10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 31, 2015

or

☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ..... to …..

Commission file number: 001-14669

HELEN OF TROY LIMITED

(Exact name of registrant as specified in its charter)

Bermuda	74-2692550
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
Clarenden House 2  Church Street Hamilton, Bermuda
(Address of principal executive offices)
1 Helen of Troy Plaza
El Paso, Texas	79912
(Registrant’s United States Mailing Address)	(Zip Code)

(915) 225-8000

(Registrant’s telephone number, including area code)

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 ☒      No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).Yes ☒      No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☒	Accelerated filer  ☐
Non-accelerated filer   ☐	Smaller Reporting Company  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).Yes ☐      No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class	Outstanding at July 6, 2015
Common Shares, $0.10 par value, per share	28,617,758 shares

HELEN OF TROY LIMITED AND SUBSIDIARIES

FORM 10‐Q

TABLE OF CONTENTS

PAGE

PARTI.	FINANCIALINFORMATION
Item1.	FinancialStatements	2
Item2.	Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations	21
Item3.	QuantitativeandQualitativeDisclosuresaboutMarketRisk	37
Item4.	ControlsandProcedures	41
PART2.	OTHERINFORMATION
Item1.	LegalProceedings	43
Item1A.	RiskFactors	43
Item2.	UnregisteredSalesofEquitySecuritiesandUseofProceeds	44
Item6.	Exhibits	45
SIGNATURES		46

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PART I.   FINANCIAL INFORMATION

ITEM 1.   FINANCIAL STATEMENTS

HELEN OF TROY LIMITED AND SUBSIDIARIES

Consolidated Condensed Balance Sheets (Unaudited)

(in thousands, except shares and par value)

	May 31,		February 28,
	2015		2015
Assets
Assets, current:
Cash and cash equivalents	$	15,262	$	12,295
Receivables - principally trade, less allowances of $5,869 and $5,882		210,001		222,499
Inventory, net		299,300		293,081
Prepaid expenses and other current assets		11,111		9,715
Income taxes receivable		4,707		417
Deferred tax assets, net		25,362		26,753
Total assets, current		565,743		564,760
Property and equipment, net of accumulated depreciation of $84,165 and $82,154		125,329		126,068
Goodwill		582,479		549,727
Other intangible assets, net of accumulated amortization of $116,967 and $111,627		398,523		398,430
Deferred tax assets, net		2,461		2,132
Other assets, net of accumulated amortization of $9,489 and $9,166		12,603		12,638
Total assets	$	1,687,138	$	1,653,755
Liabilities and Stockholders' Equity
Liabilities, current:
Accounts payable, principally trade	$	113,384	$	98,564
Accrued expenses and other current liabilities		131,072		141,201
Deferred tax liabilities, net		186		200
Long-term debt, current maturities		23,800		21,900
Total liabilities, current		268,442		261,865
Long-term debt, excluding current maturities		415,007		411,307
Deferred tax liabilities, net		51,080		52,711
Other liabilities, noncurrent		20,472		23,307
Total liabilities		755,001		749,190
Commitments and contingencies
Stockholders' equity:
Cumulative preferred stock, non-voting, $1.00 par. Authorized 2,000,000 shares; none issued		-		-
Common stock, $0.10 par. Authorized 50,000,000 shares; 28,598,812 and 28,488,411 shares
issued and outstanding		2,860		2,849
Additional paid in capital		186,992		179,934
Accumulated other comprehensive income (loss)		17		(76)
Retained earnings		742,268		721,858
Total stockholders' equity		932,137		904,565
Total liabilities and stockholders' equity	$	1,687,138	$	1,653,755

See accompanying notes to consolidated condensed financial statements.

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HELEN OF TROY LIMITED AND SUBSIDIARIES

Consolidated Condensed Statements of Income (Unaudited)

(in thousands, except per share data)

	Three Months Ended May 31,
	2015		2014
Sales revenue, net	$	345,345	$	311,778
Cost of goods sold		202,026		192,258
Gross profit		143,319		119,520
Selling, general and administrative expense		113,776		87,397
Asset impairment charges		3,000		9,000
Operating income		26,543		23,123
Nonoperating income, net		138		50
Interest expense		(2,892)		(3,417)
Income before income taxes		23,789		19,756
Income tax expense (benefit):
Current		4,014		2,039
Deferred		(635)		1,319
Net income	$	20,410	$	16,398
Earnings per share:
Basic	$	0.72	$	0.56
Diluted	$	0.70	$	0.55
Weighted average shares of common stock used in
computing net earnings per share:
Basic		28,520		29,105
Diluted		29,088		29,616

See accompanying notes to consolidated condensed financial statements.

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HELEN OF TROY LIMITED AND SUBSIDIARIES

Consolidated Condensed Statements of Comprehensive Income (Unaudited)

(in thousands)

	Three Months Ended May 31,
	2015						2014
	Before				Net of		Before				Net of
	Tax		Tax		Tax		Tax		Tax		Tax
Income	$	23,789	$	(3,379)	$	20,410	$	19,756	$	(3,358)	$	16,398
Other comprehensive income
Cash flow hedge activity - interest rate swaps
Changes in fair market value		-		-		-		12		(5)		7
Settlements reclassified to income		-		-		-		914		(320)		594
Subtotal		-		-		-		926		(325)		601
Cash flow hedge activity - foreign currency contracts
Changes in fair market value		267		(68)		199		78		(17)		61
Settlements reclassified to income		(119)		13		(106)		166		(27)		139
Subtotal		148		(55)		93		244		(44)		200
Total other comprehensive income		148		(55)		93		1,170		(369)		801
Comprehensive income	$	23,937	$	(3,434)	$	20,503	$	20,926	$	(3,727)	$	17,199

See accompanying notes to consolidated condensed financial statements.

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HELEN OF TROY LIMITED AND SUBSIDIARIES

Consolidated Condensed Statements of Cash Flows (Unaudited)

(in thousands)

	Three Months Ended May 31,
	2015		2014
Cash provided (used) by operating activities:
Net income	$	20,410	$	16,398
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		10,354		8,500
Amortization of financing costs		291		257
Provision for doubtful receivables		(46)		118
Non-cash share-based compensation		2,061		1,295
Intangible asset impairment charges		3,000		9,000
Loss on the sale of property and equipment		-		1
Deferred income taxes and tax credits		(954)		1,321
Changes in operating capital, net of effects of acquisition of businesses:
Receivables		12,544		(4,479)
Inventories		(6,219)		(9,195)
Prepaid expenses and other current assets		(1,367)		1,641
Other assets and liabilities, net		(2,942)		(2,987)
Accounts payable		14,820		9,233
Accrued expenses and other current liabilities		(10,013)		(23,939)
Accrued income taxes		(4,440)		(4,193)
Net cash provided by operating activities		37,499		2,971
Cash provided (used) by investing activities:
Capital and intangible asset expenditures		(2,717)		(1,822)
Proceeds from the sale of property and equipment		7		-
Payment to acquire a business		(42,750)		-
Net cash used by investing activities		(45,460)		(1,822)
Cash provided (used) by financing activities:
Proceeds from line of credit		121,500		337,700
Repayment of line of credit		(114,000)		(102,700)
Repayment of long-term debt		(1,900)		(1,900)
Payment of financing costs		-		(1)
Proceeds from share issuances under share-based compensation plans, including tax benefits		5,009		2,935
Payment of tax obligations resulting from cashless share award exercises		-		(4,569)
Payments for repurchases of common stock		-		(273,598)
Share-based compensation tax benefit		319		127
Net cash provided (used) by financing activities		10,928		(42,006)
Net increase (decrease) in cash and cash equivalents		2,967		(40,857)
Cash and cash equivalents, beginning balance		12,295		70,027
Cash and cash equivalents, ending balance	$	15,262	$	29,170

See accompanying notes to consolidated condensed financial statements.

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HELEN OF TROY LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)

May 31, 2015

Note 1 - Basis of Presentation and Conventions Used in this Report

The accompanying consolidated condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly our consolidated financial position as of May 31, 2015 and February 28, 2015, and the results of our consolidated operations for the interim periods presented.We follow the same accounting policies when preparing quarterly financial data as we use for preparing annual data. These statements should be read in conjunction with the consolidated financial statements and the notes included in our latest annual report on Form 10-K for the fiscal year ended February 28, 2015, and our other reports on file with the Securities and Exchange Commission (the “SEC”).

In this report and the accompanying consolidated condensed financial statements and notes, unless otherwise indicated or the context suggests otherwise, references to “the Company”, “our Company”, “Helen of Troy”, “we”, “us”, or “our” refer to Helen of Troy Limited and its subsidiaries. We refer to the Company's common shares, par value $0.10 per share, as “common stock.” References to “OXO” refer to the operations of OXO International and certain of its affiliated subsidiaries that comprise our Housewares segment. References to “Kaz” refer to the operations of Kaz, Inc. and its subsidiaries, which comprise a segment within the Company referred to as the Healthcare / Home Environment segment. References to “Healthy Directions” refer to the operations of Healthy Directions, LLC and its subsidiaries, acquired on June 30, 2014, that comprise the Nutritional Supplements segment. We use product and service names in this report for identification purposes only and they may be protected in the United States and other jurisdictions by trademarks, trade names, service marks, and other intellectual property rights of the Company and other parties. The absence of a specific attribution in connection with any such mark does not constitute a waiver of any such right. All trademarks, trade names, service marks, and logos referenced herein belong to their respective owners. References to “the FASB” refer to the Financial Accounting Standards Board. References to “GAAP” refer to U.S. generally accepted accounting principles. References to “ASU” refer to the codification of GAAP in the Accounting Standards Updates issued by the FASB. References to “ASC” refer to the codification of GAAP in the Accounting Standards Codification issued by the FASB.

We are a global designer, developer, importer, marketer, and distributor of an expanding portfolio of brand-name consumer products. We have four segments: Housewares, Healthcare / Home Environment, Nutritional Supplements, and Beauty (formerly referred to as “Personal Care”). Our Housewares segment provides a broad range of innovative consumer products for the home. Product offerings include food preparation tools, gadgets, storage containers, cleaning, organization, and baby and toddler care products. The Healthcare / Home Environment segment focuses on healthcare devices such as thermometers, humidifiers, blood pressure monitors, and heating pads; water filtration systems, and small home appliances such as portable heaters, fans, air purifiers, and insect control devices. Our Nutritional Supplements segment is a leading provider of premium branded vitamins, minerals and supplements, as well as other health products sold directly to consumers. Our Beauty segment products include electric hair care, beauty care and wellness appliances; grooming tools and accessories; and liquid-, solid- and powder-based personal care and grooming products.

Our business is seasonal due to different calendar events, holidays and seasonal weather patterns. Historically, our highest sales volume and operating income occur in our third fiscal quarter ending November 30th. We purchase our products from unaffiliated manufacturers, most of which are located in China, Mexico and the United States.

Our consolidated condensed financial statements are prepared in U.S. Dollars and in accordance with GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. We have reclassified, combined or separately disclosed certain amounts in the prior period’s consolidated condensed financial statements and accompanying footnotes to conform to the current period’s presentation.These reclassifications had no effect on previously reported results of operations, working capital or stockholders’ equity.

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Note 2 – New Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that we adopt according to the various timetables the FASB specifies.  Unless otherwise discussed below, we believe the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial position, results of operations and cash flows upon adoption.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers”, issued as a new Topic, ASC Topic 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle of the guidance is that a Company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In April 2015, the FASB voted to propose deferral of the effective date of the new revenue standard by one year, but to permit entities to adopt one year earlier if they choose. The proposed deferral is not a final decision. Assuming the proposal is sustained after the FASB’s due process (including their evaluation of resulting public comments), we will be required to adopt the new standard in fiscal year 2019 and can adopt either retrospectively or as a cumulative effect adjustment as of the date of adoption. We are currently evaluating the effect this new accounting guidance will have on our consolidated results of operations, cash flows and financial position.

Note 3 – Commitments and Contingencies

We are involved in various legal claims and proceedings in the normal course of operations. We believe the outcome of these matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity.

Notes 7, 10, 12, and 13 to these consolidated condensed financial statements provide additional information regarding certain of our significant commitments and certain significant contingencies we have provided for in the accompanying consolidated condensed financial statements.

Our products are under warranty against defects in material and workmanship for periods ranging from two to five years. We estimate our warranty accrual using historical trends and believe that these trends are the most reliable method by which we can estimate our warranty liability. The following table summarizes the activity in our warranty accrual for the periods covered below:

ACCRUAL FOR WARRANTY RETURNS

(in thousands)

	Three Months Ended May 31,
	2015 (1)		2014
Beginning balance	$	23,553	$	19,269
Additions to the accrual		13,514		12,686
Reductions of the accrual - payments and credits issued		(16,173)		(12,815)
Ending balance	$	20,894	$	19,140

(1) For the fiscal quarter ended May 31, 2015, the table includes accrual additions of $2.33 million and related payments and credits of $2.39 million, attributed to Healthy Directions.

Note 4 – Earnings per Share

We compute basic earnings per share using the weighted average number of shares of common stock outstanding during the period.  We compute diluted earnings per share using the weighted average number of shares of common stock outstanding plus the effect of dilutive securities. Dilutive securities at any given point in time may consist of outstanding stock options, issued and contingently issuable unvested restricted share units, and other

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performance-based share awards. Options for common stock are excluded from the computation of diluted earnings per share if their effect is antidilutive.  See Note 15 to these consolidated condensed financial statements for more information regarding share-based payment arrangements. 

