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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended February 28, 1998
Commission file number 0-23312
HELEN OF TROY LIMITED
(Exact name of the 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, TEXAS 79915
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (915) 779-6363
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK - $.10 PAR VALUE
(Title of Class)
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K (Section 229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [X]
The aggregate market value of the voting stock held by non-affiliates
of the registrant as of April 30, 1998 was $497,433,000.
As of April 30, 1998 there were 27,808,570 shares of Common Stock, $.10
Par Value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
None
Index to Exhibits - Page 44
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TABLE OF CONTENTS
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PAGE
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PART I Item 1. Business 1
Item 2. Properties 7
Item 3. Legal Proceedings 7
Item 4. Submission of Matters to a Vote of Security Holders 7
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PART II Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters 8
Item 6. Selected Financial Data 9
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 8. Financial Statements and Supplementary Data 14
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure 36
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PART III Item 10. Directors and Executive Officers of the Registrant 36
Item 11. Executive Compensation 38
Item 12. Security Ownership of Certain Beneficial Owners
and Management 40
Item 13. Certain Relationships and Related Transactions 41
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PART IV Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K 42
Signatures 43
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</TABLE>
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PART I
ITEM 1. BUSINESS
GENERAL
The registrant was originally incorporated in 1968 and has been a
public company since 1971. Helen of Troy Limited, a Bermuda company, was formed
on December 1, 1993. On February 16, 1994, Helen of Troy Texas Corporation
(originally incorporated in 1968), a Texas corporation, became a subsidiary of
Helen of Troy Limited pursuant to the terms of the Exchange Agreement between
Helen of Troy Texas Corporation and Helen of Troy Limited. Unless the context
otherwise requires, references herein to the Company refer to the current
Bermuda company and its subsidiaries.
The Company designs and develops a variety of personal care appliances
including hair dryers, curling irons, brush irons, lighted mirrors, hairsetters,
ladies shavers, foot baths, massagers, and artificial nails, and markets them
primarily to retailers, distributors and the professional hair care market in
the United States, Canada, Europe and other countries throughout the world. The
Company also designs and develops hair brushes, combs and other hair care
accessories, and markets them to the same customers. The percentages of sales
made in the United States for fiscal years ended the last day of February in
1998, 1997 and 1996 were 95%, 96% and 98% respectively.
The Company markets its products primarily under the trademarks "Vidal
Sassoon" under license from The Procter & Gamble Company, "Revlon" under license
from Revlon Consumer Products Corporation, "Dr. Scholl's" under licenses from
Schering-Plough Corporation, "Caruso", "Dazey," "Lady Dazey," "Lady Carel,"
"Sable," "Helen of Troy," "Salon Edition," "HOT Tools," "Professional Caruso,"
and "Gallery Series." Vidal Sassoon, Revlon, Dazey and Dr. Scholl's appliances
and combs and brushes are sold to retailers, including mass merchandisers and
catalog distributors, drug stores, department stores and grocery stores. Helen
of Troy, Salon Edition, HOT Tools, Gallery Series, Professional Caruso, Lady
Dazey and Lady Carel appliances are sold to professional stylists and their
customers through a network of independent beauty and barber supply
distributors.
PRODUCTS
Full lines of hair care appliances are sold under three principal trade
names, Vidal Sassoon, Revlon and Helen of Troy. The Vidal Sassoon line includes
hair dryers, curling irons, brush irons, lighted mirrors, hairsetters, brushes,
combs and hair care accessories. The Company entered into license agreements
with Revlon Consumer Products Corporation during the third quarter of fiscal
year 1993 and began sales under this trademark in the United States during the
first half of fiscal 1994. This line includes hair dryers, curling irons, brush
irons, hairsetters, lady shavers, brushes, combs, mirrors, functional hair care
accessories and artificial nails. The Sable and HOT Tools product lines of
electric hair styling appliances were developed for meeting the special hair
care needs of ethnic consumers. Where traditional styling irons may either
overheat or not get hot enough, Sable's and HOT Tools' variable temperature
controls offer a broad range of heat settings for naturally textured to fragile
hair.
The Company's hair dryers include a variety of popular features.
Full-size dryers offer higher wattage, and more heat settings and blower speeds
than the smaller models. Mid-size and compact dryers are offered to accommodate
individual preferences and provide travel convenience. Special features such as
folding handles and dual electrical current adaptability are included on several
models.
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Curling irons and brush irons are available with variable temperature
settings and in a range of barrel sizes. Because barrel size affects the
tightness of the curl, purchasers often buy multiple irons. Selected models also
heat-up rapidly and automatically shut-off within one hour, providing enhanced
convenience and safety.
Hairsetters provide hot rollers in several size groups and are
preferred by customers who want a longer lasting curl. Certain models include
such features as steam injection, quick heat-up and cool touch tips that make
the rollers easier to handle.
Growth in the Company's Vidal Sassoon and Revlon brush and comb lines
is being achieved by taking advantage of the strong brand name appeal, using
competitive pricing and continually adding new products. Products in this
category include a wide variety of hair care products ranging from classic
wooden brushes with boar bristles to heat retaining aluminum brushes to unique
hair styling tools.
One of the Company's more recent product extensions is hair care
accessories. Accessories introduced in fiscal 1996 under the Vidal Sassoon trade
name include items such as bows, barrettes, clips, rollers, headbands, ponytail
holders and bobby pins. Sales of accessories to mass merchandisers more than
doubled in fiscal 1997 over fiscal 1996 and led the Company to further expand
its product offering in fiscal 1998.
In October 1996 the Company acquired the assets of two personal care
lines of Dazey Corporation of Kansas City, Missouri. As a result of this
purchase, the Company's product lines were expanded to include foot baths, foot
massagers and body massagers under the Dr. Scholl's trade name pursuant to
license agreements with Schering-Plough Corporation and hard hat salon hair
dryers and turbo spa products under the Dazey, Lady Dazey and Lady Carel trade
names.
In the first quarter of fiscal 1997 the Company signed a license
agreement with the Revlon Consumer Products Corporation to produce and
distribute artificial nails and related implements and accessories using the
Revlon trade name. The Company has developed a full line of artificial nails and
related accessories. The first shipment of artificial nails was made in the
first quarter of fiscal 1998.
In June 1997 the Company acquired the assets of Caruso International.
As a result of this purchase the Company acquired the Caruso tradename and all
technology developed by Caruso International for steam hairsetters.
The Company continues to respond to changes in the personal care
appliance market and the health and beauty care market through developing new
products and improving existing products. Development of new products designed
to appeal to diverse consumer markets is performed by the Company's marketing
and engineering staffs with assistance from independent consulting firms.
MARKETING AND DISTRIBUTION
The Company's products are sold primarily in the United States of
America through three marketing divisions: the Consumer Appliances Division, the
Health and Beauty Care Division and the Professional Salon Division. Extensive
television and other national media advertising by The Procter & Gamble Company
("P & G") for its Vidal Sassoon liquid hair care products has resulted in wide
recognition of the Vidal Sassoon name throughout the retail hair care market.
The Company executed License Agreements with Revlon Consumer Products
Corporation to market its products under the Revlon trademark. The Revlon
trademark is known throughout the world. Products under this trademark began
shipping during the first half of fiscal 1994. It is advertised extensively by
the licensor in the United States and in major international markets, in
television and
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print media. As a result of the Company's October 1996 acquisition, which was
mentioned above, the Company obtained rights to the Dr. Scholl's licenses in
North America for foot baths, foot massagers and body massagers from the
Schering-Plough Corporation. During fiscal 1998 the Company signed a Trade Mark
Licence Agreement that allows the Company to distribute the products mentioned
above using the Scholl's name in various countries in Europe, Central and South
America, the Middle East and in the Far East. Dr. Scholl's is a famous trade
name which is universally recognized and is supported by intensive media
advertising. Additionally, the Company purchased the Dazey, Lady Dazey and Lady
Carel trade names with respect to personal care appliances. The Company's
cooperative advertising and promotion programs and its own media advertising
campaigns have extended trade name recognition into the hair care appliance
market and contributed to the growth of the Consumer Appliances Division and the
Health and Beauty Care Division.
Consumer Appliances Division and Health and Beauty Care Division sales
for the Company were somewhat seasonal in fiscal 1998 with 58% of the sales
being made in the second and third fiscal quarters of the year. At February 28,
1998, consistent with prior years and industry experience, the Company had no
material amount of backlog orders for any product group. Approximately 29% of
the Company's net sales in the year ended February 28, 1998 were made to one
customer and its affiliate. Approximately 27% of the Company's net sales in the
year ended February 28, 1997 were made to one customer and its affiliate and
29%, 10% and 10% of the Company's net sales in the year ended February 29, 1996
were made to three customers.
Consumer Appliances Division and Heath and Beauty Care Division. These
divisions are responsible for marketing products in the United States, Canada
and Mexico. Primary trade names are Vidal Sassoon and Revlon. Vidal Sassoon and
Revlon products consist of lines of hand-held hair dryers, curling irons, brush
irons, hairsetters, lighted mirrors, ladies shavers, brushes, combs and other
hair care accessories which are distributed to retailers, including mass
merchandisers and catalog distributors, drug stores, department stores and
grocery stores. With the October 1996 acquisition of two personal care lines of
Dazey Corporation, the Consumer Appliances Division expanded its product lines
to include foot baths, foot massagers and body massagers under the Dr. Scholl's
trade name, and hard hat salon hair dryers and turbo spa products under the
Dazey, Lady Dazey and Lady Carel trade names. A full line of artificial nails
and related implements and accessories bearing the Revlon trade name were added
to the products of the Health and Beauty Care Division in fiscal 1998. Caruso
steam hairsetters were also added to the Consumer Appliances Division's products
during fiscal 1998.
The Company markets its consumer products through approximately 50
independent manufacturers' representative organizations and through its own
sales staff.
The Company promotes its consumer products primarily through print
media and sales promotion campaigns. The Company also advertises its products on
television and in numerous consumer and trade magazines.
Professional Salon Division. The Company markets its "professional"
products to professional stylists and beauticians through beauty and barber
supply distributors for use and for resale. Sales are made through independent
manufacturers' representatives throughout the United States. This division
markets products under the trademarks Helen of Troy, Salon Edition, Gallery
Series, HOT Tools, Dazey, Professional Caruso, Lady Dazey and Lady Carel.
The Professional Salon Division also serves as a development resource
for new products to be marketed in all of the Company's product groups. The
Company believes it has responded to changes in the hair care appliance market
while providing durable appliances that meet the exacting needs of the
professional stylist.
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International Sales. During fiscal 1990, the Company entered into a
separate agreement (the "European Agreement") with The Procter & Gamble Company
which grants the Company the exclusive license to sell personal hair care
appliances, lighted mirrors, brushes, combs and hair care accessories in various
countries in western Europe and the United Kingdom under the Vidal Sassoon trade
name. As of January 1, 1993, the European Agreement was amended to include
additional territories and to extend the term of the license. The expanded
territory now includes the United Kingdom and all of western Europe.
During fiscal 1992, the Company entered into a separate agreement (the
"Mexico Agreement") with The Procter & Gamble Company which grants the Company
the exclusive license to sell personal hair care appliances, lighted mirrors,
combs, brushes, and hair care accessories in Mexico under the Vidal Sassoon
trade name. As of January 1, 1993, the Mexico Agreement was amended to lengthen
the term of the license.
