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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
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FOR THE FISCAL YEAR ENDED
JANUARY 31, 1999 COMMISSION FILE NO. 1-13026
BLYTH INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 36-2984916
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 FIELD POINT ROAD
GREENWICH, CONNECTICUT 06830
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (203) 661-1926
Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EXCHANGE ON WHICH REGISTERED
------------------- ------------------------------------
Common Stock, $0.02 par value New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |X|
As of April 15, 1999, the aggregate market value of the voting stock
held by non-affiliates of the registrant was approximately $767 million based
on the closing price of the registrant's Common Stock on the New York Stock
Exchange on such date and based on the assumption, for purposes of this
computation only, that all of the registrant's directors and executive officers
are affiliates.
As of April 15, 1999, there were outstanding 48,680,474 shares of
Common Stock, $0.02 par value.
DOCUMENTS INCORPORATED BY REFERENCE
(1) Portions of the 1999 Annual Report to Shareholders for the
fiscal year ended January 31, 1999 (Incorporated into Parts I
and II)
(2) Portions of the 1999 Proxy Statement for the 1999 Annual
Meeting of Shareholders to be held on June 8, 1999
(Incorporated into Part III)
TABLE OF CONTENTS
PART I
Item 1. Business...............................................................................................3
Item 2. Properties............................................................................................11
Item 3. Legal Proceedings.....................................................................................12
Item 4. Submission of Matters to a Vote of Security Holders...................................................12
PART II
Item 5. Market for Registrant's Common Equity and Related Stockholder Matters.................................12
Item 6. Selected Financial Data...............................................................................12
Item 7. Management's Discussion and Analysis of Financial Condition and Results of
Operations...........................................................................................12
Item 7A. Quantitative and Qualitative Disclosure about Market Risk.............................................13
Item 8. Financial Statements and Supplementary Data...........................................................13
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure...........................................................................................13
PART III
Item 10. Directors and Executive Officers of the Registrant....................................................14
Item 11. Executive Compensation................................................................................14
Item 12. Security Ownership of Certain Beneficial Owners and Management........................................14
Item 13. Certain Relationships and Related Transactions........................................................14
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.......................................14
2
PART I
ITEM 1. BUSINESS
Blyth Industries, Inc. (the "Company", which may be referred to as "we", "us" or
"our") operates in the home fragrance products market. The Company is a leader
in the design, manufacture, marketing and distribution of an extensive line of
home fragrance products including scented candles, outdoor citronella candles,
potpourri and environmental fragrance products. Closely complementing these
products are a broad range of candle accessories and decorative gift bags and
tags. These products are sold under various brand names through a wide variety
of distribution channels. We are also a producer of portable heating fuel and
other institutional products sold, under various brand names, both domestically
and internationally through independent sales representatives and distributors.
The Company has operations within and outside the United States and sells its
products worldwide.
Our net sales have grown substantially in the last five years. Internal growth
and acquisitions have contributed to such growth. Internal growth has been
generated by increased sales of home fragrance products to consumers worldwide,
the introduction of new products and product line extensions, and geographic
expansion. We have successfully integrated numerous acquisitions and investments
into our operations since the Company's formation in 1977.
Our home page on the Internet is at www.blythindustries.com. You can learn more
about us by visiting that site. That information, however, is not incorporated
herein by reference.
In managing our day to day business, as well as evaluating strategic
opportunities, the Company is organized toward the worldwide consumer market for
home fragrance products.
Within the worldwide consumer market, which in fiscal year 1999 accounted for
over 90% of our net sales, we focus on three primary areas: the retail consumer
channel in the United States; the direct selling channel in the United States;
and markets outside the United States.
THE U.S. RETAIL CONSUMER CHANNEL
With respect to the retail consumer channel in the United States, our brands
continued to grow in fiscal year 1999. Through the activities of Candle
Corporation of America, Endar Corp., Jeanmarie Creations, Inc., and New Ideas
International, Inc., we market our products through a variety of distribution
channels and tailor our products, designs, packaging and prices to satisfy
the varying demands of customers within each distribution channel.
Specifically, we sell our products to department and gift stores, specialty
chains, food and drug stores, and mass
3
merchandisers, through a network of independent sales representatives and
Company sales managers. We support these independent sales representatives by
providing them with comprehensive product catalogues and samples to market our
everyday and seasonal product lines. We believe that our competitive position in
these markets is enhanced by our ability to respond quickly to new orders and
our ability to assist customers through inventory management and control and to
satisfy delivery requirements through on-line ordering.