For the periods covered below, the basic and diluted shares are as follows:

WEIGHTED AVERAGE DILUTED SECURITIES

(in thousands)

	Three Months Ended May 31,
	2015	2014
Weighted average shares outstanding, basic	28,520	29,105
Incremental shares from share-based payment arrangements	568	511
Weighted average shares outstanding, diluted	29,088	29,616
Dilutive securities, stock options	798	728
Dilutive securities, unvested or unsettled share awards	294	231
Antidilutive securities, stock options	197	233

Note 5 – Segment Information

The following tables contain segment information for the periods covered below:

			Healthcare / Home		Nutritional
May 31, 2015 (thousands)	Housewares		Environment		Supplements		Beauty		Total
Sales revenue, net	$	65,186	$	143,042	$	39,440	$	97,677	$	345,345
Asset impairment charges		-		-		-		3,000		3,000
Operating income		11,183		8,418		2,620		4,322		26,543
Capital and intangible asset expenditures		325		300		1,131		961		2,717
Depreciation and amortization		1,008		5,063		1,968		2,315		10,354

			Healthcare / Home		Nutritional
May 31, 2014 (thousands)	Housewares		Environment		Supplements		Beauty		Total
Sales revenue, net	$	66,756	$	142,489	$	-	$	102,533	$	311,778
Asset impairment charges		-		-		-		9,000		9,000
Operating income		13,035		8,717		-		1,371		23,123
Capital and intangible asset expenditures		824		406		-		592		1,822
Depreciation and amortization		888		5,232		-		2,380		8,500

We compute segment operating income based on net sales revenue, less cost of goods sold, SG&A and any asset impairment charges associated with the segment. The SG&A used to compute each segment’s operating income is directly associated with the segment, plus shared service and corporate overhead expenses that are allocable to the segment.In fiscal year 2016, we began making an allocation of shared service and corporate overhead costs to the Nutritional Supplements segment. For the three months ended May 31, 2015, the allocations totaled $0.74 million. We do not allocate nonoperating income and expense, including interest or income taxes, to operating segments.

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Note 6 – Comprehensive Income (Loss)

The table below presents the changes in accumulated other comprehensive income (loss) by component and the amounts reclassified out of accumulated other comprehensive income (loss) for the 2016 fiscal year-to-date:

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT

(in thousands)

	Unrealized Holding Gains(Losses) on Cash Flow Hedges (1)
Balance at February 28, 2015	$	(76)
Other comprehensive income before reclassification		267
Amounts reclassified out of accumulated other comprehensive income		(119)
Tax effects		(55)
Other Comprehensive Income (Loss)		93
Balance at May 31, 2015	$	17

(1) Represents activity associated with foreign currency contracts. Includes net deferred tax (expense) benefits of ($0.02) and $0.03 million at May 31, 2015 and February 28, 2015, respectively.

Note 7 – Supplemental Balance Sheet Information

PROPERTY AND EQUIPMENT

(in thousands)

	Estimated
	Useful Lives			May 31,		February 28,
	(Years)			2015		2015
Land		-		$	12,800	$	12,800
Building and improvements	3	-	40		102,058		102,058
Computer, furniture and other equipment	3	-	15		63,837		64,464
Tools, molds and other production equipment	1	-	10		26,004		25,861
Construction in progress		-			4,795		3,039
Property and equipment, gross					209,494		208,222
Less accumulated depreciation					(84,165)		(82,154)
Property and equipment, net				$	125,329	$	126,068

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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

(in thousands)

	May 31,		February 28,
	2015		2015
Accrued compensation, benefits and payroll taxes	$	32,406	$	44,382
Accrued sales returns, discounts and allowances		24,072		24,271
Accrued warranty returns		20,894		23,553
Accrued advertising		23,935		18,930
Accrued product liability, legal and professional fees		6,280		6,001
Accrued royalties		6,392		7,683
Accrued property, sales and other taxes		7,060		6,850
Derivative liabilities, current		121		240
Other		9,912		9,291
Total accrued expenses and other current liabilities	$	131,072	$	141,201

OTHER LIABILITIES, NONCURRENT

(in thousands)

	May 31,		February 28,
	2015		2015
Deferred compensation liability	$	4,357	$	7,091
Liability for uncertain tax positions		10,145		10,295
Other liabilities		5,970		5,921
Total other liabilities, noncurrent	$	20,472	$	23,307

Note 8 – Goodwill and Intangible Assets

Annual Impairment Testing in the First Quarter of Fiscal Year 2016 - We performed our annual evaluation of goodwill and indefinite-lived intangible assets for impairment during the first quarter of fiscal year 2016. As a result of our testing of indefinite-livedtrademarks, we recorded a non-cash asset impairment charge of $3.00 million ($2.66 million after tax). The charge was related to a trademark in our Beauty segment, which was written down to its estimated fair value, determined on the basis of future discounted cash flows using the relief from royalty valuation method.

Annual Impairment Testing in the First Quarter of Fiscal Year 2015 - We performed our annual evaluation of goodwill and indefinite-lived intangible assets for impairment during the first quarter of fiscal year 2015. As a result of our testing of indefinite-lived trademarks and licenses, we recorded a non-cash asset impairment charge of $9.00 million ($8.16 million after tax). The charge was related to certain trademarks in our Beauty segment, which were written down to their estimated fair value, determined on the basis of future discounted cash flows using the relief from royalty valuation method.

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A summary of the carrying amounts and associated accumulated amortization for all intangible assets by operating segment follows:

GOODWILL AND INTANGIBLE ASSETS

(in thousands)

	May 31, 2015								February 28, 2015
	Gross		Cumulative						Gross		Cumulative
	Carrying		Goodwill		Accumulated		Net Book		Carrying		Goodwill		Accumulated		Net Book
	Amount		Impairments		Amortization		Value		Amount		Impairments		Amortization		Value
Housewares:
Goodwill	$	166,132	$	-	$	-	$	166,132	$	166,132	$	-	$	-	$	166,132
Trademarks - indefinite		75,200		-		-		75,200		75,200		-		-		75,200
Other intangibles - finite		15,756		-		(12,646)		3,110		15,754		-		(12,331)		3,423
Total Housewares		257,088		-		(12,646)		244,442		257,086		-		(12,331)		244,755
Healthcare / Home Environment:
Goodwill		284,510		-		-		284,510		251,758		-		-		251,758
Trademarks - indefinite		58,400		-		-		58,400		54,000		-		-		54,000
Licenses - finite		15,300		-		(10,118)		5,182		15,300		-		(9,377)		5,923
Licenses - indefinite		3,000		-		-		3,000		-		-		-		-
Other intangibles - finite		116,230		-		(46,607)		69,623		113,727		-		(43,848)		69,879
Total Healthcare / Home Environment		477,440		-		(56,725)		420,715		434,785		-		(53,225)		381,560
Nutritional Supplements:
Goodwill		96,486		-		-		96,486		96,486		-		-		96,486
Brand assets - indefinite		65,500		-		-		65,500		65,500		-		-		65,500
Other intangibles - finite		43,800		-		(5,736)		38,064		43,800		-		(4,171)		39,629
Total Nutritional Supplements		205,786		-		(5,736)		200,050		205,786		-		(4,171)		201,615
Beauty:
Goodwill		81,841		(46,490)		-		35,351		81,841		(46,490)		-		35,351
Trademarks - indefinite		51,754		-		-		51,754		54,754		-		-		54,754
Trademarks - finite		150		-		(83)		67		150		-		(82)		68
Licenses - indefinite		10,300		-		-		10,300		10,300		-		-		10,300
Licenses - finite		13,696		-		(11,295)		2,401		13,696		-		(11,216)		2,480
Other intangibles - finite		46,404		-		(30,482)		15,922		47,876		-		(30,602)		17,274
Total Beauty		204,145		(46,490)		(41,860)		115,795		208,617		(46,490)		(41,900)		120,227
Total	$	1,144,459	$	(46,490)	$	(116,967)	$	981,002	$	1,106,274	$	(46,490)	$	(111,627)	$	948,157

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The following table summarizes the amortization expense attributable to intangible assets for the periods covered in this quarterly report, as well as our estimated amortization expense for the fiscal years 2016 through 2021.

AMORTIZATION OF INTANGIBLE ASSETS

(in thousands)

Aggregate Amortization Expense
For the three months ended
May 31, 2015	$	6,814
May 31, 2014	$	5,259

Estimated Amortization Expense
For the fiscal years ended
February 2016	$	27,267
February 2017	$	26,886
February 2018	$	23,129
February 2019	$	18,535
February 2020	$	16,995
February 2021	$	14,716

Note 9 – Acquisitions

Vicks VapoSteam Acquisition  -On March 31, 2015, the Company announced the acquisition of the Vicks VapoSteam U.S. liquid inhalant business from The Procter & Gamble Company (“P&G”), which includes a fully paid-up license of P&G’s Vicks VapoSteam trademarks. In a related transaction, the Company acquired a fully paid-up U.S. license of P&G’s Vicks VapoPad trademarks for scent pads. The vast majority of Vicks VapoSteam and VapoPads are used in Vicks humidifiers, vaporizers and other health care devices already marketed by the Company. The aggregate purchase price for the two transactions was approximately $42.75 million financed primarilywithborrowings under the Credit Agreement,asdefined in Note 10 to these consolidated condensed financial statements. The acquired VapoSteam business had annual revenues of approximately $10 million in calendar year 2014. VapoSteam operations are reported in the Healthcare / Home Environment segment.

We have completed our analysis of the economic lives of the assets acquired and determined the appropriate allocation of the initial purchase price. We assigned $7.40 million to trademarks with indefinite economic lives. We assigned $1.20 million to customer relationships and $1.20 million to product formulations and will amortize these assets over expected lives of 19.5 and 20.0 years, respectively. For the customer relationships, we used historical attrition rates to assign an expected life. For product formulations, we used our best estimate of the remaining product life. The trademarks are considered to have indefinite lives that are not subject to amortization. Substantially all the remaining balance of the purchase price was assigned to goodwill,which is expected to be deductible for income tax purposes.The fair values of the intangible assets were estimated by applying income and market approaches. These fair value measurements were based on significant inputs that are not observable in the market and, therefore, represent Level 3 measurements.

Healthy Directions Acquisition -On June 30, 2014, we completed the acquisition of Healthy Directions, LLC and its subsidiaries (“Healthy Directions”), a leader in the premium branded vitamin, mineral and supplement market, for a total cash purchase price of $195.94 million. The purchase price was funded primarily with borrowings under the Credit Agreement.  The sellers were certain funds controlled by American Securities, LLC and ACI Capital Co., LLC. Significant assets acquired include inventory, property and equipment, customer relationships, brand assets, and goodwill. Acquisition-related expenses incurred during fiscal year 2015 were approximately $3.61 million ($2.31 million after tax). Healthy Directions reports its operations as the Nutritional Supplements segment.

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We accounted for the acquisition as the purchase of a business and recorded the excess purchase price as goodwill. The goodwill recognized is expected to be deductible for income tax purposes. As of February 28, 2015, we completed our analysis of the economic lives of all the assets acquired and determined the appropriate allocation of the initial purchase price. We assigned the acquired brand assets an indefinite economic life and are amortizing the customer relationships over an expected weighted average life of approximately seven years. For the customer relationships, we used historical attrition rates to assign an expected life. Since the brand assets acquired are considered to have an indefinite life, they are not subject to amortization.

The following schedule presents the acquisition date fair value of the net assets of Healthy Directions. These balances are preliminary and may be subject to additional adjustment.

HEALTHY DIRECTIONS - NET ASSETS RECORDED UPON ACQUISITION AT JUNE 30, 2014

(in thousands)

Assets:
Receivables	$	257
Inventory		6,226
Prepaid expenses and other current assets		1,875
Property and equipment		5,962
Goodwill		95,308
Brand assets - indefinite		65,500
Customer relationships - definite		43,800
Subtotal - assets		218,928
Liabilities:
Accounts payable		6,479
Accrued expenses		13,964
Other long-term liabilities		2,542
Subtotal - liabilities		22,985
Net assets recorded	$	195,943

The fair values of the above assets acquired and liabilities assumed were estimated by applying income and market approaches.These fair value measurements are based on significant inputs that are not observable in the market and, therefore, represent Level 3 measurements. Key assumptions included various discount rates based upon a 14.6 percent weighted average cost of capital, a royalty rate of 5 percent used in the determination of brand assets, and a customer attrition rate of 14 percent per year used in the determination of customer relationship values.

Note 10 – Debt

We have a Credit Agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent, and other lenders that provides for an unsecured total revolving commitment of $650 million as of May 31, 2015. The commitment under the Credit Agreement terminates on January 16, 2020. Borrowings accrue interest under one of two alternative methods as described in the Credit Agreement. With each borrowing against our credit line, we can elect the interest rate method based on our funding needs at the time. We also incur loan commitment fees and letter of credit fees under the Credit Agreement. Outstanding letters of credit reduce the borrowing availability under the Credit Agreement on a dollar-for-dollar basis.  As of May 31, 2015, the outstanding revolving loan principal balance was $345 million and there were $0.78 million of open letters of credit outstanding against the Credit Agreement. For the fiscal quarter ended May 31, 2015, borrowings under the Credit Agreement incurred interest charges at rates ranging from 1.43 to 4.00 percent. For the fiscal quarter ended May 31,2014, borrowings under the Credit Agreement incurred interest charges at rates ranging from 1.90 to 4.00 percent. As of May 31, 2015, the amount available for borrowings under the Credit Agreement was $304.22 million.

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A summary of our long-term debt is as follows:

LONG-TERM DEBT

(dollars in thousands)

	Original
	Date	Interest			May 31,		February 28,
	Borrowed	Rates		Matures	2015		2015
$37.61 million unsecured loan with the Mississippi Business Finance Corporation (the "MBFC Loan"), interest is set and payable quarterly at a Base Rate, plus a margin of up to 1.00%, or applicable LIBOR plus a margin of up to 2.00%, as determined by the interest rate elected and the Leverage Ratio. Loan subject to holder's call on or after March 1, 2018. Loan can be prepaid without penalty. (1)	03/13	Floating		03/23	$	33,807	$	35,707
$100 million unsecured Senior Notes payable at a fixed interest rate of 3.90%. Interest payable semi-annually. Annual principal payments of $20 million began in January 2014. Prepayment of notes are subject to a "make whole" premium.	01/11	3.90	%	01/18		60,000		60,000
Credit Agreement	01/15	Floating		01/20		345,000		337,500
Total long-term debt						438,807		433,207
Less current maturities of long-term debt						(23,800)		(21,900)
Long-term debt, excluding current maturities					$	415,007	$	411,307

(1) A  $1.90 million principal payment was made on March 1, 2015.  The remaining loan balance is payable as follows: $3.80 million on March 1, 2016; $5.70 million on March 1, 2017; $1.90 million annually on March 1, 2018 through 2022; and $14.81 million on March 1, 2023.  Any remaining outstanding principal and interest is due upon maturity on March 1, 2023.

The fair market value of the fixed rate debt at May 31, 2015, computed using a discounted cash flow analysis was $61.81 million,compared to the $60 million book value and represents a Level 2 liability. Our other long-term debt has floating interest rates, and its book value approximates its fair value at May 31, 2015.