In fiscal 1993 the Company entered into the first of a series of
agreements with Revlon Consumer Products Corporation which grant the Company the
right to market personal care appliances, brushes and combs, ladies shavers and
functional hair care accessories throughout the world except for certain markets
such as Western Europe. Additionally, the Company can market artificial nails
under the Revlon tradename throughout the world. See the section entitled
"License Agreements."
MANUFACTURING AND SUPPLIES
The personal care products sold by the Company are manufactured
primarily in The Peoples Republic of China, Thailand, Taiwan and South Korea
(the "Far East"), utilizing molds and certain other tooling owned by the
Company's wholly owned subsidiary, Helen of Troy Limited ("HOTB"), a Barbados
corporation. The Company purchases from HOTB, which contracts with unrelated
factories. The combined production capacity of these factories exceeds the
Company's current needs and projected sales growth. The Company believes it will
be able to continue purchasing on the same basis for the foreseeable future and
that additional production capacity is available to the Company if needed.
As a result of the manufacture of the Company's products in the Far
East, the Company is subject to risks associated with trade barriers, currency
exchange fluctuations and political unrest. Political changes in China have not
affected the production or exportation of the Company's goods. The Company
believes that adequate production facilities are available in other parts of the
world should they be needed. However, the relocation of production capacity
could require substantial time for the establishment of comparable production
levels and could result in increased production costs. A small percentage of the
Company's products are purchased in other countries such as the United States of
America and Mexico.
Virtually all of the Company's products are imported and most are
subject to customs duty. The rates at which duties are charged are subject to
legislative changes as political relationships between countries change.
The Company's U.S. subsidiary operates under Supply Agreements with
HOTB wherein HOTB purchases goods and sells them to the Company. HOTB contracts
with an affiliated service company, a subsidiary of the Company, for the
services of numerous electrical engineers, technicians and quality control
supervisors and inspectors in the Far East to help assure the quality of
products purchased by the Company. Manufacturing processes are supervised by
these personnel and product acceptance is subject to quality control checks by
inspectors in the factories. The Company offers up to a two year limited
warranty on its products.
In fiscal 1998, for distribution in the United States, Canada and
Mexico, products manufactured in the Far East were shipped to the west coast of
the United States and thereafter transported by truck or rail service
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to warehouse facilities in El Paso, Texas; Memphis, Tennessee; and Toronto,
Canada. Substantially all of the Company's products are shipped from these
warehouses. For distribution in Europe, products are manufactured in the Far
East and shipped to public warehouse facilities in Amsterdam, The Netherlands
and Nottinghamshire, the United Kingdom or directly to customers. See Item 2
Properties - Plant and Facilities.
LICENSE AGREEMENTS
The Company is licensed by P & G to use the trademark Vidal Sassoon to
manufacture, sell and distribute a line of electric personal hair care
appliances and accessories. The license agreement with P & G provides the
Company an exclusive license to distribute and sell, within the United States
and Canada, under the Vidal Sassoon trademark, electric and battery operated
personal hair care appliances, including hair dryers, curling irons, brush
irons, hairsetters, lighted mirrors and hair care accessories. New products,
including packaging and advertising, must be approved by the licensor.
Through two other agreements with P & G, the "U.S. and Canadian Brush
Licenses," the Company has the exclusive use of the trademark Vidal Sassoon on
brushes, combs and hair care accessories in the United States and Canada. The
term of the brush licenses runs concurrent with the appliance license. Cross
marketing of products under the Vidal Sassoon licenses is allowed.
During fiscal 1990, the Company entered into the European Agreement
with P & G which grants the Company the exclusive license to sell personal hair
care appliances, lighted mirrors and brushes, combs and hair care accessories in
various countries in western Europe and in the United Kingdom under the Vidal
Sassoon trade name. As of January 1, 1993, the European Agreement was amended to
include additional territories and to extend the term of the license. The
expanded territory now includes all of western Europe.
During fiscal 1992, the Company entered into the Mexico Agreement with
P & G which grants the Company the exclusive license to sell personal hair care
appliances, lighted mirrors, brushes, combs, and hair care accessories in Mexico
under the Vidal Sassoon trade name. As of January 1, 1993, the Mexico Agreement
was amended to extend the term of the license.
Under License Agreements entered into on September 30, 1992, the
Company is licensed by Revlon Consumer Products Corporation to use the Revlon
trademark to manufacture, sell and distribute a line of electric hair care
appliances, including hair dryers, curling irons, hairsetters, brushes, combs,
lady shavers, hand-held mirrors and functional hair care accessories. The
license agreements include the United States, Canada and the rest of the world
other than certain markets.
In fiscal 1996 the Company amended its license agreement with Revlon to
include women's electric and battery operated shavers.
In the first quarter of fiscal 1997 the Company signed an agreement
with Revlon Consumer Products Corporation to manufacture and distribute
artificial nails and related implements and accessories under the Revlon trade
name. Shipments of these new products began in the first quarter of fiscal 1998.
The agreement allows the Company to distribute its products throughout the
world. Initially artificial nails will be distributed in the United States.
In connection with its acquisition of two personal care lines of Dazey
Corporation in October 1996, the Company obtained rights to the Dr. Scholl's
licenses for foot baths, foot massagers and body massagers from
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the Schering-Plough Corporation. During fiscal 1998 the Company signed a Trade
Mark Licence Agreement which enables the Company to distribute the above
mentioned products in various countries in Europe, Central and South America,
the Middle East and in the Far East.
COMPETITION
The Company encounters significant competition with respect to all of
its products. The Company's primary competition for its Consumer Appliances
Division comes from Conair Corporation, Windmere-Durable Holdings, Inc. and
Remington Products Company. Competition for the Company's Health and Beauty Care
Division primarily comes from Goody Products Inc., a division of Newell Company;
Conair; and L and N Marketing and Sales Corporation. Competition for artificial
nails comes from Cosmar, a division of Renaissance Cosmetics, Inc. These major
competitors are large organizations with known brand names and substantial
resources. Product pricing plays an important part in these competitive markets.
Product packaging and performance as well as brand name recognition are other
significant factors affecting competition within the personal care market.
For sales in the United States of America, the Company believes that
its Professional Salon Division is one of the primary sellers of personal hair
care appliances to the professional trade. The major competitors for the Helen
of Troy professional product group are Belson Products, a division of Windmere
Corporation, and Conair Corporation.
SEASONALITY
Sales of the Company's products are somewhat seasonal, with a large
percentage of net sales occurring during the Christmas selling season. The
Company typically derives 58% of its annual net sales in the second and third
fiscal quarters of each year. As a result of this seasonality, the Company's
inventory and working capital needs fluctuate substantially during the year. In
addition, Christmas orders from retailers are often made late in the year,
making forecasting of production schedules and inventory purchases difficult.
REGULATION
Most of the Company's retail distributors in the United States of
America (as well as several state and local authorities) require that the
Company's retail appliance products meet the safety standards of Underwriters
Laboratories, Inc. (U.L.). For products sold in Canada, the Company is subject
to the standards of the Canadian Standards Association. Alternatively, the U.L.
can also certify products for distribution in Canada. Electrical products sold
in Europe or Mexico meet the safety standards imposed for those countries
depending on the sales location. The Company has not experienced difficulty in
satisfying such standards.
For sales in the United States of America, the Company is also subject
to the jurisdiction of the Federal Trade Commission with respect to, among other
things, the content of advertising and other trade practices.
TRADEMARKS AND PATENTS
The Company's business is materially dependent upon the continued use
of the trademarks Vidal Sassoon and Revlon which are registered by the
respective licensors. See Item 1 Business - License Agreements.
Certain of the trademarks and designs used in connection with the sale
of the Company's products are registered with the United States Patent and
Trademark Office and similar offices in certain other domains. The
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Company frequently seeks registrations for various additional trademarks under
which its products are sold. The Company does not believe that its business is
otherwise materially dependent upon patents and patent protection.
EMPLOYEES
The Company employs 318 full-time employees (including officers) in the
United States, Hong Kong and Europe of whom 127 are marketing, sales and
distribution employees and 92 are administrative personnel.
The remainder are engineering and development employees.
The Company has enjoyed satisfactory working relations with its
employees, none of whom are covered by any collective bargaining agreement, and
the Company has never experienced a work stoppage.
ITEM 2. PROPERTIES
PLANT AND FACILITIES
The corporate offices owned by the Company consist of an office
building with approximately 40,000 square feet, situated on approximately one
acre of land at 6827 Market Avenue in El Paso, Texas. Additionally, the Company
owns and maintains 12,000 square feet of warehouse space on a 62,000 square foot
lot adjacent to the headquarters building. During fiscal 1996 the Company
purchased approximately 50 acres of land in El Paso, Texas, to house its
corporate offices and distribution center. In fiscal 1997 the Company
constructed a 408,000 square foot distribution center. This facility is used for
storage and shipping of the Company's products. In fiscal 1998 the Company began
construction of a corporate office facility adjacent to the distribution center.
The new office facility is scheduled to be completed near the end of fiscal 1999
and will consist of approximately 135,000 square feet.
The Company's Hong Kong subsidiary leases an office where it occupies
approximately 19,000 square feet. Previously, the Company's Hong Kong subsidiary
was headquartered in approximately 12,000 square feet of office space in Hong
Kong acquired by condominium ownership. In fiscal 1998 this owned office was
leased to a third party. The Company's United Kingdom and German subsidiaries
each lease a small office.
The Company utilizes warehouse space in public warehouses in Memphis,
Tennessee; Amsterdam, the Netherlands; Nottinghamshire, the United Kingdom;
Toronto, Canada; and Hong Kong, to facilitate inventory distribution. The
Company believes storage capacity of its warehouse and the public warehouse
space is sufficient for its present needs.
ITEM 3. LEGAL PROCEEDINGS
The Company is not aware of any legal proceedings of a material nature,
pending or threatened, to which the Company is or may become a party.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Nothing was submitted.
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PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
PRICE RANGE OF COMMON STOCK
The Common Stock is currently listed on the NASDAQ National Market
System [symbol: HELE]. The following table sets forth, for the periods
indicated, in dollars per share, the high and low bid prices of the Common Stock
as reported on the NASDAQ National Market System. These quotations reflect the
inter-dealer prices, without retail mark-up, mark-down or commission and may not
necessarily represent actual transactions.
<TABLE>
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High Low
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<S> <C> <C>
Fiscal 1997
First quarter 6 13/16 5 7/16
Second quarter 8 5 5/8
Third quarter 10 3/4 6 7/8
Fourth quarter 12 3/4 9 5/8
Fiscal 1998
First quarter 13 1/2 10 5/8
Second quarter 16 21/32 12 3/4
Third quarter 20 1/2 11 5/8
Fourth quarter 16 3/4 12 1/8
</TABLE>
APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS
<TABLE>
<CAPTION>
Approximate Number of
Holders of Record
Title of Class (as of April 30, 1998)
------------------------------- ------------------------
<S> <C>
Common Stock, $.10 Par Value 461 (1)
</TABLE>
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(1) Shares held in "nominee" or "street" name at each bank nominee or
brokerage house are included in the number of shareholders of record as
a single shareholder.
DIVIDENDS
The Board of Directors' current policy is to retain earnings to provide
funds for the operation and expansion of the Company's business and for
potential acquisitions. The Company has not paid any cash dividends on its
Common Stock since inception. Any change in dividend policy will depend upon
future conditions, including earnings and financial condition, general business
conditions, any applicable contractual limitations and other factors deemed
relevant by the Board of Directors.