U.S. DIRECT SELLING CHANNEL
Our direct selling channel reaches consumers by utilizing a network of
independent sales consultants to sell products through the home party plan
method of selling. Our independent sales consultants receive their earnings
based on sales of our products at home parties organized by them. This channel
utilized over 28,000 independent sales consultants selling in the United States
in fiscal year 1999, and we were represented by independent sales consultants in
all 50 states. Our direct selling channel demonstrated excellent growth in
fiscal year 1999, with its sales in the United States growing over 25%.
MARKETS OUTSIDE THE U.S.
We also market our products outside the United States to department and gift
stores, specialty chains, and mass merchandisers through a network of
independent sales representatives and Company sales managers, including
representatives and managers of subsidiaries of the Company (some of which
are Colony Gift Corporation Limited, Eclipse Candles Limited, PartyLite
Gifts, Inc. and, as of December 1998, Liljeholmens Stearinfabriks AB). Our
recent long term investment in Liljeholmens strengthened the Company's
position in the European candle market, making us a leader in mass retailers
in Sweden, Denmark, Germany and Switzerland.
International markets offer the Company significant potential for growth. In
fiscal year 1999, approximately 18% of our total sales were outside of the
United States and our international growth rate exceeded 40%. The Company's
brands currently have the leading share of market for fragrance candles in
England, Germany, Switzerland and Austria.
Our international operations include exports of products sold through Company
sales managers and independent sales representatives, which products compete
in the candle markets of Canada, Europe, Latin America and the Pacific Rim,
to distributors, department and gift stores, mass merchandisers and food
service distributors. We currently plan to continue to expand internationally
through the establishment of foreign-based marketing and distribution
operations.
More detailed information regarding geographic area data is set forth in
Note 11 to the Company's consolidated financial statements, appearing in the
Company's 1999 Annual Report to Shareholders. This information is incorporated
herein by reference.
4
OTHER
The Company is also a supplier of institutional products to restaurants, hotels
and other institutional customers. We sell these products through independent
sales representatives, independent food service distributors, and Company sales
managers. Sales of our institutional products grew in fiscal year 1999 in part
due to the strength of our new products and the combination of our table-top
illumination products and our new catering products, namely the Sterno(R) and
Handy-Fuel(R) brands, which we acquired from the Colgate-Palmolive Company in
December 1997. Institutional sales in fiscal year 1999 were less than ten
percent of the Company's total sales.
PRODUCTS AND BRANDS
The primary products we sell are:
Candles, scented and unscented
Candle accessories
Aromatherapy candles
Potpourri
Citronella, candles and liquid wax
Air fresheners, filters and sprays
Decorative gift bags and tags
Liquid wax lamps
Food warmers
Portable heating fuel
Our "flagship" key brand names under which these products are sold are:
Colonial Candle of Cape Cod(R)
PartyLite(R)
Ambria(TM)
Carolina Designs(TM)
Colony(R) (1) (2)
Sterno(R)
GIES(TM) (1)
Our other key brand names are, in alphabetical order:
Aromatics(TM)
Asp-Holmblad(TM) (1)
Candle Corporation of America(TM)
Canned Heat(TM)
Canterbury(TM)
Eclipse Candles(TM) (1) (2)
Endar(TM)
Eternalux(R)
FanMate(R)
FilterMate(R)
Florasense(R)
Fragrance Originals(R)
Handy Fuel(R)
Jeanmarie(R)
Liljeholmens(R)
New Ideas(TM)
Old Harbor Candles(R)
Original Recipe(TM)
NEW PRODUCT DEVELOPMENT
We develop and introduce new products each year to satisfy changing consumer
tastes. The new product development process is managed on a worldwide basis
- --------------------------------------------------------------------------------
(1) Sold only outside of the United States.
(2) The Colony(R) and Eclipse Candles(TM) trademarks are registered in the
United Kingdom and other countries outside of the United States. Our
products under the Colony(R) and Eclipse Candles(TM) marks are offered and
sold only outside of the United States, and are not available in the
United States. Colony and Eclipse Candles brand products sold in the
United States are in no way associated with us, and are made and sold by
another company.
5
by teams comprised of brand managers, product managers, designers, foreign
sourcing personnel, laboratory technicians, manufacturing engineers and sales
managers.
New product concepts are directed to the marketing departments from all areas
within the Company, as well as from the Company's independent sales
representatives. The new product development process, including market research,
comparative analysis, engineering specifications, feasibility studies, testing
and evaluation, can require from 3 to 18 months to complete. New products have
typically accounted for at least 15% of our net sales in the first full year
following introduction.
