................................................ 708,334
Goldman Sachs International....................................................................... 708,333
Merrill Lynch International....................................................................... 708,333
Commerzbank Aktiengesellschaft.................................................................... 125,000
Credit Agricole Indosuez.......................................................................... 125,000
HSBC Investment Bank PLC.......................................................................... 125,000
------------
Subtotal...................................................................................... 2,500,000
------------
Total......................................................................................... 12,500,000
------------
------------
</TABLE>

The U.S. underwriters and the international underwriters, and the U.S.
representatives and the international representatives, are collectively referred
to as the underwriters and the representatives,

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respectively. The underwriting agreement provides that the obligations of the
several underwriters to pay for and accept delivery of the shares of our common
stock offered hereby are subject to the approval of specific legal matters by
their counsel and to other conditions. The underwriters are obligated to
purchase all of the shares of our common stock except those covered by the U.S.
underwriters' over-allotment option described below if any are purchased.

In the agreement between U.S. and international underwriters, each U.S.
underwriter has represented and agreed that, with specific exceptions:

- it is not purchasing any shares for the account of anyone other than a
U.S. or Canadian person, and

- it has not offered or sold, and will not offer or sell, directly or
indirectly, any shares or distribute any prospectus relating to the shares
outside the United States or Canada or to anyone other than a U.S. or
Canadian person.

In the agreement between U.S. and international underwriters, each
international underwriter has represented and agreed that, with specific
exceptions:

- it is not purchasing any shares for the account of any U.S. or Canadian
person, and

- it has not offered or sold, and will not offer or sell, directly or
indirectly, any shares or distribute any prospectus relating to the shares
in the United States or Canada or to any U.S. or Canadian person.

For any underwriter that is both a U.S. underwriter and an international
underwriter, these representations and agreements made by it in its capacity as
a U.S. underwriter apply only to it in its capacity as a U.S. underwriter and
those made by it in its capacity as an international underwriter apply only to
it in its capacity as an international underwriter. The limitations described
above do not apply to stabilization transactions or to other transactions
specified in the agreement between U.S. and international underwriters. As used
in this prospectus, U.S. or Canadian person means any national or resident of
the United States or Canada, or any corporation, pension, profit-sharing or
other trust or other entity organized under the laws of the United States or
Canada or of any of their political subdivisions, other than a branch located
outside the United States and Canada of any U.S. or Canadian person. U.S. or
Canadian person includes any U.S. or Canadian branch of a person who is
otherwise not a U.S. or Canadian person. All shares of common stock to be
purchased by the underwriters under the underwriting agreement are referred to
as shares.

In the agreement between U.S. and international underwriters, sales of
shares may be made between the U.S. underwriters and international underwriters.
The price of any shares so sold will be the public offering price set forth on
the cover page of this prospectus, in U.S. dollars, less an amount not greater
than the per share amount of the concession to dealers set forth below.

In the agreement between U.S. and international underwriters, each U.S.
underwriter has represented that it has not offered or sold, and has agreed not
to offer or sell, any shares in any province or territory of Canada or to, or
for the benefit of, any resident of any province or territory of Canada in
contravention of the securities laws of Canada. Each U.S. underwriter has
represented that any offer or sale of shares in Canada will be made only
pursuant to an exemption from the requirement to file a prospectus in the
province or territory of Canada in which the offer or sale is made. Each U.S.
underwriter has further agreed to send to any dealer who purchases from it any
of the shares a notice stating in substance that, by purchasing the shares, the
dealer agrees that any offer or sale of shares in Canada will be made only
pursuant to an exemption from the requirement to file a prospectus in the
province or territory of Canada in which the offer or sale is made. Each dealer
will deliver to any other dealer to whom it sells any of the shares a notice
containing substantially the same Canadian selling restrictions.

66
<PAGE>
In the agreement between U.S. and international underwriters, each
international underwriter has represented and agreed that:

- it has not offered or sold and, prior to the date six months after the
closing date for the sale of the shares to the international underwriters,
will not offer or sell, any shares to persons in the United Kingdom except
to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments for the purposes of their businesses
or otherwise in circumstances which have not resulted and will not result
in an offer to the public in the United Kingdom within the meaning of the
public offers of Securities Regulations 1995,

- it has complied and will comply with all applicable provisions of the
Financial Services Act 1986, and

- it has and will distribute any document relating to the shares in the
United Kingdom only to a person who is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1996 (as amended) or is a person to whom the document
may otherwise lawfully be distributed.

In the agreement between U.S. and international underwriters, each
international underwriter has further represented that it has not offered or
sold, and has agreed not to offer or sell in Japan or to or for the account of
any resident of Japan, any of the shares. This limitation does not apply to
Japanese international underwriters or dealers and offers or sales pursuant to
any exemption from the registration requirements of the Securities and Exchange
Law and otherwise in compliance with applicable provisions of Japanese law. Each
international underwriter has further agreed to send to any dealer who purchases
from it any of the shares a notice stating that, by purchasing the shares, the
dealer agrees that any offer or sale of the shares in Japan will be made only to
Japanese international underwriters or dealers or under an exemption from the
registration requirements of the Securities and Exchange Law and otherwise in
compliance with applicable provisions of Japanese law. Each dealer will send to
any other dealer to whom it sells any of the shares a notice containing
substantially the same Japanese selling restrictions.

The underwriters initially propose to offer part of the shares directly to
the public at the public offering price set forth on the cover page of this
prospectus. The underwriters may also offer the shares to securities dealers at
a price that represents a concession not in excess of $.76 per share under the
public offering price. Any underwriter may allow and dealers may reallow, a
concession not in excess of $.10 per share to other underwriters or to
securities dealers. After the initial offering of the shares, the offering price
and other selling terms may from time to time be changed by the representatives.

The selling stockholders have granted to the U.S. underwriters an option,
exercisable for 30 days from the date of this prospectus to purchase up to an
aggregate of 1,875,000 additional shares at the public offering price set forth
on the cover page of this prospectus, less underwriting discounts and
commissions. The U.S. underwriters may exercise this option solely for the
purpose of covering over-allotments, if any, made in connection with the
offering of the shares offered pursuant to this prospectus. To the extent this
option is exercised, each U.S. underwriter will become obligated, subject to
specified conditions, to purchase about the same percentage of additional shares
as the number set forth next to the U.S. underwriter's name in the preceding
table bears to the total number of shares set forth next to the names of all
U.S. underwriters in the preceding table. If the U.S. underwriters' option is
exercised in full, the total price to the public for this offering would be
$258,750,000, the total underwriters' discounts and commissions would be
$16,818,750 and total proceeds to Yankee Candle and the selling stockholders
would be $241,931,250.

The underwriters have informed us and the selling stockholders that they do
not intend sales to discretionary accounts to exceed five percent of the total
number of shares offered by them.

67
<PAGE>
Our common stock has been approved for listing on the NYSE under the symbol
"YCC," subject to official notice of issuance. The underwriters intend to sell
shares to a minimum of 2,000 beneficial owners in lots of 100 or more so as to
meet the distribution requirements of this listing.

At our request and the request of the selling stockholders, the underwriters
will reserve up to 625,000 shares to be sold in the offering and offered hereby
for sale, at the initial public offering price, to our directors, officers and
employees and others, generally in the United States. This directed share
program will be administered by Morgan Stanley & Co. Incorporated. The number of
shares available for sale to the general public will be reduced to the extent
these individuals purchase the reserved shares. Any reserved shares which are
not so purchased will be offered by the underwriters to the general public on
the same basis as the other shares offered in this prospectus.

Each of Yankee Candle and the selling stockholders, including those selling
stockholders who are our directors and executive officers, has agreed that,
without the prior written consent of Morgan Stanley & Co. Incorporated on behalf
of the underwriters, it will not, during the period ending 180 days after the
date of this prospectus:

- offer, pledge, sell, contract to sell, sell any option or contract to
purchase, purchase any option or contract to sell, grant any option, right
or warrant to purchase, lend, or otherwise transfer or dispose of,
directly or indirectly, any shares of common stock or any securities
convertible into or exercisable or exchangeable for common stock, or

- enter into any swap or other arrangement that transfers to another, in
whole or in part, any of the economic consequences of ownership of the
common stock,

whether any transaction described above is to be settled by delivery of shares
of common stock or other securities, in cash or otherwise.

The restrictions described in the previous paragraph do not apply to:

- the reorganization in connection with this offering,

- the sale of the shares to the underwriters,

- the issuance by us of shares of common stock upon the exercise of an
option or warrant or the conversion of a security outstanding on the date
of this prospectus of which the underwriters have been advised in writing,

- the granting of stock options and/or restricted stock units pursuant to
our existing employee benefit plans and to directors in connection with
their initial appointment to the board of directors, provided that these
options, other than director options, do not become exercisable and these
units do not vest during the 180-day period, and

- transactions by any person other than us relating to shares of common
stock or other securities acquired in open market or other transactions
after the completion of the offering.