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ITEM 6. SELECTED FINANCIAL DATA
The selected consolidated financial information set forth below has
been summarized from the Company's Consolidated Financial Statements which, for
each of the years in the five year period ended February 28, 1998, have been
audited by KPMG Peat Marwick LLP, independent certified public accountants. This
information should be read in conjunction with the Consolidated Financial
Statements and the related Notes to Consolidated Financial Statements included
in Item 8 Financial Statements and Supplementary Data. All currency amounts in
this document are denominated in U.S. dollars.
<TABLE>
<CAPTION>
Twelve Months Ended
Last Day of February
-----------------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
(in thousands, except earnings per share)
<S> <C> <C> <C> <C> <C>
Statements of Income Data:
Net sales $ 248,098 $ 213,035 $ 167,053 $ 138,143 $ 123,198
Cost of sales 153,087 132,861 102,341 86,405 77,917
--------- --------- --------- --------- ---------
Gross profit 95,011 80,174 64,712 51,738 45,281
Selling, general and
administrative expenses 64,911 57,438 47,356 37,139 35,473
--------- --------- --------- --------- ---------
Operating income 30,100 22,736 17,356 14,599 9,808
Interest expense (3,487) (2,262) (1,795) (915) (881)
Other income, net 2,203 1,665 1,286 811 453
--------- --------- --------- --------- ---------
Earnings before income taxes 28,816 22,139 16,847 14,495 9,380
Income taxes 6,484 4,981 3,790 3,279 1,455
--------- --------- --------- --------- ---------
Earnings before cumulative
effect of change in accounting
principle 22,332 17,158 13,057 11,216 7,925
Cumulative effect of change
in accounting principle -- -- -- -- (397)
--------- --------- --------- --------- ---------
Net earnings $ 22,332 $ 17,158 $ 13,057 $ 11,216 $ 7,528
========= ========= ========= ========= =========
Per Share Data: (1)
Basic $ .83 $ .66 $ .51 $ .44 $ .28
Diluted $ .77 $ .62 $ .49 $ .41 $ .26
Weighted average number of
common and common equivalent
shares outstanding:
Basic 26,856 26,078 25,834 25,406 27,317
Diluted 28,851 27,770 26,746 27,192 29,480
</TABLE>
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<TABLE>
<CAPTION>
Last Day of February
---------------------------------------------------------
1998 1997 1996 1995 1994
---- ---- ---- ---- ----
(in thousands)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Working capital $154,294 $111,937 $110,606 $ 59,079 $ 57,494
Total assets 227,560 182,226 154,588 133,243 122,759
Long-term debt 55,450 40,450 40,450 -- --
Stockholders' equity (2) $149,484 $120,482 $101,878 $ 88,627 $ 85,683
</TABLE>
(1) Per share data has been adjusted for a 100% stock dividend that was paid on
September 22, 1997, and for a 100% stock dividend that was paid on July 1,
1996.
(2) In fiscal 1994 the Company repurchased 784,000 shares at a cost of
$2,752,000. In fiscal 1995 the Company repurchased 2,597,600 shares at a
cost of $9,309,000.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The following table sets forth, for the periods indicated, selected
consolidated operating data for the Company as a percentage of net sales.
<TABLE>
<CAPTION>
Relationship to Net Sales
Fiscal Year
-------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Net sales 100.0% 100.0% 100.0%
Cost of sales 61.7 62.4 61.3
--------- --------- ---------
Gross profit 38.3 37.6 38.7
Selling, general and
administrative expenses 26.2 27.0 28.3
--------- --------- ---------
Operating income 12.1 10.6 10.4
Interest expense (1.4) (1.0) (1.1)
Other income, net .9 .8 .7
--------- --------- ---------
Earnings before income taxes 11.6 10.4 10.0
Income taxes 2.6 2.3 2.2
--------- --------- ---------
Net earnings 9.0% 8.1% 7.8%
========= ========= =========
</TABLE>
10
<PAGE> 13
FISCAL YEAR ENDED FEBRUARY 28, 1998 COMPARED WITH FISCAL YEAR ENDED
FEBRUARY 28, 1997
During fiscal 1998, net sales increased 16.5% or $35,063,000 to
$248,098,000 from fiscal 1997 net sales of $213,035,000. The increase in net
sales is attributable to increased volume in all product categories. The growth
is attributed primarily to the introduction of competitive new products,
improved packaging and to the Company's performance as an outstanding vendor.
Additionally, sales of Revlon artificial nails began in the first quarter of
fiscal 1998.
Gross profit, as a percent of net sales, increased to 38.3% in fiscal
1998 from 37.6% in fiscal 1997. The increased gross profit margin is primarily
attributable to a favorable combination of changes in the mix of products sold.
Selling, general and administrative expenses decreased as a percent of
net sales to 26.2% in fiscal 1998 from 27.0% in fiscal 1997. The decreased
percentage is a result of the increase in net sales and the relatively fixed
nature of certain expenses.
Interest expense in fiscal 1998 increased over interest expense in
fiscal 1997 due to the increase in average outstanding debt which resulted from
issuance of $15,000,000 in Senior Notes by the Company's U.S. subsidiary in July
1997. The issuance of those notes resulted in increased investments in short
term securities, which increased interest income in fiscal 1998.
Other income also increased in fiscal 1998 due to the gain on the sale
of land which occurred in the second quarter.
FISCAL YEAR ENDED FEBRUARY 28, 1997 COMPARED WITH FISCAL YEAR ENDED
FEBRUARY 28, 1996
Net sales increased $45,982,000 during fiscal 1997, a 28% increase from
fiscal 1996 net sales. Excluding the effect of sales attributed to the purchase
of new lines of business in October 1996, the Company's increase in sales was
22%. The increase is attributable to increased volume as the Company's market
share increased in the Divisions that make retail sales and the Professional
Salon Division. The introduction of new hair care appliance models, increased
brush and comb sales, and sales of hair care accessories were the primary causes
of the market share increase.
Gross profit, as a percent of net sales, decreased to 37.6% in fiscal
1997 from 38.7% in fiscal 1996. The lines of business acquired in October 1996
experienced lower than normal gross profit margins in the last five months of
fiscal 1997. The exclusion of these sales and cost of goods sold during fiscal
1997 would have resulted in a gross profit margin of 38%. Gross profit margins
in fiscal 1996 were higher than normal.
Selling, general and administrative expenses decreased as a percent of
net sales to 27.0% in fiscal 1997 from 28.3% in fiscal 1996. The decreased
percentage is a result of the relatively fixed nature of certain expenses.
Interest expense in fiscal 1997 increased over interest expense in
fiscal 1996 due to the increase in average outstanding debt which resulted from
issuance of the $40,000,000 in Senior Notes issued by the Company's U.S.
subsidiary in January 1996. The issuance of those notes, net of payment of
outstanding bank loans, resulted in increased investments in short term
securities, which increased interest income in fiscal 1997.
LIQUIDITY AND CAPITAL RESOURCES
The Company's U.S. subsidiary ("HOT") operates under a supply agreement
with HOTB, which contracts with unrelated factories for the manufacture of
products, which are sold to HOT and other purchasers. To allow the issuance of
letters of credit, HOT and HOTB maintain lines of credit through two banks. The
facilities are limited to $10 million and $4 million and expire in July 1999 and
July 1998, respectively, and bear
11
<PAGE> 14
interest at the banks' prime rates or, for HOT's line of credit, at alternate
rates based on Eurodollar investment rates for specific time periods.
Cash and cash equivalents increased $29,872,000 from $25,798,000 at
February 28, 1997 to $55,670,000 at February 28, 1998. The increase in cash was
due primarily to earnings and the issuance of $15,000,000 in Senior Notes.
The increases in receivables, inventory and current liabilities are
attributable to the Company's sales growth. Property and equipment increased as
the Company's U.S. subsidiary began construction of a new office facility in the
fourth quarter of fiscal 1998. Other assets increased because of the Company's
acquisition of the assets of Caruso International in June 1997. The increase in
long-term debt was due to HOT's issuance of $15,000,000 in Senior Notes in July
1997.
Prepaid expenses increased because the Company's Hong Kong subsidiary
purchased tax reserve certificates in Hong Kong. The Inland Revenue Department
in Hong Kong has audited the operations of certain subsidiaries of the Company
and has required the Company to purchase tax reserve certificates to secure the
proposed adjustments. The Company is vigorously defending its position that the
Company has complied with all applicable reporting and tax payment obligations.
Management expects that the Company will prevail with its defenses and will
recover the deposits; nevertheless, no assurances can be given at this time.
Working capital increased $42,357,000 from $111,937,000 at February 28,
1997 to $154,294,000 at February 28, 1998. The current ratio was 7.8 to 1 at
February 28, 1998. Management expects that operations and available financing
sources will continue providing sufficient capital resources for the Company.
On August 30, 1993, the Board of Directors approved a stock repurchase
program under which Helen of Troy Corporation may buy up to six million shares
of its common stock from time to time as market conditions dictate. On February
22, 1994, the Board of Directors of Helen of Troy Limited approved and ratified
the continuation of that program. As of the end of fiscal 1995, the Company had
repurchased 3,381,600 shares under this program at a cost of $12,061,000. During
the Company's fiscal years ended the last day of February 1998, 1997 and 1996,
no repurchase of stock occurred.
In June 1997 the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 130, "Reporting
Comprehensive Income." SFAS No. 130 establishes standards for the reporting and
display of comprehensive income and its components in a full set of general-
purpose financial statements and is effective for financial statements issued
for periods beginning after December 15, 1997. Given the Company's current
operations, the adoption of SFAS No. 130 is not expected to have an impact on
the financial statements of the Company.
In June 1997 the FASB issued SFAS No. 131, "Disclosures about Segments
of an Enterprise and Related Information." SFAS No. 131 requires that companies
report certain information about operating segments in complete sets of
financial statements issued to shareholders and is effective for financial
statements issued for periods beginning after December 15, 1997. The adoption of
SFAS No. 131 could require the Company to include additional disclosures in
future reports issued to shareholders. However, the Company does not expect the
adoption of SFAS No. 131 to have a material impact on its financial statements.
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5, "Reporting on the Costs of Start-Up
Activities" (SOP 98-5). The SOP requires that costs incurred during start-up
activities, including organization costs, be expensed as incurred and is
effective for financial statements issued for fiscal years beginning after
December 15, 1998. The Company does not expect the adoption of SOP 98-5 to have
a material impact on its financial statements.
12
<PAGE> 15
In recent years, inflation has not had a material impact upon the
results of the Company's operations.
The Company continues to assess its exposure related to the impact of
the Year 2000 date issue. The Year 2000 date issue arises from the fact that
throughout the worldwide business community some computer programs use only two
digits to identify a year in a date field. The Company's key financial and
operational systems have been reviewed and it has been determined that the
majority of the systems do not require burdensome modifications. Accordingly,
management does not expect that any costs to be incurred will have a material
adverse impact on the Company's financial position, results of operations or
cash flows. However, the Company could be adversely impacted by the Year 2000
date issue if suppliers, customers and other businesses do not address this
issue successfully. Management continues to assess these risks in order to
reduce the impact on the Company.
13
<PAGE> 16
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULE
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report 15
Consolidated Financial Statements:
Consolidated Balance Sheets as of February 28, 1998 and 1997 16
Consolidated Statements of Income for each of the years in the
three-year period ended February 28, 1998 18
Consolidated Statements of Stockholders' Equity for each of
the years in the three-year period ended February 28, 1998 19
Consolidated Statements of Cash Flows for each of the years
in the three-year period ended February 28, 1998 20
Notes to Consolidated Financial Statements 22
Financial Statement Schedule -
Schedule II - Valuation and Qualifying Accounts for each of
the years in the three-year period ended February 28, 1998 35
</TABLE>
All other schedules are omitted as the required information is included in
the consolidated financial statements or is not applicable.