MANUFACTURING AND DISTRIBUTION
We are continuously attempting to reduce our costs through more efficient
production and distribution methods, technological advancements and
consolidating and rationalizing acquired equipment and facilities. Since our
1994 initial public offering, we have invested over $150 million in new, more
advanced equipment in order to lower manufacturing costs, improve product
quality and significantly increase manufacturing capacity so that we may meet
historical and expected future sales growth. As a result, we have more than
doubled our manufacturing and distribution capacity in recent years.
During fiscal year 1999, the Company continued with its planned construction
of a European distribution facility of approximately 327,000 square feet,
which was completed in February 1999. In December 1998, the Company entered
into a construction and operating lease agreement for a manufacturing
facility in Monterrey, Mexico of approximately 200,000 square feet, which we
expect to be fully completed by August 1999.
The manufacture of the Company's products involves the use of various highly
automated processes and technologies, as well as certain hand crafting and
finishing. During recent years, we have invested in new automated machinery that
we believe has resulted, and will continue to result, in significant cost
savings and capacity expansion.
To maximize distribution efficiencies, we operate a network of stand-alone
distribution facilities in addition to distribution facilities in our
manufacturing plants.
CUSTOMERS
Customers for our home fragrance products include department and gift stores and
specialty chains, food and drug stores, mass merchandisers, and individual
consumers (through the home party plan network). Our institutional customers are
primarily distributors servicing that market. No single customer accounts for
10% or more of our sales. In each of the channels of distribution in which we do
business, our five largest customers have been customers for at least five
years.
COMPETITION
Our business is highly competitive. The principal competitive factors are new
6
product introductions, product quality, delivery time, customer service and
price. The domestic and international consumer market for home fragrance
products is highly fragmented. Numerous suppliers serve this market. Because
there are relatively low barriers to entry, the Company may face future
competition from other consumer product companies, which may have substantially
greater financial and marketing resources than those available to the Company.
EMPLOYEES
As of January 1999, the Company had approximately 3,500 full-time employees. Of
those, approximately 2,700 are non-salaried. Approximately 200 hourly workers in
the Company's Chicago, Illinois and Brooklyn, New York facilities are
represented by Local 777 of the Teamsters and Local 422-S of the AFL-CIO.
Contracts with these unions will expire in June 2000 and June 1999,
respectively. The remaining employees, approximately 94% of total employees, are
salaried and non-salaried, non-unionized employees. We believe that our
relations with our employees are good. Since its formation in 1977, the Company
has never experienced a work stoppage.
RAW MATERIALS
All of the raw materials used by us, principally petroleum based wax and glass
containers, have historically been available in adequate supply from multiple
sources.
TRADEMARKS
The Company owns numerous United States trademark registrations and has
trademark applications pending in the United States Patent and Trademark Office
with respect to certain of its products. In addition, from time to time we
register certain trademarks in certain foreign countries. All of our United
States trademark registrations can be maintained and renewed provided that the
trademarks are still in use for the goods and services covered by such
registrations. We regard these trademarks as valuable assets. Although we own
certain patents which we consider valuable, our business is not dependent upon
any single patent or group of patents.
ENVIRONMENTAL LAW COMPLIANCE
Most of our manufacturing, distribution and certain research operations are
affected by federal, state and local environmental laws. These laws relate to
the discharge of materials or otherwise with respect to the protection of the
environment. We have made and intend to continue to make necessary expenditures
for compliance with applicable laws. We do not believe these expenditures will
have any material effect on our capital expenditures, earnings or competitive
position.
YEAR 2000 COMPUTER SYSTEMS COMPLIANCE
Information on the Company's Year 2000 Computer Systems Compliance is
7
incorporated by reference to pages 17-18 of the Company's Annual Report to
Shareholders for the fiscal year ended January 31, 1999. The referenced pages of
such annual report have been filed as part of Exhibit 13 to this report.
