<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED APRIL 30, 1998
Commission file number 1-13026
BLYTH INDUSTRIES, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-2984916
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
100 FIELD POINT ROAD, GREENWICH, CONNECTICUT 06830
(Address of principal executive offices) (Zip Code)
(203) 661-1926
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the registrant's classes
of common stock, as of the latest practicable date.
49,164,626 COMMON SHARES AS OF MAY 29, 1998.
Page 1 of 14
<PAGE>
BLYTH INDUSTRIES, INC.
INDEX
PAGE
Form 10-Q Cover Page 1
Form 10-Q Index 2
Part I. Financial Information:
Item 1. Financial Statements:
Consolidated Balance Sheets 3
Consolidated Statements of Earnings 4
Consolidated Statements of Stockholders' Equity 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8-10
Part II. Other Information
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11-12
Item 6. Exhibits and Reports on Form 8-K 13
Signatures 14
Page 2 of 14
<PAGE>
Part I. FINANCIAL INFORMATION
Item I. FINANCIAL STATEMENTS
BLYTH INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
APRIL 30, JANUARY 31,
(In thousands, except share data) 1998 1998
- -----------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 14,878 $ 21,273
Accounts receivable, less allowance for doubtful receivables
of $1,443 and $1,353, respectively 50,937 51,980
Inventories 150,103 135,524
Prepaid expenses 414 612
Deferred income taxes 1,500 2,442
- ------------------------------------------------------------------------------------------------------
Total current assets 217,832 211,831
PROPERTY, PLANT AND EQUIPMENT:
Less accumulated depreciation ($45,848 and $41,749, respectively) 171,928 170,710
OTHER ASSETS:
Investment 6,363 6,438
Excess of cost over fair value of assets acquired, net of
accumulated amortization of $2,918 and $2,417, respectively 57,235 57,419
Deposits 976 992
- ------------------------------------------------------------------------------------------------------
Total assets $ 454,334 $ 447,390
- ------------------------------------------------------------------------------------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Current maturities of long-term debt $ 935 $ 1,013
Account payable 42,510 39,138
Accrued expenses 37,512 29,574
Income taxes 7,449 2,005
- ------------------------------------------------------------------------------------------------------
Total current liabilities 88,406 71,730
DEFERRED INCOME TAXES 7,727 7,100
LONG-TERM DEBT, less current maturities 94,888 119,617
EXCESS OF FAIR VALUE OVER COST OF ASSETS ACQUIRED, net of
accumulated amortization of $721 and $691, respectively 683 713
MINORITY INTEREST 831 1,398
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY:
Preferred stock - authorized 10,000,000 shares of $0.01
par value; no shares issued and outstanding - -
Common Stock - authorized 100,000,000 shares of $0.02
par value; issued and outstanding, 49,139,126 and
49,100,953, respectively 983 982
Additional contributed capital 92,651 92,357
Retained earnings 168,165 153,493
- ------------------------------------------------------------------------------------------------------
Total stockholders' equity 261,799 246,832
- ------------------------------------------------------------------------------------------------------
Total liabilities and stockholders' equity $ 454,334 $ 447,390
- ------------------------------------------------------------------------------------------------------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>
Page 3 of 14
<PAGE>
BLYTH INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(UNAUDITED)
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED APRIL 30 (In thousands, except per share data)
1998 1997
<S> <C> <C>
- ------------------------------------------------------------------------------------------------------
Net sales $ 201,030 $ 155,060
Cost of goods sold 82,607 69,197
- ------------------------------------------------------------------------------------------------------
Gross profit 118,423 85,863
Selling and shipping 72,364 51,517
Administrative 19,842 14,647
Amortization of goodwill 507 210
- ------------------------------------------------------------------------------------------------------
92,713 66,374
- ------------------------------------------------------------------------------------------------------
Operating profit 25,710 19,489
Other expense (income)
Interest expense 1,723 904
Interest income (56) (226)
Equity in earnings of investee 40 (81)
- ------------------------------------------------------------------------------------------------------
1,707 597
- ------------------------------------------------------------------------------------------------------
Earnings before income tax expense and minority interest 24,003 18,892
Income tax expense 9,428 7,616
- ------------------------------------------------------------------------------------------------------
Earnings before minority interest 14,575 11,276
Minority interest (97) (38)
- ------------------------------------------------------------------------------------------------------
Net earnings $ 14,672 $ 11,314
- ------------------------------------------------------------------------------------------------------
Basic:
Net earnings per common share $ 0.30 $ 0.23
Weighted average number of shares outstanding 49,115 48,923