14
<PAGE> 17
INDEPENDENT AUDITORS' REPORT
The Board of Directors and Stockholders
Helen of Troy Limited:
We have audited the consolidated financial statements of Helen of Troy Limited
and subsidiaries as listed in the index on page 14. In connection with our
audits of the consolidated financial statements, we also have audited the
financial statement schedule as listed in the index on page 14. These
consolidated financial statements and financial statement schedule are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and financial statement
schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Helen of Troy
Limited and subsidiaries as of February 28, 1998 and 1997, and the results of
their operations and their cash flows for each of the years in the three-year
period ended February 28, 1998, in conformity with accounting principles
generally accepted in the United States. Also in our opinion, the related
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
KPMG PEAT MARWICK LLP
El Paso, Texas
April 30, 1998
15
<PAGE> 18
HELEN OF TROY LIMITED
AND SUBSIDIARIES
Consolidated Balance Sheets
February 28, 1998 and 1997
(in thousands, except par value and shares)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Assets
Current assets:
Cash and cash equivalents $ 55,670 $ 25,798
Receivables - principally trade, less
allowance for doubtful receivables of
$568 in 1998 and $400 in 1997 44,569 36,951
Inventories 71,357 68,267
Prepaid expenses 3,802 939
Deferred income tax benefits (note 5) 1,522 1,276
---------- ----------
Total current assets 176,920 133,231
Property and equipment
net of accumulated depreciation of $4,892
in 1998 and $3,983 in 1997 (note 2) 26,255 25,780
License agreements, at cost less accumulated
amortization of $8,068 in 1998 and $7,117
in 1997 8,984 9,935
Other assets at cost, net of amortization 15,401 13,280
---------- ----------
$ 227,560 $ 182,226
========== ==========
</TABLE>
(Continued)
16
<PAGE> 19
HELEN OF TROY LIMITED
AND SUBSIDIARIES
Consolidated Balance Sheets
February 28, 1998 and 1997
(in thousands, except par value and shares)
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Liabilities and Stockholders' Equity
Current liabilities:
Notes payable to banks (note 3) $ -- $ 4,001
Accounts payable, principally trade 1,430 2,645
Accrued expenses:
Advertising and promotional 4,599 2,580
Other 7,389 6,934
Income taxes payable (note 5) 9,208 5,134
---------- ----------
Total current liabilities 22,626 21,294
Long-term debt (note 4) 55,450 40,450
---------- ----------
Total liabilities 78,076 61,744
---------- ----------
Stockholders' equity (note 6):
Cumulative preferred stock, non-voting, $1.00
par value. Authorized 2,000,000 shares;
none issued -- --
Common stock, $.10 par value. Authorized
50,000,000 shares; 27,281,242 and 26,286,874
shares issued and outstanding at February 28, 1998
and 1997, respectively 2,728 1,314
Additional paid-in-capital 31,899 26,643
Retained earnings 114,857 92,525
---------- ----------
Total stockholders' equity 149,484 120,482
---------- ----------
Commitments and contingencies (notes 5 and 7)
$ 227,560 $ 182,226
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
17
<PAGE> 20
HELEN OF TROY LIMITED
AND SUBSIDIARIES
Consolidated Statements of Income
(in thousands, except shares and earnings per share)
<TABLE>
<CAPTION>
Years Ended Last Day of February
---------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Net sales $ 248,098 $ 213,035 $ 167,053
Cost of sales 153,087 132,861 102,341
------------ ------------ ------------
Gross profit 95,011 80,174 64,712
Selling, general and administrative
expenses (note 7) 64,911 57,438 47,356
------------ ------------ ------------
Operating income 30,100 22,736 17,356
Other income (expense):
Interest expense (3,487) (2,262) (1,795)
Other income, net 2,203 1,665 1,286
------------ ------------ ------------
Total other (expense) (1,284) (597) (509)
------------ ------------ ------------
Earnings from operations before
income taxes 28,816 22,139 16,847
Income taxes (note 5) 6,484 4,981 3,790
------------ ------------ ------------
Net earnings $ 22,332 $ 17,158 $ 13,057
============ ============ ============
Earnings per share: (note 1)
Basic $ .83 $ .66 $ .51
Diluted .77 .62 .49
============ ============ ============
Weighted average number of common and
common equivalent shares used in
computing net earnings per share:
Basic 26,856,463 26,077,572 25,834,056
Diluted 28,850,689 27,769,608 26,745,460
</TABLE>
See accompanying notes to consolidated financial statements.
18
<PAGE> 21
HELEN OF TROY LIMITED
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years ended last day of February 1998, 1997 and 1996
(in thousands)
<TABLE>
<CAPTION>
Additional Total
Common Paid-In Retained Stockholders
Stock Capital Earnings Equity
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Balances, February 28, 1995 $ 643 $ 25,674 $ 62,310 $ 88,627
Exercise of common stock
options, net (notes 5 and 6) 5 189 -- 194
Net earnings -- -- 13,057 13,057
---------- ---------- ---------- ----------
Balances, February 29, 1996 648 25,863 75,367 101,878
Exercise of common stock
options, net (notes 5 and 6) 15 1,431 -- 1,446
Stock dividend 651 (651) -- --
Net earnings -- -- 17,158 17,158
---------- ---------- ---------- ----------
Balances, February 28, 1997 1,314 26,643 92,525 120,482
Exercise of common stock
options, net (notes 5 and 6) 63 6,607 -- 6,670
Stock dividend 1,351 (1,351) -- --
Net earnings -- -- 22,332 22,332
---------- ---------- ---------- ----------
Balances, February 28, 1998 $ 2,728 $ 31,899 $ 114,857 $ 149,484
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
19
<PAGE> 22
HELEN OF TROY LIMITED
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Years Ended Last Day of February
---------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $ 22,332 $ 17,158 $ 13,057
Adjustments to reconcile net earnings
to net cash provided by operating
activities:
Depreciation and amortization 3,999 2,683 2,156
Provision for doubtful receivables 168 10 27
Deferred taxes, net (246) (453) (427)
Gain on sale of assets (216) -- --
Non-cash charge to expenses (note 7) -- 3,198 --
Changes in operating assets and liabilities:
Accounts receivable (7,786) (8,107) (3,697)
Inventory (3,090) (19,695) (2,498)
Prepaid expenses (2,863) (517) (298)
Accounts payable (1,215) 1,640 (1,374)
Accrued expenses 2,474 2,862 1,304
Income taxes payable 4,074 3,124 (4,879)
---------- ---------- ----------
Net cash provided by operating
activities 17,631 1,903 3,371
Cash flows used for investing activities:
Capital and license expenditures (3,255) (13,342) (4,627)
Proceeds from sale of assets 1,692 -- --
Other assets (4,387) (10,296) (141)
Collection on notes receivable 522 484 438
---------- ---------- ----------
Net cash used for investing
activities (5,428) (23,154) (4,330)
</TABLE>
(Continued)
20
<PAGE> 23
HELEN OF TROY LIMITED
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(in thousands)
<TABLE>
<CAPTION>
Years Ended Last Day of February
--------------------------------
1998 1997 1996
---- ---- ----
<S> <C> <C> <C>
Cash flows provided by financing activities:
Net (repayments) borrowings on
revolving line of credit (4,001) 1,408 (27,407)
Proceeds from long-term
debt 15,000 -- 40,450
Proceeds from exercise of options, net 6,670 1,446 194
---------- ---------- ----------
Net cash provided
by financing activities 17,669 2,854 13,237
---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents 29,872 (18,397) 12,278
Cash and cash equivalents, beginning
of year 25,798 44,195 31,917
---------- ---------- ----------
Cash and cash equivalents, end of year $ 55,670 $ 25,798 $ 44,195
========== ========== ==========
Supplemental cash flow disclosures:
Interest paid $ 3,459 $ 2,915 $ 1,368
Income taxes paid (net of refunds) (213) 2,882 8,317
</TABLE>
See accompanying notes to consolidated financial statements.
21
<PAGE> 24
HELEN OF TROY LIMITED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
February 28, 1998 and 1997
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) General
Helen of Troy Limited, a Bermuda company, was formed on December 1,
1993. On February 16, 1994, Helen of Troy Texas Corporation, a
Texas corporation, became a subsidiary of Helen of Troy Limited
pursuant to the terms of the Exchange Agreement between Helen of
Troy Texas Corporation and Helen of Troy Limited. The accompanying
consolidated financial statements are prepared in U.S. dollars and
in accordance with generally accepted accounting principles
followed in the United States of America.
The Company and its subsidiaries are principally engaged in the
design, development, importation and wholesale distribution of
hair care appliances, hair brushes, combs and accessories and
related personal care products. Most of the Company's purchases of
such appliances and products are made from unaffiliated
manufacturers principally located in The Peoples Republic of
China, Thailand, Taiwan and South Korea (the "Far East"). As a
result of the manufacture of the Company's products in the Far
East, the Company is subject to risks associated with trade
barriers, currency exchange fluctuations and political unrest.
Political changes in the Far East have not affected the production
of the Company's goods. The Company believes that adequate
production facilities are available in other countries should they
be needed. However, the relocation of production capacity could
require substantial time for the establishment of comparable
production levels and could result in increased production costs.
(b) Principles of Consolidation
The consolidated financial statements include the accounts of Helen of
Troy Limited and its subsidiaries. All significant intercompany
balances and transactions have been eliminated in consolidation.
(c) Inventories
Inventories are stated at the lower of cost (first-in, first-out) or
market (net realizable value).
(d) Property and Equipment
Property and equipment are stated at cost. Depreciation has been
recorded by using the straight-line method over the estimated
useful lives of the assets.
(Continued)
22
<PAGE> 25
HELEN OF TROY LIMITED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
(e) License Agreements
The great majority of the Company's sales are made subject to License
Agreements with the licensors of the Vidal Sassoon, Revlon and Dr.
Scholl's trade names. The acquisition costs of the existing
license agreements are being amortized on a straight line basis
over the lives of the respective agreements. Net sales subject to
all license agreements aggregated 85%, 87% and 89% of total net
sales for the fiscal years 1998, 1997 and 1996, respectively.
(f) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit carry
forwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years
in which those temporary differences are expected to be recovered
or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that
includes the enactment date.
(g) Earnings per Share
In February 1997, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No. 128,
"Earnings per Share". SFAS No. 128 supersedes Accounting
Principles Board (APB) No. 15, "Earnings Per Share" and requires
the calculation and dual presentation of Basic and Diluted
earnings per share (EPS), replacing the measures of Primary and
Fully-diluted EPS as reported under APB No. 15. SFAS No. 128 is
effective for financial statements issued for periods ending after
December 15, 1997; earlier application is not permitted.
Basic earnings per share is computed based upon the weighted average
number of common shares outstanding during the period. Diluted
earnings per share is computed based upon the weighted average
number of common shares plus the effects of dilutive securities.
The number of dilutive securities was 1,994,226, 1,692,036 and
911,404 for the fiscal years ended the last day of February 1998,
1997 and 1996, respectively. All potentially dilutive securities
are included in earnings per share.
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. On August 26, 1997, the
Company's Directors approved a 2-for-1 stock split which was paid
as a 100% stock dividend on September 22, 1997 to stockholders of
record on September 8, 1997. 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.