CAUTIONARY FACTORS THAT MAY AFFECT FUTURE RESULTS
OUR DISCLOSURE AND ANALYSIS IN THIS REPORT AND IN OUR 1999 ANNUAL REPORT TO
SHAREHOLDERS CONTAIN SOME FORWARD-LOOKING STATEMENTS. FORWARD-LOOKING STATEMENTS
GIVE OUR CURRENT EXPECTATIONS OR FORECASTS OF FUTURE EVENTS. YOU CAN USUALLY
IDENTIFY THESE STATEMENTS BY THE FACT THAT THEY DO NOT RELATE STRICTLY TO
HISTORICAL OR CURRENT FACTS. THEY OFTEN USE WORDS SUCH AS "ANTICIPATE",
"ESTIMATE", "EXPECT", "PROJECT", "INTEND", "PLAN", "BELIEVE," AND OTHER WORDS
AND TERMS OF SIMILAR MEANING IN CONNECTION WITH ANY DISCUSSION OF FUTURE
OPERATING OR FINANCIAL PERFORMANCE. IN PARTICULAR, THESE INCLUDE STATEMENTS
RELATING TO FUTURE ACTIONS, PROSPECTIVE PRODUCTS OR PRODUCT APPROVALS, FUTURE
PERFORMANCE OR RESULTS OF CURRENT AND ANTICIPATED PRODUCTS, SALES EFFORTS,
EXPENSES, THE OUTCOME OF CONTINGENCIES SUCH AS LEGAL PROCEEDINGS, AND FINANCIAL
RESULTS. FROM TIME TO TIME, WE ALSO MAY PROVIDE ORAL OR WRITTEN FORWARD-LOOKING
STATEMENTS IN OTHER MATERIALS WE RELEASE TO THE PUBLIC.
ANY OR ALL OF OUR FORWARD-LOOKING STATEMENTS IN THIS REPORT, IN OUR 1999
ANNUAL REPORT TO SHAREHOLDERS AND IN ANY OTHER PUBLIC STATEMENTS WE MAKE MAY
TURN OUT TO BE WRONG. THEY CAN BE AFFECTED BY INACCURATE ASSUMPTIONS WE MIGHT
MAKE OR BY KNOWN OR UNKNOWN RISKS AND UNCERTAINTIES. MANY FACTORS MENTIONED
IN THIS DISCUSSION, FOR EXAMPLE, PRODUCT COMPETITION AND THE COMPETITIVE
ENVIRONMENT, WILL BE IMPORTANT IN DETERMINING FUTURE RESULTS. CONSEQUENTLY,
NO FORWARD-LOOKING STATEMENT CAN BE GUARANTEED. ACTUAL FUTURE RESULTS MAY
VARY MATERIALLY.
WE UNDERTAKE NO OBLIGATION TO PUBLICLY UPDATE ANY FORWARD-LOOKING STATEMENT,
WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS OR OTHERWISE. YOU ARE
ADVISED, HOWEVER, TO CONSULT ANY FURTHER DISCLOSURES WE MAKE ON RELATED SUBJECTS
IN OUR 10-Q, 8-K AND 10-K REPORTS TO THE SEC. ALSO NOTE THAT WE PROVIDE THE
FOLLOWING CAUTIONARY DISCUSSION OF RISKS, UNCERTAINTIES AND POSSIBLY INACCURATE
ASSUMPTIONS RELEVANT TO OUR BUSINESS. THESE ARE SOME OF THE FACTORS THAT WE
THINK COULD CAUSE OUR ACTUAL RESULTS TO DIFFER MATERIALLY FROM EXPECTED AND
HISTORICAL RESULTS. OTHER FACTORS BESIDES THOSE LISTED HERE COULD ALSO ADVERSELY
AFFECT THE COMPANY. THIS DISCUSSION IS PROVIDED AS PERMITTED BY THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995.
|_| RISK OF INABILITY TO MAINTAIN GROWTH RATE
The Company has grown substantially in recent years. We expect that our future
growth will be generated by sales to the faster growing worldwide consumer
market for home fragrance products. The market for our institutional products
has grown, but more slowly, and we expect it will continue to do so. Our ability
to continue to grow depends on the following: market acceptance of existing
products, the successful introduction of new products, and increases in
production and distribution
8
capacity to meet demand. The home fragrance products industry is driven by
consumer tastes. Accordingly, there can be no assurance that our existing or
future products will maintain or achieve market acceptance. We expect that, as
we grow, our rate of growth will be less than our historical growth rate. In
addition, we have grown in part through acquisitions and there can be no
assurance that we will be able to continue to identify suitable acquisition
candidates, to consummate acquisitions on terms favorable to the Company, to
finance acquisitions or to successfully integrate acquired operations. In the
future, acquisitions may contribute more to the overall Company's sales growth
rate than historically.
|_| ABILITY TO RESPOND TO INCREASED PRODUCT DEMAND
Our significant internal growth has required increases in personnel, expansion
of production and distribution facilities, and enhancement of management
information systems. Our ability to meet future demand for products will be
dependent upon success in (1) training, motivating and managing new employees,
(2) bringing new production and distribution facilities on line in a timely
manner, (3) improving management information systems in order to respond
promptly to customer orders and (4) improving our ability to forecast
anticipated product demand in order to continue to fill customer orders
promptly. If we are unable to meet future demand for products in a timely and
efficient manner, our operating results could be materially adversely affected.
