<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended May 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ............ to ..............
Commission file number 0-23312
HELEN OF TROY LIMITED
(Exact name of registrant as specified in its charter)
Bermuda 74-2692550
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6827 Market Avenue
El Paso, TX 79915
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (915) 779-6363
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 [ ]
As of July 3, 1997 there were 13,291,666 shares of Common Stock, $.10 Par
Value, outstanding.
<PAGE> 2
HELEN OF TROY LIMITED AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page No.
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1 Consolidated Condensed Balance
Sheets as of May 31, 1997 and
February 28, 1997 . . . . . . . . . . . . . . 3
Consolidated Condensed Statements
of Income for the Three Months
Ended May 31, 1997 and May 31, 1996 . . . . . 5
Consolidated Condensed Statements
of Cash Flows for the Three Months
Ended May 31, 1997 and May 31, 1996 . . . . . 6
Notes to Consolidated Condensed
Financial Statements . . . . . . . . . . . . 8
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . 9
PART II. OTHER INFORMATION
Item 5 Other information . . . . . . . . . . . . . . . . . . 10
Item 6 Exhibits and Reports on Form 8-K . . . . . . . . . . . 10
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
</TABLE>
2
<PAGE> 3
PART I. FINANCIAL INFORMATION
HELEN OF TROY LIMITED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except shares)
<TABLE>
<CAPTION>
May 31, February 28,
1997 1997
---------- ----------
(unaudited)
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 25,565 $ 25,798
Receivables - principally trade,
less allowance for doubtful
receivables of $595 at May 31, 1997
and $400 at February 28, 1997 42,496 36,951
Inventories 64,511 68,267
Prepaid expenses 2,454 939
Deferred income tax benefits 1,161 1,276
---------- ----------
Total current assets 136,187 133,231
Property and equipment
net of accumulated depreciation of
$4,283 at May 31, 1997 and
$3,983 at February 28, 1997 26,082 25,780
License agreements, at cost, less accumulated
amortization of $7,306 at May 31, 1997
and $7,117 at February 28, 1997 9,746 9,935
Note receivable 405 522
Other assets, net of amortization 12,602 12,758
---------- ----------
Total assets $ 185,022 $ 182,226
========== ==========
</TABLE>
(continued)
3
<PAGE> 4
HELEN OF TROY LIMITED AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(in thousands, except shares)
<TABLE>
<CAPTION>
May 31, February 28,
1997 1997
---------- ----------
(unaudited)
<S> <C> <C>
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable $ -- $ 4,001
Accounts payable, principally trade 2,103 2,645
Accrued expenses:
Advertising and promotional 5,564 2,580
Other 6,450 6,934
Income taxes payable 5,915 5,134
---------- ----------
Total current liabilities 20,032 21,294
Long-term debt 40,450 40,450
---------- ----------
Total liabilities 60,482 61,744
Stockholders' equity:
Cumulative preferred stock, non-voting,
$1.00 par value. authorized 2,000,000
shares; none issued -- --
Common stock, $.10 par value
authorized 25,000,000 shares;
issued and outstanding 13,207,632 shares at
May 31, 1997 and 13,143,437 shares at
February 28, 1997 1,321 1,314
Additional paid-in capital 27,142 26,643
Retained earnings 96,077 92,525
---------- ----------
Total stockholders' equity 124,540 120,482
---------- ----------
Commitments and contingencies (Note 2) -- --
Total liabilities and stockholders' equity $ 185,022 $ 182,226
========== ==========
</TABLE>
See accompanying notes to consolidated condensed financial statements.
4
<PAGE> 5
HELEN OF TROY LIMITED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(unaudited)
(in thousands, except shares and earnings per share)
<TABLE>
<CAPTION>
Three Months Ended
May 31,
1997 1996
------------ ------------
<S> <C> <C>
Net sales $ 52,448 $ 43,836
Cost of sales 32,637 27,496
------------ ------------
Gross profit 19,811 16,340
Selling, general and administrative expenses 14,944 13,119
------------ ------------
Operating income 4,867 3,221
Other income (expense):
Interest expense (711) (755)
Other income, net 427 633
------------ ------------
Total other income (expense) (284) (122)
------------ ------------
Earnings before income taxes 4,583 3,099
Income tax expense (benefit):
Current 916 866
Deferred 115 (169)
------------ ------------
Net earnings $ 3,552 $ 2,402
============ ============
Net earnings per common and common equivalent
share: (Notes 3 and 5) $ .25 $ .18
Weighted average number of common and common
equivalent shares used in computing net
earnings per share 14,208,758 13,619,014
</TABLE>
See accompanying notes to consolidated condensed financial statements.