In order to facilitate the offering, the underwriters may engage in
transactions that stabilize, maintain or otherwise affect the price of the
shares of common stock. Specifically, the underwriters may agree to sell or
allot more shares than the 12,500,000 shares of our common stock which we and
the selling stockholders have agreed to sell to them. This over-allotment would
create a short position in our common stock for the underwriters' account. To
cover any over-allotments or to stabilize the price of the common stock, the
underwriters may bid for, and purchase, shares of common stock in the open
market. Finally, the underwriting syndicate may reclaim selling concessions
allowed to an underwriter or a dealer for distributing the common stock in the
offering, if the syndicate repurchases previously distributed common stock in
transactions to cover syndicate short positions, in stabilization transactions
or otherwise. The underwriters have reserved the right to reclaim selling
concessions in order to encourage underwriters and dealers to distribute the
common stock for investment, rather than for short-term profit taking.
Increasing the

68
<PAGE>
proportion of the offering held for investment may reduce the supply of common
stock available for short-term trading. Any of these activities may stabilize or
maintain the market price of the common stock above independent market levels.
The underwriters are not required to engage in these activities and may end any
of these activities at any time.

From time to time, some of the underwriters and their affiliates have
provided, and may continue to provide, banking services and financing to us and
the Forstmann Little partnerships.

We, the selling stockholders and the underwriters have agreed to indemnify
each other against a variety of liabilities, including liabilities under the
Securities Act.

PRICING OF THE OFFERING

Prior to this offering, there has been no public market for the common
stock. The initial public offering price has been determined by negotiations
among us, the selling stockholders and the U.S. representatives. Among the
factors considered in determining the initial public offering price were the
future prospects of our company and our industry in general, our sales, earnings
and other financial and operating information in recent periods, and the
price-earnings ratios, sales growth rates, market prices of securities and other
financial and operating information of companies engaged in activities similar
to those of our company.

LEGAL MATTERS

The validity of the shares of common stock offered by this prospectus will
be passed upon for Yankee Candle by Fried, Frank, Harris, Shriver & Jacobson (a
partnership including professional corporations), New York, New York, and Hale
and Dorr LLP, Boston, Massachusetts as to matters of Massachusetts law and for
the underwriters by Davis Polk & Wardwell, New York, New York. Fried, Frank,
Harris, Shriver & Jacobson has in the past provided, and may continue to
provide, legal services to Forstmann Little and its affiliates.

EXPERTS

The consolidated financial statements of The Yankee Candle Company, Inc. as
of December 31, 1998 and for the year ended December 31, 1998 included in this
prospectus and the related financial statement schedule included elsewhere in
this Registration Statement have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports appearing herein and elsewhere
in the registration statement, and are included in reliance upon the reports of
Deloitte & Touche LLP given upon their authority as experts in accounting and
auditing.

The financial statements and schedule of The Yankee Candle Company, Inc. at
December 31, 1997, and for the year then ended, appearing in this prospectus and
registration statement have been audited by Ernst & Young LLP, independent
auditors, as set forth in their reports thereon appearing elsewhere herein, and
are included in reliance upon the reports of Ernst & Young LLP given on the
authority of such firm as experts in accounting and auditing.

The consolidated financial statements of The Yankee Candle Company, Inc. for
the year ended December 31, 1996 included in this prospectus and the related
financial statement schedule included elsewhere in this Registration Statement
have been audited by Fisk, Bilton, Smith & Co., P.C., independent auditors, as
stated in their reports appearing herein and elsewhere in the registration
statement, and are included in reliance upon the report of Fisk, Bilton, Smith &
Co., P.C. given upon their authority as experts in accounting and auditing.

Our current auditors are Deloitte & Touche LLP, who audited our 1998
financial statements. On May 4, 1998, the Board of Directors dismissed Ernst &
Young LLP, who audited our 1997 financial statements, and appointed Deloitte &
Touche LLP. On June 13, 1997, our then sole shareholder dismissed

69
<PAGE>
Fisk, Bilton, Smith & Co., P.C., who audited our 1996 financial statements, and
appointed Ernst & Young LLP.

There were no disagreements between either (a) Ernst & Young LLP and our
management at the decision-making level during the period of their engagement or
(b) Fisk, Bilton, Smith & Co., P.C. and our management at the decision-making
level during the period of their engagement, which disagreements, if not
resolved to the satisfaction of either Ernst & Young LLP or Fisk, Bilton, Smith
& Co., P.C., would have caused either to make reference to the subject matter of
the disagreements in connection with their reports. In addition, there were no
reportable events during the respective engagement periods of Ernst & Young LLP
and Fisk, Bilton, Smith & Co., P.C.

Prior to their respective appointments, neither we nor anyone on our behalf
consulted Deloitte & Touche LLP or Ernst & Young LLP regarding the application
of accounting principles to a specified transaction or the type of audit opinion
that might be rendered on our financial statements, and neither Deloitte &
Touche LLP nor Ernst & Young LLP provided a written or oral report or advice
that our management concluded was an important factor considered by us in
reaching a decision on the issue.

WHERE YOU CAN FIND MORE INFORMATION

Yankee Candle has filed with the Securities and Exchange Commission a
registration statement on Form S-1, which includes amendments, exhibits,
schedules and supplements, under the Securities Act of 1933 and the rules and
regulations under the Securities Act, for the registration of the common stock
offered by this prospectus. Although this prospectus, which forms a part of the
registration statement, contains all material information included in the
registration statement, parts of the registration statement have been omitted
from this prospectus as permitted by the rules and regulations of the
Commission. For further information with respect to Yankee Candle and the common
stock offered by this prospectus, please refer to the registration statement.
The registration statement can be inspected and copied at prescribed rates at
the public reference facilities maintained by the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's regional
offices at Seven World Trade Center, 13th Floor, New York, New York 10048 and
Northwestern Atrium Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661. The public may obtain information regarding the Washington, D.C.
Public Reference Room by calling the Commission at 1-800-SEC-0330. In addition,
the registration statement is publicly available through the Commission's site
on the Internet's World Wide Web, located at: http://www.sec.gov. Following the
offering, Yankee Candle's future public filings are expected to be available for
inspection at the offices of the New York Stock Exchange, Inc., 20 Broad Street,
New York, New York 10005.

After the offering, we will be subject to the full informational
requirements of the Securities Exchange Act of 1934, as amended. To comply with
these requirements, we will file periodic reports, proxy statements and other
information with the Commission.

Our logo and the titles of our products mentioned in this prospectus are our
trademarks.

70
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Audited Historical Consolidated Financial Statements

Independent Auditors' Reports...................................................... F-2

Consolidated Balance Sheets as of December 31, 1997 and 1998....................... F-5

Consolidated Statements of Operations for the years ended
December 31, 1996, 1997 and 1998................................................. F-6

Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1996, 1997 and 1998................................................. F-7

Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1997 and 1998................................................. F-8

Notes to Consolidated Financial Statements......................................... F-9

Unaudited Interim Condensed Consolidated Financial Statements

Unaudited Interim Condensed Consolidated Balance Sheet as of April 3, 1999......... F-21

Unaudited Interim Condensed Consolidated Statements of Operations for the
three months ended March 31, 1998 and the thirteen weeks ended April 3, 1999..... F-22

Unaudited Interim Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 1998 and the thirteen weeks ended April 3, 1999..... F-23

Notes to Unaudited Interim Condensed Consolidated Financial Statements............. F-24
</TABLE>

F-1
<PAGE>
INDEPENDENT AUDITORS' REPORT

Board of Directors
The Yankee Candle Company, Inc.
Whately, Massachusetts

We have audited the accompanying consolidated balance sheet of The Yankee
Candle Company, Inc. and subsidiaries as of December 31, 1998 and the related
statements of operations, stockholders' equity (deficit) and cash flows for the
year then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, such 1998 financial statements present fairly, in all
material respects, the financial position of The Yankee Candle Company, Inc. and
subsidiaries as of December 31, 1998, and the results of their operations and
their cash flows for the year then ended in conformity with generally accepted
accounting principles.

/s/ Deloitte & Touche LLP
Boston, Massachusetts
March 31, 1999 (June 30, 1999 as to Note 14 and portions of Notes 2 and 11)

F-2
<PAGE>
REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors
The Yankee Candle Company, Inc.

We have audited the accompanying balance sheet of The Yankee Candle Company,
Inc. as of December 31, 1997, and the related statements of operations and cash
flows for the year then ended. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audit.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of The Yankee Candle Company,
Inc. at December 31, 1997, and the results of its operations and its cash flows
for the year then ended in conformity with generally accepted accounting
principles.

/s/ Ernst & Young LLP

Boston, Massachusetts
March 6, 1998, except Note 14, as to which the date is June 30, 1999

F-3
<PAGE>
INDEPENDENT AUDITORS' REPORT

The Board of Directors
The Yankee Candle Company, Inc.

We have audited the accompanying statement of operations, stockholder's
equity (deficit) and cash flows of The Yankee Candle Company, Inc. for the year
ended December 31, 1996. These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements based on our audit.

In our opinion, such financial statements present fairly, in all material
respects, the results of operations and cash flows of The Yankee Candle Company,
Inc. for the year ended December 31, 1996 in conformity with generally accepted
accounting principles.