|_| RISKS ASSOCIATED WITH INTERNATIONAL SALES AND FOREIGN-SOURCED PRODUCTS
Our international business has grown at a faster rate than sales in the United
States. In addition, we source a portion of our candle accessories and
decorative gift bags from independent manufacturers in the Pacific Rim, Europe
and Mexico. For these reasons we are subject to the following risks inherent in
foreign manufacturing and sales: 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.
|_| RAW MATERIALS
For certain raw materials, there may be temporary shortages due to weather or
other factors, including disruptions in supply caused by raw material
transportation or production delays. Such raw material shortages have not
previously had, and are not expected to have, a material adverse effect on the
Company's operations.
|_| DEPENDENCE ON KEY MANAGEMENT PERSONNEL
Our success depends upon the contributions of key management personnel,
particularly our Chairman, Chief Executive Officer and President, Robert B.
Goergen. We do not have
9
employment contracts with any of our key management personnel, nor do we
maintain any key person life insurance policies. The loss of any of the key
management personnel could have a material adverse effect on the Company.
|_| COMPETITION
Our business is highly competitive, both in terms of price and new product
introductions. The worldwide consumer market for home fragrance products 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 home fragrance products industry, we may face increased
future competition from other companies, some of which may have substantially
greater financial and marketing resources than those available to us. From time
to time during the year-end holiday season, we experience competition from
candles manufactured in foreign countries, particularly China. In addition,
certain of our competitors focus on a particular geographic or single-product
market and attempt to gain or maintain market share solely on the basis of
price.
10
ITEM 2. PROPERTIES
The following table sets forth the location and approximate square footage
of the Company's major manufacturing and distribution facilities[1]:
Location Use Approximate Square Feet
-------------------------------
Owned Leased
Batavia, Illinois......................... Manufacturing 120,000 --
Brooklyn, New York........................ Distribution -- 30,000
Caldas da Rainha, Portugal................ Manufacturing and
related distribution 42,000 --
Carol Stream, Illinois.................... Distribution -- 651,000
Carson, California........................ Manufacturing and
related distribution -- 38,000
Chicago, Illinois......................... Manufacturing and
related distribution 168,000 --
Cumbria, England.......................... Manufacturing and
related distribution 163,000 52,000
Diessen, Netherlands...................... Distribution -- 78,000
Diessenhofen, Switzerland................. Manufacturing and
related distribution 11,000 --
Elkin, North Carolina..................... Manufacturing and
related distribution 690,000 --
Glinde, Germany........................... Manufacturing and
related distribution 32,000 --
Miami, Florida............................ Manufacturing and
related distribution 22,000 --
Huckelhoven, Germany...................... Manufacturing and
related distribution 11,000 --
Hyannis, Massachusetts.................... Manufacturing 69,000 --
Isle of Wight, England.................... Manufacturing 55,000 --
Monterrey, Mexico[2]...................... Manufacturing -- 200,000
Montgomery, Illinois[3]................... Distribution -- 344,000
Ontario, Canada........................... Distribution -- 41,000
Oskarshamm, Sweden........................ Manufacturing and
related distribution -- 123,000
Plymouth, Massachusetts................... Distribution 59,000 --
Temecula, California..................... Manufacturing and
related distribution -- 361,000
Texarkana, Texas.......................... Manufacturing and
related distribution 130,000 --
Thomasville, Georgia...................... Manufacturing and
related distribution 66,000 --
Tilburg, Netherlands...................... Distribution 327,000 --
Tijuana, Mexico........................... Manufacturing -- 120,000
Tulsa, Oklahoma........................... Distribution 98,000 81,000
Vordingborg, Denmark...................... Manufacturing and
related distribution 21,000 --
Weston-Super-Mare, England................ Manufacturing and
related distribution -- 62,000
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[1] Chart includes major manufacturing and distribution facilities for
Liljeholmens Stearinfabriks AB, in which the Company acquired approximately 79%
Class A voting common stock in December 1998.
[2] Lease signed December 1998 for August 1999 completion to replace current
plant of 85,000 square feet.
[3] Facility is leased by third party service provider; the Company pays
provider an all-inclusive service fee.
11
The Company's executive offices, administrative offices and outlet
stores are generally located in leased space (except for certain offices located
in owned space). All of the Company's properties are currently being utilized
for their intended purpose.