5
<PAGE> 6
HELEN OF TROY LIMITED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
<TABLE>
<CAPTION>
Three Months Ended
May 31,
1997 1996
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 3,552 $ 2,402
Adjustments to reconcile net income
to net cash used by operating activities:
Depreciation and amortization 872 592
Provision for doubtful receivables 195 354
Provision for deferred tax benefit 115 (169)
Changes in operating assets and liabilities:
Accounts receivable (5,740) (5,847)
Inventory 3,756 (2,842)
Prepaid expenses (1,515) (660)
Accounts payable (542) 2,719
Accrued expenses 2,500 2,222
Income taxes payable 781 759
-------- --------
Net cash provided (used) by
operating activities 3,974 (470)
Cash flows from investing activities:
Capital and license expenditures (652) (4,348)
Other assets (177) (144)
Collection on note receivable 117 156
-------- --------
Net cash used by investing activities (712) (4,336)
</TABLE>
(continued)
6
<PAGE> 7
HELEN OF TROY LIMITED AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited, in thousands)
<TABLE>
<CAPTION>
Three Months Ended
May 31,
1997 1996
-------- --------
<S> <C> <C>
Cash flows from financing activities:
Net payments on revolving
line of credit (4,001) (2,593)
Proceeds from exercise of options 506 9
-------- --------
Net cash used by financing activities (3,495) (2,584)
-------- --------
Net decrease in cash and cash equivalents (233) (7,390)
-------- --------
Cash and cash equivalents, beginning of period 25,798 44,195
-------- --------
Cash and cash equivalents, end of period $ 25,565 $ 36,805
======== ========
Supplemental cash flow disclosures:
Interest paid $ 728 $ 821
Income taxes paid, net of refund -- 427
</TABLE>
See accompanying notes to consolidated condensed financial statements.
7
<PAGE> 8
HELEN OF TROY LIMITED AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENT
May 31, 1997
Note 1 - In the opinion of the Company, the accompanying consolidated
condensed financial statements contain all adjustments
(consisting of only normal recurring adjustments) necessary to
present fairly its financial condition as of May 31, 1997 and
February 28, 1997 and the results of its operations for the
periods ended May 31, 1997 and 1996. While the Company
believes that the disclosures presented are adequate to make
the information not misleading, it is suggested that these
statements be read in conjunction with the financial
statements and the notes included in the Company's latest
annual report on Form 10-K.
Note 2 - The Company is involved in various claims and legal actions
arising in the ordinary course of business. In the opinion of
management, the ultimate disposition of such claims and legal
actions will not have a material adverse effect on the
financial position of the Company.
Note 3 - Primary earnings per common and common equivalent share are
computed based upon the weighted average number of common
shares plus common share equivalents (dilutive stock options
and warrants) outstanding during the period. Fully diluted
earnings per share are based on the weighted average number of
common shares plus equivalents determined on the basis of
maximum potential dilution from stock options and warrants.
Earnings per common and common equivalent share, assuming full
dilution, is not materially dilutive for any of the periods
presented.
Note 4 - The business of the Company is seasonal with greater than 60%
of annual sales volume normally occurring in the second and
third fiscal quarters.
Note 5 - On June 4, 1996, the Company's Directors approved a 2-for-1
stock split which was paid as a 100% stock dividend on July 1,
1996 to stockholders of record on June 17, 1996. All
references in the financial statements to number of shares and
per share amounts of the Company's common stock have been
retroactively restated to reflect the increased number of
common shares outstanding.
8
<PAGE> 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
Results of Operations
Net sales increased $8,612,000 during the first quarter of fiscal 1998, a 20%
increase in net sales when compared with the first quarter of fiscal 1997. The
increase is attributable to increased volume as the Company's market share
increased throughout the Divisions that make retail sales and in the
Professional Salon Division, and also to the incremental sales resulting from
the October 1996 Dazey acquisition.