(Continued)
23
<PAGE> 26
HELEN OF TROY LIMITED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
(h) Cash Equivalents
The Company considers all highly liquid debt instruments purchased
with an original maturity of three months or less to be cash
equivalents.
(i) Foreign Currency Transactions
The U.S. dollar has been determined to be the functional currency of
the Company and each of its subsidiaries in accordance with SFAS
No. 52, "Foreign Currency Translation." If applicable, all
transactions of the non-U.S. companies have been re-measured in
U.S. dollars using historical exchange rates. Changes in exchange
rates which affect cash flows and the related receivables or
payables are recognized as transaction gains and losses in the
determination of net earnings.
(j) Advertising
Advertising costs are expensed as incurred. During the fiscal years
ended February 28, 1998, February 28, 1997 and February 29, 1996,
$13,522,000, $10,544,000 and $7,319,000, respectively, of
advertising costs were charged to selling, general and
administrative expenses.
(k) Warranties
The Company's products are under warranty against defects in material
and workmanship for a period of up to two years. The Company has
established an accrual for these anticipated future warranty
costs.
(l) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make
estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those estimates.
(m) Stock-based Employee Compensation
The Company accounts for stock-based compensation plans utilizing the
provisions of APB No. 25, "Accounting for Stock Issued to
Employees." In October 1995, the FASB issued SFAS No. 123,
"Accounting for Stock-Based Compensation." Under SFAS No. 123,
companies are allowed to continue to apply the provisions of APB
25 to their stock-based employee compensation arrangements. The
method used by the Company to adopt SFAS No. 123 requires the
Company to supplement its financial statements with additional
disclosures (note 6).
(Continued)
24
<PAGE> 27
HELEN OF TROY LIMITED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
(n) Accounting for Asset Impairment
During March 1995 the FASB issued SFAS No. 121, "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of." SFAS No. 121 requires that long-lived assets and
certain identifiable intangibles to be held and used by an entity
be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may
not be recoverable. The adoption of SFAS No. 121 had no material
impact on the Company's financial position or the results of its
operations at the time of adoption.
(o) Financial Instruments
SFAS No. 107, "Disclosure about Fair Value of Financial Instruments,"
requires the Company to disclose estimated fair values for its
financial instruments. The carrying amounts of cash and cash
equivalents, receivables, accounts payable, accrued expenses and
income taxes payable approximate fair value because of the short
maturity of these items. Based on prevailing interest rates for
similar instruments, the fair value of notes payable to banks and
a portion of long-term debt approximate their carrying value. See
footnote 4 for management's assessment of the fair value of the
Company's guaranteed Senior Notes.
(p) Reporting Comprehensive Income
In June 1997 the FASB issued SFAS No. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for the reporting and
display of comprehensive income and its components in a full set
of general-purpose financial statements and is effective for
financial statements issued for periods beginning after December
15, 1997. Given the Company's current operations, the adoption of
SFAS No. 130 is not expected to have an impact on the financial
statements of the Company.
(q) Segment Disclosures
In June 1997 the FASB issued SFAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information." SFAS No. 131
requires that companies report certain information about operating
segments in complete sets of financial statements issued to
shareholders and is effective for financial statements issued for
periods beginning after December 15, 1997. The adoption of SFAS
No. 131 could require the Company to include additional
disclosures in future reports issued to shareholders. However, the
Company does not expect the adoption of SFAS No. 131 to have a
material impact on its financial statements.
(r) Reporting on Start-Up Costs
In April 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-5, "Reporting on the Costs of
Start-Up Activities" (SOP 98-5). The SOP requires that costs
incurred during start-up activities, including organization costs,
be expensed as incurred and is effective for financial statements
issued for fiscal years beginning after December 15, 1998. The
Company does not expect the adoption of SOP 98-5 to have a
material impact on its financial statements.
(Continued)
25
<PAGE> 28
HELEN OF TROY LIMITED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
2) PROPERTY AND EQUIPMENT
A summary of property and equipment is as follows:
<TABLE>
<CAPTION>
Estimated
Useful Lives
(Years) 1998 1997
------- ---- ----
(in thousands)
<S> <C> <C> <C>
Land $ 8,656 $ 9,994
Buildings and improvements 20 - 40 13,037 13,046
Computer and office equipment 3 - 5 5,461 4,128
Furniture and fixtures 5 848 579
Transportation equipment 3 - 5 929 922
Construction in progress 2,216 1,094
-------- --------
31,147 29,763
Less accumulated depreciation (4,892) (3,983)
-------- --------
Property and equipment, net $ 26,255 $ 25,780
======== ========
</TABLE>
During the years ended February 28, 1998 and 1997 the Company's U.S.
subsidiary capitalized $43,000 and $613,000, respectively of
interest expense in connection with the construction of a new
office facility and distribution center.
(Continued)
26
<PAGE> 29
HELEN OF TROY LIMITED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(3) NOTES PAYABLE
The Company's U.S. subsidiary maintains a line of credit with a bank for
the issuance of letters of credit. The facility is limited to $10
million (United States currency) and bears interest at the bank's prime
rate or at alternate rates based on Eurodollar investment rates for
specific time periods. The credit facility expires on July 31, 1999.
The Company's U.S. subsidiary did not have any balance outstanding at
February 28, 1998 under this credit facility nor was any of the
facility used to finance letters of credit at February 28, 1998. At
February 28, 1997 the Company's U.S. subsidiary had $4,001,000
outstanding under this credit facility.
To allow the issuance of letters of credit, one of the Company's non-U.S.
subsidiaries maintains a line of credit with a bank. The facility is
limited to $4 million (United States currency) and bears interest at
the bank's U.S. dollar base rate, with all outstanding balances due
July 31, 1998. At February 28, 1998, no loans were outstanding under
this agreement and $159,000 was used to finance letters of credit which
were paid by the Company subsequent to February 28, 1998.
(4) LONG-TERM DEBT
On January 5, 1996 the Company's U.S. subsidiary issued guaranteed Senior
Notes at face value of $40,000,000. Interest is paid quarterly at a
rate of 7.01%. The Senior Notes are unsecured, are guaranteed by the
Company and are due January 5, 2008. Principal payments begin in fiscal
2005. Using a discounted cash flow analysis based on estimated market
rates, the estimated fair value of the guaranteed Senior Notes at
February 28, 1998 is approximately $38,660,000.
On December 31, 1996 the Company's U.S. subsidiary executed a $40,000,000
Guaranteed Senior Note Facility ("Facility"). The Facility allows the
Company's U.S. subsidiary to draw up to $40,000,000 over a period of
two years. As borrowings under the Facility occur, they become
unsecured fixed rate long-term notes. On July 18, 1997 the Company's
U.S. subsidiary issued a $15,000,000 Senior Note under this Facility.
Interest is paid quarterly at a rate of 7.24%. The Senior Note is
guaranteed by the Company and is due July 18, 2012. Principal payments
begin in fiscal 2009. Using a discounted cash flow analysis based on
estimated market rates, the estimated fair value of the guaranteed
Senior Note at February 28, 1998 is approximately $14,350,000.
Other long-term debt includes of a note for $450,000. Interest payments are
made monthly based on the prime rate for corporate loans at major U.S.
money center commercial banks (8.4% at February 28, 1998). The note is
payable in full on January 25, 2001.
(Continued)
27
<PAGE> 30
HELEN OF TROY LIMITED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(5) INCOME TAXES
<TABLE>
<CAPTION>
Years Ended
Last Day of February
------------------------------------------
1998 1997 1996
---- ---- ----
(in thousands)
<S> <C> <C> <C>
The components of earnings
before income tax expense are
as follows:
U.S $ 6,588 $ 5,983 $ 4,704
Non-U.S 22,228 16,156 12,143
---------- ---------- ----------
$ 28,816 $ 22,139 $ 16,847
========== ========== ==========
The components of income tax expense
(benefit) are as follows:
Current:
U.S $ 4,199 $ 4,901 $ 3,938
Non-U.S 2,531 533 279
Deferred (246) (453) (427)
---------- ---------- ----------
$ 6,484 $ 4,981 $ 3,790
========== ========== ==========
</TABLE>
Total income tax expense differs from the amounts computed by applying the
statutory tax rate to earnings before income taxes. The reasons for
these differences are as follows:
<TABLE>
<CAPTION>
Years Ended
Last Day of February
------------------------------------
1998 1997 1996
---- ---- ----
(in thousands)
<S> <C> <C> <C>
Computed "expected" tax expense at the
U.S. statutory rate of 35% $ 10,086 $ 7,749 $ 5,896
Increase (decrease) in income
taxes resulting from:
Income from non-U.S. operations
subject to varying income tax
levies (3,602) (2,768) (2,106)
---------- ---------- ----------
Actual tax expense $ 6,484 $ 4,981 $ 3,790
========== ========== ==========
</TABLE>
(Continued)
28
<PAGE> 31
HELEN OF TROY LIMITED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(5) INCOME TAXES, CONTINUED
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at February 28,
1998 and 1997 were:
<TABLE>
<CAPTION>
1998 1997
---- ----
<S> <C> <C>
Deferred tax assets: (in thousands)
Inventories, principally due to additional
costs inventories for tax purposes
pursuant to the U.S. Tax Reform
Act of 1986 $ 637 $ 507
Accrued expenses 687 601
Accounts receivable, property and
equipment, and other 220 249
---------- ----------
Total gross deferred tax assets 1,544 1,357
---------- ----------
Deferred tax liabilities:
Depreciation and amortization (18) (81)
Accrued expenses (4) --
---------- ----------
Total gross deferred tax liabilities (22) (81)
---------- ----------
Net deferred tax asset $ 1,522 $ 1,276
========== ==========
</TABLE>
The U.S. Federal income tax returns of the Company's U.S. subsidiary for
the fiscal years 1994, 1995 and 1996 have been examined by the Internal
Revenue Service (the IRS). The IRS has proposed two adjustments which
affect pricing between the Company's U.S. subsidiary and one of the
Company's foreign subsidiaries. The impact of the two proposed
adjustments could create a tax liability of approximately $780,000. The
Company disagrees with the proposed adjustments and is vigorously
defending the position of its U.S. subsidiary. Currently the Company is
preparing to argue the position of its U.S. subsidiary before the
appeals section of the IRS. Although the ultimate outcome of the
appeals process cannot be predicted with certainty, management is of
the opinion that adequate provision has been made in the financial
statements for the estimated impact of the transfer pricing issues.
The Inland Revenue Department (the IRD) in Hong Kong has made assertions
concerning its ability to tax certain profits of the Company's foreign
subsidiaries for the years 1990 through 1998. Hong Kong tax laws allow
for the taxation of profits that are earned from activities conducted
in Hong Kong. The Company is vigorously defending its position that the
activities which produced the profits in question occurred outside of
Hong Kong and that the Company has complied with all applicable
reporting and tax payment obligations. If the position taken by the IRD
were to prevail, the tax liability could range from U.S. $400,000 to
U.S. $10,800,000. Management believes that the proposed adjustments
lack legal merit and will be nullified. Although the ultimate outcome
cannot be predicted with certainty, management is of the opinion that
adequate provision has been made in the financial statements for the
expected resolution of the IRD's claims.
The Company plans to permanently invest all of the undistributed earnings
of the non-U.S. subsidiaries of the U.S. Corporation in non-U.S.
locations. In accordance with generally accepted accounting principles
in the U.S., no provision has been made for U.S. federal income taxes
on a portion of these undistributed earnings. At February 28, 1998, the
undistributed earnings for which the Company has not provided deferred
U.S. federal income taxes approximated $33,332,000.