ITEM 3. LEGAL PROCEEDINGS
The Company is involved in litigation arising in the ordinary course of its
business. In the opinion of the Company's management, existing litigation will
not have a material adverse effect on the Company's financial position or
results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company's 1999 annual meeting of stockholders will be held on June 8,
1999. No matter was submitted to a vote of security holders in the fourth
quarter of the fiscal year ended January 31, 1999.
PART II
ITEM 5. MARKET FOR THE COMPANY'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
The principal market for our Common Stock is the New York Stock Exchange.
Information required by this Item is incorporated by reference to page 1 of the
Company's Annual Report to Shareholders for the fiscal year ended January 31,
1999. The referenced page of our annual report has been filed as part of Exhibit
13 to this report.
ITEM 6. SELECTED FINANCIAL DATA
Information required by this Item is incorporated by reference to page 11
of the Company's Annual Report to Shareholders for the fiscal year ended January
31, 1999. The referenced page of such annual report has been filed as part of
Exhibit 13 to this report.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Information required by this Item is incorporated by reference to pages 12
through 18 of the Company's Annual Report to Shareholders for the fiscal year
ended January 31, 1999. The referenced pages of such annual report have been
filed as part of Exhibit 13 to this report.
12
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Information required by this Item is incorporated by reference to page 16
of the Company's Annual Report to Shareholders for the fiscal year ended January
31, 1999. The referenced pages of such annual report have been filed as part of
Exhibit 13 to this report.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Information required by this Item is incorporated by reference to pages 19
through 33 of the Company's Annual Report to Shareholders for the fiscal year
ended January 31, 1999. The referenced pages of such annual report have been
filed as part of Exhibit 13 to this report.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On April 8, 1997, the Board of Directors of the Company, acting upon the
recommendation of its Audit Committee, appointed Coopers & Lybrand L.L.P.
(now PricewaterhouseCoopers LLP) as the independent accountants of the
Company for the fiscal year ended January 31, 1998, and determined not to
engage Grant Thornton LLP ("Grant Thornton") as the independent certified
public accountants of the Company for the fiscal year ended January 31, 1998.
Grant Thornton had been previously engaged to audit the Company's financial
statements for seven years, including the fiscal year ended January 31, 1997.
Grant Thornton's report on the financial statements of the Company for the
fiscal year ended January 31, 1997 did not contain any adverse opinion or
disclaimer of opinion and was not qualified or modified as to uncertainty,
audit scope or accounting principles. There were no disagreements with Grant
Thornton on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedure, which disagreements, if
not resolved to Grant Thornton's satisfaction, would have caused Grant
Thornton to make reference to the subject matter of the disagreement(s) in
connection with its reports on the Company's financial statements. Pursuant
to a letter from Grant Thornton to the Securities and Exchange Commission
(the "SEC"), dated May 2, 1997, a copy of which is attached as Exhibit 16 to
Blyth's Current Report on Form 8-K/A filed on the same date with the SEC,
Grant Thornton agrees with the above statements.
13
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information required by Items 10 through 13 is included in the
Company's proxy statement dated April 30, 1999, on pages 3 through 12.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(1). Financial Statements
The following consolidated financial statements are contained on the
indicated pages of this report:
Page No.
--------
Report of Independent Accountants................................................... *
Report of Independent Certified Public Accountants.................................. *
Statements:
Consolidated Balance Sheets.................................................... *
Consolidated Statements of Earnings............................................ *
Consolidated Statements of Stockholders' Equity................................ *
Consolidated Statements of Cash Flows.......................................... *
Notes to Consolidated Financial Statements..................................... *
* Incorporated herein by reference to the appropriate portions of the
Company's Annual Report to Shareholders for the fiscal year ended January
31, 1999. (See Part II.)
14
(a)(2). FINANCIAL STATEMENT SCHEDULES
The following financial statement schedule is contained on the indicated
pages of this report:
Page No.
--------
Report of Independent Accountants S-1
Report of Independent Certified Public Accountants S-2
Allowance for Doubtful Receivables S-3
All other schedules are omitted because they are inapplicable or the
requested information is shown in the consolidated financial statements or
related notes.
