Bruce G. Crain, President of Blyth's Wholesale Group,
to Lead New Company
Blyth to Sharpen Focus on Direct Selling and
Catalog and Internet Channels
GREENWICH, Conn., Sept. 19, 2005 (PRIMEZONE) -- Blyth, Inc. (NYSE:BTH), a leading designer and marketer of home fragrance and home decor products, announced today that its Board has unanimously approved a tax-free spin-off of its Wholesale Group to Blyth shareholders. The planned spin-off of the Wholesale Group will create the largest publicly traded wholesale decorative Home Expressions company, with approximately 3,200 employees and estimated revenues of $700 million for the fiscal year ending January 31, 2006.
The Wholesale Group holds leading positions in both branded and private label candle markets in North America and Europe through its Blyth HomeScents International division, which includes the North American premium and mass channel businesses and the European Colony and Gies businesses. The Group is also a leader in home decor and seasonal decorations on both continents through its CBK and Midwest divisions in North America and Kaemingk, Edelman and Euro-Decor divisions in Europe. Additionally, the Group is the market leader in the North American chafing fuel and tabletop lighting trade, supplying the foodservice and retail channels through the Sterno Group division.
Bruce G. Crain, President of the Wholesale Group, will be the Chief Executive Officer of the new company. He has held a variety of positions at Blyth during his over eight-year tenure, including, most recently, responsibility for the Company's Wholesale segment, which includes its North American and European businesses, as well as Blyth Global Sourcing and Research and Development. Earlier in his career, Mr. Crain also oversaw PartyLite's global supply chain activities, Blyth Corporate Marketing and other functional areas. Mr. Crain, age 45, received his MBA from the Stanford Graduate School of Business and his BA from Wesleyan University. Prior to Blyth, he served as Chief Financial Officer of Home Innovations, Inc., was a consultant with McKinsey & Company and also held a variety of financial services industry roles. In addition to Mr. Crain, the executive officers of the new company will include Stephen Kosmalski, Group President - Blyth Wholesale North America, and Jeff Carr, Group President - Blyth Wholesale Europe. Additional officers, including a Chief Financial Officer to be named, will also join the executive team.
"Elevating this high caliber team to lead a new company and effecting a tax-free spin off of the Wholesale segment provides a unique opportunity to allow each of the Wholesale Group and Blyth's remaining businesses to realize their full potential by developing senior management teams whose sole focus will be the specific opportunities associated with their respective distribution channels, as well as to unlock value for Blyth's shareholders," commented Bob Goergen, Chairman and Chief Executive Officer of Blyth. "Bruce's wealth of experience in the home decorative market both inside and outside of Blyth will support his vision of leveraging the size and scale of the Wholesale business to drive sales and profits with trend-leading products and a hybrid supply chain of sourcing and manufacturing. Steve Kosmalski has overseen the dramatic turn around of our North American home fragrance business, and Jeff Carr has been instrumental in the integration of recent acquisitions into our European wholesale structure. Under their leadership, we believe the new company is well positioned for value creation. Following the spin-off, we at Blyth will be able to sharpen our focus further on our core Direct Selling and Catalog and Internet businesses."
"I am excited by the opportunity to lead the new company," stated Mr. Crain. "As the leader in a fragmented market, the Wholesale Group has distinct opportunities for growth as a stand-alone company. We are focused on product and merchandising innovation, global supply chain management and partnering with our retailers and suppliers, believing that solid execution in these areas is key to our joint success in today’s competitive marketplace."
The businesses included in the new company are expected to produce revenues in fiscal year 2006 of approximately $700 million. In fiscal year 2005, the Wholesale segment contributed operating income of $30.7 million on sales of $657 million. The Wholesale segment reported assets of $614 million and depreciation of $17.9 million in fiscal year 2005. For fiscal year 2006, inclusive of the segment that is being spun off, Blyth's earnings are expected to be between $2.00 and $2.05 per share.