- ------------------------------------------------------------------------------------------------------
Diluted:
Net earnings per common share $ 0.30 $ 0.23
Weighted average number of shares outstanding 49,633 49,451
- ------------------------------------------------------------------------------------------------------
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
</TABLE>
Page 4 of 14
<PAGE>
BLYTH INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(UNAUDITED)
- ------------------------------------------------------------------------------
April 30, (In thousands, except share data)
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
ADDITIONAL TOTAL
COMMON STOCK CONTRIBUTED RETAINED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS EQUITY
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
FOR THE THREE MONTHS ENDED APRIL 30, 1997:
Balance, February 1, 1997 48,921,518 $ 651 $ 89,522 $ 99,230 $189,403
Net earnings for the period - - - 11,314 11,314
Common stock issued in connection with
exercise of stock options 5,100 - 51 - 51
--------------------------------------------------------------------------
Balance, April 30, 1997 48,926,618 $ 651 $ 89,573 $ 110,544 $200,768
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
FOR THE THREE MONTHS ENDED APRIL 30, 1998:
Balance, February 1, 1998 48,100,953 $ 982 $ 92,357 $ 153,493 $246,832
Net earnings for the period - - - 14,672 14,672
Common stock issued in connection with
exercise of stock options 38,173 1 294 - 295
--------------------------------------------------------------------------
Balance, April 30, 1998 49,139,126 $ 983 $ 92,651 $ 168,165 $261,799
- ---------------------------------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 5 of 14
<PAGE>
BLYTH INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
- ------------------------------------------------------------------------------
<TABLE>
<CAPTION>
THREE MONTHS ENDED APRIL 30 (In thousands) 1998 1997
- -------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 14,672 $ 11,314
Adjustments to reconcile net earnings to net cash provided by
operating activities:
Depreciation and amortization 4,606 2,888
Deferred income taxes 1,569 (205)
Equity in earnings of investee 40 (81)
Minority interest (97) (38)
Changes in operating assets and liabilities, net of
effect of business acquisition:
Accounts receivable 1,043 (3,142)
Inventories (14,579) (8,600)
Prepaid expenses 198 (530)
Other assets 17 (180)
Accounts payable 3,368 (4,617)
Accrued expenses 7,941 4,424
Income taxes 5,444 5,468
- --------------------------------------------------------------------------------------------------
Total adjustments 9,550 (4,613)
- --------------------------------------------------------------------------------------------------
Net cash provided by operating activities 24,222 6,701
Cash flows from investing activities:
Purchases of property, plant and equipment (5,318) (13,737)
Purchases of business net of cash acquired (788) (652)
- --------------------------------------------------------------------------------------------------
Net cash used in investing activities (6,106) (14,389)
- --------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Proceeds from issuance of common stock 295 51
Borrowings from bank line of credit 65,000 2,563
Repayments on bank line of credit (89,600) (605)
Payments on long-term debt (206) (314)
- --------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities (24,511) 1,695
- --------------------------------------------------------------------------------------------------
Net decrease in cash (6,395) (5,993)
Cash and cash equivalents at beginning of period 21,273 27,832
- --------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of period $ 14,878 $ 21,839
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 6 of 14
<PAGE>
BLYTH INDUSTRIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of the Company,
its wholly owned subsidiaries and their subsidiaries. All significant
intercompany accounts and transactions have been eliminated. In the
opinion of the Management, the accompanying unaudited consolidated
financial statements include all accruals (consisting only of normal
recurring accruals) necessary for fair presentation of the Company's
consolidated financial position at April 30, 1998 and the consolidated
results of its operations and cash flows for the three month period ended
April 30, 1998 and 1997. In June 1997, the Company effected a three-for-
two stock split in the form of a stock dividend. All share quantities,
per share amounts and options data have been retroactively restated to
reflect the stock split. As a result of the May 1997 pooling transaction,
in which the Company acquired Endar Corp., all consolidated financial
statements and related schedules presented for the three month period
ended April 30, 1997 have been adjusted to include the results of
operations and financial position of Endar Corp., and all share quantities
and per share amounts give effect to the Endar acquisition. These interim
statements should be read in conjunction with the Company's consolidated
financial statements for the year ended January 31, 1998, as set forth in
the Company's Form 10-K Annual Report. Operating results for the three
months ended April 30, 1998 are not necessarily indicative of the results
that may be expected for the year ending January 31, 1999.