During fiscal years 1998, 1997 and 1996, certain stock options were
exercised by officers and employees which resulted in a tax deduction
for U.S. Federal income tax purposes but which did not affect tax
expense for financial reporting purposes. The tax effect of these
transactions for fiscal years 1998, 1997 and 1996 has been an increase
to additional paid-in-capital of $2,533,000, $362,000 and $433,000,
respectively.
(Continued)
29
<PAGE> 32
HELEN OF TROY LIMITED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(6) STOCK OPTIONS
Pursuant to a stock option and restricted stock plan adopted in fiscal
1994, the Company has reserved 8,000,000 shares of its common stock for
issuance to officers and key employees. The plan contains provisions
for incentive stock options, non-qualified stock options and restricted
stock grants.
Incentive Stock Options (ISO's) and Non-Qualified Stock Options (Non-Q's)
can be granted at an exercise price that is not less than the fair
market value of the common stock on the date of grant. The vesting
schedule under the plan adopted in 1994 is determined individually for
each option grant.
The Helen of Troy Limited 1995 Stock Option Plan for Non-Employee Directors
(the Directors Plan) was adopted in fiscal 1996. The Directors Plan
automatically issues 4,000 stock options to eligible directors on the
grant date. The options are exercisable one year after issuance and
have an exercise price equal to the mean between the high and low
trading prices of the Company's common stock on the date of the grant.
<TABLE>
<CAPTION>
Weighted Average Exercisable at 2/28/98
Number of Contractual Exercise Weighted
Options Price Range Life Price Average
Exercise
Options Price
-----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ISO's
523,878 $ 3.13 to $ 7.81 5.92 $ 4.67 115,210 $ 4.36
256,754 $10.50 to $19.44 6.69 $13.20 4,400 $10.66
------- ---------
Total 780,632 $ 3.13 to $19.44 -- $ 7.47 119,610 $ 4.59
Non-Q's
2,309,344 $ 1.89 to $ 6.75 4.17 $ 3.45 1,817,384 $ 3.14
1,315,546 $12.09 to $ 16.75 8.95 $15.96 1,000 $12.09
--------- ---------
Total 3,624,890 $ 1.89 to $ 16.75 -- $ 7.99 1,818,384 $ 3.15
Directors Plan
28,000 $ 5.13 to $ 7.06 7.57 $ 6.23 28,000 $ 6.23
120,000 $15.94 to $ 16.41 9.00 $16.02 -- --
------- ---------
Total 148,000 $ 5.13 to $ 16.41 -- $14.15 28,000 $ 6.23
</TABLE>
(Continued)
30
<PAGE> 33
HELEN OF TROY LIMITED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(6) STOCK OPTIONS, CONTINUED
The Company accounts for its option plans under APB No. 25, under which no
compensation cost has been recognized in the income statements. Had
compensation cost for these plans been determined consistent with SFAS
No. 123, the Company's net income and earnings per share would have
been reduced to the following pro forma amounts:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
<S> <C> <C> <C> <C>
Net Income: As reported $ 22,332,000 $ 17,158,000 $ 13,057,000
Pro Forma 19,539,000 16,204,000 12,157,000
Earnings per Share:
Basic: As Reported $ .83 $ .66 $ .51
Pro Forma .73 .62 .47
Diluted: As Reported .77 .62 .49
Proforma .68 .58 .45
</TABLE>
The following summarizes activity relating to stock options:
<TABLE>
<CAPTION>
1998 1997 1996
---- ---- ----
SHARES WEIGHTED Shares Weighted Shares Weighted
(000) AVERAGE (000) Average (000) Average
EXERCISE Exercise Exercise
PRICE Price Price
-------- --------- ------- -------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding, beginning of year 4,005 $ 3.95 4,214 $ 3.70 2,344 $ 2.57
Options granted 1,643 15.68 170 8.33 2,338 4.53
Options exercised (994) 4.16 (355) 3.04 (230) 2.27
Options forfeited (100) 5.46 (24) 5.13 (238) 2.14
------ ------- -------
Options outstanding, end of year 4,554 8.10 4,005 3.95 4,214 3.70
Options exercisable at year-end 1,966 3.28 1,954 3.08 1,428 2.65
Weighted average fair value of options
granted during the year 7.04 2.42 1.78
</TABLE>
The fair value of each option grant estimated on the date of grant using
the Black-Scholes option pricing model with the following weighted
average assumptions used for grants in fiscal 1998, 1997 and 1996: risk
free interest rate of 6.5% for options granted under the 1994 stock
option and restricted stock plan, and under the Directors Plan; a zero
expected dividend yield; expected lives of 10, 5, 4, and 3 years
depending on the term of the option granted; expected volatility of
23.4% for the fiscal year 1998 and 20% for the fiscal years 1997 and
1996.
(Continued)
31
<PAGE> 34
HELEN OF TROY LIMITED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(7) COMMITMENTS AND CONTINGENCIES
The Company has employment contracts with certain of its officers.
These agreements provide for minimum salary levels and potential
incentive bonuses. One agreement automatically renews itself each
month for a five year period and provides that in the event of a
merger, consolidation or transfer of all or substantially all of
the assets of the Company to an unaffiliated party, an election
may be made by the officer to receive a cash payment for the
balance of the obligations under the agreement. The expiration
dates for these agreements range from February 28, 1999 to
February 28, 2003. The aggregate commitment for future salaries,
at February 28, 1998, excluding incentive compensation, was
approximately $4,521,000.
During fiscal years 1990 and 1989, the Company entered into barter
agreements to exchange certain inventory items for advertising
credits. As of February 28, 1997, the Company disposed of unused
advertising credits. The fiscal year 1997 non-cash charge of
$3,198,000 is included with the Company's selling, general and
administrative expenses.
There are claims and legal proceedings pending against the Company
which arise in the normal course of the Company's operations. In
the opinion of management, the outcome of these matters will not
have a materially adverse effect on the consolidated financial
position, results of operations or liquidity of the Company and
its subsidiaries.
The Company continues to assess its exposure related to the impact of
the Year 2000 date issue. The Year 2000 date issue arises from
the fact that throughout the worldwide business community some
computer programs use only two digits to identify a year in a
date field. The Company's key financial and operational systems
have been reviewed and it has been determined that the majority
of the systems do not require burdensome modifications.
Accordingly, management does not expect that any costs to be
incurred will have a material adverse impact on the Company's
financial position, results of operations or cash flows. However,
the Company could be adversely impacted by the Year 2000 date
issue if suppliers, customers and other businesses do not address
this issue successfully. Management continues to assess these
risks in order to reduce the impact on the Company.
(Continued)
32
<PAGE> 35
HELEN OF TROY LIMITED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(8) SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Selected unaudited quarterly financial data is as follows (in thousands,
except per share amounts):
<TABLE>
<CAPTION>
Three Months Ended the Last Day of
--------------------------------------------------------------------------------------
May August November February Total
-----
<S> <C> <C> <C> <C> <C>
1998:
Net sales $52,448 $60,929 $82,780 $51,941 $248,098
Gross profit 19,811 23,263 31,801 20,136 95,011
Net earnings 3,552 5,897 9,243 3,640 22,332
Earnings per
share
Basic .13 .22 .34 .13 .83
Diluted .12 .21 .32 .13 .77
1997:
Net sales $43,836 $50,491 $74,477 $44,231 $213,035
Gross profit 16,340 18,686 28,334 16,814 80,174
Net earnings 2,402 4,095 7,805 2,856 17,158
Earnings per
share
Basic .09 .16 .30 .11 .66
Diluted .09 .15 .28 .10 .62
</TABLE>
The business of the Company is seasonal, with approximately fifty-eight
percent of annual sales volume normally occurring in the second and
third fiscal quarters.
(Continued)
33
<PAGE> 36
HELEN OF TROY LIMITED
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(9) SEGMENT AND GEOGRAPHIC INFORMATION
The Company operates in one industry segment - health, beauty and personal
care appliances and accessories. Products are procured through the
Company's non-U.S. contract manufacturing subsidiary located in
Barbados, West Indies. Unaffiliated factories are used on an
order-by-order basis. Approximately 90% and 91% of total assets are
located in the United States of America at February 28, 1998 and 1997,
respectively. The percentages of third party sales made in the United
States for fiscal years ended in 1998, 1997 and 1996 were 95%, 96% and
98%, respectively.
Approximately 29% and 27% of the Company's net sales in the years ended
February 28, 1998 and 1997, respectively, were made to one customer and
its affiliate. Approximately 29%, 10% and 10% of the Company's net
sales in the year ended February 29, 1996 were made to three customers.
(10) ASSET ACQUISITION
On October 4, 1996 the Company acquired the assets of two personal care
lines of Dazey Corporation, of Kansas City, Missouri. Included in the
purchase were certain inventories, designs, equipment, tooling, license
rights and trademarks for existing products bearing the Dazey, Lady
Dazey, Lady Carel and Dr. Scholl's trade names. The purchase method of
accounting was used to record the acquisition. Costs in excess of the
fair value of assets acquired, which consist of the majority of the
purchase price, are included in other assets and are being amortized
over fifteen years.
On June 12, 1997 the Company acquired the assets of Caruso International.
Included in the purchase were certain inventories, designs and
trademarks. The purchase method of accounting was used to record the
acquisition. The majority of the purchase price is comprised of costs
in excess of the fair value of assets acquired (included in other
assets) and is being amortized over fifteen years.
On a proforma basis these acquisitions would not have a material effect on
net revenues or net earnings.
34
<PAGE> 37
Schedule II
HELEN OF TROY LIMITED
AND SUBSIDIARIES
Valuation and Qualifying Accounts
Years Ended February 28, 1998, February 28, 1997 and February 29, 1996
(in thousands)
<TABLE>
<CAPTION>
Balance Write-off of Balance at
beginning Charged uncollectible end of
Description of year to Recoveries accounts year
----------- ------- costs and ---------- -------- ----
expenses
--------
<S> <C> <C> <C> <C> <C>
Year ended February 28, 1998:
Allowance for doubtful
accounts $ 400 $ 551 $ -- $ 383 $ 568
Year ended February 28, 1997:
Allowance for doubtful
accounts 390 349 2 341 400
Year ended February 28, 1996:
Allowance for doubtful
accounts 363 289 1 263 390
</TABLE>
35
<PAGE> 38
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There have been none.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The table below sets forth certain information regarding the
directors and executive officers of the Company as of April 30,
1998.
<TABLE>
<CAPTION>
Director
Name Age Position With the Company Since
- --------------- --- -------------------------- ---------
<S> <C> <C> <C>
Gerald J. Rubin 54 Chairman, Chief Executive Officer 1993
and Director
Daniel C. Montano 49 Director 1993
Byron H. Rubin 48 Director 1993
Stanlee N. Rubin 53 Director 1993
Gary B. Abromovitz 55 Director 1993
Christopher L. Carameros 44 Director 1993
H. McIntyre Gardner 36 President and Chief Operating Officer --
Sam L. Henry 48 Senior Vice President, Finance, --
Chief Financial Officer, and Secretary
</TABLE>
Directors and executive officers each serve for a one year term or until
their successors are elected and qualified to serve. Gerald J. Rubin and Byron
H. Rubin are brothers.
Set forth below are descriptions of the principal occupations during at
least the past five years of the directors and executive officers of the
Company.
Gerald J. Rubin, founder of Helen of Troy Corporation, has been the
Chairman and Chief Executive Officer of the Company since December 1993 and of
Helen of Troy Corporation since 1984. Mr. Rubin has been a Director of the
Company since December 1993 and of Helen of Troy Corporation since 1969.