/s/ Fisk, Bilton, Smith & Co., P.C.
West Springfield, Massachusetts
March 4, 1997 (June 30, 1999 as to Note 14)

F-4
<PAGE>
THE YANKEE CANDLE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1997 AND 1998
(IN THOUSANDS)

<TABLE>
<CAPTION>
1997 1998
--------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................................................ $ 7,377 $ 30,411
Accounts receivable, less allowance of $360 in 1997 and $450 in 1998, respectively....... 6,933 8,546
Inventory................................................................................ 10,212 12,482
Prepaid expenses and other current assets................................................ 496 855
Deferred tax assets...................................................................... 158 1,542
--------- ----------
Total current assets................................................................... 25,176 53,836
PROPERTY, PLANT AND EQUIPMENT (NET)........................................................ 43,912 48,315
MARKETABLE SECURITIES...................................................................... 386 856
CLASSIC VEHICLES........................................................................... 1,589 874
DEFERRED FINANCING COSTS................................................................... -- 6,566
NOTE RECEIVABLE--RELATED PARTY............................................................. 1,573 --
DEFERRED TAX ASSETS........................................................................ -- 164,474
OTHER ASSETS............................................................................... 460 424
--------- ----------
TOTAL ASSETS........................................................................... $ 73,096 $ 275,345
--------- ----------
--------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Bank loans............................................................................... $ 17,080 $ --
Accounts payable......................................................................... 6,275 13,287
Accrued interest......................................................................... 124 1,895
Accrued payroll.......................................................................... 3,666 4,768
Accrued income taxes..................................................................... 954 --
Other accrued liabilities................................................................ 1,313 2,982
Current portion of long-term debt........................................................ 874 --
--------- ----------
Total current liabilities.............................................................. 30,286 22,932
--------- ----------
DEFERRED COMPENSATION OBLIGATION........................................................... 540 1,004
LONG-TERM DEBT--Less current portion....................................................... 7,310 320,000
DEFERRED TAX LIABILITIES................................................................... 169 --
COMMITMENTS AND CONTINGENCIES (Notes 10 and 12)
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $.01 par value per share, 300,000 shares authorized; 98,005 issued; 98,005
and 48,445 shares outstanding at 1997 and 1998, respectively........................... 980 980
Additional paid-in capital............................................................... (918) 126,610
Treasury stock, 49,560 shares at 1998.................................................... -- (212,448)
Retained earnings........................................................................ 34,729 19,048
Capital subscription receivable.......................................................... -- (1,084)
Unearned stock compensation.............................................................. -- (1,698)
Accumulated other comprehensive income................................................... -- 1
--------- ----------
Total stockholders' equity (deficit)................................................... 34,791 (68,591)
--------- ----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)................................... $ 73,096 $ 275,345
--------- ----------
--------- ----------
</TABLE>

See notes to consolidated financial statements.

F-5
<PAGE>
THE YANKEE CANDLE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1996 1997 1998
------------ ------------ --------------
<S> <C> <C> <C>
NET SALES............................................................. $ 112,199 $ 144,103 $ 184,477
COST OF SALES......................................................... 53,207 62,069 79,105
------------ ------------ --------------
Gross profit.................................................... 58,992 82,034 105,372
------------ ------------ --------------
OPERATING EXPENSES:
Selling expenses.................................................... 23,244 26,935 30,546
General and administrative expenses................................. 21,687 27,031 19,753
Bonus related to the Recapitalization............................... -- -- 61,263
------------ ------------ --------------
44,931 53,966 111,562
------------ ------------ --------------
INCOME (LOSS) FROM OPERATIONS......................................... 14,061 28,068 (6,190)
------------ ------------ --------------
OTHER (INCOME) EXPENSE:
Interest income..................................................... (165) (151) (219)
Interest expense.................................................... 1,913 2,154 16,268
Other expense....................................................... 221 334 737
------------ ------------ --------------
Total other expense............................................. 1,969 2,337 16,786
------------ ------------ --------------
INCOME (LOSS) BEFORE PROVISION FOR INCOME
TAXES............................................................... 12,092 25,731 (22,976)
PROVISION FOR INCOME TAXES............................................ 410 1,360 9,656
------------ ------------ --------------
NET INCOME (LOSS)..................................................... $ 11,682 $ 24,371 $ (32,632)
------------ ------------ --------------
------------ ------------ --------------
HISTORICAL BASIC EARNINGS (LOSS) PER SHARE............................ $ 0.12 $ 0.25 $ (0.51)
------------ ------------ --------------
------------ ------------ --------------
HISTORICAL DILUTED EARNINGS (LOSS) PER SHARE.......................... $ 0.12 $ 0.25 $ (0.51)
------------ ------------ --------------
------------ ------------ --------------
PRO FORMA INFORMATION (UNAUDITED):
HISTORICAL INCOME (LOSS) BEFORE
PROVISION (BENEFIT) FOR INCOME TAXES.............................. $ 12,092 $ 25,731 $ (22,976)
PRO FORMA PROVISION (BENEFIT) FOR INCOME TAXES...................... $ 4,830 $ 10,686 $ (8,731)
------------ ------------ --------------
PRO FORMA NET INCOME (LOSS)......................................... $ 7,262 $ 15,045 $ (14,245)
------------ ------------ --------------
------------ ------------ --------------
PRO FORMA BASIC EARNINGS (LOSS) PER SHARE........................... $ 0.07 $ 0.15 $ (0.22)
------------ ------------ --------------
------------ ------------ --------------
PRO FORMA DILUTED EARNINGS (LOSS) PER SHARE......................... $ 0.07 $ 0.15 $ (0.22)
------------ ------------ --------------
------------ ------------ --------------
WEIGHTED AVERAGE BASIC SHARES OUTSTANDING............................. 98,005 98,005 64,458
------------ ------------ --------------
------------ ------------ --------------
WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING........................... 98,005 98,005 64,458
------------ ------------ --------------
------------ ------------ --------------
</TABLE>

See notes to consolidated financial statements.

F-6
<PAGE>
THE YANKEE CANDLE COMPANY, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK ADDITIONAL CAPITAL
---------------------- PAID-IN TREASURY RETAINED SUBSCRIPTION
SHARES AMOUNT CAPITAL STOCK EARNINGS RECEIVABLE
--------- ----------- ----------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996................... 98,005 $ 980 $ (918) $ -- $ 28,561 $ --
Distributions to stockholder............. -- -- -- -- (3,125) --
Net income/comprehensive income.......... -- -- -- -- 11,682 --
--------- ----- ----------- ----------- ---------- ------------
BALANCE, DECEMBER 31, 1996................. 98,005 980 (918) -- 37,118 --
Distributions to stockholder............. -- -- -- -- (26,760) --
Net income/comprehensive income.......... -- -- -- -- 24,371 --
--------- ----- ----------- ----------- ---------- ------------
BALANCE, DECEMBER 31, 1997................. 98,005 980 (918) -- 34,729 --
Distributions to stockholder............. -- -- -- -- (34,102) --
Transfer of accumulated deficit to
additional paid-in capital at
termination of S-Corporation status.... -- -- (51,053) -- 51,053 --
Redemption of common stock............... -- -- -- (212,448) -- --
Recognition of deferred tax asset........ -- -- 175,683 -- -- --
Capital subscription receivable.......... -- -- 1,084 -- -- (1,084)
Unearned stock compensation.............. -- -- 1,814 -- -- --
Amortization of unearned stock
compensation........................... -- -- -- -- -- --
Comprehensive income (loss):
Net loss............................... -- -- -- -- (32,632) --
Foreign currency translation gain...... -- -- -- -- -- --
Comprehensive income (loss).............. -- -- -- -- -- --
--------- ----- ----------- ----------- ---------- ------------
BALANCE, DECEMBER 31, 1998................. 98,005 $ 980 $ 126,610 $ (212,448) $ 19,048 $ (1,084)
--------- ----- ----------- ----------- ---------- ------------
--------- ----- ----------- ----------- ---------- ------------

<CAPTION>
ACCUMULATED
OTHER
UNEARNED COMPREHENSIVE COMPREHENSIVE
STOCK COMPENSATION INCOME INCOME TOTAL
-------------------- ------------------- --------------- -----------
<S> <C> <C> <C> <C>
BALANCE, JANUARY 1, 1996................... $ -- $ -- $ 28,623
Distributions to stockholder............. -- -- (3,125)
Net income/comprehensive income.......... -- -- $ 11,682 11,682
------- --- --------------- -----------
--- ---------------
BALANCE, DECEMBER 31, 1996................. -- -- 37,180
Distributions to stockholder............. -- -- (26,760)
Net income/comprehensive income.......... -- -- 24,371 24,371
------- --- --------------- -----------
--- ---------------
BALANCE, DECEMBER 31, 1997................. -- -- 34,791
Distributions to stockholder............. -- -- (34,102)
Transfer of accumulated deficit to
additional paid-in capital at
termination of S-Corporation status.... -- -- --
Redemption of common stock............... -- -- (212,448)
Recognition of deferred tax asset........ -- -- 175,683
Capital subscription receivable.......... -- -- --
Unearned stock compensation.............. (1,814) -- --
Amortization of unearned stock
compensation........................... 116 -- 116
Comprehensive income (loss):
Net loss............................... -- -- (32,632) (32,632)
Foreign currency translation gain...... -- 1 1 1
--- ---------------
Comprehensive income (loss).............. -- -- $ (32,631) --
------- --- --------------- -----------
--- ---------------
BALANCE, DECEMBER 31, 1998................. $ (1,698) $ 1 $ (68,591)
------- -----------
------- -----------
</TABLE>

See notes to consolidated financial statements.