The spin-off is intended to take the form of a tax-free pro rata distribution to Blyth shareholders of a new publicly traded stock. The stock distribution ratio is expected to be approximately one share of the new company for every three shares of Blyth common stock and will be confirmed at a future date. The transaction is expected to be completed in the second quarter of fiscal 2006, subject to receipt of a ruling from the Internal Revenue Service as to certain aspects of the transaction, receipt of an opinion of Blyth's outside counsel as to the tax-free nature of the transaction, registration of the new security with the Securities and Exchange Commission and certain other customary conditions. Management intends to seek listing on the New York Stock Exchange.
Blyth, Inc., headquartered in Greenwich, CT, USA, is a Home Expressions company competing primarily in the home fragrance, home decor, seasonal decorations and gift industry. The Company designs, markets and distributes an extensive array of candles, home fragrance products, decorative accessories, seasonal decorations and household convenience items, as well as tabletop lighting and chafing fuel for the Away From Home or foodservice trade. Blyth manufactures most of its candles and sources nearly all of its other products. Its products are sold direct to the consumer under the PartyLite(r) and Purple Tree(tm) brands, to retailers in the premium and specialty retail channels under the Colonial Candle(tm), Carolina(r), CBK(r), and Seasons of Cannon Falls(r) brands, to retailers in the mass retail channel under the Florasense(r), Ambria(r), FilterMate(r) and Sterno(r) brands, to consumers in the catalog and Internet channel under the Miles Kimball(r), Exposures(r), Walter Drake(r), The Home Marketplace(r) and Directions…the path to better health(r) brands, and to the Foodservice industry under the Sterno(r), Ambria(r) and HandyFuel(r) brands. In Europe, Blyth's products are also sold under the PartyLite(r), Colonial(r), Gies(r), Liljeholmens(r), Ambria(r), Carolina(r), Kaemingk(tm), Edelman(r) and Euro-Decor(r) brands.
Blyth, Inc. may be found on the Internet at www.blyth.com.
This press release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements concerning plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are other than statements of historical facts. Actual results could differ materially due to various factors, including projected revenues for the new company, Blyth's 2006 projected earnings per share, the likelihood and expected timing for the spin-off transaction, and Blyth's expectation that the proposed spin-off will create additional value for Blyth shareholders. In addition, there are a number of risks associated with the proposed spin-off transaction. For example, the spin-off is conditioned upon Blyth receiving confirmation from the Internal Revenue Service (the "IRS") that the transaction would be tax-free to Blyth and its shareholders. The proposed transaction is complicated and there can be no assurance that the IRS will confirm the company's belief that the transaction should be able to be completed on a tax-free basis. If the company does not receive the requested IRS ruling, the company will not proceed with the spin-off transaction. Even if the spin-off is completed, there can be no assurance that it will create value for Blyth shareholders. The value of the stock in the new company will depend on a number of factors, many of which are beyond the control of Blyth and the new company, such as investor confidence in the management team and prospects for the new company, in addition to the operating and financial performance of the Wholesale group.
Furthermore, Blyth's actual results could be materially impacted by the slowing of the United States or European economies or retail environments, the risk that we will be unable to maintain our historic growth rate, our ability to respond appropriately to changes in product demand, the risk that we will be unable to integrate the businesses that we acquire into our existing operations, the risks (including foreign currency fluctuations, economic and political instability, transportation delays, difficulty in maintaining quality control, trade and foreign tax laws and others) associated with international sales and foreign sourced products, risks associated with our ability to recruit new independent sales consultants, our dependence on key corporate management personnel, risks associated with the sourcing of raw materials for our products, competition in terms of price and new product introductions, risks associated with our information technology systems (including, susceptibility to outages due to fire, floods, power loss, telecommunications failures, computer viruses, break-ins and similar events) and other factors described in this press release and in the Company's Annual Report on Form 10-K for the year ended January 31, 2005.