Daniel C. Montano has been a Director of the Company since December 1993
and of Helen of Troy Corporation since 1980. He has been the managing Director
of C & K Capital since January 1997. From January of 1995 to December 1996, he
was Director of Investment Banking at Brook Street Securities. Mr. Montano was
President and a Director of Montano Securities Corporation from 1979 to January
1995. He also serves as a director of ESSCO USA, a Greek shipping company.
Byron H. Rubin has been a director of the Company since December 1993 and
of Helen of Troy Corporation since 1981. He has been a partner in the firm
Daniels & Rubin (formerly known as Integrated Financial of Texas), an insurance
and tax planning firm in Dallas, Texas since 1979.
Stanlee N. Rubin is the wife of Gerald J. Rubin, Chairman of the Board of
Directors. She has been a Director of the Company since December 1993 and of
Helen of Troy Corporation since 1990. Mrs. Rubin
36
<PAGE> 39
is active in civic and charitable organizations. She is a member of the
University of Texas at El Paso Board of Development. She is presently on the
Board of Directors of the Alumni Association of the University of Texas at El
Paso, The National Conference of Christians and Jews and the El Paso Symphony
Guild. Mrs. Rubin is also a Partner for The Susan G. Komen Breast Cancer
Foundation.
Gary B. Abromovitz has been a Director of the Company since December 1993
and of Helen of Troy Corporation since 1990. He has been a partner in the law
offices of Bonn/Abromovitz Law Firm in Phoenix, Arizona since 1990. From 1985 to
1989, he was Of Counsel to the law firm Bonn & Anderson in Phoenix, Arizona.
Christopher L. Carameros has been a Director of the company since December
1993 and of Helen of Troy Corporation since June 1993. From August 1997 to the
present Mr. Carameros has been President of L & M Asset Management Inc., a
financial services and asset management company. From September 1993 to July
1997 he was an Executive Vice President of Cactus Apparel Inc., an apparel
manufacturing company. He also serves as a Director of Farah Incorporated.
H. McIntyre Gardner has been the President and Chief Operating Officer of
the Company since September 1997. From 1994 to September 1997 Mr. Gardner served
as Executive Vice President and President of Appliance Corp. of America. Mr.
Gardner also held the position of President for Hanover Associates, Inc. from
1991 to 1997.
Sam L. Henry has been the Senior Vice-President, Finance, Chief Financial
Officer and Secretary of the Company since December 1993 and of Helen of Troy
Corporation since 1986.
Except as indicated above, none of the directors of the Company is a
director of any other publicly held company.
37
<PAGE> 40
ITEM 11. EXECUTIVE COMPENSATION
The following table sets forth the summary of compensation paid to the
Company's Chief Executive Officer and its other Executive Officers during fiscal
years 1996 through 1998.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG TERM ALL OTHER
ANNUAL COMPENSATION COMPENSATION COMPENSATION($)
-------------------------------------------- ------------ ---------------
OTHER
NAME AND ANNUAL
PRINCIPAL COMPENSATION OPTIONS/
POSITION YEAR SALARY ($) BONUS ($) $ SARS (#)
- -------------------- ------- ------ ----- ---------- --------
<S> <C> <C> <C> <C> <C> <C>
Gerald J. Rubin 1998 $ 625,003 $ 885,000 $ -0- 1,000,000 $ 16,414 (1)(2)(3)
Chairman and Chief 1997 623,158 551,705 -0- -0- 15,821 (1)(2)(3)
Executive Officer 1996 600,000 262,000 -0- 1,200,000 15,363 (1)(2)(3)
H. McIntyre Gardner 1998 216,667 50,000 -0- 300,000 -0-
President and Chief
Operating Officer
Sam L. Henry 1998 215,636 28,240 -0- 20,000 4,517 (1)(2)
Senior Vice-President 1997 205,367 40,343 -0- -0- 4,517 (1)(2)
Finance 1996 188,343 24,485 -0- 80,000 3,761 (1)(2)
</TABLE>
(1) These amounts include the Company's contributions to Helen of Troy
Corporation's 401(k) Profit Sharing Plan.
(2) Includes amounts representing premiums for life insurance or the economic
benefit of split dollar policies paid by the Company for life insurance
arrangements on behalf of the Executive Officer.
(3) Amounts represent the annual lease value of a vehicle provided by the
Company.
38
<PAGE> 41
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
VALUE AT ASSUMED
ANNUAL RATES OF
STOCK PRICE
APPRECIATION FOR
OPTION TERM
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------------------------------------------
NUMBER OF
SECURITIES % OF TOTAL
UNDER- OPTIONS/
LYING SARS
OPTIONS/ GRANTED TO
SARS EMPLOYEES EXERCISE OF
GRANTED IN FISCAL BASE PRICE EXPIRATION
NAME (#) YEAR ($/SH) DATE 5%($) 10%($)
---- --------- ---------- ------------ ----------- ---- ------
<S> <C> <C> <C> <C> <C> <C>
G. Rubin 1,000,000 60.9% $ 15.9375 08/26/07 $10,023,008 $25,400,270
H.M. Gardner 300,000 18.3% $ 16.75 09/02/07 $ 3,160,195 $ 8,008,556
S. Henry 20,000 1.2% $ 12.50 05/27/07 $ 157,224 $ 398,436
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR END OPTION/SAR VALUES
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS/SARS AT OPTIONS/SARS AT
ON VALUE FISCAL YEAR END (#) FISCAL YEAR END ($) (1)
EXERCISE REALIZED ----------------------------- -----------------------------
NAME (#) ($) EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
--------------- --------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
G. Rubin -- -- 1,700,000 1,400,000 $20,628,140 $ 4,300,000
H. M. Gardner -- -- -- 300,000 -- --
S. Henry 60,000 598,903 47,000 91,000 523,984 822,375
</TABLE>
(1) Based on the closing price of the NASDAQ National Market System - Composite
Transactions of the Company's Common Stock on February 28, 1998 ($15.25).
CONTRACTS
The Company has entered into contracts with each of its directors and
officers to indemnify them against certain fees and expenses incurred in legal
proceedings to which the officer or director is made a party by reason of
serving as an officer or director of the Company, so long as the party to be
indemnified acted in good faith or in a manner reasonably believed to be in or
not opposed to the best interests of the Company.
39
<PAGE> 42
The Company has an employment contract with Mr. Gerald J. Rubin. The
contract for Mr. Rubin was effective March 1, 1995, provided for a base salary
of $600,000 and a bonus equal to 5% of adjusted earnings from continuing
operations less Mr. Rubin's base salary. Mr. Rubin amended his employment
contract to remove the bonus previously provided under his contract and to
substitute the bonus payable thereunder for the bonus under the Helen of Troy
1997 Cash Bonus Performance Plan which was approved by the Company's
shareholders. The Company has an employment contract with H. McIntyre Gardner.
Mr. Gardner's contract was effective September 1, 1997, provides for a base
salary of $400,000 and a bonus which is dependent upon the Company achieving
specific pre-tax income levels.
In the event of the death of Messrs. Rubin or Gardner, all unpaid benefits
under these agreements are payable to their estates.
Gerald J. Rubin's contract renews itself monthly for a new five year term.
Gerald J. Rubin's and H. McIntyre Gardner's contracts grant them the right to
elect a cash payment of the remainder of their contracts in the event of a
merger, consolidation or transfer of all or substantially all of the Company's
assets to any unaffiliated company or other person.
The Company has purchased, pursuant to the terms of his employment
contract, life insurance in the amount of $5.0 million on the life of Gerald J.
Rubin, payable in the event of death to his respective designees. The Company
has also purchased three "second to die" life insurance contracts in the
cumulative amount of $29.0 million on the lives of Gerald J. Rubin and Stanlee
N. Rubin, payable to their respective designee. All of the above policies
referred to in this paragraph are Split Dollar policies, which provide for the
return of premiums advanced by the Company to be reimbursed to the Company upon
death of the insured(s).
DIRECTOR COMPENSATION
Each member of the board of directors of the Company who is not an employee
or officer of the Company received a fee of $3,000 for each meeting of the Board
of Directors attended, together with travel and lodging expenses incurred in
connection therewith. Additional payments of $1,500 were made quarterly to each
such director. As approved by the Company's shareholders in 1996, each
non-employee director receives 4,000 stock options on September 1st of each
year. As approved by the Company's shareholders in 1997, each non-employee
director received a one-time grant on August 26, 1997 of 20,000 stock options.
The stock options have an exercise price equal to the medium between the high
and low market prices on the day the stock options are issued. The stock options
vest after one year. Aaron M. Shenkman was a director and an employee of the
Company for the first seven months of fiscal 1998. As an employee of the Company
Mr. Shenkman was paid a salary of $87,500 and a bonus of $175,000.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
None
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth as of April 30, 1998, the beneficial
ownership of common stock of the directors, all officers and directors of the
Company as a group, and each person known to the Company to be the beneficial
owner of more than 5% of its outstanding common stock:
<TABLE>
<CAPTION>
NAME NUMBER OF SHARES PERCENT
<S> <C> <C>
Gerald J. Rubin (1)(2)(3)(4) 4,439,922 15.3%
6827 Market Avenue
El Paso, Texas 79915
Byron H. Rubin -- *
Daniel C. Montano 8,000 *
Gary B. Abromovitz 12,000 *
</TABLE>
40
<PAGE> 43
<TABLE>
<S> <C> <C>
Stanlee N. Rubin (4) 8,000 *
Christopher L. Carameros -- *
Sam L. Henry 125,000 *
All directors and officers as a group
(8 persons) (3) 4,935,614 15.8%
Fidelity Management and Research
Company (5) 2,721,400 9.4%
82 Devonshire Street
Boston, Massachusetts 02109
A I M Management Group Inc. (6) 2,311,600 7.9%
11 Greenway Plaza, Suite 1919
Houston, Texas 77046
</TABLE>
* ownership of less than 1% of the outstanding common stock
(1) Does not include 144,000 shares in a trust for the children of Gerald J.
Rubin and Stanlee N. Rubin in which they disclaim any beneficial ownership.
(2) Includes 276,980 shares in the case of Mr. Gerald J. Rubin held
beneficially through a partnership in which Gerald J. Rubin is a partner.
(3) Includes 1,200,000 shares in the case of Gerald J. Rubin, and 1,289,000
shares in the case of all directors and officers which are issuable
pursuant to options which are exercisable within sixty days of April 30,
1998.
(4) Includes 2,962,942 shares and all stock options granted which are subject
to a one-half undivided community property interest with Stanlee N. Rubin.
(5) As extracted from Form 13G filed as of February 14, 1998, by Fidelity
Management and Research Company, this represents sole investment power for
2,721,400 shares and sole voting power for no shares.
(6) As extracted from Form 13G filed as of February 9, 1998, by A I M
Management Group Inc., this represents shared investment power for
2,311,600 shares and sole voting power for no shares.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
None.
41
<PAGE> 44
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of the report:
1. Financial Statements
Independent Auditors' Report
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
2. Schedules: Schedule II - Valuation and Qualifying Accounts
(b) Reports on Form 8-K.
No reports on Form 8-K were filed during the quarter ended
February 28, 1998.
(c) Exhibits (numbered in accordance with Item 601 of Regulation S-K).
3(a) - See Exhibit Index
42
<PAGE> 45
The registrant will send its annual report to security holders and proxy
solicitation material subsequent to the filing of this form and shall furnish
copies of both to the Commission when they are sent to security holders.