F-7
<PAGE>
THE YANKEE CANDLE COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
1996 1997 1998
---------- ---------- ----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)........................................................... $ 11,682 $ 24,371 $ (32,632)
Adjustments to reconcile net income (loss) to net cash provided by (used in)
operating activities:
Depreciation and amortization............................................. 3,094 3,581 4,662
Provision for loss on classic vehicles.................................... 400 46 --
Unrealized gain on marketable equity securities........................... -- (37) (92)
Non-cash stock compensation............................................... -- -- 116
Deferred taxes............................................................ -- (35) 9,656
(Gain) loss on disposal of fixed assets and classic vehicles.............. (14) 460 (146)
Changes in assets and liabilities:
Accounts receivable--net................................................ (501) (983) (1,613)
Inventory............................................................... 2,450 (1,064) (2,270)
Prepaid expenses and other assets....................................... (351) 1,005 (323)
Accounts payable........................................................ (606) 1,105 7,012
Accrued expenses and other liabilities.................................. 1,076 1,586 4,052
---------- ---------- ----------
Net cash provided by (used in) operating activities................... 17,230 30,035 (11,578)

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment....................................................... (10,076) (9,173) (9,433)
Acquisition of classic vehicles............................................. (327) (455) --
Acquisition of trademarks................................................... (6) (17) --
Loans to stockholder........................................................ (608) (204) --
Proceeds from sale of equipment............................................. 30 22 506
Proceeds from sale of classic vehicles...................................... -- 215 --
Purchase of marketable equity securities for deferred compensation plan..... -- (349) (378)
---------- ---------- ----------
Net cash used in investing activities................................. (10,987) (9,961) (9,305)
---------- ---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (repayments) under bank credit agreements.................... (4,547) 14,080 (31,097)
Proceeds from long-term borrowings.......................................... 1,599 -- 320,000
Principal payments on long-term debt........................................ (3,038) (861) (8,183)
Deferred financing costs.................................................... -- -- (7,115)
Redemption of common stock.................................................. -- -- (212,448)
Distributions to stockholder................................................ (3,126) (26,760) (17,240)
---------- ---------- ----------
Net cash provided by (used in) financing activities................... (9,112) (13,541) 43,917
---------- ---------- ----------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.......................... (2,869) 6,533 23,034
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR.................................. 3,713 844 7,377
---------- ---------- ----------
CASH AND CASH EQUIVALENTS, END OF YEAR........................................ $ 844 $ 7,377 $ 30,411
---------- ---------- ----------
---------- ---------- ----------
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest.................................................................. $ 1,968 $ 2,078 $ 14,497
---------- ---------- ----------
---------- ---------- ----------
Income taxes.............................................................. $ 352 $ 485 $ 8,730
---------- ---------- ----------
---------- ---------- ----------
Noncash distributions to sole stockholder................................... $ 16,862
----------
----------
</TABLE>

See notes to consolidated financial statements.

F-8
<PAGE>
THE YANKEE CANDLE COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

1. HISTORY, RECAPITALIZATION AND FINANCING

The Yankee Candle Company, Inc. (the "Company") and its subsidiaries is a
leading designer, manufacturer, wholesaler and retailer of premium scented
candles in the growing giftware industry. The Company has a 30-year history of
offering Yankee Candle products and marketing them as affordable luxuries and
consumable gifts. The Company's current products are available in numerous
fragrances and include a wide variety of jar candles,
Samplers-Registered Trademark-, pillars, tapers and other candle products
marketed under the trade names Housewarmer-Registered Trademark- and Country
Kitchen-Registered Trademark-, as well as candle accessories. The Company sells
such products to its wholesale customers who have gift store locations
nationwide and through its retail base of 62 company-owned and operated stores
in 20 states as of December 31, 1998.

On March 25, 1998, the Company entered into a Recapitalization and Stock
Purchase Agreement with Yankee Candle Holdings Corp. ("Holdings"), Michael
Kittredge ("MK"), and affiliates of Forstmann Little & Co. ("FL&Co."). On April
27, 1998 in connection with the Recapitalization, the Company (i) redeemed (the
"Redemption") a portion of its common stock held by MK for approximately
$200,000; (ii) paid transaction fees and expenses, including financing fees, of
approximately $19,550; (iii) repaid existing indebtedness of approximately
$49,300; and (iv) paid bonuses related to the Recapitalization of approximately
$61,300. In addition, Holdings acquired shares of common stock from MK for
approximately $180,000. This purchase was financed by the issuance of Holdings'
common stock to FL&Co. and senior management (together with the Redemption, the
"Recapitalization"). Upon completion of the Recapitalization, Holdings owned 90%
of the common stock and MK retained 10% of the common stock of the Company.

The Redemption and related transactions described above were financed
through the issuance of $320,000 of subordinated debentures (the "Subordinated
Debentures"). In addition, the Company entered into a credit agreement with a
consortium of banks that provided for a $60,000 revolving credit facility. The
Company borrowed $2,500 under this revolving credit facility.

The Company incurred financing costs of approximately $7,100 which were
recorded as deferred financing costs. In addition, the Company incurred
approximately $12,450 of transaction costs related to the Recapitalization which
were charged to treasury stock.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION--The accompanying consolidated financial
statements include the accounts of the Company and its wholly owned
subsidiaries. All significant intercompany accounts and transactions have been
eliminated.

ACCOUNTING ESTIMATES--The preparation of financial statements in conformity
with generally accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.

REVENUE RECOGNITION--The Company sells its products directly to retail
customers and through wholesale channels. Revenue from the sale of merchandise
to retail customers is recognized at the time of sale. Revenue from sales to
wholesale customers is recognized upon shipment of product. Revenue from
merchandise credits and gift certificates issued is deferred until redemption.

F-9
<PAGE>
THE YANKEE CANDLE COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CASH AND CASH EQUIVALENTS--The Company considers all short-term
interest-bearing investments with original maturities of three months or less to
be cash equivalents. Such investments are classified by the Company as "held to
maturity" securities under the provisions of Statement of Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity Securities"
(SFAS No. 115). These securities are stated at cost, adjusted for amortization
of discounts and premiums to maturity.

MARKETABLE SECURITIES--The Company classifies the marketable securities held
in its deferred compensation plan as "trading" securities under SFAS No. 115. In
accordance with the provisions of this statement, the investment balance is
stated at fair market value, based on quoted market prices. Unrealized gains and
losses are reflected in earnings; realized gains and losses are computed using
the specific identification method. As the assets held in the deferred
compensation plan reflect amounts due to employees, but available for general
creditors of the Company in the event the Company becomes insolvent, the Company
has recorded the investment balance as a non-current asset and has established a
corresponding other long-term liability entitled "deferred compensation
obligation" on the balance sheet.

The marketable securities held in this plan consist of investments in mutual
funds at December 31, 1997 and 1998. Unrealized gains included in earnings
during the years ended December 31, 1997 and 1998 were $37 and $92,
respectively. Gains of $9 and $30 were realized during 1997 and 1998,
respectively.

ACCOUNTS RECEIVABLE--Accounts receivable primarily represents amounts due
from wholesale customers.

INVENTORIES--Inventories are stated at the lower of cost or market on a
last-in, first-out ("LIFO") basis. In 1998, the liquidation of certain LIFO
layers decreased cost of sales by $383.

PROPERTY, PLANT AND EQUIPMENT--Property, plant and equipment are stated at
cost and are depreciated on the straight-line method based on the estimated
useful lives of the various assets. The estimated useful lives are as follows:

<TABLE>
<S> <C>
Buildings and improvements.................................... 5 to 40
years
Computer equipment............................................ 5 years
Furniture and fixtures........................................ 5 to 10
years
Equipment..................................................... 10 years
Leased vehicles............................................... 5 years
</TABLE>

Leasehold improvements are amortized using the straight-line method over the
lesser of the estimated life of the improvement or the remaining life of the
lease. Expenditures for normal maintenance and repairs are charged to expense as
incurred.

DEFERRED FINANCING COSTS--The Company amortizes deferred financing costs
using the effective interest method over the life of the related debt.
Accumulated amortization was $0 and $548 at December 31, 1997 and 1998,
respectively.

TRADEMARKS--Trademarks are recorded at cost and amortized over 15 years.
Cost of trademarks, included in other assets at December 31, 1997 and 1998, was
$227 and $231, respectively. Accumulated amortization was $54 and $69, at
December 31, 1997 and 1998, respectively.

F-10
<PAGE>
THE YANKEE CANDLE COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
CLASSIC VEHICLES--The Company has invested in certain vehicles, which it
displays in its car museum. These vehicles are stated at cost, with no provision
for depreciation, since their useful lives are indeterminable and their values
fluctuate with the classic vehicle market. When management believes that a
permanent decline in value has occurred, the assets are written down to their
fair value. During the years ended December 31, 1996, 1997 and 1998, the value
of these vehicles was written down by $400, $46, and $0, respectively.