All of our debt is unconditionally guaranteed, on a joint and several basis, by the Company and certain of its subsidiaries. Our debt agreements require the maintenance of certain financial covenants, including maximum leverage ratios, minimum interest coverage ratios and minimum consolidated net worth levels (as each of these terms is defined in the various agreements).  Our debt agreements also contain other customary covenants, including among other things, covenants restricting or limiting the Company, except under certain conditions set forth therein, from (1) incurring debt, (2) incurring liens on its properties, (3) making certain types of investments, (4) selling certain assets or making other fundamental changes relating to mergers and consolidations, and (5) repurchasing shares of our common stock and paying dividends.

As of May 31, 2015, our debt agreements effectively limited our ability to incur more than $284.60 million of additional debt from all sources, including the Credit Agreement. We were in compliance with the terms of these agreements as of May 31, 2015.  

Note 11 – Income Taxes

Income tax expense for the fiscal quarter ended May 31, 2015 was 14.2 percent of income before income taxes, compared to 17.0 percent for the same period last year. The year-over-year comparison of our effective tax rates was primarily impacted by shifts in the mix of taxable income in our various tax jurisdictions.Our effective tax rates were unfavorably impacted by asset impairment charges of $3.00 million for the fiscal quarter ended May 31, 2015, and $9.00 million for the fiscal quarter ended May 31,2014, for which the related tax benefits were $0.34 and $0.86 million, respectively.

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Note 12 – Fair Value

The fair value hierarchy of our financial assets and liabilities carried at fair value and measured on a recurring basis is as follows:

FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES

(in thousands)

	Fair Values at
	May 31, 2015
	(Level 2) (1)
Assets:
Money market accounts	$	623
Foreign currency contracts		158
Total assets	$	781
Liabilities:
Fixed rate debt - (2)	$	61,807
Floating rate debt		378,807
Foreign currency contracts		121
Total liabilities	$	440,735

	Fair Values at
	February 28, 2015
	(Level 2) (1)
Assets:
Money market accounts	$	1,692
Foreign currency contracts		129
Total assets	$	1,821
Liabilities:
Fixed rate debt - (2)	$	62,006
Floating rate debt		373,207
Foreign currency contracts		240
Total liabilities	$	435,453

(1) Our financial assets and liabilities are classified as Level 2 because their valuation is dependent on observable inputs and other quoted prices for similar assets or liabilities, or model-derived valuations whose significant value drivers are observable.

(2)  Debt values are reported at estimated fair value in these tables, but are recorded in the accompanying consolidated condensed balance sheets at the undiscounted value of remaining principal payments due.

The carrying amounts of cash and cash equivalents, receivables and accounts payable approximate fair value because of the short maturity of these items.  Money market accounts are included in cash and cash equivalents in the accompanying consolidated condensed balance sheets and are classified as Level 2 items.

We classify our fixed and floating rate debt as Level 2 liabilities because the estimation of their fair market value requires the use of discount rates based upon current market rates of interest for debt with comparable terms. These discount rates are significant other observable market inputs. The fair market value of the fixed rate debt was computed using a discounted cash flow analysis and discount rates of 1.96 percent at May 31, 2015 and 2.05

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percent at February 28, 2015. All other long-term debt has floating interest rates, and its book value approximates its fair value as of the reporting date.

We use derivatives for hedging purposes. As of May 31, 2015, our derivatives consist of foreign currency contracts. We determine the fair value of our derivative instruments based on Level 2 inputs in the fair value hierarchy. See Notes 6, 7 and 13 to these consolidated condensed financial statements for more information on our hedging activities.

The Company’s other non-financial assets include goodwill and other intangible assets, which we classify as Level 3 assets. These assets are measured at fair value on a non-recurring basis as part of the Company’s impairment assessments and as circumstances require. As discussed in Note 8 to these consolidated condensed financial statements, in connection with our annual impairment testing during the fiscal quarter ended May 31, 2015, we recorded a non-cash asset impairment charge of $3.00 million ($2.66 million after tax). The charge related to a trademark in our Beauty segment, which was written down to its estimated fair value, determined on the basis of future discounted cash flows using the relief from royalty valuation method.

Note 13 – Financial Instruments and Risk Management

Foreign Currency Risk - Our functional currency is the U.S. Dollar. By operating internationally, we are subject to foreign currency risk from transactions denominated in currencies other than the U.S. Dollar (“foreign currencies”). Such transactions include sales, certain inventory purchases and operating expenses. As a result of such transactions, portions of our cash, trade accounts receivable and trade accounts payable are denominated in foreign currencies. During the fiscal quarters ended May 31, 2015 and 2014, approximately 14 and 15 percent, respectively, of our net sales revenue was in foreign currencies. These sales were primarily denominated in British Pounds, Euros, Mexican Pesos, Canadian Dollars, and Venezuelan Bolivars. We make most of our inventory purchases from the Far East and primarily use the U.S. Dollar for such purchases. In our consolidated condensed statements of income, exchange gains and losses resulting from the remeasurement of foreign taxes receivable, taxes payable, deferred tax assets, and deferred tax liabilities, are recognized in their respective income tax lines, and all other foreign exchange gains and losses from remeasurement of the balance sheet are recognized in SG&A. For the fiscal quarter ended May 31, 2015, we recorded net foreign exchange losses, including the impact of currency hedges, of $0.88 million in SG&A and gains of $0.14 million in income tax expense. For the fiscal quarter ended May 31, 2014, we recorded net foreign exchange losses, including the impact of currency hedges, of $0.03 million in SG&A and gains of $0.04 million in income tax expense.

We have historically hedged against certain foreign currency exchange rate risk by using a series of forward contracts designated as cash flow hedges to protect against the foreign currency exchange risk inherent in our forecasted transactions denominated in currencies other than the U.S. Dollar. We do not enter into any forward exchange contracts or similar instruments for trading or other speculative purposes.

Chinese Renminbi Currency Exchange Uncertainties - A significant portion of the products we sell are purchased from third-party manufacturers in China. During fiscal year 2015 and through the end of our first quarter in fiscal year 2016, the Chinese Renminbi remained relatively flat against the U.S. Dollar. However, China’s currency intervention strategy with respect to the U.S. Dollar is continuously evolving. If China’s currency begins to fluctuate against the U.S. Dollar in the short-to-intermediate term, our product costs could increase over time.

Venezuelan Bolivar Currency Exchange Uncertainties - In February 2013, the Venezuelan government devalued its currency from 4.30 to 6.30 Bolivars per U.S. Dollar for all goods and services. In March 2013, the Venezuelan government announced an additional complementary auction-based exchange rate mechanism known as SICAD 1. SICAD 1 was made available to certain companies that operate in designated industry sectors. At May 31, 2015, the SICAD 1 rate was 12 Bolivars to the U.S. Dollar.

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In early 2014, the Venezuelan government created a National Center of Foreign Commerce (“CENCOEX”) to control the multiple currency exchange rate mechanisms that may be available for a company to exchange funds.  CENCOEX was granted the authority to determine the sectors that will be allowed to buy U.S. Dollars in SICAD auctions, and subsequently introduced a more accessible market-based, SICAD 2 daily auction exchange market. 

In February 2015, the Venezuelan government unveiled its latest foreign exchange mechanism known as SIMADI, which replaced the SICAD 2 rate as the lowest rate in Venezuela’s three-tier foreign exchange system.  Under the latest program, SICAD 1 (now referred to as “SICAD”) is still being used in limited circumstances, which we believe preclude us from accessing such rates if we chose to do so. SIMADI is a somewhat less restrictive auction system whose value is determined by market forces. SIMADI is currently under a trial period and accounts for a small percentage of Venezuela’s foreign exchange. At May 31, 2015, the SIMADI rate was approximately 199 Bolivars to the U.S. Dollar.

Despite the recent changes made by the Venezuelan government, there remains a significant degree of uncertainty as to which exchange markets might be available to the Company. To date, we have not gained access to U.S. Dollars in Venezuela through either SICAD or SIMADI mechanisms, nor do we intend to do so. As of May 31, 2015, these auctions had not eliminated or changed the official rate of 6.30 Bolivars per U.S. Dollar.

Our business in Venezuela continues to be entirely self-funded with earnings from operations. We have no current need or intention to repatriate Venezuelan earnings and remain committed to the business for the long-term. Within Venezuela, we market primarily liquid-, solid- and powder-based personal care and grooming products, which are sourced almost entirely within the country. We do not have, nor do we foresee having, any need to access SICAD or SIMADI. Accordingly, we continue to utilize the official rate of 6.30 Bolivars per U.S. Dollar to re-measure our Venezuelan financial statements.

For the fiscal quarters ended May 31, 2015 and 2014, sales in Venezuela represented approximately

1.2 and 0.6 percent, respectively, of the Company’s consolidated net sales revenue. At May 31, 2015, we had a U.S. Dollar based net investment in our Venezuelan business of $11.60 million, consisting almost entirely of working capital.

Developments within the Venezuelan economy, including any future governmental interventions, are beyond our ability to control or predict, and we cannot assess impacts, if any, such events may have on our Venezuelan business.  We will continue to closely monitor the applicability and viability of the various exchange mechanisms. 

Interest Rate Risk – Interest on our outstanding debt as of May 31, 2015 is both floating and fixed.  Fixed rates are in place on $60 million of 3.90% Senior Notes due January 2018, while floating rates are in place on the balance of all other debt outstanding, which totaled$378.81 million as of May 31, 2015.  If short-term interest rates increase, we will incur higher interest rates on any outstanding balances under our Credit Agreement and the MBFC Loan.

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The fair values of our derivative instruments are as follows:

FAIR VALUES OF DERIVATIVE INSTRUMENTS

(in thousands)

	May 31, 2015
					Prepaid		Accrued
					Expenses		Expenses
		Final			andOther		andOther
		Settlement	Notional		Current		Current
Designated as hedging instruments	HedgeType	Date	Amount		Assets		Liabilities
Foreign currency contracts - sell Canadian Dollars	Cash flow	2/2016	$	13,250	$	143	$	-
Foreign currency contracts - sell Euro	Cash flow	2/2016	€	11,000		15		-
Foreign currency contracts - sell Pounds	Cash flow	2/2016	£	5,700		-		121
Total fair value					$	158	$	121

	February 28, 2015
					Prepaid		Accrued
					Expenses		Expenses
		Final			and Other		and Other
		Settlement	Notional		Current		Current
Designated as hedging instruments	Hedge Type	Date	Amount		Assets		Liabilities
Foreign currency contracts - sell Euro	Cash flow	1/2016	€	10,000	$	129	$	-
Foreign currency contracts - sell Pounds	Cash flow	2/2016	£	6,900		-		240
Total fair value					$	129	$	240

The pre-tax effect of derivative instruments for the periods covered in this quarterly report are as follows:

PRE-TAX EFFECT OF DERIVATIVE INSTRUMENTS

(in thousands)

	Three Months Ended May 31,
	Gain/(Loss)				Gain/(Loss)Reclassified
	RecognizedinOCI				fromAccumulatedOther
	(effectiveportion)				ComprehensiveIncome(Loss)intoIncome
	2015		2014		Location	2015		2014
Currency contracts - cash flow hedges	$	267	$	78	SG&A	$	119	$	(166)
Interest rate swaps - cash flow hedges		-		12	Interestexpense		-		(914)
Total	$	267	$	90		$	119	$	(1,080)

We expect net gains of $0.04million associated with foreign currency contracts currently reported in accumulated other comprehensive income, to be reclassified into income over the next twelve months. The amount ultimately realized, however, will differ as exchange rates change and the underlying contracts settle.

Counterparty Credit Risk - Financial instruments, including foreign currency contracts, expose us to counterparty credit risk for nonperformance. We manage our exposure to counterparty credit risk by only dealing with counterparties who are substantial international financial institutions with significant experience using such derivative instruments. Although our theoretical credit risk is the replacement cost at the then-estimated fair value of these instruments, we believe that the risk of incurring credit losses is remote.

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Note 14 – Repurchase of Helen of Troy Common Stock

As of May 31, 2015, we were authorized by our Board of Directors to purchase up to $265.43 million of common stock in the open market or through private transactions. On March 14, 2014, the Company completed a modified “Dutch auction” tender offer resulting in the repurchase of 3,693,816 shares of its outstanding common stock at a total cost of $247.83 million, including tender offer transaction-related costs. The Company also repurchased 408,327 shares of outstanding common stock on the open market at a total cost of $25.77 million during the fiscal quarter ended May 31, 2014.

Our current equity-based compensation plans include provisions that allow for the “net exercise” of stock options by all plan participants. In a net exercise, any required payroll taxes, federal withholding taxes and exercise price of the shares due from the option holder can be paid for by having the option holder tender back to the Company a number of shares at fair value equal to the amounts due. These transactions are accounted for by the Company as a purchase and retirement of shares and are included in the table below as common stock received in connection with share-based compensation.

For the fiscal quarter ended May 31, 2015, we did not repurchase any shares of common stock. Additionally, no shares of common stock were tendered by our employees in "net exercise" transactions.During the fiscal quarter ended May 31, 2014, certain employees tendered 1,993 shares of common stock having a market value of $59.13 per share, or $0.12 million in the aggregate, and our former CEO tendered 68,086 shares of common stock having a market value of $67.10 per share, or $4.57 million in the aggregate, as payment for related federal tax obligations arising from the vesting and settlement of performance-based restricted stock units and restricted stock awards. 

The following table summarizes our share repurchase activity for the periods covered below:

SHARE REPURCHASES

	Three Months Ended May 31,
	2015		2014
Common stock repurchased on the open market or through tender offer
Number of shares		-		4,102,143
Aggregate market value of shares (in thousands)	$	-	$	273,599
Average price per share	$	-	$	66.70
Common stock received in connection with share-based compensation
Number of shares		-		70,079
Aggregate market value of shares (in thousands)	$	-	$	4,686
Average price per share	$	-	$	66.87

Note 15 – Share-Based Compensation Plans

We have share-based awards outstanding under several share-based compensation plans.  During the fiscal quarter ended May 31, 2015, the Company had the following share-based compensation activity:

· We granted options to purchase 145,500 shares of common stock to certain employees. The fair values of these options were estimated using the Black-Scholes option pricing model to estimate fair values ranging from $24.34 to $29.68 for grants with terms of four and five  years. The following assumptions were used for the grants: expected lives ranging from 4.05 to 4.35 years; risk-free interest rates ranging from 1.28 to 1.37 percent; zero dividend yield; and expected volatilities ranging from 37.26 to 39.48 percent.