2. INVENTORIES
The components of inventory consist of the following (in thousands):
APRIL 30, 1998 JANUARY 31, 1998
Finished goods $124,388 $113,273
Work in progress 3,365 2,263
Raw materials 22,350 19,988
---------- -----------
$150,103 $135,524
---------- -----------
---------- -----------
3. EARNINGS PER SHARE
The components of basic and diluted earnings per share are as follows (in
thousands):
<TABLE>
<CAPTION>
--------------------------------------------------------------------------
APRIL 30,
--------------------------------------------------------------------------
1998 1997
<S> <C> <C>
Net earnings $14,672 $11,314
--------------------------------------------------------------------------
Weighted average number of common
shares outstanding:
Basic 49,115 48,923
Dilutive effect of stock options 518 528
--------------------------------------------------------------------------
Weighted average number of common
shares outstanding:
Diluted 49,633 49,451
--------------------------------------------------------------------------
</TABLE>
4. COMPREHENSIVE INCOME
The Company has adopted FASB Statement No. 130 "Reporting Comprehensive
Income". This Statement establishes new standards for the presentation
and disclosure of other comprehensive income. There were no material items
in the quarters ended April 30, 1998 and 1997 and for the year ended
January 31, 1998.
Page 7 of 14
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
NET SALES
Net sales in the first quarter ended April 30, 1998 increased $45.9
million or 29.6% to $201.0 million compared with $155.1 million a year
earlier. Virtually all of this increase was attributable to unit growth
in sales of the Company's everyday products, particularly scented candles
and candle accessories. Two areas of the business experienced a growth
rate higher than the Company average for the three months ended April 30,
1998: PartyLite Gifts, our party plan direct seller in the United States;
and International markets. The increase in sales to new domestic
customers was attributable to improved penetration of select channels of
distribution and to geographic expansion in the United States,
particularly by the Company's direct selling activities. International
sales accounted for approximately 17% of the total net sales for the
quarter ended April 30, 1998.
GROSS PROFIT
Gross profit in the first quarter ended April 30, 1998 increased $32.5
million, or 37.8% from $85.9 million for the quarter ended April 30, 1997
to $118.4 million. Gross profit margin increased from 55.4% for the
quarter ended April 30, 1997 to 58.9% for the quarter ended April 30,
1998. The Company is benefiting from the capital investments made over
the last three years in process technology improvements and automated pick
and pack systems, as well as cost savings from two new distribution
centers, which were not operational in the first quarter of fiscal 1998.
Also contributing to the increase in gross profit percentage were product
and market mix, reflecting sales for scented candles and candle
accessories at PartyLite and International, which carry a higher gross
profit percentage than our other product channels.
SELLING AND SHIPPING EXPENSE
Selling and shipping expense increased $20.9 million, or 40.6%, from $51.5
million in the quarter ended April 30, 1997 (33.2% of net sales), to $72.4
million in the quarter ended April 30, 1998 (36.0% of net sales). The
increases were primarily attributable to increased sales to the consumer
market, particularly sales through the Company's home party plan direct
selling activities and International, in which sales expenses, as a
percentage of net sales, are relatively higher.
ADMINISTRATIVE EXPENSE
Administrative expense increased $5.2 million, or 35.6%, from $14.6
million in the quarter ended April 30, 1997 (9.4% of net sales) to $19.8
million in the quarter ended April 30, 1998 (9.9% of net sales). Such
increases were primarily a result of increases in investment in
infrastructure to support international sales growth and increased
spending associated with improvements in information and administrative
support systems including Year 2000 related expenses.