ADVERTISING--The Company expenses the costs of advertising as they are
incurred. Advertising expense was $733, $1,306 and $1,986 for the years ended
1996, 1997 and 1998, respectively.

IMPAIRMENT ACCOUNTING--The Company reviews the recoverability of its
long-lived assets when events or changes in circumstances occur that indicate
that the carrying value of the assets may not be recoverable. This review is
based on the Company's ability to recover the carrying value of the assets from
the expected undiscounted future cash flows. If an impairment is indicated, the
Company measures the loss based on the fair value of the asset using various
valuation techniques. If an impairment loss exists, the amount of the loss will
be recorded in the consolidated statements of operations. It is possible that
future events or circumstances could cause these estimates to change.

PRO FORMA ADJUSTMENTS--The Company had, until the Recapitalization, elected
to be treated as an S Corporation for federal and state income tax purposes.
Under this previous election, income for federal income tax purposes was not
taxed at the corporate level but was taxed to MK.

On April 27, 1998, the Company's tax status changed from an S Corporation to
a C Corporation. The income statement reflects a provision for income taxes for
federal and state purposes for the period the Company was a C Corporation and a
provision for state taxes for the periods the Company was an S Corporation. The
pro forma financial information shows the effect on the historical financial
statements as if the Company had been taxed as a C Corporation during 1996, 1997
and 1998 instead of an S Corporation until April 27, 1998.

INCOME TAXES--The Company accounts for income taxes under the provisions of
Statement of Financial Accounting Standards ("SFAS") No. 109, "Accounting for
Income Taxes." SFAS No. 109 requires the recognition of deferred tax liabilities
and assets for the expected future tax consequences of temporary differences
between the carrying amounts and the tax basis of assets and liabilities using
enacted tax rates in effect in the years in which the differences are expected
to reverse. The provision for income taxes in the consolidated statements of
operations is the actual computed tax obligation or receivable for the period,
plus or minus the change during the period in deferred income tax assets and
liabilities.

NEWLY ISSUED ACCOUNTING STANDARDS--During 1998, SFAS No. 133, "Accounting
for Derivative Instruments and Hedging Activities," was issued by the Financial
Accounting Standards Board. This statement is effective for periods beginning
after June 15, 1999. The Company is currently evaluating the impact, if any, of
this statement.

FAIR VALUE OF FINANCIAL INSTRUMENTS--The estimated fair values of all
financial instruments, excluding the Subordinated Debentures (see Note 6),
approximate their carrying amounts in the consolidated balance sheets due to (i)
the short-term maturity of certain instruments or (ii) the floating interest
rate associated with certain instruments which have the effect of repricing such
instruments regularly.

F-11
<PAGE>
THE YANKEE CANDLE COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
In connection with the Recapitalization, the Subordinated Debentures were
issued to a partnership affiliated with FL&Co. and were immediately distributed
to its limited partners. The Subordinated Debentures can only be issued to an
affiliate of FL&Co. as part of an investment unit, are transferable in limited
circumstances and are not traded nor are they readily tradable. Pursuant to the
partnership agreement, the Subordinated Debentures (i) were sold as an
investment unit which included 37.5% of the shares of Holdings' common stock,
(ii) bear interest at a rate of one percent above the five year treasury rate
and (iii) may be prepaid without penalty or premium at any time. Based on the
five year treasury rate at December 31, 1998 and assuming repayment in three
years, the assumed date of refinancing, the Company believes that the fair value
of the Subordinated Debentures at December 31, 1998 is approximately $330
million.

EARNINGS PER SHARE--Statement of Financial Accounting Standards No. 128
"Earnings Per Share," requires two presentations of earnings per share--"basic"
and "diluted." Basic earnings per share is computed by dividing income available
to common stockholders (the numerator) by the weighted-average number of common
shares (the denominator) for the period. The computation of diluted earnings per
share is similar to basic earnings per share, except that the denominator is
increased to include the number of additional common shares that would have been
outstanding if the potentially dilutive common shares had been issued.

The denominator in the calculation is based on the following weighted
average number of common shares:

<TABLE>
<CAPTION>
1996 1997 1998
--------- --------- ---------
<S> <C> <C> <C>
Basic................................................................................ 98,005 98,005 64,458
Diluted.............................................................................. 98,005 98,005 64,458
</TABLE>

The Company had issued no options nor had there been any other common stock
equivalents that would have caused the basic and diluted shares numbers to
differ in 1996 or 1997. In 1998, however, contingently returnable shares and
shares issuable pursuant to option awards which were deemed common stock
equivalents were excluded from the computation of diluted earnings per share
because of their anti-dilutive effect on earnings per share.

PRIOR-YEAR RECLASSIFICATIONS--Certain 1996 and 1997 amounts have been
reclassified to conform with the 1998 presentation.

F-12
<PAGE>
THE YANKEE CANDLE COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

3. INVENTORIES

The components of inventory were as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1997 1998
--------- ---------
Finished goods.......................................................... $ 7,735 $ 9,967
Work-in-process......................................................... 45 126
Raw materials and packaging............................................. 3,242 2,816
--------- ---------
11,022 12,909
Less LIFO reserve....................................................... (810) (427)
--------- ---------
$ 10,212 $ 12,482
--------- ---------
--------- ---------
</TABLE>

4. PROPERTY, PLANT AND EQUIPMENT

The components of property, plant and equipment were as follows:

<TABLE>
<CAPTION>
DECEMBER 31,
--------------------
<S> <C> <C>
1997 1998
--------- ---------
Land and improvements.................................................... $ 3,351 $ 3,971
Buildings and improvements............................................... 33,385 36,120
Computer equipment....................................................... 3,429 4,584
Furniture and fixtures................................................... 4,037 5,471
Equipment................................................................ 9,039 9,445
Leased vehicles.......................................................... 1,836 814
Construction-in-process.................................................. 893 1,815
--------- ---------
Total.................................................................... 55,970 62,220
Less accumulated depreciation and amortization........................... (12,058) (13,905)
--------- ---------
$ 43,912 $ 48,315
--------- ---------
--------- ---------
</TABLE>

5. CONCENTRATION OF CREDIT RISK

The Company maintains cash balances at several financial institutions.
Accounts at each institution are insured by the Federal Deposit Insurance
Corporation up to $100. Uninsured balances aggregated $8,534 and $28,177 at
December 31, 1997 and 1998, respectively.

The Company extends credit to its wholesale customers. No single customer
accounted for more than 2% of total sales during any year presented nor did any
such customer account for more than 7% of the outstanding receivable balance at
either December 31, 1997 or 1998.

F-13
<PAGE>
THE YANKEE CANDLE COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

6. LONG-TERM DEBT

Long term debt is summarized as follows at December 31:

<TABLE>
<CAPTION>
1997 1998
--------- ----------
<S> <C> <C>
6 3/4% Subordinated Debentures; due 2009-2011........................... $ -- $ 320,000
Mortgage loan with interest fixed at 8% through April, 2004, converting
to prime for the remaining term, payable in a monthly installment of
$59 plus interest, with a final payment of the unpaid balance in April
2009.................................................................. 7,933 --
Term note with monthly principal and interest installments of $16 to
maturity in June 1999................................................. 251 --
--------- ----------
8,184 320,000
Less current portion.................................................... 874 --
--------- ----------
Noncurrent portion...................................................... $ 7,310 $ 320,000
--------- ----------
--------- ----------
</TABLE>

In connection with the Recapitalization, the Company issued $320,000 of
Subordinated Debentures that were distributed to limited partners of FL&Co. The
Subordinated Debentures bear interest at 6 3/4%, which is payable semiannually
in May and November commencing on November 30, 1998. The Subordinated Debentures
are payable in three equal annual installments of approximately $106,700
beginning May 31, 2009.

In April 1998, the Company entered into a credit agreement with a consortium
of banks (the "Credit Agreement"). The Credit Agreement provides for a revolving
credit facility of $60,000. A portion of the revolving credit facility, in an
amount not to exceed $15,000, may be used, to the extent available, for standby
and commercial letters of credit. The credit facility under the Credit Agreement
terminates April 27, 2002, with any outstanding amounts due on that date. There
were no borrowings at December 31, 1998. Outstanding letters of credit at
December 31, 1998 were $500.

The Company is required to pay a commitment fee on the average daily
unutilized portion of the revolving-credit facility at a rate of 3/8% per annum.
The Company may elect to set the interest rate on all or a portion of revolving
credit loans at a rate per annum equal to (a) 1% plus the greater of (i) Prime
Rate, (ii) Federal Funds Rate plus 1/2% or (iii) CD Rate plus 1% or (b) the
Eurodollar Rate plus 2%.

The Credit Agreement includes restrictions as to, among other things, the
amount of additional indebtedness, contingent obligations, liens, investments,
asset sales, capital expenditures and dividends, and requires the maintenance of
minimum levels of interest coverage. None of the restrictions contained in the
Credit Agreement are expected to have a significant effect on the ability of the
Company to operate. As of December 31, 1998, the Company was in compliance with
all financial and operating covenants under the Credit Agreement.