· We issued 1,575 restricted shares to non-employee Board members with total grant date fair values of $0.12 million and a share price of $78.11.

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· During the fiscal quarter ended May 31, 2015, we issued 2,000 shares of common stock to our CEO at a fair value of $89.12 per share.

· Employees exercised stock options to purchase 106,825 shares of common stock.

We recorded the following share-based compensation expense in SG&A for the periods covered below:

SHARE-BASED PAYMENT EXPENSE

(in thousands, except per share data)

	Three Months Ended May 31,
	2015		2014
Stock options	$	693	$	704
Directors stock compensation		175		247
Performance based and other stock awards		1,245		418
Share-based payment expense		2,113		1,369
Less income tax benefits		(319)		(127)
Share-based payment expense, net of income tax benefits	$	1,794	$	1,243
Earnings per share impact of share based payment expense:
Basic	$	0.06	$	0.04
Diluted	$	0.06	$	0.04

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ITEM 2.   MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This discussion (“MD&A”) contains a number of forward-looking statements, all of which are based on current expectations. Actual results may differ materially due to a number of factors, including those discussed in Part I, Item 3.“Quantitative and Qualitative Disclosures about Market Risk” and “Information Regarding Forward- Looking Statements” in this report and “Risk Factors” in the Company’s most recent annual report on Form 10-K and its other filings with the Securities and Exchange Commission (the “SEC”). This discussion should be read in conjunction with our consolidated condensed financial statements included under Part I, Item 1. of this report.

Throughout MD&A, we refer to certain measures used by management to evaluate financial performance. We also may refer to a number of financial measures that are not defined under GAAP, but have corresponding GAAP-based measures. Where non-GAAP measures appear, we provide tables reconciling these to their corresponding GAAP-based measures and make reference to a discussion of their use. We believe these measures provide investors with important information that is useful in understanding our business results and trends.  Please see “Explanation of Certain Terms and Measures Used in MD&A” beginning on page 35 for more information on the use and calculation of certain GAAP-based and non-GAAP financial measures.

OVERVIEW

We operate our business under four segments: Housewares, Healthcare / Home Environment, Nutritional Supplements, and Beauty (formerly referred to as “Personal Care”). Our Housewares segment provides a broad range of innovative consumer products for the home. Product offerings include food preparation tools, gadgets, storage containers, cleaning, organization, and baby and toddler care products. The Healthcare / Home Environment segment focuses on healthcare devices such as thermometers, humidifiers, blood pressure monitors, and heating pads; water filtration systems; and small home appliances such as portable heaters, fans, air purifiers, and insect control devices. Our Nutritional Supplements segment is a leading provider of premium branded vitamins, minerals and supplements, as well as other health products sold directly to consumers. Our Beauty segment products include electric hair care, beauty care and wellness appliances; grooming tools and accessories; and liquid-, solid- and powder-based personal care and grooming products.

The Nutritional Supplements segment sells directly to consumers. Our other segments sell their products primarily through mass merchandisers, drugstore chains, warehouse clubs, catalogs, grocery stores, and specialty stores. In addition, the Beauty segment sells extensively through beauty supply retailers and wholesalers, and the Healthcare / Home Environment segment sells certain of its product lines through medical distributors and other products through home improvement stores. We purchase our products from unaffiliated manufacturers, most of which are located in China, Mexico and the United States.

Our business is seasonal due to different calendar events, holidays and seasonal weather patterns. Historically, our highest sales volume and operating income occur in our third fiscal quarter ending November 30th.

Our business is dependent upon discretionary consumer demand for most of our products and primarily operates within mature and highly developed consumer markets. The principal driver of our operating performance is the strength of the U.S. retail economy, as approximately 79 percent of our fiscal year 2015 net sales revenue was from U.S. shipments. We believe that domestic macroeconomic conditions are improving at a modest rate. Internationally, we continue to be negatively affected by the strength of the U.S. Dollar, which had the effect of lowering U.S. Dollar reported consolidated net sales revenue by $7.71 million during the fiscal quarter ended May 31, 2015, compared to the same period last year. While some domestic economic indicators are trending positively, we continue to believe consumers remain cautious and are reactionary to global events.

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We continue to believe that the growth in the internet as a sales channel is eroding market share in the traditional “brick and mortar” channels. For the fiscal quarter ended May 31, 2015, sales to internet-based customers and internet-based divisions of traditional retail customers grew approximately 38 percent compared to the same period last year and comprised approximately 10 percent of our consolidated net sales revenue. We believe it will become increasingly important to leverage our domestic distribution capabilities to meet the logistical challenge of higher frequency, smaller order size shipments. We also believe our acquisition of Healthy Directions has brought additional internet and direct-to-consumer expertise to our Company, which we hope will provide us with future operational scale to further develop the internet channel across other product lines.

Significant Recent Developments

· On March 31, 2015, the Company announced the acquisition of the Vicks VapoSteam U.S. liquid inhalant business from The Procter & Gamble Company (“P&G”), which includes a fully paid-up license of P&G’s Vicks VapoSteam trademarks. In a related transaction, the Company acquired a fully paid-up U.S. license of P&G’s Vicks VapoPad trademarks for scent pads. The vast majority of Vicks VapoSteam and VapoPads are used in Vicks humidifiers, vaporizers and other health care devices already marketed by the Company. The aggregate purchase price for the two transactions was approximately $42.75 millionfinanced primarily with borrowings under the Credit Agreement, as defined further below. The acquired VapoSteam business had annual revenues of approximately $10 million in calendar year 2014 and we expect it to be accretive to fiscal year 2016 earnings per share. The VapoSteam acquisition provided incremental net sales revenue of $0.65 million for the two months of operations included in the fiscal quarter ended May 31, 2015. The VapoSteam business is highly seasonal and is expected to peak in our third fiscal quarter, therefore, the net sales revenue in the fiscal quarter ended May 31, 2015 is not expected to be indicative of expected annualized net sales revenue. The VapoSteam operations are reported in the Healthcare / Home Environment segment.

· In March 2015, we announced the introduction of a premium line of kitchen electrics under the OXO On brand. The initial line will consist of motorized toasters, coffee makers, a coffee grinder, an electric kettle, an immersion blender, and a hand mixer. The line will ship initially in the U.S. offering several unique features, as well as thoughtful design elements based on OXO’s universal design ethos. We believe OXO On appliances will provide the simplicity, functionality, and thoughtfulness consumers have come to expect from the OXO brand. The line is expected to ship to retail stores in the second half of fiscal year 2016.

· During the quarter ended May 31, 2015, we worked on the transition of the Nutritional Supplements order fulfillment operations to our Southaven, Mississippi distribution facility. We expect the transition to be completed in the third quarter of fiscal year 2016. 

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Financial Performance Highlights

Consolidated net sales revenue for the fiscal quarter ended May 31, 2015 increased $33.57 million to $345.35 million, compared to $311.78 million for the same period last year, an increase of 10.8 percent. Core business net sales revenue declined $6.53 million, or 2.1 percent.  Net sales revenue for the fiscal quarter ended May 31, 2015 includes the unfavorable impact of net foreign exchange fluctuations of $7.71 million, compared to the same period last year, most of which impacted the Healthcare / Home Environment and Beauty segments. The West Coast port disruption also negatively impacted net sales revenue, mostly in the Beauty segment, as certain products were not available to ship. Net sales revenue in our Housewares segment decreased $1.57 million, or 2.4 percent, compared to the same period last year. Net sales revenue in our Healthcare / Home Environment segment increased $0.55 million, or 0.4 percent, compared to the same period last year. The Nutritional Supplement segment contributed net sales revenue of $39.44 million. Net sales revenue in our Beauty segment decreased $4.86 million, or 4.7 percent, compared to the same period last year.

In addition to our net sales revenue performance discussed above, key results for the fiscal quarter ended May 31, 2015 include the following:

Consolidated gross profit margin as a percentage of net sales revenue increased 3.2 percentage points to 41.5 percent for the fiscal quarter ended May 31, 2015, compared to 38.3 percent for the same period last year.

Our SG&A ratio increased by 4.9 percentage points to 32.9 percent for the fiscal quarter ended May 31, 2015, compared to 28.0 percent for the same period last year.

Operating income was $26.54 million for the fiscal quarter ended May 31, 2015, compared to $23.12 million for the same period last year. Operating income for the fiscal quarter ended May 31, 2015 includes non-cash intangible asset impairment charges of $3.00 million, compared to $9.00 million for the same period last year.

· Adjusted operating margin decreased 1.3 percentage points to 11.1 percent for the fiscal quarter ended May 31, 2015, compared to 12.4 percent for the same period last year. The decline in adjusted operating margin was primarily due to the impact of foreign currency fluctuations, the West Coast port disruption;investments in advertising, marketing, new products, and channel development; and a shift in the timing of customer orders in our Housewares segment into the fourth quarter of fiscal year 2015 and the second quarter of fiscal year 2016.

· Income tax expense was $3.38 million, or 14.2 percent of income before taxes, for the fiscal quarter ended May 31, 2015, compared to $3.36 million, or 17.0 percent of income before taxes, for the same period last year.

For the fiscal quarter ended May 31, 2015, our net income was $20.41 million, compared to $16.40 million for the same period last year. Our diluted earnings per share was $0.70 for the the fiscal quarter ended May 31, 2015, compared to $0.55 for the same period last year.

Adjusted income was $30.70 million for the fiscal quarter ended May 31, 2015, compared to $30.76 million for the same period last year. Our adjusted diluted EPS was $1.06 for the fiscal quarter ended May 31, 2015, compared to $1.04 for the same period last year.

Adjusted operating income, adjusted operating margin, adjusted income, and adjusted diluted EPS are non-GAAP financial measures as contemplated by SEC Regulation G, Rule 100. These measures are discussed further, and reconciled to their applicable GAAP-based measures on pages 28, 29 and 30.

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RESULTS OF OPERATIONS

The following table sets forth, for the periods indicated, our selected operating data, in U.S. Dollars, as a year-over-year percentage change and as a percentage of net sales revenue. We will refer to this table in the discussion of results of operations which follows:

SELECTED OPERATING DATA

(dollars in thousands)

	Three Months Ended May 31,								% of Sales Revenue, net
	2015 (1)		2014		$ Change		% Change		2015		2014
Sales revenue by segment, net
Housewares	$	65,186	$	66,756	$	(1,570)	(2.4)	%	18.9	%	21.4	%
Healthcare / Home Environment		143,042		142,489		553	0.4	%	41.4	%	45.7	%
Nutritional Supplements		39,440		-		39,440	*		11.4	%	-	%
Beauty		97,677		102,533		(4,856)	(4.7)	%	28.3	%	32.9	%
Total sales revenue, net		345,345		311,778		33,567	10.8	%	100.0	%	100.0	%
Cost of goods sold		202,026		192,258		9,768	5.1	%	58.5	%	61.7	%
Gross profit		143,319		119,520		23,799	19.9	%	41.5	%	38.3	%
Selling, general and administrative expense		113,776		87,397		26,379	30.2	%	32.9	%	28.0	%
Asset impairment charges		3,000		9,000		(6,000)	(66.7)	%	0.9	%	2.9	%
Operating income		26,543		23,123		3,420	14.8	%	7.7	%	7.4	%
Nonoperating income (expense), net		138		50		88	176.0	%	0.0	%	0.0	%
Interest expense		(2,892)		(3,417)		525	(15.4)	%	(0.8)	%	(1.1)	%
Total other expense		(2,754)		(3,367)		613	(18.2)	%	(0.8)	%	(1.1)	%
Income before income taxes		23,789		19,756		4,033	20.4	%	6.9	%	6.3	%
Income tax expense		3,379		3,358		21	0.6	%	1.0	%	1.1	%
Net income	$	20,410	$	16,398	$	4,012	24.5	%	5.9	%	5.3	%

(1) Includes three months of operations of Healthy Directions, which was acquired on June 30, 2014 and two months of operations of the VapoSteam business, which was acquired on March 31, 2015.

* Calculation is not meaningful.

First Quarter of Fiscal Year 2016 Compared to First Quarter of Fiscal Year 2015

Consolidated net sales revenue:

Consolidated net sales revenue for the fiscal quarter ended May 31, 2015 increased $33.57 million to $345.35 million, compared to $311.78 million for the same period last year, an increase of 10.8 percent. Net sales revenue in our Housewares segment decreased $1.57 million, or 2.4 percent, compared to the same period last year. The decline in net sales revenue was primarily due to a shift in the timing of customer orders into the fourth quarter of fiscal year 2015 and the second quarter of fiscal year 2016. Net sales revenue in the Housewares segment was also impacted by inventory adjustments at several retailers. Net sales revenue in our Healthcare / Home Environment segment increased $0.55 million, or 0.4 percent, compared to the same period last year, despite an unfavorable impact of $5.16 million from foreign currency fluctuations. The VapoSteam acquisition provided incremental net sales revenue of $0.65 million for the two months of operations included in the fiscal quarter ended May 31, 2015. The VapoSteam business is highly seasonal and is expected to peak in our third fiscal quarter, therefore, the net sales revenue in the fiscal quarter ended May 31, 2015 is not expected tobe indicative of expected annualized net sales revenue. The VapoSteam operations are reported in the Healthcare / Home Environment segment. The Nutritional Supplements segment contributed net sales revenue of $39.44 million. Net sales revenue in our Beauty segment decreased $4.86 million, or 4.7 percent, compared to the same period last year. Foreign currency fluctuations had the effect of reducing U.S. Dollar reported net sales revenue

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for the Beauty segment by $2.16 million, or 2.1 percent, compared to the same period last year. Net sales revenue was also negatively impacted by the West Coast port disruption, retailer inventory adjustments, and lower closeout shipments than in the same period last year.

Impact of acquisitions on net sales revenue:

Because we are an acquisition-oriented company, we provide an analysis of our net sales revenue in terms of growth from our core business and growth from acquisitions. Our most recent acquisitions of Healthy Directions and Vicks VapoSteam occurred on June 30, 2014 and March 31, 2015, respectively. For further information about these acquisitions, see Note 9 to the accompanying consolidated condensed financial statements.