(a)(3). EXHIBITS
EXHIBIT NO. DESCRIPTION OF EXHIBIT
- ----------- ----------------------
3.1* Restated Certificate of Incorporation of the Registrant
3.2* Restated By-laws of the Registrant
4.1+ Amended and Restated 1994 Employee Stock Option Plan of the
Registrant (incorporated by reference to Exhibit 4.1 to the
Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended July 31, 1996)
4.1(a)+ Amended and Restated 1994 Employee Stock Option Plan of the
Registrant (incorporated by reference to Exhibit 4.1 to the
Registrant's Current Report on Form 8-K/A filed April 20,
1998)
4.2+ Form of Nontransferable Incentive Stock Option Agreement under
the Amended and Restated 1994 Employee Stock Option Plan of
the Registrant (incorporated by reference to Exhibit 4.2 to
the Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended July 31, 1996)
4.3+ Form of Nontransferable Non-Qualified Stock Option Agreement
under the Amended and Restated 1994 Employee Stock Option Plan
of the Registrant (incorporated by reference to Exhibit 4.3 to
the Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended July 31, 1996)
4.4+ 1994 Stock Option Plan for Non-Employee Directors of the
Registrant (incorporated by reference to Exhibit 4.4 to the
Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended July 31, 1996)
4.5*+ Form of Stock Option Agreement under the 1994 Stock Option
Plan for Non-Employee Directors of the Registrant
10.1 Credit Agreement, dated as of October 17, 1997, among the
Registrant, the Banks listed therein, Morgan Guaranty Trust
Company of New York, as documentation agent, and Bank of
America National Trust and Savings Association, as
administrative agent (incorporated by reference to Exhibit
10.1 to the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended October 31, 1997)
15
10.2 Note Purchase Agreement, dated July 7, 1995 (the "Note
Purchase Agreements"), relating to the 7.54% Senior Notes due
June 30, 2005, among Candle Corporation Worldwide, Inc.,
Candle Corporation of America, and PartyLite Gifts, Inc., as
Issuers, the Registrant, as guarantor, and the Purchasers
named therein (incorporated by reference to Exhibit 10.2 to
the Registrant's Quarterly Report on Form 10-Q for the fiscal
quarter ended July 31, 1995)
10.2(a) Fourth Amendment, dated as of October 17, 1997, to Note
Purchase Agreements (incorporated by reference to Exhibit 10.2
to the Registrant's Quarterly Report on Form 10-Q for the
fiscal quarter ended October 31, 1997)
10.2(b) Assumption Agreement, dated as of October 17, 1997, of Note
Purchase Agreements, among Candle Corporation Worldwide, Inc.,
Candle Corporation of America, and PartyLite Gifts, Inc., as
assignors, and the Registrant, as assignee (incorporated by
reference to Exhibit 10.3 to the Registrant's Quarterly Report
on Form 10-Q for the fiscal quarter ended October 31, 1997)
10.2(c) Guaranty Agreement, dated as of October 17, 1997, by Candle
Corporation Worldwide, Inc. (incorporated by reference to
Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q
for the fiscal quarter ended October 31, 1997)
10.2(d) Form of 7.54% Senior Notes due June 30, 2005 (incorporated by
reference to Exhibit 10.5 to the Registrant's Quarterly Report
on Form 10-Q for the fiscal quarter ended October 31, 1997)
10.3 Master Equipment Lease Agreement between MetLife Capital,
Limited Partnership, as lessor, and Candle Corporation of
America, as lessee (incorporated by reference to Exhibit 10.21
to the Registrant's Annual Report on Form 10-K for the fiscal
year ended January 31, 1995)
10.4* Standard Form Industrial Lease dated April 22, 1993, between
Carol Point Builders I General Partnership and PartyLite
Gifts, Inc.
10.4(a) First Amendment, dated August 21, 1995, between ERI-CP, Inc.,
a Delaware corporation, as successor to Carol Point Builders I
General Partnership, and PartyLite Gifts, Inc., to Standard
Form Industrial Lease dated April 22, 1993, between Carol
Point Builders II General Partnership and PartyLite Gifts,
Inc. (incorporated by reference to Exhibit 10.4(a) to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended January 31, 1996)
10.5 Lease Agreement, dated June 25, 1997, between Carol Stream I
Development Company, as landlord, PartyLite Gifts, Inc., as
tenant, and the Registrant, as guarantor (incorporated by
reference to Exhibit 10.5 to the Registrant's Annual Report on
Form 10-K for the fiscal year ended January 31, 1998)
16
10.6*+ Form of Indemnity Agreement between the Registrant and each of
its directors
10.7*+ Amended and Restated Stock Appreciation Unit Agreement
originally dated as of September 10, 1992, between the
Registrant and Thomas K. Kreilick
10.8+ Promissory Note, dated March 17, 1995, payable by Elwood L. La
Forge, Jr. and Mary G. La Forge to the Registrant
(incorporated by reference to Exhibit 10.8 to the Registrant's
Annual Report on Form 10-K for the fiscal year ended January
31, 1998)
10.9+ Mortgage, dated March 17, 1995, between Elwood L. La Forge,
Jr. and Mary G. La Forge, as mortgagor, to the Registrant, as
mortgagee (incorporated by reference to Exhibit 10.9 to the
Registrant's Annual Report on Form 10-K for the fiscal year
ended January 31, 1998)
13.** Annual Report to Shareholders for the fiscal year ended
January 31, 1999 (Pages 1 and 11 through 33)
21.** List of Subsidiaries
23.1** Consent of PricewaterhouseCoopers LLP, independent accountants
23.2** Consent of Grant Thornton LLP, independent certified public
accountants
24.1** Power of Attorney
24.2** Certified Resolutions of the Board of Directors of the
Registrant
27.** Financial Data Schedule as of and for the period ended January
31, 1999.