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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
By: s/Gerald J. Rubin
---------------------------------------
Gerald J. Rubin, Chairman,
Chief Executive Officer and Director
Dated May 26, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
- ---------------------------------------- ------------------------------------- --------------
<S> <C> <C>
Chairman, Chief Executive Officer
and Director
s/Gerald J. Rubin (Principal Executive Officer) May 26, 1998
- ----------------------------------------
(Gerald J. Rubin)
Senior Vice President, Finance
Secretary and Chief Financial Officer
(Principal Financial and Accounting
s/Sam L. Henry Officer) May 26, 1998
- ----------------------------------------
(Sam L. Henry)
s/Stanlee N. Rubin Director May 26, 1998
- ----------------------------------------
(Stanlee N. Rubin)
s/Christopher L. Carameros Director May 26, 1998
- ----------------------------------------
(Christopher L. Carameros)
s/Byron H. Rubin Director May 26, 1998
- ----------------------------------------
(Byron H. Rubin)
s/Daniel C. Montano Director May 26, 1998
- ----------------------------------------
(Daniel C. Montano)
s/Gary B. Abromovitz Director May 26, 1998
- ----------------------------------------
(Gary B. Abromovitz)
</TABLE>
43
<PAGE> 46
HELEN OF TROY LIMITED
EXHIBITS TO FORM 10-K
For the Fiscal Year Ended February 28, 1998
COMMISSION FILE NUMBER 0-23312
44
<PAGE> 47
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
3.1 - Memorandum of Association. Exhibit 3.1 to the Registrant's
Registration Statement on Form S-4, File No. 33-73594 filed
with the Securities and Exchange Commission on December 30,
1993, is hereby incorporated herein by reference.
3.2 - Bye-Laws. Exhibit 3.2 to the Registrant's Registration
Statement on Form S-4, File No. 33-73594 filed with the
Securities and Exchange Commission on December 30, 1993, is
hereby incorporated herein by reference.
10.1 - Vidal Sassoon, Inc. Amended License Agreement of December 22,
1982. Exhibit 10.1 to the Helen of Troy Corporation's
Registration Statement on Form S-2, File No. 2-82520 filed
with the Securities and Exchange Commission on March 18, 1983,
is hereby incorporated herein by reference. The request for
confidential treatment of certain portions of this agreement
has been granted by the Commission.
10.2 - Letter Agreements Amending Sassoon License Agreement. Exhibit
10.2 to the Helen of Troy Corporation's Registration Statement
on Form S-2, File No. 33-13253 filed with the Securities and
Exchange Commission on April 8, 1987, is hereby incorporated
herein by reference.
10.3 - Form of Directors' and Executive Officers' Indemnity Agreement
dated February 11, 1994 executed by each of Gerald J. Rubin,
Sam L. Henry, Robert D. Spear, Stanlee N. Rubin, Gary B.
Abromovitz, Byron H. Rubin, Daniel C. Montano, and Christopher
L. Carameros. Exhibit 10.2 to the Registrant's Registration
Statement on Form 8-K, filed with the Securities and Exchange
Commission on February 25, 1994, is hereby incorporated herein
by reference.
10.4 - 1994 Stock Option and Restricted Stock Plan, as previously
filed with the Registrant's Registration Statement on Form
S-4, File No. 33-73594, as Exhibit 10.1 filed with the
Securities and Exchange Commission on December 30, 1993, is
hereby incorporated herein by reference.
10.5 - 401(k) Profit Sharing Plan, dated April 12, 1988, as
previously filed with Form 10-K of Helen of Troy Corporation
for the period ending February 29, 1988, is hereby
incorporated herein by reference.
10.6 - Flexible Spending Arrangement Plan, dated May 1, 1988, as
previously filed with Form 10-K of Helen of Troy Corporation
for the period ending February 29, 1988, is hereby
incorporated herein by reference.
10.7 - Vidal Sassoon, Inc., European License Agreement, dated January
1, 1990, filed with the Securities and Exchange Commission on
February 28, 1990, as previously filed with Form 10-K of Helen
of Troy Corporation for the period ending February 28, 1990,
is hereby incorporated herein by reference. The request for
confidential treatment of certain portions of this agreement
has been granted by the Commission.
</TABLE>
<PAGE> 48
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10.8 - Form of Employment Agreement, dated March 1, 1995, executed by
Gerald J. Rubin as previously filed with Form 10-K of Helen of
Troy Limited for the period ending February 29, 1996, is
hereby incorporated herein by reference.
10.9 - 401(k) Profit Sharing Plan Adoption Agreement, dated December
24, 1991, with a retroactive effective date of January 1,
1988, as previously filed with Form 10-K of Helen of Troy
Corporation for the period ending February 29, 1992, is hereby
incorporated herein by reference.
10.10 - 401(k) Profit Sharing Plan Adoption Agreement, dated December
24, 1991, with an effective date of January 1, 1992, as
previously filed with Form 10-K of Helen of Troy Corporation
for the period ending February 29, 1992, is hereby
incorporated herein by reference.
10.11 - Flexible Benefits Plan, Section 125, dated June 1, 1991, as
previously filed with Form 10-K of Helen of Troy Corporation
for the period ending February 29, 1992, is hereby
incorporated herein by reference.
10.12 - Deleted.
10.13 - First Amendment to Revlon Consumer Products Corporation
("RCPC") North America Appliance License Agreement, dated
September 30, 1992, as previously filed with Form 10-K of
Helen of Troy Corporation for the period ending February 28,
1993, is hereby incorporated herein by reference.
10.14 - First Amendment to RCPC North America Comb and Brush License
Agreement, dated September 30, 1992, as previously filed with
Form 10-K of Helen of Troy Corporation for the period ending
February 28, 1993, is hereby incorporated herein by reference.
10.15 - First Amendment to RCPC International Appliance License
Agreement, dated September 30, 1992, as previously filed with
Form 10-K of Helen of Troy Corporation for the period ending
February 28, 1993, is hereby incorporated herein by reference.
10.16 - First Amendment to RCPC International Comb and Brush License
Agreement, dated September 30, 1992, as previously filed with
Form 10-K of Helen of Troy Corporation for the period ending
February 28, 1993, is hereby incorporated herein by reference.
10.17 - Form of Non-Statutory Stock Option Agreement, dated February
28, 1994, executed by each of Gerald J. Rubin and Don Hall, as
previously filed with Form 10-K of Helen of Troy Limited for
the period ending February 28, 1994, is hereby incorporated
herein by reference.
</TABLE>
<PAGE> 49
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------- -----------
<S> <C>
10.18 - Form of Incentive Stock Option Agreement, dated February 28,
1994, executed by each of Gerald J. Rubin, Arthur A. August,
Randolph Maxwell, Sam L. Henry, William D. McCorvey and Robert
D. Spear, as previously filed with Form 10-K of Helen of Troy
Limited for the period ending February 28, 1994, is hereby
incorporated herein by reference.
10.19 - Deleted
10.20 - Form of Employment Agreement, dated January 3, 1994, executed
by William D. McCorvey, as previously filed with Form 10-K of
Helen of Troy Limited for the period ending February 28, 1994,
is hereby incorporated herein by reference.
10.21 - Supply Agreement between Helen of Troy Corporation and Helen
of Troy Limited, a Barbados corporation, dated February 28,
1994, as previously filed with Form 10-K of Helen of Troy
Limited for the period ending February 28, 1994, is hereby
incorporated herein by reference.
10.22 - License Agreement between Helen of Troy Corporation and Helen
of Troy Limited, a Barbados corporation, dated February 28,
1994, as previously filed with Form 10-K of Helen of Troy
Limited for the period ending February 28, 1994, is hereby
incorporated herein by reference.
10.23 - Amended and Restated Note Purchase, Guaranty and Master Shelf
Agreement, $40,000,000 7.01% Guaranteed Senior Notes and
$40,000,000 Guaranteed Senior Note Facility, as previously
filed with Form 10-Q of Helen of Troy Limited for the period
ending November 30, 1996, is hereby incorporated herein by
reference.
10.24 - Form of employment contract for H. McIntyre Gardner, as
previously filed with Form 10-Q of Helen of Troy Limited for
the period ending November 30, 1997, is hereby incorporated
herein by reference.
21 - Subsidiaries of the Registrant, filed herewith.
23 - Independent Auditors' Consent, filed herewith.
27 - Financial Data Schedule, filed herewith.
</TABLE>
<PAGE> 1
Exhibit 21
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
Doing
Business
Name Incorporation As
---- ------------- ---------
<S> <C> <C>
International Appliances Limited Hong Kong Same Name
Beauty Biz, Inc. Texas Same Name
Helen of Troy (Far East) Limited,
(formerly Helen of Troy (Services) Limited) Hong Kong Same Name
Helen of Troy (Cayman) Limited, (formerly
International Appliances (Cayman) Limited) Cayman Islands Same Name
Helen of Troy International, B.V. Amsterdam Same Name
Helen of Troy Limited Barbados Same Name
Helen of Troy (Services) Limited Hong Kong Same Name
(formerly Helen of Troy (Far East) Limited
Helen of Troy Texas Corporation Texas Same Name
Helen of Troy Nevada Corporation Nevada Same Name
HOT Nevada Inc. Nevada Same Name
Helen of Troy L.P. Texas Partnership Same Name
Helen of Troy International Marketing Limited Barbados Same Name
HOT(UK) Limited United Kingdom Same Name
Helen of Troy GmbH Germany Same Name
</TABLE>
<PAGE> 1
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
Helen of Troy Limited:
We consent to incorporation by reference in the registration statements No.
33-75832 and No. 333-11181 on Form S-8 of Helen of Troy Limited of our report
dated April 30, 1998 relating to the consolidated balance sheets of Helen of
Troy Limited and subsidiaries as of February 28, 1998 and 1997 and the related
consolidated statements of income, stockholders' equity and cash flows and
related schedule for each of the years in the three-year period ended February
28, 1998, which report appears in the February 28, 1998 annual report on Form
10-K of Helen of Troy Limited.
KPMG PEAT MARWICK LLP
El Paso, Texas
May 28, 1998
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS OF HELEN OF TROY LIMITED AND SUBSIDIARIES AS
OF, AND FOR THE YEAR ENDED FEBRUARY 28, 1998, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> FEB-28-1998
<PERIOD-END> FEB-28-1998
<CASH> 55,670,000
<SECURITIES> 0
<RECEIVABLES> 45,137,000
<ALLOWANCES> 568,000
<INVENTORY> 71,357,000
<CURRENT-ASSETS> 176,920,000
<PP&E> 31,147,000
<DEPRECIATION> 4,892,000
<TOTAL-ASSETS> 227,560,000
<CURRENT-LIABILITIES> 22,626,000
<BONDS> 55,450,000
0
0
<COMMON> 2,728,000
<OTHER-SE> 146,756,000
<TOTAL-LIABILITY-AND-EQUITY> 227,560,000
<SALES> 248,098,000
<TOTAL-REVENUES> 248,098,000
<CGS> 153,087,000
<TOTAL-COSTS> 153,087,000
<OTHER-EXPENSES> 64,911,000
<LOSS-PROVISION> 548,000
<INTEREST-EXPENSE> 3,487,000
<INCOME-PRETAX> 28,816,000
<INCOME-TAX> 6,484,000
<INCOME-CONTINUING> 22,332,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 22,322,000
<EPS-PRIMARY> .83
<EPS-DILUTED> .77
</TABLE>