IMPACT OF ACQUISITIONS ON NET SALES REVENUE

(dollars in thousands)

	Three Months Ended May 31,
	2015			2014
Prior year's sales revenue, net	$	311,778		$	304,516
Components of sales revenue change, net
Core business		(6,525)			7,262
Incremental net sales revenue from acquisitions (non-core business):
Healthy Directions (three months in fiscal year 2016)		39,440			-
Vicks VapoSteam (two months in fiscal year 2016)		652			-
Change in sales revenue, net		33,567			7,262
Total sales revenue, net	$	345,345		$	311,778
Total net sales revenue growth		10.8	%		2.4	%
Core business		(2.1)	%		2.4	%
Acquisitions		12.9	%		-	%

Impact of foreign currencies on net sales revenue:

During each of the fiscal quarters ended May 31, 2015 and 2014, approximately 14 and 15 percent, respectively, of our net sales revenue was denominated in foreign currencies. These transactions were primarily denominated in British Pounds, Euros, Mexican Pesos, Canadian Dollars, and Venezuelan Bolivars. For the fiscal quarter ended May 31, 2015, the impact of net foreign currency exchange rate fluctuations decreased our consolidated U.S. Dollar reported net sales revenue by approximately $7.71 million. In our Beauty segment, where our Canadian and Latin American operations comprise a higher proportion of foreign revenues than other regions, foreign exchange fluctuations had a $2.16 million unfavorable impact on reported net sales revenue. In our Housewares and Healthcare / Home environment segments, where our European and Far East operations comprise a higher proportion of foreign revenues than other regions, foreign exchange fluctuations had unfavorable impacts of $0.39 and $5.16 million, respectively, on U.S. Dollar reported net sales revenue.

Segment net sales revenue:

Housewares Segment - Net sales revenue in the Housewares segment for the fiscal quarter ended May 31, 2015 decreased $1.57 million, or 2.4 percent, to $65.19 million, compared to $66.76 million for the same period last year. The decline in net sales revenue was primarily due to a shift in the timing of customer orders into the fourth quarter of fiscal year 2015 and the second quarter of fiscal year 2016. Net sales revenue in the Housewares segment was also negatively impacted by inventory adjustments at several retailers, reduced closeout sales as a result of temporary saturation in that channel, and the comparative impact of certain seasonal promotional shipments in the club channel in the fiscal quarter ended May 31, 2014 that did not repeat in the fiscal quarter ended May 31, 2015. The segment continued to experience year-over-year gains from infant and toddler care products and from shipments of its recently introduced OXO Good Grips Greensaver storage

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products designed to prolong the refrigerated storage life of produce. We expect OXO’s longer-term growth to continue to be driven by new products, category expansion, and expanded shelf space and assortments at key traditional and internet retailers. Point-of-sale activity at a number of the segment’s key retailers continues to be strong and we believe that customer order timing and inventory adjustment impacts in the first quarter of fiscal year 2016 are temporary.

Healthcare / Home Environment Segment - Net sales revenue in the Healthcare / Home Environment segment for the fiscal quarter ended May 31, 2015 increased $0.55 million, or 0.4 percent, to $143.04 million, compared to $142.49 million for the same period last year. Unit volumes contributed approximately 2.9 percent to the segment’s net sales revenues, partially offset by an approximate 2.5 percent decrease in average unit selling price, largely due to the unfavorable $5.16 million impact that foreign currency exchange fluctuations had on U.S. Dollar reported net sales revenue. Gains in healthcare product net sales revenue were partially offset by declines in home environment product net sales revenue. In healthcare, the segment continues to benefit from recent new product introductions and a relatively strong end to the flu season, including a high incidence of fever. In home environment, fan shipments declined year-over-year in both the U.S. and Europe, and air purification declined in the Far East. Water purification net sales revenue decreased year-over-year due to a number of seasonal promotions that did not repeat in the first quarter of fiscal year 2016.

Nutritional Supplements Segment ‐The Nutritional Supplements segment includes the operating results of Healthy Directions, which we acquired on June 30, 2014. Net sales revenue for the fiscal quarter ended May 31, 2015 was $39.44 million.

Beauty Segment - Net sales revenue in the Beauty segment for the fiscal quarter ended May 31, 2015 decreased $4.86 million, or 4.7 percent, to $97.68 million, compared to $102.53 million for the same period last year. Unit volumes and average selling prices contributed approximately 1.5 and 3.2 percent, respectively to the segment’s net sales revenues declines. Foreign currency fluctuations had the effect of reducing U.S. Dollar reported net sales revenue for the Beauty segment by $2.16 million, or 2.1percent, compared to the same period last year. The impact of the West Coast port disruption also negatively impacted net sales revenue, as certain products were not available to ship. The brush and hair accessory category had solid year-over-year net sales revenue gains. The grooming, skin and hair care category was flat year-over-year with gains in Latin America offset by declines in the U.S. and Canada. The personal care appliance category experienced a year-over-year decline primarily due to foreign currency headwinds, the West Coast port disruption, and the loss of distribution with a Canadian retailer in the third quarter of fiscal year 2016. Net sales revenue was also negatively impacted by retailer inventory adjustments and lower closeout shipments, than in the same period last year.

Consolidated gross profit margin:

Consolidated gross profit as a percentage of net sales revenue for the fiscal quarter ended May 31, 2015 increased 3.2 percentage points to 41.5 percent, compared to 38.3 percent for the same period last year. The VapoSteam and Healthy Directions acquisitions had a favorable impact of 4.0 percentage points on consolidated gross profit margin for the fiscal quarter ended May 31, 2015. The gross profit margin for the core business declined 0.8 percentage points, compared to the same period last year primarily due to the unfavorable impact of foreign currency fluctuations. 

A significant portion of the products we sell are purchased from third-party manufacturers in China. During fiscal year 2015 and through the end of our first quarter in fiscal year 2016, the Chinese Renminbi remained relatively flat against the U.S. Dollar. However, China’s currency intervention strategy with respect to the U.S. Dollar is continuously evolving. If China’s currency begins to fluctuate against the U.S. Dollar in the short-to-intermediate term, our product costs could increase over time.

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Selling, general and administrative expense:

Our consolidated SG&A ratio increased 4.9 percentage points to 32.9 percent for fiscal quarter ended May 31, 2015, compared to 28.0 percent for the same period last year. The Nutritional Supplements segment operates with a higher SG&A ratio than the core business. The addition of the operations of this segment increased our SG&A ratio by 4.2 percentage points.

The SG&A ratio for the core business increased 0.8 percentage points to 28.8 percent for the fiscal quarter ended May 31, 2015, compared to 28.0 percent for the same period last year. Foreign exchange losses increased our SG&A by $0.85 million, or 0.2 percentage points. The remaining increase was primarily due to higher compensation expense and investment in advertising, marketing, new products, and channel development in  support of key brands and growth initiatives heading into our peak selling season.

Asset Impairment Charges:

We performed our annual evaluation of goodwill and indefinite-lived intangible assets for impairment during the first quarter of fiscal year 2016. As a result of our testing of indefinite-lived trademarks, we recorded a non-cash asset impairment charge of $3.00 million ($2.66 million after tax). The charge was related to a trademark in our Beauty segment, which was written down to its estimated fair value, determined on the basis of future discounted cash flows using the relief from royalty valuation method. We recorded a similar charge of $9.00 million ($8.16 million after tax) in the fiscal quarter ended May 31, 2014.

Operating Income by Segment:

The following table sets forth segment operating income, for the periods covered below:

OPERATING INCOME BY SEGMENT

(dollars in thousands)

	Three Months Ended May 31,								% of Sales Revenue, net
	2015 (1)		2014		$ Change		% Change		2015		2014
Housewares	$	11,183	$	13,035	$	(1,852)	(14.2)	%	17.2	%	19.5	%
Healthcare / Home Environment		8,418		8,717		(299)	(3.4)	%	5.9	%	6.1	%
Nutritional Supplements		2,620		-		2,620	*		6.6	%	-	%
Beauty		4,322		1,371		2,951	215.2	%	4.4	%	1.3	%
Total operating income	$	26,543	$	23,123	$	3,420	14.8	%	7.7	%	7.4	%

(1) Includes three months of operations of Healthy Directions which was acquired on June 30, 2014 and two months of operations of the VapoSteam business which was acquired on March 31, 2015.

* Calculation is not meaningful.

In the discussion that follows, our usage of the terms operating margin, operating expense ratio and operating leverage are further described and explained beginning on page 35.

Housewares Segment - Operating income for the fiscal quarter ended May 31, 2015 decreased $1.85 million, or 14.2 percent, compared to the same period last year. Operating margin decreased 2.3 percentage points to 17.2, compared to 19.5 percent for the same period last year. The decrease in operating margin was due to lower net sales revenues and the impact it had on operating leverage, higher compensation expense incurred to expand into new categories and increase operating capacity, and higher media advertising expense supporting new products and categories.

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Healthcare / Home Environment Segment - Operating income for the fiscal quarter ended May 31, 2015 decreased $0.30 million, or 3.4 percent, compared to the same period last year. Operating margin decreased 0.2 percentage points to 5.9 percent, compared to 6.1 percent  for the same period last year. The decrease in operating margin is primarily due to the unfavorable impact of foreign currency fluctuations on U.S. Dollar reported net sales revenue and operating income, partially offset by a favorable product sales mix.

Nutritional Supplements Segment  - The Nutritional Supplements segment’s operating income reflects operating results from Healthy Directions, which we acquired on June 30, 2014. The segment’s operating

income was $2.62 million, resulting in an operating margin of 6.6 percent.The sequential decline in operating margin is primarily due to incremental investments in promotions, advertising, customer acquisition and channel development. The segment’s operating income also now includes allocations of shared service and corporate overhead expenses that were not made in fiscal year 2015, the year of acquisition. For the three months ended May 31, 2015, the allocations totaled $0.74 million.

Beauty Segment - Operating income for the fiscal quarter ended May 31, 2015 increased $2.95 million, to $4.32 million, compared to $1.37 million for the same period last year. Operating margin increased 3.1 percentage points to 4.4 percent, compared to 1.3 percent for the same period last year. Operating income includes non-cash intangible asset impairment charges of $3.00 and $9.00 million in the fiscal quarters ended May 31, 2015 and 2014, respectively. The increase in operating margin was principally due to the year-over-year decline in impairment charges, partially offset by the unfavorable impact of foreign currency fluctuations, the impact on operating leverage of the West Coast port disruption, retailer inventory adjustments, andinvestments in advertising, marketing and product development incurred to support key brands and growth initiatives heading into our peak selling season.

ADJUSTED OPERATING INCOME AND OPERATING MARGIN

(dollars in thousands)

	Three Months Ended May 31, 2015
	Housewares				Healthcare / Home Environment				Nutritional Supplements				Beauty				Total
Operating income, as reported (GAAP)	$	11,183	17.2	%	$	8,418	5.9	%	$	2,620	6.6	%	$	4,322	4.4	%	$	26,543	7.7	%
Asset impairment charges (1)		-	-	%		-	-	%		-	-	%		3,000	3.1	%		3,000	0.9	%
Subtotal		11,183	17.2	%		8,418	5.9	%		2,620	6.6	%		7,322	7.5	%		29,543	8.6	%
Amortization of intangible assets (2)		312	0.5	%		3,500	2.4	%		1,564	4.0	%		1,438	1.5	%		6,814	2.0	%
Non-cash share-based compensation (3)		306	0.5	%		595	0.4	%		303	0.8	%		857	0.9	%		2,061	0.6	%
Adjusted operating income (non-GAAP)	$	11,801	18.1	%	$	12,513	8.7	%	$	4,487	11.4	%	$	9,617	9.8	%	$	38,418	11.1	%

	Three Months Ended May 31, 2014
	Housewares				Healthcare / Home Environment				Nutritional Supplements				Beauty				Total
Operating income, as reported (GAAP)	$	13,035	19.5	%	$	8,717	6.1	%	$	-	-	%	$	1,371	1.3	%	$	23,123	7.4	%
Asset impairment charges (1)		-	-	%		-	-	%		-	-	%		9,000	8.8	%		9,000	2.9	%
Subtotal		13,035	19.5	%		8,717	6.1	%		-	-	%		10,371	10.1	%		32,123	10.3	%
Amortization of intangible assets (2)		311	0.5	%		3,463	2.4	%		-	-	%		1,485	1.4	%		5,259	1.7	%
Non-cash share-based compensation (3)		274	0.4	%		581	0.4	%		-	-	%		440	0.4	%		1,295	0.4	%
Adjusted operating income (non-GAAP)	$	13,620	20.4	%	$	12,761	9.0	%	$	-	-	%	$	12,296	12.0	%	$	38,677	12.4	%

In the tables above, footnote references (1) to (3) correspond to the notes beginning on page 29 under the table entitled “Adjusted Income and EPS”.

Adjusted operating income and operating margin, as discussed in the preceding tables, may be considered non-GAAP financial measures as set forth in SEC Regulation G, Rule 100. An explanation of the reasons why the Company believes the non-GAAP financial information is useful and the nature and limitations of the non-GAAP financial measures, is furnished on page 30.

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Interest expense:

Interest expense for the fiscal quarter ended May 31, 2015 was $2.89 million, compared to $3.42 million for the same period last year. Interest expense was lower compared to the same period last year principally due to a combination of more favorable interest rates under the Credit Agreement and a reduction in the average debt balance for the fiscal quarter ended May 31, 2015.

Income tax expense:

Income tax expense for the fiscal quarter ended May 31, 2015 was 14.2 percent of income before income taxes, compared to 17.0 percent for the same period last year. The year-over-year comparison of our effective tax rate was primarily impacted by shifts in the mix of taxable income in our various tax jurisdictions. Our effective tax rates were unfavorably impacted by asset impairment charges of $3.00 million for the fiscal quarter ended May 31, 2015, and $9.00 million for the fiscal quarter ended May 31, 2014, for which the related tax benefits were $0.34 and $0.85 million, respectively.

Net income:

Net income for the fiscal quarter ended May 31, 2015 increased by $4.01 million, compared to the same period last year. Our diluted earnings per share increased $0.15 per share to $0.70 per share, compared to $0.55 per share for the same period last year.

Adjusted income and earnings per share (EPS):

In order to provide a better understanding of the impact of certain items on our net income and EPS, the analysis that follows reports the comparative after tax impact of asset impairment charges, amortization of intangible assets and non-cash share-based compensation on our net income, and basic and diluted EPS for the periods covered below.