Gross profit, as a percentage of net sales, increased to 37.8% for the first
quarter of fiscal 1998, from 37.3% in the first quarter of fiscal 1997. The
increased gross profit margin is attributable to a favorable change in the mix
of products sold.
Selling, general and administrative expenses decreased as a percent of net
sales to 28.5% in the first quarter of fiscal 1998 from 29.9% in the first
quarter of fiscal 1997. The decrease in expenses as a percentage of net sales
is due to the fixed nature of certain expenses.
Other income decreased approximately 33% in the first quarter of fiscal 1998
when compared to the same period in the previous year. The decrease in other
income was due to the Company having less cash for short term investment
purposes during the quarter ended May 31, 1997 when compared with the quarter
ended May 31, 1996.
Liquidity and Capital Resources
The Company's working capital was $116,155,000 at May 31, 1997 and the current
ratio was 6.8 to 1. Short term debt decreased $4,001,000 from February 28,
1997 to May 31, 1997.
The Company believes its capital resources are adequate to finance normal
growth and service the Company's debt obligations. Additionally, the Company
believes that internal funds and available credit will be adequate to finance a
new headquarters office building, which is planned for construction within the
next two years.
9
<PAGE> 10
PART II. OTHER INFORMATION
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
11 Earnings Per Share Computation
27 Financial Data Schedule
10
<PAGE> 11
SIGNATURES
Pursuant to the requirements 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.
HELEN OF TROY LIMITED
---------------------
(Registrant)
Date July 14, 1997 /s/ Gerald J. Rubin
-------------------------- -----------------------------
Gerald J. Rubin
Chairman of the Board, Chief
Executive Officer, President and
Chief Operating Officer
(Principal Executive Officer)
Date July 14, 1997 /s/ Sam L. Henry
--------------------------- --------------------------------
Sam L. Henry
Senior Vice-President, Finance,
and Chief Financial Officer
(Principal Financial Officer)
11
<PAGE> 12
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------- -----------
<S> <C>
11 Earnings Per Share Computation
27 Financial Data Schedule
</TABLE>
<PAGE> 1
EXHIBIT 11
HELEN OF TROY LIMITED AND SUBSIDIARIES
COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
May 31,
1997 1996
----------- -----------
<S> <C> <C>
Primary earnings per Share:
Weighted average number of
common shares outstanding 13,186,752 12,966,662
Increase in weighted average
number of common shares outstanding
due to options and warrants 1,022,006 652,352
Weighted average number of
common shares outstanding, as adjusted 14,208,758 13,619,014
Net earnings $ 3,552,000 $ 2,402,000
Net earnings per common and
common equivalent share $ .25 $ .18
Fully Diluted Earnings per Share:
Weighted average number of
common shares outstanding 13,186,752 12,966,662
Increase in weighted average
number of common shares outstanding
due to options and warrants 1,108,857 799,250
Weighted average number of
common shares outstanding, as adjusted 14,295,609 13,765,912
Net earnings $ 3,552,000 $ 2,402,000
Net earnings per common and
common equivalent share, assuming full dilution $ .25 $ .18
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated financial statements of Helen of Troy Limited and subsidiaries as
of, and for the quarter ended May 31, 1997, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-END> MAY-31-1997
<CASH> 25,565,000
<SECURITIES> 0
<RECEIVABLES> 43,091,000
<ALLOWANCES> 595,000
<INVENTORY> 64,511,000
<CURRENT-ASSETS> 136,187,000
<PP&E> 30,365,000
<DEPRECIATION> 4,283,000
<TOTAL-ASSETS> 185,022,000
<CURRENT-LIABILITIES> 20,032,000
<BONDS> 40,450,000
0
0
<COMMON> 1,321,000
<OTHER-SE> 123,219,000
<TOTAL-LIABILITY-AND-EQUITY> 185,022,000
<SALES> 52,448,000
<TOTAL-REVENUES> 52,448,000
<CGS> 32,637,000
<TOTAL-COSTS> 32,637,000
<OTHER-EXPENSES> 14,944,000
<LOSS-PROVISION> 252,000
<INTEREST-EXPENSE> 711,000
<INCOME-PRETAX> 4,583,000
<INCOME-TAX> 1,031,000
<INCOME-CONTINUING> 3,552,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,552,000
<EPS-PRIMARY> .25
<EPS-DILUTED> .25
</TABLE>