INTEREST EXPENSE
Interest expense for the three months ended April 30, 1998 was $1.7
million compared to $0.9 million for the same period in the prior year.
Such increase was primarily attributable to increased borrowing to fund
capital expenditures including the December 31, 1997 acquisition of the
Sterno-Registered Trademark-and Handy Fuel-Registered Trademark-assets.
Page 8 of 14
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
INCOME TAXES
Income tax expense increased $1.8 million or 23.7% from $7.6 million in
the quarter ended April 30, 1997 to $9.4 million in the quarter ended
April 30, 1998. The effective income tax rate decreased from
approximately 40% in the quarter ended April 30, 1997 to approximately 39%
in the quarter ended April 30, 1998 due to the growth in sales in
countries with lower tax rates than the U.S.
NET EARNINGS
As a result of the foregoing, net earnings increased $3.4 million, or
30.1% from $11.3 million the quarter ended April 30, 1997 to $14.7 million
for the quarter ended April 30, 1998.
Basic earnings per share based upon the weighted average number of shares
outstanding for the quarter ended April 30, 1998 increased $0.07 or 30.4%
to $0.30 compared to $0.23 for the quarter ended April 30, 1997.
Diluted earnings per share based upon the potential dilution that could
occur if options to issue Common Stock were exercised or converted were
$0.30 for the quarter ended April 30, 1998 compared to $0.23 for the same
period last year, an increase of $0.07 or 30.4%.
LIQUIDITY AND CAPITAL RESOURCES
Inventory increased from $135.5 million at January 31, 1998 to $150.1
million at April 30, 1998. Accounts receivable decreased $1.1 million, or
2.1% from $52.0 million at the end of fiscal 1998 to $50.9 million at
April 30, 1998 which reflects the normal business payment pattern.
Accounts payable and accrued expenses increased $11.3 million, or 16.4%
from $68.7 million at the end of fiscal 1998 to $80.0 million at April 30,
1998. The increase in accounts payable and accrued expenses is
attributable to the increases in operating assets and the Company's
overall growth.
Capital expenditures for property, plant and equipment were $5.3 million
in the three months ended April 30, 1998. Capital expenditures were
primarily investments in a new distribution center, new equipment and
improvements to existing plant and equipment. The Company anticipates
capital spending of approximately $40.0 million for fiscal 1999, of which
approximately $20.0 million will be used for a new distribution facility
in the Netherlands, with the balance of approximately $20.0 million to be
used for upgrades to machinery and equipment in existing facilities,
improvements to leased facilities, and computer hardware and software.
The Company has grown in part through acquisitions and, as part of its
growth strategy, the Company expects to continue from time to time in the
ordinary course of its business to evaluate and pursue opportunities to
acquire other companies, assets and product lines that either complement
or expand its existing business.
The Company's primary capital requirements are for working capital to fund
the increased inventory and accounts receivable required to sustain the
Company's sales growth and for capital expenditures (including capital
expenditures related to planned facilities expansion). The Company
believes that cash on hand, cash from operations and available borrowings
under the Credit Facility described below, will be sufficient to fund its
operating requirements, capital expenditures and all other obligations for
the next twelve months.
Page 9 of 14
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS:
LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
The Company has a revolving credit facility (the "Credit Facility")
arranged by J.P. Morgan Securities, Inc. with participation by a syndicate
of eight banks (together with J.P. Morgan, the "Banks") maturing October
17, 2002. Pursuant to the Credit Facility, the Banks have agreed, subject
to certain conditions, to provide an unsecured revolving credit facility
to the Company in an aggregate amount of up to $140.0 million, and the
Banks have agreed to provide under certain circumstances an additional
$35.0 million, to fund ongoing working capital requirements, letter of
credit requirements and general corporate purposes of the Company.