ADJUSTED INCOME AND EPS

(dollars in thousands, except per share data)

	Three Months Ended May 31,				Basic EPS				Diluted EPS
	2015		2014		2015		2014		2015		2014
Net income as reported (GAAP)	$	20,410	$	16,398	$	0.72	$	0.56	$	0.70	$	0.55
Asset impairment charges, net of tax (1)		2,656		8,155		0.09		0.28		0.09		0.28
Subtotal		23,066		24,553		0.81		0.84		0.79		0.83
Amortization of intangible assets, net of tax (2)		5,894		5,042		0.21		0.17		0.20		0.17
Non-cash share-based compensation, net of tax (3)		1,742		1,168		0.06		0.04		0.06		0.04
Adjusted income (non-GAAP)	$	30,702	$	30,763	$	1.08	$	1.06	$	1.06	$	1.04
Weighted average shares of common stock used in computing basic and diluted EPS						28,520		29,105		29,088		29,616

(1) For the fiscal quarters ended May 31, 2015 and 2014, non-cash intangible asset impairment charges totaling $3.00 million ($2.66 million after tax) and $9.00 million ($8.16 million after tax), respectively.

(2) For the fiscal quarters ended May 31, 2015 and 2014,amortization of intangible assets was $6.81 million ($5.89 million after tax) and $5.26 million ($5.04 million after tax), respectively.

(3) For the fiscal quarters ended May 31, 2015 and 2014, non-cash share based compensation was $2.06 million ($1.74 million after tax) and $1.30 million ($1.17 million after tax), respectively.

29

Adjusted income decreased slightly for the fiscal quarter ended May 31, 2015, compared to the same period last year. The decrease in adjusted income was primarily due to:

· the unfavorable impact of foreign currency fluctuations;

· the shift in timing of customer orders in the Housewares segment;

· the impact of the West Coast port disruption;

· inventory adjustments at several key retailers; and

· proportionally higher investment in advertising, marketing, new products, and channel development as a percentage of net sales revenue.

The declines were partially offset by incremental operating income from the Healthy Directions and VapoSteam acquisitions and lower interest expense.

Adjusted diluted EPS was $1.06 for the fiscal quarter ended May 31, 2015, compared to $1.04 for the same period last year. Adjusted diluted EPS increased due to lower weighted average diluted shares outstanding for the fiscal quarter ended May 31, 2015, compared to the same period last year. The fiscal quarter ended May 31, 2014 included a weighted average portion of the diluted share impact of 4.17 million shares repurchased during that quarter, whereas the fiscal quarter ended May 31, 2015 included the full impact.

The tables referred to on pages 28 and 29 entitled “Adjusted operating income and operating margin” and “Adjusted income and EPS”, respectively report operating income, operating margin, net income, and EPS without the after tax impact of non-cash asset impairment charges, amortization of intangible assets, and non-cash share-based compensation for the periods presented, as applicable. For additional information on these adjusted measures, see “Explanation of Certain Terms and Measures Used in MD&A” on page 35.  These measures may be considered non-GAAP financial information as set forth in SEC Regulation G, Rule 100. The preceding table reconciles these measures to their corresponding GAAP-based measures presented in our consolidated condensed statements of income. We believe that adjusted operating income, adjusted operating margin, adjusted income and EPS provide useful information to management and investors regarding financial and business trends relating to the Company’s financial condition and results of operations. We believe that these non-GAAP financial measures, in combination with the Company’s financial results calculated in accordance with GAAP, provide investors with additional perspective regarding the impact of such charges on net income and earnings per share. We also believe that these non-GAAP measures facilitate a more direct comparison of the Company’s performance with its competitors. We further believe that including the excluded charges would not accurately reflect the underlying performance of the Company’s continuing operations for the period in which the charges are incurred, even though such charges may be incurred and reflected in the Company’s GAAP financial results in the near future. The material limitation associated with the use of the non-GAAP financial measures is that the non-GAAP measures do not reflect the full economic impact of the Company's activities. The Company’s adjusted operating income, adjusted operating margin, adjusted income, and EPS are not prepared in accordance with GAAP, are not an alternative to GAAP financial information and may be calculated differently than non-GAAP financial information disclosed by other companies. Accordingly, undue reliance should not be placed on non-GAAP information.

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FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

The following are selected measures of our liquidity and capital resources for the periods covered below:

SELECTED MEASURES OF OUR LIQUIDITY AND CAPITAL UTILIZATION (1)

	Three Months Ended May 31,
	2015			2014
Accounts Receivable Turnover (Days)		57.1			63.2
Inventory Turnover (Times)		2.7			2.7
Working Capital (in thousands)	$	297,301		$	44,823
Current Ratio		2.1:1			1.1:1
Ending Debt to Ending Equity Ratio		47.1	%		54.6	%
Return on Average Equity		15.8	%		9.3	%

(1)Our computation and use of the measures in this table are further described and explained beginning on page 35.

Operating Activities:

Operating activities provided $37.50 million of cash during the first quarter of fiscal year 2016, compared to $2.97 million of cash provided during the same period last year. The increase in operating cash flow was primarily due to the timing of fluctuations in other working capital components, particularly a decrease in accounts receivable and an increase in accounts payable, compared to the same period last year.

Accounts receivable decreased $12.50 million to $210.00 million as of May 31, 2015, compared to $222.50 million at the end of fiscal year 2015. Accounts receivable turnover decreased to 57.1 days at May 31, 2015,  compared to 63.2 days for the same period last year. This calculation is based on a rolling five quarter accounts receivable balance. Substantially all of the improvement in turnover is due to the addition of the Nutritional Supplements segment, which collects most of its revenue prior to shipment.

Inventory increased $6.22 million to $299.30 million as of May 31, 2015, compared to $293.08 million at the end of fiscal year 2015. Inventory turnover was 2.7 times at May 31, 2015 and 2014.

Working capital was $297.30 million at May 31, 2015, compared to $44.82 million at May 31, 2014.   The increase in working capital is primarily due to the payment of current debt maturities totaling $96.90 million and the reclassification of our revolving credit agreement to long-term as a result of an amendment that extended the maturity to January 2020. As a result, our current ratio increased to 2.1:1 as of May 31, 2015, compared to 1.1:1 as of May 31, 2014.

Investing activities:

Investing activities used $45.46 million of cash during the fiscal quarter ended May 31, 2015. Highlights of those activities follow:

· We spent $0.08 million on building and improvements, $1.27 million on computers, furniture and other equipment, $1.26 million on tools, molds and other capital asset additions, and $0.11 million on the development of new patents; and

· We paid $42.75 million to acquire the Vicks VapoSteam inhalant business.

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Financing activities:

Financing activities provided $10.93 million of cash during the fiscal quarter ended May 31, 2015.  Highlights of those activities follow:

We had draws of $121.50 million against our credit agreement;

We repaid $114.00 million drawn against our credit agreement;

We repaid $1.90 million of our long-term debt;

Employees exercised options to purchase 106,825 shares of common stock, providing a combined $5.01 million of cash, including tax benefits; and

Share-based compensation provided $0.32 million in tax benefits.

Revolving Credit Agreement

The Company had a credit agreement, dated December 30, 2010, by and among the Company, the Borrower, Bank of America, N.A., as administrative agent, and the other lenders party thereto that provided for an unsecured total revolving commitment of $570 million. On January 16, 2015, the Company entered into that certain Amended and Restated Credit Agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent, and the other lenders party thereto. The unsecured revolving commitment under the Credit Agreement was increased from $570 million to $650 million, subject to the terms and limitations described below. The maturity of the commitment under the Credit Agreement was extended from December 31, 2015 to January 16, 2020. Additionally, the LIBOR interest rate, letter of credit fees and loan commitment fees under the Credit Agreement were reduced and the limitations of certain covenants were eased. Borrowings under the Credit Agreement accrue interest at a “Base Rate” plus a margin of zero to 1.00 percent per annum based on the leverage ratio at the time of borrowing. The Base Rate is equal to the highest of the Federal Funds Rate plus 0.50 percent, Bank of America’s prime rate, or the LIBOR rate plus 1.00 percent. Alternatively, if the Company elects, borrowings accrue interest based on the respective one-,  two-,  three-, or six-month LIBOR rate plus a margin of 1.00 to 2.00 percent per annum based upon the leverage ratio at the time of the borrowing. The Company will incur loan commitment fees under the Credit Agreement at a rate ranging from 0.15 to 0.35 percent per annum on the unused balance of the Credit Agreement. Additionally, the Company will incur letter of credit fees under the Credit Agreement at a rate ranging from 1.00 to 2.00 percent per annum on the face value of any letter of credit. All obligations under the Credit Agreement are unconditionally guaranteed, on a joint and several basis, by the Company and certain of the Company’s subsidiaries.

Other Debt Agreements

In addition to the Credit Agreement, at May 31, 2015, we had an aggregate principal balance of $60 million of 3.90% Senior Notes due January 2018 with equal $20 million installments due between January 2016 and January 2018.

In March 2014, the Company concluded its borrowings under a loan agreement with the Mississippi Business Finance Corporation (the “MBFC Loan”). Under the MBFC Loan, a principal balance of $37.61 million was incurred to fund construction of our Olive Branch, Mississippi distribution facility. A $1.90 million principal payment was made on March 1, 2015. The remaining loan balance is payable as follows: $3.80 million on March 1, 2016; $5.70 million on March 1, 2017; $1.90 million annually on March 1, 2018 through 2022; and $14.81 million on March 1, 2023. Any remaining outstanding principal and interest is due upon maturity on March 1, 2023.

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On February 18, 2015, the Company entered into a supplement to the indenture related to the MBFC Loan that lowered the interest rate of the loan. Accordingly, from and after February 1, 2015, the MBFC Loan bears interest at a variable rate as elected by us equal to either (a) a “Base Rate” plus a margin within a range of 0.00 to 1.00 percent (decreased from a range of 0.00 to 1.125 percent), depending upon the leverage ratio or (b) the respective one, two, three, or six-month LIBOR rate plus a margin within a range of 1.00 to 2.00 percent (decreased from a range of 1.00 to 2.125 percent), depending upon the leverage ratio.

Our debt agreements require the maintenance of certain financial covenants, including maximum leverage ratios, minimum interest coverage ratios and minimum consolidated net worth levels (as each of these terms are defined in the various agreements). Our debt agreements also contain other customary covenants, including, among other things, covenants restricting or limiting the Company, except under certain conditions set forth therein, from (1) incurring debt, (2) incurring liens on its properties, (3) making certain types of investments, (4) selling certain assets or making other fundamental changes relating to mergers and consolidations, and (5) repurchasing shares of our common stock and paying dividends. Our debt agreements also contain customary events of default, including failure to pay principal or interest when due, among others. Our debt agreements are cross-defaulted to each other. Upon an event of default under our debt agreements, the holders or lenders may, among other things, accelerate the maturity of any amounts outstanding under our debt agreements. Under the terms of our Credit Agreement, the commitments of the lenders to make loans to us are several and not joint. Accordingly, if any lender fails to make loans to us, our available liquidity could be reduced by an amount up to the aggregate amount of such lender’s commitments under the Credit Agreement.

The table below provides the formulas in effect for certain key financial covenants as defined in our debt agreements as of May 31, 2015:

Applicable Financial Covenant	Credit Agreement and MBFC Loan	3.90% Senior Notes
		$500 Million
Minimum Consolidated Net Worth	None	+
		25% of Fiscal Quarter Net Earnings
		After August 31, 2010 (1)
	EBIT (2)	EBIT (2)
	÷	÷
Interest Coverage Ratio	Interest Expense (2)	Interest Expense (2)
	Minimum Required:  3.00 to 1.00	Minimum Required:  2.50 to 1.00
	Total Current and Long Term Debt (3)	Total Current and Long Term Debt (3)
	÷	÷
Maximum Leverage Ratio	[EBITDA (2) + Pro Forma Effect of	[EBITDA (2) + Pro Forma Effect of Acquisitions]
	Acquisitions]
	Maximum Allowed:  3.25 to 1.00	Maximum Allowed:  3.25 to 1.00

Key Definitions:

EBIT:	Earnings Before Non-Cash Charges, Interest Expense and Taxes
EBITDA:	EBIT  +  Depreciation and Amortization Expense  +  Share Based Compensation
Total Capitalization:	Total Current and Long Term Debt  +  Total Equity
Pro Forma Effect of Acquisitions:	For any acquisition, pre-acquisition EBITDA of the acquired business is included so that the EBITDA of the acquired business included in the computation equals its twelve month trailing total.

Notes:

(1) Excluding any fiscal quarter net losses.

(2) Computed using totals for the latest reported four consecutive fiscal quarters.

(3) Computed using the ending balances as of the latest reported fiscal quarter.

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Contractual obligations and commercial commitments:

Our contractual obligations and commercial commitments at May 31, 2015, were:

PAYMENTS DUE BY PERIOD - TWELVE MONTHS ENDED THE LAST DAY OF MAY:

(in thousands)

			2016		2017		2018		2019		2020		After
	Total		1year		2 years		3 years		4 years		5 years		5 years
Fixed rate debt	$	60,000	$	20,000	$	20,000	$	20,000	$	-	$	-	$	-
Floating rate debt		378,807		3,800		5,700		1,900		1,900		346,900		18,607
Long-term incentive plan payouts		12,018		4,865		242		5,515		1,396		-		-
Interest on fixed rate debt		3,783		2,041		1,261		481		-		-		-
Interest on floating rate debt (1)		32,814		7,027		6,965		6,897		6,869		4,403		653
Open purchase orders		231,060		231,060		-		-		-		-		-
Long-term purchase commitments		2,333		969		606		606		152		-		-
Minimum royalty payments		71,767		12,566		12,567		12,518		9,297		8,859		15,960
Advertising and promotional		54,142		12,836		5,942		6,081		6,189		6,299		16,795
Operating leases		21,436		4,592		3,814		3,265		2,434		1,383		5,948
Capital spending commitments		3,029		3,029		-		-		-		-		-
Total contractual obligations (2)	$	871,189	$	302,785	$	57,097	$	57,263	$	28,237	$	367,844	$	57,963

(1) We estimate our future obligations for interest on our floating rate debt by assuming the weighted average interest rates in effect on each floating rate debt obligation at May 31, 2015 remain constant into the future. This is only an estimate, as actual rates will vary over time. In addition, for the Credit Agreement, we assume that the balance outstanding as of May 31, 2015 remains so for the entire term of the agreement. The actual balance outstanding under our Credit Agreement may fluctuate significantly in future periods, governed by the availability of cash flow from operations, and future investing and financing considerations. 