- -------------------------
* Included as an exhibit to the Registrant's Registration Statement on
Form S-1 (No. 33-77458) and incorporated herein by reference.
** Filed herewith.
+ Management contract or compensatory plan required to be filed by Item
14(c) of this report.
(b) Reports on Form 8-K
The following reports on Form 8-K were filed during the fourth quarter of
the fiscal year ended January 31, 1999:
Current Report on Form 8-K, dated December 4, 1998, attaching earnings press
release.
17
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Date: April 30, 1999
BLYTH INDUSTRIES, INC.
By: /s/ Robert B. Goergen
------------------------
Robert B. Goergen
Chairman, Chief Executive Officer
and President
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title Date
--------- ----- ----
/s/ Robert B. Goergen Chairman, Chief Executive Officer and President; April 30, 1999
- ------------------------------ Director (Principal Executive Officer)
Robert B. Goergen
/s/ Richard T. Browning Vice President and Chief Financial Officer April 30, 1999
- ------------------------------ (Principal Financial and Accounting Officer)
Richard T. Browning
/s/ Howard E. Rose Vice Chairman and Director April 30, 1999
- ------------------------------
Howard E. Rose
/s/ Roger A. Anderson Director April 30, 1999
- ------------------------------
Roger A. Anderson
/s/ John W. Burkhart Director April 30, 1999
- ------------------------------
John W. Burkhart
/s/ Pamela M. Goergen Director April 30, 1999
- ------------------------------
Pamela M. Goergen
/s/ Neal I. Goldman Director April 30, 1999
- ------------------------------
Neal I. Goldman
/s/ Roger H. Morley Director April 30, 1999
- ------------------------------
Roger H. Morley
/s/ John E. Preschlack Director April 30, 1999
- ------------------------------
John E. Preschlack
/s/ Frederick H. Stephens, Jr. Director April 30, 1999
- ------------------------------
Frederick H. Stephens, Jr.
18
REPORT OF INDEPENDENT ACCOUNTANTS
Board of Directors and Stockholders
Blyth Industries, Inc.
Our report on the consolidated financial statements of Blyth Industries, Inc.
and Subsidiaries as of January 31, 1999 and 1998 and for each of the two years
in the period ended January 31, 1999, has been incorporated by reference in this
Form 10-K from page 32 of the 1999 Annual Report to Shareholders of Blyth
Industries, Inc. and Subsidiaries. In connection with our audits of such
financial statements, we have also audited the related financial statement
schedule listed in the index at Item 14(a)(2) of this Form 10-K.
In our opinion, the financial statement schedule referred to above, when
considered in relation to the basic financial statements taken as a whole,
presents fairly, in all material respects, the information required to be
included therein.
/s/ PricewaterhouseCoopers LLP
PRICEWATERHOUSECOOPERS LLP
Chicago, Illinois
March 25, 1999
S-1
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors and Stockholders
Blyth Industries, Inc.
In connection with our audit of the consolidated financial statements of Blyth
Industries, Inc. and Subsidiaries referred to in our report dated March 28,
1997, which is included in the Annual Report to the Shareholders and
incorporated by reference in Part IV of this Form 10-K, we have also audited
Schedule II for the year ended January 31, 1997. In our opinion, this schedule
presents fairly, in all material respects, the information required to be set
forth therein.
/s/ Grant Thornton LLP
Chicago, Illinois GRANT THORNTON LLP
March 28, 1997
S-2
BLYTH INDUSTRIES, INC.
SCHEDULE II - ALLOWANCE FOR DOUBTFUL RECEIVABLES
For the years ended January 31, 1997, 1998 and 1999
(In thousands)
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
DESCRIPTION OF PERIOD EXPENSES DEDUCTIONS PERIOD
1997 .................... $ 627 $ 1,483 $ 1,056 $ 1,054
1998 .................... 1,054 3,514 3,215 1,353
1999 .................... 1,353 1,356 1,305 1,404
S-3