The mortgage loan and the term note were prepaid in April 1998 in
conjunction with the Recapitalization. In addition, the Company's short-term
borrowings under a line of credit were prepaid and the line of credit was
terminated in April 1998.

F-14
<PAGE>
THE YANKEE CANDLE COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

7. PROVISION FOR INCOME TAXES

Prior to the Recapitalization, the Company was taxed as an S Corporation for
federal and state income tax purposes. Generally, there is no federal income tax
on earnings of an S Corporation; however, some states impose a tax on taxable
earnings. There was no federal income tax provision in 1996 and 1997; but there
was a provision for state income taxes in those years.

Income tax expense consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1996 1997 1998
--------- --------- ---------
Federal:
Current.......................................................... $ -- $ -- $ --
Deferred......................................................... -- -- 8,894
--------- --------- ---------
Total Federal.................................................. -- -- 8,894
--------- --------- ---------
State:
Current.......................................................... 410 1,395 --
Deferred......................................................... -- (35) 762
--------- --------- ---------
Total State.................................................... 410 1,360 762
--------- --------- ---------
Total Income Tax Provision..................................... $ 410 $ 1,360 $ 9,656
--------- --------- ---------
--------- --------- ---------
</TABLE>

In connection with the Recapitalization, an election was made for federal
and state income tax purposes to value the assets and liabilities of the Company
at fair value. As a result of such election, there is a difference between the
financial reporting and tax bases of the Company's assets and liabilities. This
difference was accounted for by recording a deferred tax asset of approximately
$175,700 with a corresponding credit to additional paid-in capital. The deferred
tax asset will be realized as these differences, including tax goodwill, are
deducted, principally over a period of 15 years. In the opinion of management,
the Company will have sufficient profits in the future to realize the deferred
tax asset.

The tax effect of significant items comprising the Company's net deferred
tax assets (liabilities) as of December 31, are as follows:

<TABLE>
<CAPTION>
1997 1998
------------------------ ------------------------
<S> <C> <C> <C> <C>
CURRENT NONCURRENT CURRENT NONCURRENT
----------- ----------- ----------- -----------
Deferred tax assets:
Basis differential resulting from tax
election..................................... $ -- $ -- $ -- $ 164,204
Net operating loss carryforward................ -- -- -- 1,382
Deferred compensation arrangements............. -- -- 341 --
Employee benefits.............................. 117 -- 917 --
Other.......................................... 41 -- 284 --
Deferred tax liabilities
Fixed assets................................... -- (169) -- (1,112)
----- ----------- ----------- -----------
$ 158 $ (169) $ 1,542 $ 164,474
----- ----------- ----------- -----------
----- ----------- ----------- -----------
</TABLE>

F-15
<PAGE>
THE YANKEE CANDLE COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

7. PROVISION FOR INCOME TAXES (CONTINUED)
At December 31, 1998, the Company had $3,636 of net operating loss
carryforwards available for both federal and state purposes.

A reconciliation of the statutory federal income tax rate and the effective
rate of the provision for income taxes consists of the following:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1996 1997 1998
--------- --------- ---------
Statutory federal income tax rate...................................... 35% 35% 35%
State income taxes--net of federal income tax benefit.................. 3 3 3
S Corporation income................................................... (35) (35) (80)
Other.................................................................. -- 2 --
--- --- ---
3% 5% (42)%
--- --- ---
--- --- ---
</TABLE>

8. PROFIT SHARING PLAN

The Company maintains a profit sharing/salary reduction plan under section
401(k) of the Internal Revenue Code. Employer contributions amounted to $111,
$137 and $347 for 1996, 1997 and 1998, respectively. The Company, at its
discretion, may also make annual profit sharing contributions to the plan. There
were no profit sharing contributions in 1996, 1997 or 1998.

9. DEFERRED COMPENSATION

The Company has a deferred compensation agreement with seven key employees,
three of whom retired during 1998. Under this agreement, the Company will match
certain elective salary deferrals of eligible employees' compensation up to a
maximum of $20. Employer contributions amounted to $68, $140 and $133 for 1996,
1997 and 1998, respectively. Benefits under the plan (which are determined based
on the value of the investments held in the employee's name by the Company) will
be paid in a lump sum upon termination of the plan or termination of employment.

10. CONTINGENCIES

The Company is engaged in various lawsuits, either as plaintiff or
defendant, involving alleged patent infringement and breaches of contract. In
the opinion of management, the ultimate outcome of these lawsuits will not have
a material adverse effect on the Company's financial condition, results of
operations, or cash flows.

11. STOCKHOLDERS' EQUITY

CAPITAL STOCK--As of December 31, 1997 and 1998, the Company had 98,005
shares of common stock (par value $.01 per share) issued. In connection with the
1998 recapitalization, the Company redeemed 49,560 shares of common stock from
MK. These shares were held in treasury at December 31, 1998.

As discussed in Note 1, Holdings currently owns 90% of the outstanding
common stock of the Company. In connection with the 1998 recapitalization,
common stock of Holdings was purchased by management. The Company made loans to
certain members of management to aid them in the purchase

F-16
<PAGE>
THE YANKEE CANDLE COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

11. STOCKHOLDERS' EQUITY (CONTINUED)
of this common stock. These loans are reflected also in Stockholders' Equity
under the caption "Capital subscription receivable," carry an interest rate of
7%, are secured by the shares and provide for full recourse to the borrower. In
addition, rights to purchase common stock of Holdings were granted to a member
of management in October 1998 and he committed to purchase such shares in
November 1998. This common stock was purchased in 1999. A subscription
receivable for this common stock is reflected in Stockholders' Equity as
"Capital subscription receivable." In addition, Holdings granted options to
purchase common stock to key employees and directors of the Company. The options
granted are "nonqualified" for tax purposes. For financial reporting purposes,
the award of the right to purchase stock and the grant of options, in certain
cases, were considered to be below the fair value of the stock at the time of
grant. The fair value was determined based on an appraisal conducted by an
independent appraisal firm as of the relevant dates. The differences between
fair value and the purchase price or the exercise price is being charged to
compensation expense over the relevant vesting period. In 1998, such expense
aggregated $116.

Options granted and outstanding represent approximately 1% of Holdings'
equity interest in the Company. A summary of the status of option grants made by
Holdings in its own stock (and as adjusted to become equity interests in the
Company upon the initial public offering described in Note 14) as of December
31, 1998 and changes during the period ending on that date is presented below:

<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
EXERCISE
PRICE
OPTIONS PER SHARE
---------- -----------
<S> <C> <C>
Outstanding at December 31, 1997...................................... -- $ --
Granted............................................................... 427,493 4.25
Forfeited............................................................. -- --
---------- -----
Outstanding at December 31, 1998...................................... 427,493 $ 4.25
---------- -----
---------- -----
</TABLE>

Employee option grants were made pursuant to the Yankee Candle Holdings
Stock Option Plan (the "Plan").

Effective with the adoption of the Plan, the Company elected to use the
disclosure provisions of SFAS No. 123 "Accounting for Stock Based Compensation."
The Company accounts for employee options or share awards under the intrinsic
value method prescribed by APB Opinion No. 25 with pro forma disclosures of net
earnings and earnings per share, as if the fair value method of accounting
defined in SFAS No. 123 had been applied. SFAS No. 123 establishes a fair value
based method of accounting for stock-based employee compensation plans; however,
it also allows an entity to continue to measure compensation cost for those
plans using the intrinsic value based method of accounting prescribed by
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued
to Employees." Under the fair value method, compensation cost is measured at the
grant date based on the value of the award and is recognized over the service
period, which is usually the vesting period. Under the intrinsic value method,
compensation cost is the excess, if any, of the quoted market price of the stock
at the grant date or other measurement date over the amount an employee must pay
to acquire the stock.

F-17
<PAGE>
THE YANKEE CANDLE COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

11. STOCKHOLDERS' EQUITY (CONTINUED)
Under SFAS No. 123, the fair value of each option grant is estimated on the
date of grant. The following weighted average assumptions were used for grants
under the Plan in 1998 to allow for the computation of pro forma results of
operations: volatility of 20%, dividend yield of 0%, risk-free interest rate of
4.54% and expected lives of 5 years. The fair value of options granted during
1998 was between $1.19 and $4.48 for options issued with an exercise price of
$4.25. The preceding prices give effect to the transactions described in Note
14.

If compensation cost for stock option grants had been determined based on
the fair value on the grant dates for the year ended December 31, 1998
consistent with the method prescribed by SFAS No. 123, the Company's pro forma
net loss would have been $(14,290) or $(0.22) per share.

The following table summarizes information about Holdings stock options
outstanding at December 31, 1998:

<TABLE>
<CAPTION>
WEIGHTED
EXERCISE OPTIONS OPTIONS AVERAGE
PRICE OUTSTANDING EXERCISABLE REMAINING LIFE
- ----------- ----------- --------------- -----------------
<S> <C> <C> <C>
$ 4.25 427,493 -- 9.46
</TABLE>

12. COMMITMENTS

The Company leases most store locations and several vehicles. Most store
leases provide for base rentals plus contingent rentals thereafter, which are a
function of sales volume. In addition, the Company is required to pay real
estate taxes, maintenance and other operating expenses applicable to the leased
premises. Furthermore, several store leases contain rent escalation clauses.

