Blyth, Inc. (the “Company”) is a multi-channel company primarily focused on the direct to consumer market. The Company formulates and markets weight management products, nutritional supplements and energy drinks, as well as home fragrance products and decorative accessories. The Company’s products include meal replacement shakes, nutritional supplements, energy drink mixes, and an extensive array of decorative and functional household products such as candles, accessories, seasonal decorations, household convenience items and personalized gifts. The Company’s products can be found throughout North America, Europe and Australia. Our financial results are reported in three segments: the Health & Wellness segment (ViSalus), the Candles & Home Décor segment (PartyLite) and the Catalog & Internet segment (Silver Star Brands, formerly known as the Miles Kimball Company).

Note 1. Basis of Presentation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All intercompany accounts and transactions have been eliminated. The Company's subsidiaries within the Catalog & Internet segment operate on a 52 or 53-week fiscal year ending on the Saturday closest to December 31. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments (consisting only of items that are normal and recurring in nature) necessary for fair presentation of the Company's consolidated financial position as of September 30, 2013 and the consolidated results of its operations for the three and nine month periods ended September 30, 2013 and 2012, and the consolidated statement of cash flows for the nine months ended September 30, 2013 and 2012. These interim statements should be read in conjunction with the Company's Consolidated Financial Statements for the year ended December 31, 2012, as set forth in the Company's Annual Report on Form 10-K. Operating results for the three and nine months ended September 30, 2013 are not necessarily indicative of the results that may be expected for the year ending December 31, 2013.

In 2012, the Company sold its Sterno business as more fully detailed in Note 3 to the Consolidated financial statements. The results of operations of Sterno have been reclassified to discontinued operations for all periods presented.

Two-for-one stock split

On May 16, 2012, the Company's Board of Directors announced a two-for-one stock split of its common stock effective in the form of a stock dividend of one share for each outstanding share. The record date for the stock split was June 1, 2012, and the additional shares were distributed on June 15, 2012. Accordingly, all per share amounts, weighted average shares outstanding, shares outstanding and shares repurchased presented in the consolidated financial statements and notes have been adjusted retroactively to reflect the stock split. Shareholders' equity has been retroactively adjusted to give effect to the stock split for all periods presented by reclassifying the par value of the additional shares issued in connection with the stock split from Retained Earnings to Common Stock.

Recently Adopted Accounting Guidance

On January 31, 2013, FASB issued FASB ASU No. 2013-01, Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities ("ASU 2013-01"). This standard requires enhanced disclosure about financial instruments and derivative instruments that are either offset in the statement of financial position or subject to an enforceable master netting arrangement. The Company adopted ASU 2013-01 as of January 1, 2013. This standard did not have a significant impact on the Company's consolidated financial condition or results of operations.

On February 5, 2013, the FASB issued ASU 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (“ASU 2013-02”). ASU 2013-02 requires disclosure either on the face of the income statement or in the notes to the financial statements of significant amounts reclassified out of accumulated other comprehensive income in their entirety. For amounts not reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures that provide additional details about those amounts. The Company adopted ASU 2013-02 as of January 1, 2013. This standard impacted presentation only and did not affect the Company's consolidated financial condition or results of operations.

Recently Issued Accounting Guidance

In March 2013, the FASB issued ASU 2013-05, Foreign Currency Matters (Topic 830): Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (“ASU 2013-05”). This amendment clarifies the applicable guidance for the release of cumulative translation adjustment into net earnings. When an entity ceases to have a controlling financial interest in a subsidiary or group of assets within a foreign entity, the entity is required to apply the guidance in FASB Accounting Standards Codification (ASC) Topic 830-30 to release any related cumulative translation adjustment into net earnings. ASU 2013-05 is effective prospectively for fiscal years, and interim reporting periods within those years, beginning January 1, 2014. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial condition or results of operations.

In July 2013, the FASB issued ASU 2013-11, Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists ("ASU 2013-11"), which provides guidance for the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The Company will adopt the standard effective January 1, 2014. The adoption of this standard is not expected to have a material impact on the Company's consolidated financial condition or results of operations.

Other Comprehensive Income

The following table discloses the tax effects allocated to each component of other comprehensive income in the financial statements:



	Nine months ended
(In thousands)	September 30, 2013									September 30, 2012
	Before-Tax Amount			Tax (Expense) or Benefit			Net-of-tax Amount			Before-Tax Amount			Tax (Expense) or Benefit			Net-of-tax Amount
Foreign currency translation adjustments	$	(583	)	$	1,939		$	1,356		$	4,067		$	(363	)	$	3,704
Net unrealized gain (loss) on certain investments	(251		)	87			(164		)	526			(154		)	372
Net unrealized gain (loss) on cash flow hedging instruments	(79		)	28			(51		)	(745		)	252			(493		)
Less: Reclassification adjustments for (gain) loss included in net income	237			(83		)	154			(919		)	322			(597		)
Other comprehensive income (loss)	$	(676	)	$	1,971		$	1,295		$	2,929		$	57		$	2,986

The components of accumulated other comprehensive income (loss), net of tax, for the nine months ended September 30, 2013 is as follows:



(In thousands)
	Foreign Currency Translation Adjustment		Net unrealized gain (loss) on certain investments			Net unrealized loss on cash flow hedging instruments			Net Investment Hedge gain (loss)			Total
Beginning balance at January 1, 2013	$	10,390	$	191		$	(85	)	$	3,905		$	14,401
Other comprehensive income (loss) before reclassifications	2,232		(164		)	(51		)	(876		)	1,141
Amounts reclassified from accumulated other comprehensive income (loss) (1) (2)	—		(112		)	(42		)	—			(154		)
Net current period other comprehensive income (loss)	2,232		(52		)	(9		)	(876		)	1,295
Ending balance at September 30, 2013	$	12,622	$	139		$	(94	)	$	3,029		$	15,696

(1) All amounts net of a 35% tax rate.

(2) Reclassified from Accumulated other comprehensive income into Foreign exchange and other and Cost of goods sold.