Amounts which may be outstanding under the Credit Facility bear interest,
at the Company's option, at Bank of America's prime rate (8.50% at April
30, 1998) or at the Eurocurrency rate plus a credit spread ranging from
0.25% to 0.50% based on a pre-defined financial ratio, for a weighted
average interest rate of 6.77% at April 30, 1998. The Credit Facility is
guaranteed by certain of the Company's subsidiaries and contains, among
other provisions, requirements to maintain certain financial ratios and
limitations on certain payments. At April 30, 1998, the Company was in
compliance with such covenants. The Company does not believe that such
covenants will have a material effect on its operations.
Net cash provided by operating activities amounted to $24.2 million for
the three months ended April 30, 1998 compared to $6.7 million for the
three months ended April 30, 1997. This change is due to normal
fluctuations in inventory, accounts receivable, accounts payable, and
accrued expenses along with higher net earnings, as well as increased
depreciation and amortization. At April 30, 1998, approximately $69.0
million was outstanding under the Credit Facility and approximately $2.7
million of letters of credit were outstanding.
Page 10 of 14
<PAGE>
Part II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
The Company is including the following cautionary statement in this Report
to make applicable, and to take advantage of, the safe harbor provisions
of the Private Securities Litigation Reform Act of 1995 for any forward-
looking statements made by, or on behalf of, the Company. Forward-looking
statements include statements concerning plans, objectives, goals,
strategies, future events or performance and underlying assumptions and
other statements which are other than statements of historical facts.
From time to time, the Company and its representatives may publish or
otherwise make available forward-looking statements of this nature. All
such forward-looking statements, whether written or oral, and whether made
by or on behalf of the Company, are expressly qualified by the following
cautionary statements. Forward-looking statements involve risks and
uncertainties which could cause actual results or outcomes to differ
materially from those expressed in the forward- looking statements. Such
forward-looking statements are expected to be based on various
assumptions, many of which are based, in turn, upon further assumptions.
There can be no assurance that management's expectations, beliefs or
projections will occur or be achieved or accomplished. In addition to
other factors and matters discussed elsewhere in this Report and in the
Company's other public filings and statements, the following are important
factors that, in the view of the Company, could cause actual results to
differ materially from those discussed in the Company's forward- looking
statements. The Company disclaims any obligation to update any forward-
looking statements, or the following factors, to reflect events or
circumstances after the date of this Report.
Risk of Inability to Maintain Growth Rate
The Company has grown substantially in recent years. The Company expects
that its future growth will continue to be generated primarily by sales to
the faster growing consumer market, rather than the institutional market,
which has grown more slowly than the consumer market and which the Company
expects will continue to do so. The Company believes that its ability to
continue to grow at a rate comparable to its historic growth rate will
depend on continuing market acceptance of its existing products, the
successful development and introduction of new products, the increase in
production and distribution capacity to meet demand and the continued
successful implementation of its strategy. The candle industry is driven
by consumer tastes. Accordingly, there can be no assurance that the
Company's existing or future products will maintain or achieve market
acceptance. Although the Company' strategy has been successful to date,
the Company expects that, as the Company grows, its rate of growth will
be less than its historical growth rate. In addition, the Company has grown
in part through acquisitions and there can be no assurance that the
Company
Page 11 of 14
<PAGE>
Part II. OTHER INFORMATION
Risk of Inability to Maintain Growth Rate (CONTINUED)
will be able to continue to identify suitable acquisition candidates, to
consummate acquisitions on terms favorable to the Company, to finance
acquisitions or successfully to integrate acquired operations.
Ability to Respond to Increased Product Demand
The Company's continuing and significant internal growth has necessitated
increases in personnel, expansion of its production and distribution
facilities and enhancement of its management information systems. The
Company's ability to meet future demand for its products in a timely and
efficient manner will be dependent upon its success in (1) training,
motivating and managing new employees, including a number of new senior
managers, (2) bringing new production and distribution facilities on line
in a timely manner, (3) improving management information systems in order
to continue to be able to respond promptly to customer orders and (4)
improving its ability to forecast anticipated product demand in order to
continue to fill customer orders promptly. If the Company were unable to
meet future demand for its products in a timely and efficient manner, its
operating results could be materially adversely affected.