The aggregate annual future minimum lease commitments under operating leases
as of December 31, 1998 are as follows:

<TABLE>
<CAPTION>
OPERATING
LEASES
-----------
<S> <C>
1999............................................................................... $ 3,355
2000............................................................................... 3,263
2001............................................................................... 3,177
2002............................................................................... 3,004
2003............................................................................... 2,732
Thereafter......................................................................... 8,551
-----------
Total minimum lease payments....................................................... $ 24,082
-----------
-----------
</TABLE>

Rent expense for the years ended December 31, 1996, 1997 and 1998 was
approximately $2,886, $3,062 and $3,997, respectively.

At December 31, 1998, the Company has purchase commitments of $306
outstanding for various capital projects related to the acquisition of new
equipment and construction of new retail stores.

F-18
<PAGE>
THE YANKEE CANDLE COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

13. SEGMENTS OF ENTERPRISE AND RELATED INFORMATION

The Company has segmented its operations in a manner that reflects how its
chief operating decision-maker (the "CEO") currently reviews the results of the
Company and its subsidiaries' businesses. The Company has two reportable
segments--retail and wholesale. The identification of these segments results
from management's recognition that while the product produced is similar, the
type of customer for the product and services and the methods used to distribute
the product are different.

The CEO evaluates both its retail and wholesale operations based on an
"operating earnings" measure. Such measure gives recognition to specifically
identifiable operating costs such as cost of sales, selling, and depreciation
and amortization charges. Administrative charges are generally not allocated to
specific operating segments and are accordingly reflected in the
unallocated/corporate/other category as are such costs relating to items such as
LIFO reserves, etc. Other components of the statement of operations which are
classified below operating income are also not allocated by segments. The
Company does not account for or report assets, capital expenditures or
depreciation and amortization by segment to the CEO.

The following are the relevant data for the years ended December 31:

<TABLE>
<CAPTION>
BALANCE PER
UNALLOCATED/ CONSOLIDATED
CORPORATE/ FINANCIAL
1996 RETAIL WHOLESALE OTHER STATEMENTS
- --------------------------------------------------------- ---------- ---------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales................................................ $ 42,909 $ 69,290 $ -- $ 112,199
Operating earnings (loss)................................ 13,156 18,508 (17,603) 14,061
Unallocated costs........................................ -- -- (1,969) (1,969)
------------
Earnings (loss) before taxes............................. -- -- -- $ 12,092
------------
------------

1997
- ---------------------------------------------------------
Net sales................................................ $ 59,227 $ 84,876 $ -- $ 144,103
Operating earnings (loss)................................ 18,118 31,188 (21,238) 28,068
Unallocated costs........................................ -- -- (2,337) (2,337)
------------
Earnings (loss) before taxes............................. -- -- -- $ 25,731
------------
------------

1998
- ---------------------------------------------------------
Net sales................................................ $ 81,210 $ 103,267 $ -- $ 184,477
Operating earnings (loss)................................ 23,343 45,102 (74,635) (6,190)
Unallocated costs........................................ -- -- (16,786) (16,786)
------------
Earnings (loss) before taxes............................. -- -- -- $ (22,976)
------------
------------
</TABLE>

F-19
<PAGE>
THE YANKEE CANDLE COMPANY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
YEARS ENDED DECEMBER 31, 1996, 1997 AND 1998
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

14. SUBSEQUENT EVENTS

The Company currently is pursuing an initial public offering which is
expected to be completed during the third quarter of 1999. In connection with
this contemplated public offering the Company has authorized a reorganization
prior to the closing of the offering to:

- reorganize and split its currently issued shares on a 98,005 to 1 basis,

- increase its authorized shares of common stock to 300,000,000 ($.01 par
value per share) and also authorize 100,000,000 shares of preferred stock,
and

- exchange 43,545,479 shares of newly issued $.01 par value per share
Company common stock and options to purchase 554,521 shares of Company
common stock on the same economic terms and conditions as the Holdings
options for all of Holdings assets, consisting principally of shares of
Company common stock.

All share and per share amounts have been restated to give effect to these
transactions.

F-20
<PAGE>
THE YANKEE CANDLE COMPANY, INC. AND SUBSIDIARIES

UNAUDITED INTERIM CONDENSED CONSOLIDATED BALANCE SHEET
APRIL 3, 1999

(IN THOUSANDS)

<TABLE>
<S> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents....................................................... $ 27,560
Accounts receivable, less allowance of $480..................................... 10,299
Inventory....................................................................... 19,688
Prepaid expenses and other current assets....................................... 1,395
Deferred tax assets............................................................. 1,542
---------
Total current assets.......................................................... 60,484
PROPERTY, PLANT AND EQUIPMENT (NET)............................................... 51,413
MARKETABLE SECURITIES............................................................. 618
CLASSIC VEHICLES.................................................................. 874
DEFERRED FINANCING COSTS.......................................................... 6,362
DEFERRED TAX ASSETS............................................................... 164,474
OTHER ASSETS...................................................................... 475
---------
TOTAL ASSETS.................................................................. $ 284,700
---------
---------

LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable................................................................ $ 13,337
Accrued interest................................................................ 7,398
Accrued payroll................................................................. 4,259
Accrued income taxes............................................................ 1,634
Other accrued liabilities....................................................... 2,217
---------
Total current liabilities..................................................... 28,845

DEFERRED COMPENSATION OBLIGATION.................................................. 1,071
LONG-TERM DEBT--Less current portion.............................................. 320,000
---------

COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY (DEFICIT):
Common stock, $.01 par value per share, 300,000 shares authorized; 98,005
issued;
48,445 shares outstanding..................................................... 980
Additional paid-in capital...................................................... 127,433
Treasury stock, 49,560 shares................................................... (212,988)
Retained earnings............................................................... 22,524
Capital subscription receivable................................................. (815)
Unearned stock compensation..................................................... (2,239)
Accumulated other comprehensive income.......................................... (111)
---------
Total stockholders' equity (deficit).......................................... (65,216)
---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT).......................... $ 284,700
---------
---------
</TABLE>

See notes to unaudited interim condensed consolidated financial statements.

F-21
<PAGE>
THE YANKEE CANDLE COMPANY, INC. AND SUBSIDIARIES

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1998 AND THIRTEEN WEEKS ENDED APRIL 3, 1999

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
1998 1999
--------- ---------
<S> <C> <C>
NET SALES................................................................................... $ 35,313 $ 46,590
COST OF SALES............................................................................... 16,400 20,804
--------- ---------
Gross Profit.............................................................................. 18,913 25,786

OPERATING EXPENSES:
Selling expenses.......................................................................... 7,480 8,509
General and administrative expenses....................................................... 4,006 6,213
--------- ---------
11,486 14,722
--------- ---------
INCOME FROM OPERATIONS...................................................................... 7,427 11,064
--------- ---------
OTHER (INCOME) EXPENSE:
Interest income........................................................................... (48) (290)
Interest expense.......................................................................... 369 5,768
Other income.............................................................................. (11) (44)

Total other expense..................................................................... 310 5,434
--------- ---------

INCOME BEFORE PROVISION FOR INCOME TAXES.................................................... 7,117 5,630
PROVISION FOR INCOME TAXES.................................................................. -- 2,252
--------- ---------
NET INCOME.................................................................................. $ 7,117 $ 3,378
--------- ---------
--------- ---------
HISTORICAL BASIC EARNINGS PER SHARE......................................................... $ 0.07 $ 0.07
--------- ---------
--------- ---------

HISTORICAL DILUTED EARNINGS PER SHARE....................................................... $ 0.07 $ 0.07
--------- ---------
--------- ---------

PRO FORMA INFORMATION:
HISTORICAL INCOME BEFORE PROVISION FOR INCOME TAXES....................................... $ 7,117
PRO FORMA PROVISION FOR INCOME TAXES...................................................... 2,704
---------
---------
PRO FORMA NET INCOME...................................................................... $ 4,413
---------
---------
PRO FORMA BASIC EARNINGS PER SHARE........................................................ $ 0.05
---------
---------

PRO FORMA DILUTED EARNINGS PER SHARE...................................................... $ 0.05
---------
---------

WEIGHTED AVERAGE BASIC SHARES OUTSTANDING................................................... 98,005 46,821
--------- ---------
--------- ---------

WEIGHTED AVERAGE DILUTED SHARES OUTSTANDING................................................. 98,005 48,826
--------- ---------
--------- ---------
</TABLE>

See notes to unaudited interim condensed consolidated financial statements.