(2) In addition to the contractual obligations and commercial commitments in the table above, as of May 31, 2015, we have recorded a provision for our uncertain tax positions of $10.15 million. We are unable to reliably estimate the timing of future payments, if any, related to uncertain tax positions. Therefore, we have excluded these tax liabilities from the table above.

Off-Balance Sheet Arrangements:

We have no existing activities involving special purpose entities or off-balance sheet financing.

Current and Future Capital Needs:

Based on our current financial condition and current operations, we believe that cash flows from operations and available financing sources will continue to provide sufficient capital resources to fund our foreseeable short- and long-term liquidity requirements. We expect our capital needs to stem primarily from the need to purchase sufficient levels of inventory and to carry normal levels of accounts receivable on our balance sheet. In addition, we continue to evaluate acquisition opportunities on a regular basis. We may finance acquisition activity with available cash, the issuance of shares of common stock, additional debt, or other sources of financing, depending upon the size and nature of any such transaction and the status of the capital markets at the time of such acquisition. The Company may also elect to repurchase additional shares of common stock up to the balance of its current authorization over the next two fiscal years, subject to limitations contained in its debt agreements and based upon its assessment of a number of factors, including share price, trading volume and general market conditions, as well as on working capital requirements, general business conditions, financial conditions, any applicable contractual limitations and other factors, including alternative investment opportunities. For additional information, see Part II, Item 2. “Unregistered Sales of Equity Securities and Use of Proceeds” in this report.

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CRITICAL ACCOUNTING POLICIES

The SEC defines critical accounting policies as those that are both most important to the portrayal of a company’s financial condition and results, and require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. For a discussion of our critical accounting policies, see Part II, Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, under the heading “Critical Accounting Policies” in our annual report on Form 10-K for the year ended February 28, 2015. There have been no material changes to the Company’s critical accounting policies from the information provided in our annual report on Form 10-K.

NEW ACCOUNTING GUIDANCE

See Note (2) “New Accounting Pronouncements” in the accompanying consolidated condensed financial statements for a discussion of the status and potential impact of any new accounting pronouncements.

EXPLANATION OF CERTAIN TERMS AND MEASURES USED IN MD&A

Accounts receivable turnover: Twelve month trailing net sales revenue divided by the average of the current and prior four fiscal quarters’ ending accounts receivable balances. This result is divided into 365 to express turnover in terms of average days outstanding.

Adjusted diluted EPS (non-GAAP): Adjusted income divided by the weighted average shares of common stock outstanding plus the effect of diluted securities.

Adjusted income (non-GAAP): Net income as reported under GAAP excluding the following items net of their applicable tax effects, as applicable: non-cash asset impairment charges, acquisition‐related expenses, amortization of intangible assets, and non-cash share-based compensation, as applicable.

Adjusted operating income (non-GAAP): Operating income for the Company or a segment as reported under GAAP excluding non-cash asset impairment charges, acquisition‐related expenses, amortization of intangible assets, and non-cash share-based compensation, as applicable.

Adjusted operating margin (non-GAAP): Adjusted Operating income for the Company or a segment divided by the related net sales revenue for the Company or a segment.

Core business: Sales, expense or operating income associated with product lines or brands after the first twelve months from the date the product line or brand was acquired. Sales, expense and operating income from developed brands or product lines are always considered core business.

Corporate overhead costs: General corporate managerial and related administrative compensation costs, legal, accounting, and regulatory compliance costs together with associated operating overhead that is not directly attributable to any one operating segment, but benefits the Company as a whole. These charges are allocated to each operating segment based upon a number of factors depending on the nature of the expense. Such factors include relative revenues, estimates of relative labor expenditures for each segment, and certain intangible asset levels held by each segment.

Current ratio: Current assets divided by current liabilities at the end of a reporting period, expressed as a ratio.

Ending debt to equity ratio: Total interest bearing short- and long-term debt divided by shareholder’s equity. We use this as a leverage metric to indicate what proportion of debt and equity we are using to finance assets.

Growth from acquisitions:  Net sales revenue growth associated with product lines or brands that we have acquired and operated for less than twelve months during each period presented.

Inventory turnover: Twelve month trailing cost of goods sold divided by the average of the current and prior four fiscal quarters’ ending inventory balances.

Operating expense ratio: Total operating expense (SG&A plus asset impairment charges) for the Company or a segment divided by the related net sales revenue for the Company or a segment.

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Operating leverage: The improvement in operating margin that the Company achieves with sales growth, due to the fixed nature of certain operating expenses. 

Operating margin: Operating income for the Company or a segment divided by the related net sales revenue for the Company or a segment.

Return on average equity: Twelve month trailing net income divided by the average of the current and prior four fiscal quarters’ ending stockholders’equity.

Segment operating income: We compute segment operating income based on net sales revenue less cost of goods sold, SG&A, and any asset impairment charges associated with the segment. The SG&A used to compute each segment operating income is directly associated with the segment. We then deduct allocations for operational shared services and corporate overhead costs. We do not allocate nonoperating income and expense, including interest or income taxes to operating segments.

SG&A ratio: Total SG&A for the Company or a segment divided by the related net sales revenue for the Company or a segment.

Working capital: Current assets less current liabilities.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Changes in currency exchange rates and interest rates are our primary financial market risks.

Foreign Currency Risk:

Our functional currency is the U.S. Dollar. By operating internationally, we are subject to foreign currency risk from transactions denominated in currencies other than the U.S. Dollar (“foreign currencies”). Such transactions include sales, certain inventory purchases and operating expenses. As a result of such transactions, portions of our cash, trade accounts receivable and trade accounts payable are denominated in foreign currencies. During the fiscal quarters ended May 31, 2015 and 2014, approximately 14 and 15 percent, respectively, of our net sales revenue was in foreign currencies. These sales were primarily denominated in British Pounds, Euros, Mexican Pesos, Canadian Dollars, and Venezuelan Bolivars. We make most of our inventory purchases from the Far East and use the U.S. Dollar for such purchases. In our consolidated condensed statements of income, exchange gains and losses resulting from the remeasurement of foreign taxes receivable, taxes payable, deferred tax assets, and deferred tax liabilities, are recognized in their respective income tax lines, and all other foreign exchange gains and losses from remeasurement of the balance sheet are recognized in SG&A.

We identify foreign currency risk by regularly monitoring our foreign currency-denominated transactions and balances. Where operating conditions permit, we reduce foreign currency risk by purchasing most of our inventory with U.S. Dollars and by converting cash balances denominated in foreign currencies to U.S. Dollars.

We have historically hedged against certain foreign currency exchange rate risk by using a series of forward contracts designated as cash flow hedges to protect against the foreign currency exchange risk inherent in our forecasted transactions denominated in currencies other than the U.S. Dollar. In these transactions, we execute a forward currency contract that will settle at the end of a forecasted period. A hedging relationship is created because the size and terms of the forward contract are designed so that its fair market value will move in the opposite direction and approximate magnitude of the underlying foreign currency’s forecasted exchange gain or loss during the forecasted period. To the extent that we forecast the expected foreign currency cash flows from the period we enter into the forward contract until the date it will settle with reasonable accuracy, we significantly lower or materially eliminate a particular currency’s exchange risk exposure over the life of the related forward contract. We enter into these types of agreements where we believe we have meaningful exposure to foreign currency exchange risk and the hedge pricing appears reasonable. It is not practical for us to hedge all our exposures, nor are we able to project in any meaningful way the possible effect and interplay of all foreign currency fluctuations on translated amounts or future earnings. This is due to our constantly changing exposure to various currencies, the fact that each foreign currency reacts differently to the U.S. Dollar and the significant number of currencies involved. Accordingly, we will always be subject to foreign exchange rate-risk on exposures we have not hedged, and these risks may be material. We do not enter into any forward exchange contracts or similar instruments for trading or other speculative purposes. We expect that as currency market conditions warrant, and our foreign denominated transaction exposure grows, we will continue to execute additional contracts in order to hedge against certain potential foreign exchange losses.

Chinese Renminbi Currency Exchange Uncertainties - A significant portion of the products we sell are purchased from third-party manufacturers in China. During fiscal year 2015 and through the end of our first quarter in fiscal year 2016, the Chinese Renminbi remained relatively flat against the U.S. Dollar. However, China’s currency intervention strategy with respect to the U.S. Dollar is continuously evolving. If China’s currency begins to fluctuate against the U.S. Dollar in the short-to-intermediate term, our product costs could increase over time.

Venezuelan Bolivar Currency Exchange Uncertainties - In February 2013, the Venezuelan government devalued its currency from 4.30 to 6.30 Bolivars per U.S. Dollar for all goods and services. In March 2013, the Venezuelan government announced an additional complementary auction-based exchange rate mechanism known as SICAD 1. SICAD 1 was made available to certain companies that operate in designated industry sectors. At May 31, 2015, the SICAD1 rate was 12 Bolivars to the U.S. Dollar.

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In early 2014, the Venezuelan government created a National Center of Foreign Commerce (“CENCOEX”) to control the multiple currency exchange rate mechanisms that may be available for a company to exchange funds. CENCOEX was granted the authority to determine the sectors that will be allowed to buy U.S. Dollars in SICAD auctions, and subsequently introduced a more accessible market-based, SICAD 2 daily auction exchange market.

In February 2015, the Venezuelan government unveiled its latest foreign exchange mechanism known as SIMADI, which replaced the SICAD 2 rate as the lowest rate in Venezuela’s three-tier foreign exchange system. 

Under the latest program, SICAD 1 (now referred to as “SICAD”) is still being used in limited circumstances, which we believe preclude us from accessing such rates if we chose to do so. SIMADI is a somewhat less restrictive auction system whose value is determined by market forces. SIMADI is currently under a trial period and accounts for a small percentage of Venezuela’s foreign exchange. At May 31, 2015, the SIMADI rate was approximately 199 Bolivars to the U.S. Dollar.

Despite the recent changes made by the Venezuelan government, there remains a significant degree of uncertainty as to which exchange markets might be available to the Company. To date, we have not gained access to U.S. Dollars in Venezuela through either SICAD or SIMADI mechanisms, nor do we intend to do so. As of May 31, 2015, these auctions had not eliminated or changed the official rate of 6.30 Bolivars per U.S. Dollar.

Our business in Venezuela continues to be entirely self-funded with earnings from operations. We have no current need or intention to repatriate Venezuelan earnings and remain committed to the business for the long-term. Within Venezuela, we market primarily liquid-, solid- and powder-based personal care and grooming products, which are sourced almost entirely within the country.We do not have, nor do we foresee having, any need to access SICAD or SIMADI. Accordingly, we continue to utilize the official rate of 6.30 Bolivars per U.S. Dollar to re-measure our Venezuelan financial statements.

For the fiscal quarters ended May 31, 2015 and 2014, sales in Venezuela represented approximately 1.2 and 0.6 percent, respectively, of the Company’s consolidated net sales revenue. At May 31, 2015, we had a U.S. Dollar based net investment in our Venezuelan business of $11.60 million, consisting almost entirely of working capital.

Developments within the Venezuelan economy, including any future governmental interventions, are beyond our ability to control or predict, and we cannot assess impacts, if any, such events may have on our Venezuelan business. We will continue to closely monitor the applicability and viability of the various exchange mechanisms. 

Interest Rate Risk:

Interest on our outstanding debt as of May 31, 2015 is both floating and fixed. Fixed rates are in place on $60 million of 3.90%  Senior Notes due January 2018, while floating rates are in place on the balance of all other debt outstanding, which totaled $378.81 million as of May 31, 2015. If short-term interest rates increase, we will incur higher interest rates on any outstanding balances under our Credit Agreement and the MBFC Loan.

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The fair values of our derivative instruments are as follows:

FAIR VALUES OF DERIVATIVE INSTRUMENTS

(in thousands)

	May 31, 2015
					Prepaid		Accrued
					Expenses		Expenses
		Final			andOther		andOther
		Settlement	Notional		Current		Current
Designated as hedging instruments	HedgeType	Date	Amount		Assets		Liabilities
Foreign currency contracts - sell Canadian Dollars	Cash flow	2/2016	$	13,250	$	143	$	-
Foreign currency contracts - sell Euro	Cash flow	2/2016	€	11,000		15		-
Foreign currency contracts - sell Pounds	Cash flow	2/2016	£	5,700		-		121
Total fair value					$	158	$	121

	February 28, 2015
					Prepaid		Accrued
					Expenses		Expenses
		Final			and Other		and Other
		Settlement	Notional		Current		Current
Designated as hedging instruments	Hedge Type	Date	Amount		Assets		Liabilities
Foreign currency contracts - sell Euro	Cash flow	1/2016	€	10,000	$	129	$	-
Foreign currency contracts - sell Pounds	Cash flow	2/2016	£	6,900		-		240
Total fair value					$	129	$	240

Counterparty Credit Risks:

Financial instruments, including foreign currency contracts, expose us to counterparty credit risk for nonperformance. We manage our exposure to counterparty credit risk by only dealing with counterparties who are substantial international financial institutions with significant experience using such derivative instruments. Although our theoretical credit risk is the replacement cost at the then-estimated fair value of these instruments, we believe that the risk of incurring credit risk losses is remote.