Risks Associated with International Sales and Foreign-Sourced Products
The Company sources a portion of its candle accessories and decorative
gift bags from independent manufacturers in the Pacific Rim, Europe and
Mexico. In addition, since 1990, the Company's international business has
grown at a faster rate than sales in the United States. The Company is
subject to the following risks inherent in foreign sales and
manufacturing: fluctuations in currency exchange rates; economic and
political instability; transportation delays; difficulty in maintaining
quality control; restrictive actions by foreign governments;
nationalizations; the laws and policies of the United States affecting
importation of goods (including duties, quotas and taxes); and trade and
foreign tax laws.
Dependence on Key Management Personnel
The Company's success depends to a significant degree upon the continued
contributions of its key management personnel, particularly its Chairman,
Chief Executive Officer and President, Robert B. Goergen. The Company does
not have employment contracts with any of its key management personnel,
nor does the Company maintain any key person life insurance policies. The
loss of any of the Company's key management personnel could have a
material adverse effect on the Company.
Competition
The Company's business is highly competitive, both in terms of price and
new product introductions. The candle and fragrance products industry is
highly fragmented, with numerous suppliers serving one or more of the
distribution channels served by the Company. Because there are relatively
low barriers to entry to the candle and fragrance products industry, the
Company may face increased future competition from other companies, some
of which may have substantially greater financial and marketing resources
than those available to the Company. From time to time during the year-end
holiday season, the Company experiences competition from candles
manufactured in foreign countries, particularly China. In addition,
certain of the Company's competitors focus on a particular geographic or
single-product market and attempt to gain or maintain market share solely
on the basis
of price.
Page 12 of 14
<PAGE>
Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
27. Financial data schedule
b) Reports on Form 8-K
During the fiscal quarter ended April 30, 1998, the Company filed the
following Current Reports on Form 8-K:
The Company filed a Current Report on Form 8-K on March 13, 1998
to report financial statements with respect to the Sterno-
Registered Trademark- and Handy Fuel-Registered Trademark-
acquisition.
The Company filed a Current Report on Form 8-K on March 26, 1998
to attach the Company's results of operations for the fiscal
quarter ended January 31, 1998.
The Company filed a Current Report on Form 8-K on April 13, 1998
to report certain unaudited financial data of the Company.
The Company filed a Current Report on Forms 8-K and 8-K/A on April
13, 1998 and April 20, 1998, respectively, filing the Company's
amended and restated employee stock option plan.
Page 13 of 14
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE
UNDERSIGNED THEREUNTO DULY AUTHORIZED.
BLYTH INDUSTRIES, INC.
Date: June 15, 1998 By:/s/ Robert B. Goergen
----------------------
Robert B. Goergen
Chief Executive Officer
Date: June 15, 1998 By:/s/ Richard T. Browning
-----------------------
Richard T. Browning
Chief Financial Officer
Page 14 of 14
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION PAGE NO.
27. Financial data schedule N/A
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT APRIL 30, 1998 AND THE CONSOLIDATED STATEMENT OF
EARNINGS, STOCKHOLDERS' EQUITY AND CASH FLOWS FOR THE THREE MONTHS ENDED APRIL
30, 1998, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1999
<PERIOD-START> FEB-01-1998
<PERIOD-END> APR-30-1998
<CASH> 14,878
<SECURITIES> 0
<RECEIVABLES> 52,380
<ALLOWANCES> 1,443
<INVENTORY> 150,103
<CURRENT-ASSETS> 217,832
<PP&E> 217,776
<DEPRECIATION> 45,848
<TOTAL-ASSETS> 454,334
<CURRENT-LIABILITIES> 88,406
<BONDS> 0
0
0
<COMMON> 983
<OTHER-SE> 260,816
<TOTAL-LIABILITY-AND-EQUITY> 454,334
<SALES> 201,030
<TOTAL-REVENUES> 201,030
<CGS> 82,607
<TOTAL-COSTS> 82,607
<OTHER-EXPENSES> 92,315
<LOSS-PROVISION> 398
<INTEREST-EXPENSE> 1,723
<INCOME-PRETAX> 24,003
<INCOME-TAX> 9,428
<INCOME-CONTINUING> 14,575
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 14,672
<EPS-PRIMARY> 0.30
<EPS-DILUTED> 0.30
</TABLE>