F-22
<PAGE>
THE YANKEE CANDLE COMPANY, INC. AND SUBSIDIARIES

UNAUDITED INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 1998 AND THIRTEEN WEEKS ENDED APRIL 3, 1999
(IN THOUSANDS)

<TABLE>
<CAPTION>
1998 1999
---------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:

Net income............................................................................... $ 7,117 $ 3,378

Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization.......................................................... 981 1,305
Unrealized gain on marketable equity securities........................................ (3) (45)
Non-cash stock compensation............................................................ -- 282

Loss on disposal of fixed assets and classic vehicles.................................. 2 8
Changes in assets and liabilities:
Accounts receivable-net.............................................................. (1,722) (1,777)
Inventory............................................................................ (2,755) (7,279)
Prepaid expenses and other assets.................................................... (763) (607)
Accounts payable..................................................................... 3,857 46
Accrued expenses and other liabilities............................................... 442 6,034
---------- ---------
Net cash provided by operating activities.......................................... 7,156 1,345

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of equipment.................................................................... (1,604) (4,242)
Sale of marketable equity securities..................................................... 386 410
Loans to stockholder..................................................................... (127) --
Proceeds from sale of equipment.......................................................... 80 26
Purchase of marketable equity securities for deferred compensation plan.................. -- (127)
---------- ---------
Net cash used in investing activities.................................................. (1,265) (3,933)

CASH FLOWS FROM FINANCING ACTIVITIES:
Amounts paid for capital redemption...................................................... -- (540)
Payment on capital subscription receivable............................................... -- 269
Principal payments on long-term debt..................................................... (6,807) --
Distributions to stockholder............................................................. (3,830) --
---------- ---------
Net cash used in financing activities.................................................. (10,637) (271)

EFFECT OF EXCHANGE RATE ON CASH............................................................ -- 8

NET DECREASE IN CASH AND CASH EQUIVALENTS.................................................. (4,746) (2,851)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD............................................. 7,377 30,411
---------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD................................................... $ 2,631 $ 27,560
---------- ---------
---------- ---------

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest............................................................................... $ 396 $ 258
Income taxes........................................................................... -- 618
</TABLE>

See notes to unaudited interim condensed consolidated financial statements.

F-23
<PAGE>
THE YANKEE CANDLE COMPANY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

THREE MONTHS ENDED MARCH 31, 1998 AND THIRTEEN WEEKS ENDED APRIL 3, 1999

1. BASIS OF PRESENTATION

The unaudited interim condensed consolidated financial statements of The
Yankee Candle Company, Inc. and its wholly-owned subsidiaries (the "Company") as
of and for the thirteen weeks and the three month periods ended April 3, 1999
and March 31, 1998, respectively, have been prepared in accordance with
generally accepted accounting principles. Effective January 1, 1999, the Company
adopted a 52/53 week fiscal year. In the opinion of management, such information
contains all adjustments, consisting only of normal recurring adjustments,
necessary for a fair presentation of the results for such periods. Certain prior
year amounts have been reclassified to conform to the current presentation. All
intercompany transactions and balances have been eliminated. The results of
operations for the 13 weeks ended April 3, 1999 are not necessarily indicative
of the results to be expected for the full fiscal year ending January 1, 2000.

Certain information and disclosures normally included in the notes to
consolidated financial statements have been condensed or omitted as permitted by
the rules and regulations of the Securities and Exchange Commission, although
the Company believes the disclosure is adequate to make the information
presented not misleading. The accompanying unaudited financial statements should
be read in conjunction with the financial statements of the Company for the year
ended December 31, 1998.

2. INVENTORIES

Inventory quantities are substantiated through the completion of quarter-end
physical inventory counts. Inventories are stated at the lower of cost or market
on a last-in first-out ("LIFO") basis. Because the inventory determination under
the LIFO method is based on an annual determination of inventory levels and
costs as of the final year-end, the interim LIFO calculation is based on
management's estimates of expected year-end inventory levels.

<TABLE>
<CAPTION>
AS OF APRIL
3,
1999
------------
<S> <C>
(AUDITED)
Finished goods.................................................................. $ 15,610
Work in process................................................................. 165
Raw materials................................................................... 3,913
------------
Total inventory........................................................... $ 19,688
------------
------------
</TABLE>

3. INCOME TAXES

The Company's effective tax rate in the first quarter of fiscal 1999 was
40%. The Company was taxed as an S Corporation for federal and state income tax
purposes for the quarter ended March 31, 1998, and therefore, there was no
federal income tax provision for that period. These financial statements also
contain a pro forma calculation of tax expense as if the Company had become a C
Corporation on January 1, 1998.

4. EARNINGS PER SHARE

Under SFAS No. 128, the Company provides dual presentation of earnings per
share ("EPS") on a basic and diluted basis. The computation of basic earnings
per share is based on the weighted average

F-24
<PAGE>
THE YANKEE CANDLE COMPANY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

THREE MONTHS ENDED MARCH 31, 1998 AND THIRTEEN WEEKS ENDED APRIL 3, 1999

4. EARNINGS PER SHARE (CONTINUED)
number of common shares outstanding during the period and excludes shares that
are contingently returnable. The following table reconciles the denominator in
basic earnings per share to the denominator in diluted earnings per share:

<TABLE>
<CAPTION>
THREE MONTHS THIRTEEN WEEKS
ENDED ENDED
MARCH 31, APRIL 3,
1998 1999
------------- --------------
<S> <C> <C>
Weighted average basic shares outstanding...................... 98,005 46,821
Contingently returnable shares and shares issuable pursuant to
stock option grants.......................................... -- 2,005
------------- -------
Diluted shares outstanding..................................... 98,005 48,826
------------- -------
------------- -------
</TABLE>

5. COMPREHENSIVE INCOME

The Company adopted SFAS 130, "Reporting Comprehensive Income" as of
December 31, 1998. Comprehensive income includes all changes in equity during
the period except those resulting from transactions with owners of the Company;
it has two components: net income and other comprehensive income. Accumulated
other comprehensive income reported on the Company's Consolidated Balance Sheets
consists of foreign currency translation adjustments. Comprehensive income, net
of related tax effects (where applicable), is as follows (in thousands):

<TABLE>
<CAPTION>
THREE MONTHS THIRTEEN WEEKS
ENDED ENDED
MARCH 31, APRIL 3,
1998 1999
------------- ---------------
<S> <C> <C>
Net income..................................................... $ 7,117 $ 3,378
Translation adjustment......................................... -- 112
------ ------
Total comprehensive income............................... $ 7,117 $ 3,490
------ ------
------ ------
</TABLE>

F-25
<PAGE>
THE YANKEE CANDLE COMPANY, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(CONTINUED)

THREE MONTHS ENDED MARCH 31, 1998 AND THIRTEEN WEEKS ENDED APRIL 3, 1999

6. SEGMENT INFORMATION

The Company has two reportable segments--retail and wholesale.

The following are the relevant data for the three months ended March 31,
1998 and the thirteen weeks ended April 3, 1999:

<TABLE>
<CAPTION>
BALANCE PER
UNALLOCATED/ CONSOLIDATED
CORPORATE/ FINANCIAL
1998 RETAIL WHOLESALE OTHER STATEMENTS
- ------------------------------------------- --------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales.................................. $ 11,623 $ 23,690 $ -- $ 35,313
Operating earnings......................... 1,489 8,415 (2,477) 7,427
Unallocated costs.......................... -- -- 310 310
------------
Earnings before taxes...................... -- -- -- $ 7,117
------------
------------
</TABLE>

<TABLE>
<CAPTION>
BALANCE PER
UNALLOCATED/ CONSOLIDATED
CORPORATE/ FINANCIAL
1999 RETAIL WHOLESALE OTHER STATEMENTS
- ------------------------------------------- --------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
Net sales.................................. $ 17,027 $ 29,563 $ -- $ 46,590
Operating earnings......................... 2,774 12,796 (4,506) 11,064
Unallocated costs.......................... -- -- 5,434 5,434
------------
Earnings before taxes...................... -- -- -- $ 5,630
------------
------------
</TABLE>

F-26
<PAGE>
[PICTURE OF PRODUCTS]

EDGAR ARTWORK DESCRIPTIONS

Inside Back Cover of Prospectus:

Caption: A Sampling of Yankee Candle-Registered Trademark- fragrances.

- Upper left hand corner: Picture showing a full line of Yankee
Candle-Registered Trademark- products with "Honeydew Melon" fragrance.

- Upper right hand corner: Picture showing a full line of Yankee
Candle-Registered Trademark- products with "Mountain Lake" fragrance.

- Lower left hand corner: Picture showing a full line of Yankee
Candle-Registered Trademark- products with "Fresh Lilac" fragrance.

- Lower right hand corner: Picture showing a full line of Yankee
Candle-Registered Trademark- products with "Gardenia" fragrance.
<PAGE>
[LOGO]
<PAGE>
[ALTERNATE INTERNATIONAL COVER]
PROSPECTUS

12,500,000 SHARES

[LOGO]

THE YANKEE CANDLE COMPANY, INC.

COMMON STOCK

-----------------

-------------------

OUR COMMON STOCK HAS BEEN APPROVED FOR LISTING ON THE NEW YORK STOCK EXCHANGE
UNDER THE SYMBOL "YCC."

-------------------

INVESTING IN OUR COMMON STOCK INVOLVES RISKS. SEE "RISK FACTORS" BEGINNING ON
PAGE 7.

-----------------

PRICE $18 A SHARE

-------------------

MORGAN STANLEY DEAN WITTER

GOLDMAN SACHS INTERNATIONAL

MERRILL LYNCH INTERNATIONAL

JULY 1, 1999