We like to think that when we deposit a dollar at the bank, it goes into a big vault and we can pull out that same dollar at any time. But that¿s not how the U.S. banking system works. Banks take that money and invest it to make money themselves, so cash gets spread around. This, naturally, leads to a big risk: What happens if those investments go sour? Well, you¿d be out of luck. You can¿t get your dollar back.

The Federal Reserve doesn¿t like that scenario, so it prohibits banks from putting all the cash it has on deposit on the line. In fact, the Fed forces banks to keep a portion of their assets at the Federal Reserve itself, to make sure that some of your assets won¿t get squandered if the bank¿s bets go south. These are called ¿reserves,¿ (hence, Federal Reserve. Got it? Good), and usually amount to 10% of the total cash kept in checking accounts.

These reserves are never exactly 10%, and banks like to keep a little extra in reserve ¿ not, as you might think, to make you more comfortable that they¿re in good financial shape, but rather so they can take that excess and lend it to other banks and make money off it. (They¿re banks, they can¿t help themselves.) The rate at which they make these loans is called the Federal Funds rate, which is set by the Federal Reserve¿s Federal Open Market Committee.

When you hear people chattering about how the Fed cut or hiked interest rates, this is what they¿re talking about: the interest rate banks can charge for lending money from their reserves. This begs the question: If these are essentially loans between banks, why is the Fed Funds rate so important for the rest of the economy?

Well, simply put, because loans make the financial world go round. Bank A lends Bank B $10,000 at a Fed Funds rate of 5%. Bank B then lends out $10,000 to a small business at 7%. The small business then takes that money and expands the business and hires new workers. Now someone is employed, Bank B has made interest off the loan, and Bank A is the richer for making it all happen. It¿s perhaps overly simplistic, but you get the idea. When you want the economy to thrive, you make lending cheaper.

Of course, sometimes you don¿t want the economy to thrive. In fact, you might want it to cool down, mostly to avoid money flooding the system and causing inflation. In that case, the Fed raises interest rates, making it difficult to lend or borrow.

Home / Markets / Industries / Retail

Monday, August 04, 2008

Blyth, Inc. Announces Further Expansion Into Direct Selling Channel

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GREENWICH, Conn., Aug 4, 2008 (PrimeNewswire via COMTEX) ----Blyth, Inc. (NYSE:BTH), a leading multi-channel designer and marketer of home fragrance products, home decor products and household convenience items, today reported that it has signed an agreement to purchase ViSalus Holdings, LLC through a series of investments through 2012. ViSalus is a direct seller of nutritional supplements, energy drinks and weight management products sold to consumers in the United States one-on-one by independent distributors, approximately half of whom are men.

Commenting on the investment, Robert B. Goergen, Blyth's Chairman of the Board and CEO, said, "Today's commitment builds further on Blyth's long-term focus on direct-to-consumer sales opportunities. Several years ago, we initiated a start up, Two Sisters Gourmet, which markets sauces, dips and related food products to consumers through the party plan method of direct selling. Now, we are entering the health and wellness category. Importantly, we are able to diversify within the direct selling channel with products that appeal to different consumer segments and do not compete with our core PartyLite business."

Mr. Goergen continued, "Our partnership with the founders of ViSalus is mutually beneficial in that Blyth is entering into a third direct selling product category marketing consumable goods and ViSalus can leverage expertise from Blyth's direct selling core competency, as well as various corporate functions required by a growing enterprise. Moreover, longer term, our experience entering international markets should be beneficial to ViSalus's expansion."

ViSalus Holdings LLC was founded by Ryan Blair, Nick Sarnicola and Blake Mallen in March 2005. The founders and the ViSalus management team will retain their roles and lead the company.

"The stakeholders of ViSalus are thrilled that ViSalus will become a member of the Blyth family of companies. Our union with Blyth will provide significant resources, helping our Company to achieve its objectives," stated Ryan Blair, CEO of ViSalus Holdings LLC.

The acquisition of ViSalus by Blyth involves related parties. Several years ago, the Ropart Asset Management Fund I (www.ropart.com), a private equity vehicle owned by the Goergen family, provided seed capital for ViSalus, and one of Mr. Goergen's sons, who is not involved with Blyth, was elected to the Board of Managers of ViSalus. As a result, Blyth's Board of Directors took a number of additional steps designed to ensure that the transaction was considered, analyzed, negotiated and approved objectively and independently. Several months ago the board formed a committee comprised solely of independent directors to explore and analyze in detail the process by which management identified, proposed, analyzed and negotiated the acquisition to ensure that management was acting independently and in the best interests of Blyth and its shareholders.

The committee retained Bryant Park Capital, Inc. and received their opinion to the effect that, as of July 29, 2008 and based upon and subject to the matters stated in its opinion, the consideration to be paid by Blyth pursuant to the purchase agreement was fair from a financial point of view to Blyth. The committee retained the law firm of Morgan Lewis & Bockius, LLP to advise it with respect to the transaction. Following this process and after consideration of the relationships and the interests of the Goergen family, the independent members of Blyth's board concluded based on the recommendation of the committee that the transaction is in the best interests of Blyth and approved the transaction.

Blyth, Inc., headquartered in Greenwich, CT, USA, is a Home Expressions company that markets an extensive array of home fragrance products, decorative accessories, seasonal decorations and household convenience items. The Company sells its products through multiple channels of distribution, including the home party plan method of direct selling, as well as through the wholesale and catalog/Internet channels. Blyth also markets tabletop lighting and chafing fuel for the Away From Home or foodservice trade. The Company manufactures most of its candles and chafing fuel and sources nearly all of its other products. Its products are sold direct to the consumer under the PartyLite(r) and Two Sisters Gourmet(tm) brands, to retailers in the premium and specialty retail channels under the Colonial Candle(tm), CBK(r) and Seasons of Cannon Falls(r) brands, to retailers in the mass retail channel under the Sterno(r) brand, to consumers in the catalog and Internet channel under the Miles Kimball(r), Exposures(r), Walter Drake(r), The Home Marketplace(r), Easy Comforts(tm) and Boca Java(tm) 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) brand.

Blyth, Inc. may be found on the Internet at www.blyth.com.

ViSalus Holdings LLC. with offices in Troy, Michigan and Los Angeles, California, is a leading Weight Management and Nutritional Supplement maker utilizing the direct selling channel to distribute its products. The company provides innovative health solutions through high quality wellness products such as the Vi-PAK Advanced Anti-Aging and Energy System, ViSalus NEURO Smart Energy Drink, and the Trim Slim Shape Program for healthy weight loss and weight management.

ViSalus may be found on the Internet at www.visalus.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 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, 2008.

This news release was distributed by PrimeNewswire, www.primenewswire.com

SOURCE: Blyth, Inc.

Blyth, Inc. Robert H. Barghaus, Chief Financial Officer (203) 661-1926, ext. 6668 Tyler
   P. Schuessler, Vice President, Organizational Development and Investor Relations (203) 661-1926, ext. 6643

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