Blyth Inc. (BTH) Files Quarterly Report for the Period Ended on 2008-10-31
Blyth Inc. operates in the home fragrance products market. The company is engaged in the design manufacture marketing and distribution of an extensive line of home fragrance products primarily including scented candles potpourri outdoor citronella candles and environmental fragrance products. The company also offers a broad range of candle accessories decorative gift bags and tags and seasonal decorations. It is also a producer of portable heating fuel and other institutional products sold under various brand names both domestically and internationally. Blyth Inc. has a market cap of $288.07 million; its shares were traded at around $6.75 with a P/E ratio of 5.79 and P/S ratio of 0.25. The dividend yield of Blyth Inc. stocks is 6.67%.
Highlight of Business Operations:Administrative and other expense for the nine months ended October 31, 2008, decreased $6.4 million, or 6%, to $93.0 million from $99.4 million in the comparable prior year period. This decline was principally due to severance related charges and the termination of an office lease and related assets of $3.0 million and $2.4 million, respectively, taken in April 2007 associated with the sale of BHI NA, as well as improved expense management on a year over year basis. As a percent of sales, administrative expense was 12.6% for the nine months ended October 31, 2008 and 2007.
Interest expense for the nine months ended October 31, 2008, decreased approximately $3.5 million, or 32%, to $7.4 million from $10.9 million in the comparable prior year period. Interest expense for the three months ended October 31, 2008 decreased approximately $1.1 million, or 31%, to $2.5 million from $3.6 million in the comparable prior year period. The decrease in interest expense for both of these periods is primarily the result of a decrease in long-term borrowings.
Interest income for the nine months ended October 31, 2008 decreased approximately $2.7 million to $3.3 million from $6.0 million in the comparable prior year period. Interest income for the three months ended October 31, 2008 decreased approximately $1.1 million to $0.9 million from $2.0 million in the comparable prior year period. The decrease in interest income is primarily due to lower average cash and short-term investment balances.
The Company s effective tax rate for the nine months ended October 31, 2008 was 9.2%, resulting in an income tax benefit of $2.9 million, compared to the prior year effective tax rate of 26.9%, resulting in an income tax expense of $7.9 million. The current year s effective tax rate included a tax benefit of approximately $7.0 million recorded as a result of an international restructuring plan that was completed in the third quarter. This was offset in part by the impact of non-deductible goodwill and other intangible impairment charges of $9.1 million, an additional tax provision of $1.9 million related to a state voluntary disclosure settlement proposal, and a $1.8 million valuation allowance for the capital loss recorded during the first quarter related to the write down of the RedEnvelope investment discussed in Note 5. The effective tax rate for the first nine months of last year was favorably impacted by $2.3 million as the result of the reversal of a previously established valuation allowance against capital loss carryforwards, and $0.8 million of provision-to-tax return adjustments made as a result of filing the company s U.S. federal income tax return. The valuation allowance was reversed as a result of a capital gain generated on the sale of certain assets and liabilities of the BHI NA business. These favorable impacts were partially offset by income taxes provided on unremitted foreign earnings. Excluding theses charges and benefits, the effective tax rates for the nine months ended this year and last year would have been 37.6% and 38.3% respectively.
Net cash used by investing activities was $0.1 million. Net capital expenditures for property, plant and equipment were $6.3 million for the first nine months of fiscal 2009 compared to $7.0 million in the prior year period. We liquidated our $10.0 million investment in the limited partnership, received $2.2 million from the sale of our interest in the Australian joint venture and redeemed our investment in auction rate securities for $10.0 million. Included in investing activities are uses of cash for the purchases of ViSalus for $13.0 million and incurred acquisition costs of $1.0 million, for a total acquisition cost of $14.0 million, net of cash acquired of $0.5 million and As We Change for $2.3 million.
In May 1999, we filed a shelf registration statement for issuance of up to $250.0 million in debt securities with the Securities and Exchange Commission. On September 24, 1999, we issued $150.0 million of 7.90% Senior Notes due October 1, 2009 at a discount of approximately $1.4 million, which is being amortized over the life of the notes. Through October 31, 2008, we have repurchased a total of $111.3 million of these notes, the remainder of which are due within the next twelve months and have been reclassified to Current maturities of long-term debt. Such notes contain, among other provisions, restrictions on liens on principal property or stock issued to collateralize debt. As of October 31, 2008, we were in compliance with such provisions. Interest is payable semi-annually in arrears on April 1 and October 1. On October 20, 2003, we issued $100.0 million of 5.50% Senior Notes due on November 1, 2013 at a discount of approximately $0.2 million, which is being amortized over the life of the notes. Such notes contain provisions and restrictions similar to those in the 7.90% Senior Notes. As of October 31, 2008, we were in compliance with such provisions. Interest is payable semi-annually in arrears on May 1 and November 1. The notes may be redeemed in whole or in part at any time at a specified redemption price. The proceeds of the debt issuances were used for general corporate purposes.
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