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INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

Certain written and oral statements made by our Company and subsidiaries of our Company may constitute "forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995. This includes statements made in this report, in other filings with the Securities and Exchange Commission (the "SEC"), in press releases, and in certain other oral and written presentations. Generally, the words "anticipates", "believes", "expects", "plans", "may", "will", "should", "seeks", "estimates", "project", "predict", "potential", "continue", "intends", and other similar words identify forward-looking statements. All statements that address operating results, events or developments that we expect or anticipate will occur in the future, including statements related to sales, earnings per share results, and statements expressing general expectations about future operating results, are forward-looking statements and are based upon our current expectations and various assumptions. We believe there is a reasonable basis for our expectations and assumptions, but there can be no assurance that we will realize our expectations or that our assumptions will prove correct. Forward-looking statements are subject to risks that could cause them to differ materially from actual results. Accordingly, we caution readers not to place undue reliance on forward-looking statements. We believe that these risks include but are not limited to the risks described in this report under Part 1, Item 1A. “Risk Factors” of our annual report on Form 10-K for the year ended February 28, 2015 and risks otherwise described from time to time in our SEC reports as filed. Such risks, uncertainties and other important factors include, among others:

· the retention and recruitment of key personnel;

· our ability to deliver products to our customers in a timely manner and according to their fulfillment standards;

· our relationships with key customers and licensors;

· the costs of complying with the business demands and requirements of large sophisticated customers;

· our dependence on the strength of retail economies and vulnerabilities to any prolonged economic downturn;

· expectations regarding our recent and future acquisitions, including our ability to realize anticipated cost savings, synergies and other benefits along with our ability to effectively integrate acquired businesses;

· foreign currency exchange rate fluctuations;

· disruptions in U.S., Euro zone, Venezuela, and other international credit markets;

· risks associated with weather conditions;

· our dependence on foreign sources of supply and foreign manufacturing, and associated operational risks including but not limited to long lead times, consistent local labor availability and capacity, and timely availability of sufficient shipping carrier capacity;

· risks to the Nutritional Supplements segment associated with the availability, purity and integrity of materials used in the manufacture of vitamins, minerals and supplements;

· the impact of changing costs of raw materials, labor and energy on cost of goods sold and certain operating expenses;

· the geographic concentration and peak season capacity of certain U.S. distribution facilities increases our exposure to significant shipping disruptions and added shipping and storage costs;

· difficulties encountered during the transition of certain businesses to our distribution facilities could interrupt our logistical systems and cause shipping disruptions;

· our projections of product demand, sales and net income are highly subjective in nature and future sales and net income could vary in a material amount from such projections;

· circumstances which may contribute to future impairment of goodwill, intangible or other long-lived assets;

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· the risks associated with the use of trademarks licensed from and to third parties;

· our ability to develop and introduce a continuing stream of new products to meet changing consumer preferences;

· increased product liability and reputational risks associated with the formulation and distribution of vitamins, minerals and supplements;

· the risks associated with potential adverse publicity and negative public perception regarding the use of vitamins, minerals and supplements;

· trade barriers, exchange controls, expropriations, and other risks associated with foreign operations;

· debt leverage and the constraints it may impose on our cash resources and ability to operate our business;

· the costs, complexity and challenges of upgrading and managing our global information systems;

· the risks associated with information security breaches;

· the increased complexity of compliance with a number of new government regulations as a result of adding vitamins, minerals and supplements to the Company’s portfolio of products;

· the risks associated with tax audits and related disputes with taxing authorities;

· the risks of potential changes in laws, including tax laws, health insurance laws and new regulations related to conflict minerals along with the costs and complexities of compliance with such laws; and

· our ability to continue to avoid classification as a controlled foreign corporation.

We undertake no obligation to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise.

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ITEM 4. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

Our management, under the supervision and with the participation of our Chief Executive Officer (CEO) and Chief Financial Officer (CFO), maintains disclosure controls and procedures as defined in Rules 13a-15(e) under the Exchange Act that are designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosures. Because of inherent limitations, disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of disclosure controls and procedures are met.

Our management, including our CEO and CFO, has evaluated the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended May 31, 2015. Based upon that evaluation, the CEO and CFO concluded that our disclosure controls and procedures were effective at a reasonable level of assurance as of May 31, 2015, the end of the period covered by this quarterly report on Form 10-Q.

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

In connection with the evaluation described above, we identified no change in our internal control over financial reporting as defined in Rule 13a-15(f) of the Exchange Act that occurred during our fiscal quarter ended May 31, 2015, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are involved in various legal claims and proceedings in the normal course of operations. We believe the outcome of these matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity.

ITEM 1A. RISK FACTORS

The ownership of our common stock involves a number of risks and uncertainties. When evaluating the Company and our business before making an investment decision regarding our securities, potential investors should carefully consider the risk factors and uncertainties described in Part 1, Item 1A. “Risk Factors” of our annual report on Form 10-K for the fiscal year ended February 28, 2015. Since the filing of our annual report on Form 10-K, there have been no material changes in our risk factors from those disclosed therein.

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ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

As of May 31, 2015, we were authorized by our Board of Directors to purchase up to $265.43 million of common stock in the open market or through private transactions. On March 14, 2014, the Company completed a modified “Dutch auction” tender offer resulting in the repurchase of 3,693,816 shares of its outstanding common stock at a total cost of $247.83 million, including tender offer transaction-related costs. The Company also repurchased 408,327 shares of outstanding common stock on the open market at a total cost of $25.77 million during the fiscal quarter ended May 31, 2014.

Our current equity-based compensation plans include provisions that allow for the “net exercise” of stock options by all plan participants. In a net exercise, any required payroll taxes, federal withholding taxes and exercise price of the shares due from the option holder can be paid for by having the option holder tender back to the Company a number of shares at fair value equal to the amounts due. These transactions are accounted for by the Company as a purchase and retirement of shares and are included in the table below as common stock repurchased.

For the fiscal quarter ended May 31, 2015, we did not repurchase any shares of common stock. Additionally, no shares of common stock were tendered by our employees in "net exercise" transactions.During the fiscal quarter ended May 31, 2014, certain employees tendered 1,993 shares of common stock having a market value of $59.13 per share, or $0.12 million in the aggregate, and our former CEO tendered 68,086 shares of common stock having a market value of $67.10 per share, or $4.57 million in the aggregate, as payment for related federal tax obligations arising from the vesting and settlement of performance-based restricted stock units and restricted stock awards. 

The following table summarizes our share repurchase activity for the periods covered below:

ISSUER PURCHASES OF EQUITY SECURITIES FOR THE THREE MONTHS ENDED MAY 31, 2015

	TotalNumberof SharesPurchased	AveragePrice PaidperShare		TotalNumberof SharesPurchased asPartofPublicly AnnouncedPlans orPrograms			DollarValueof SharesthatMay YetbePurchased UnderthePlans orPrograms (in thousands)
March 1 through March 31, 2015	-	$	-		-	$	265,428
April 1 through April 30, 2015	-		-		-		265,428
May 1 through May 31, 2015	-		-		-		265,428
Total	-	$	-		-

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ITEM 6.	EXHIBITS
	(a)	Exhibits
		31.1*	Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
		31.2*	Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
		32**	Joint certification of the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
		101.INS *	XBRL Instance Document
		101.SCH *	XBRL Taxonomy Extension Schema
		101.CAL *	XBRL Taxonomy Extension Calculation Linkbase
		101.DEF *	XBRL Taxonomy Extension Definition Linkbase
		101.LAB *	XBRL Taxonomy Extension Label Linkbase
		101.PRE *	XBRL Taxonomy Extension Presentation Linkbase
		*     Filed herewith.
		** Furnished herewith.

45

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	HELEN OF TROY LIMITED
	(Registrant)
Date:    July 10, 2015	/s/ Julien R. Mininberg
	Julien R. Mininberg
	Chief Executive Officer,   Director and Principal Executive Officer
Date:    July 10, 2015	/s/ Brian L. Grass
	Brian L. Grass
	Chief Financial Officer
	and Principal Financial Officer
Date:    July 10, 2015	/s/ Richard J. Oppenheim
	Richard J. Oppenheim
	Financial Controller
	and Principal Accounting Officer

46

Index to Exhibits

31.1*	Certification of the Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a) pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32**	Joint Certification of the Chief Executive Officer and the Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS *		XBRL Instance Document
101.SCH *		XBRL Taxonomy Extension Schema
101.CAL *		XBRL Taxonomy Extension Calculation Linkbase
101.DEF *		XBRL Taxonomy Extension Definition Linkbase
101.LAB *		XBRL Taxonomy Extension Label Linkbase
101.PRE *		XBRL Taxonomy Extension Presentation Linkbase
*	Filed herewith.
**	Furnished herewith.

47

EX-31.1

EXHIBIT 31.1

CERTIFICATION

I, Julien R. Mininberg, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the fiscal quarter ended May 31, 2015of Helen of Troy Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 

c)  Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: July 10, 2015

/s/ Julien R. Mininberg

Julien R. Mininberg

Chief Executive Officer,

Director and Principal Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION

I, Brian L. Grass, certify that:

1. I have reviewed this quarterly report on Form 10-Q for the fiscal quarter ended May 31, 2015 of Helen of Troy Limited;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)  Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; 

b)  Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; 

c)  Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)   Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Dated: July 10, 2015

/s/ Brian L. Grass

Brian L. Grass

Chief Financial Officer

and Principal Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION

In connection with the quarterly report of Helen of Troy Limited (the “Company”) on Form 10-Q for the fiscal quarter ended May 31, 2015, as filed with the Securities and Exchange Commission (the “Report”), and pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of the undersigned, the Chief Executive Officer and Chief Financial Officer of the Company, hereby certifies that to the best of their knowledge:

1. The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:July 10, 2015

/s/ Julien R. Mininberg

Julien R. Mininberg

Chief Executive Officer,

Director and Principal Executive Officer

/s/ Brian L. Grass

Brian L. Grass

Chief Financial Officer

and Principal Financial Officer

This certification is not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that section. This certification is not deemed to be incorporated by reference into any filing under the Securities Act of 1933 or Securities Exchange Act of 1934, except to the extent that the Company specifically incorporates it by reference.

XML

Comprehensive Income (Loss) (Details) - USD ($) $ in Thousands	3 Months Ended
	May. 31, 2015	May. 31, 2014	Feb. 28, 2015
Components of accumulated other comprehensive loss
Balance	$ 904,565
Tax effects	(55)	$ (369)
Other comprehensive income	93	$ 801
Balance	932,137
Unrealized Holding Gains (Losses) On Cash Flow Hedges | Foreign currency contracts
Components of accumulated other comprehensive loss
Balance	(76)
Other comprehensive income before reclassification	267
Amounts reclassified out of accumulated other comprehensive income (loss)	(119)
Tax effects	(55)
Other comprehensive income	93
Balance	17
Net deferred tax benefits			$ 30
Net deferred tax expense	$ (20)

XML

Repurchase of Helen of Troy Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands		3 Months Ended
	Mar. 14, 2014	May. 31, 2015
Repurchase of common stock
Shares of common stock tendered by employees in "net exercise" transactions		0
Performance-based | Restricted stock units and restricted stock awards | Former Chief Executive Officer [Member]
Repurchase of common stock
Common stock repurchased and retired (in shares)		68,086
Common stock repurchased and retired, total cost or aggregate market value		$ 4,570
Average price per share (in dollars per share)		$ 67.10
Performance-based | Restricted stock units and restricted stock awards | Certain employees
Repurchase of common stock
Common stock repurchased and retired (in shares)		1,993
Common stock repurchased and retired, total cost or aggregate market value		$ 120
Average price per share (in dollars per share)		$ 59.13
Dutch auction self tender
Repurchase of common stock
Common stock repurchased and retired (in shares)	3,693,816
Common stock repurchased and retired, total cost or aggregate market value	$ 247,830
Open market transactions
Repurchase of common stock
Common stock repurchased and retired (in shares)		408,327
Common stock repurchased and retired, total cost or aggregate market value		$ 25,770
Open market or tender offer
Repurchase of common stock
Amount of shares authorized for purchase		$ 265,430

XML

Income Taxes (Details) - USD ($) $ in Thousands	3 Months Ended
	May. 31, 2015	May. 31, 2014
Income Taxes
Effective income tax rate (as a percent)	14.20%	17.00%
Asset impairment charges	$ 3,000	$ 9,000
Tax benefit related to asset impairment charges	$ 340	$ 860

XML

Share-Based Compensation Plans (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	May. 31, 2015	May. 31, 2014
Share-based compensation plans
Number of shares withheld for the federal tax obligations	0
SHARE-BASED PAYMENT EXPENSE
Less income tax benefits	$ (319)	$ (127)
Share-based payment expense, net of income tax benefits	$ 1,794	$ 1,243
Earnings per share impact of share-based payment expense:
Basic (in dollars per share)	$ 0.06	$ 0.04
Diluted (in dollars per share)	$ 0.06	$ 0.04
SG&A
SHARE-BASED PAYMENT EXPENSE
Share-based payment expense	$ 2,113	$ 1,369
Employee stock options
Share-based compensation plans
Options granted (in shares)	145,500
Range of risk free interest rates used, minimum (as a percent)	1.28%
Range of risk free interest rates used, maximum (as a percent)	1.37%
Expected dividend rate (as a percent)	0.00%
Range of expected volatility rates used, minimum (as a percent)	37.26%
Range of expected volatility rates used, maximum (as a percent)	39.48%
Exercise of stock options (in shares)	106,825
Employee stock options | Minimum
Share-based compensation plans
Fair value for grants (in dollars per share)	$ 24.34
Term of award	4 years
Expected terms used	4 years 18 days
Employee stock options | Maximum
Share-based compensation plans
Fair value for grants (in dollars per share)	$ 29.68
Term of award	5 years
Expected terms used	4 years 4 months 6 days
Restricted stock (RSA) | Directors
Share-based compensation plans
Granted, issued or earned, Awards issued or earned (in shares)	1,575
Grant date fair value	$ 120
Grant date fair value (in dollars per share)	$ 78.11
Stock compensation | Directors | SG&A
SHARE-BASED PAYMENT EXPENSE
Share-based payment expense	$ 175	247
Stock compensation | CEO
Share-based compensation plans
Granted, issued or earned, Awards issued or earned (in shares)	2,000
Vested and settled or exercised, fair value (in dollars per share)	$ 89.12
Performance-based and other stock awards | SG&A
SHARE-BASED PAYMENT EXPENSE
Share-based payment expense	$ 1,245	418
Stock Option Officers Employees and Consultants [Member] | SG&A
SHARE-BASED PAYMENT EXPENSE
Share-based payment expense	$ 693	$ 704

XML

Debt - Schedule (Details) - USD ($)		3 Months Ended
	Mar. 01, 2015	May. 31, 2015	May. 31, 2014	Feb. 28, 2015
Long-term debt
Long-term Debt.		$ 438,807,000		$ 433,207,000
Less current maturities of long-term debt		23,800,000		21,900,000
Long-term debt, excluding current maturities		415,007,000		411,307,000
Principal payment made		1,900,000	$ 1,900,000
Unsecured state industrial development loan
Long-term debt
Long-term Debt.		33,807,000		35,707,000
Principal payment made	$ 1,900,000
Outstanding principal payable on March 1, 2016		3,800,000
Outstanding principal payable on March 1, 2017		5,700,000
Outstanding principal payable on March 1, 2018		1,900,000
Outstanding principal payable on March 1, 2019		1,900,000
Outstanding principal payable on March 1, 2020		1,900,000
Outstanding principal payable on March 1, 2021		1,900,000
Outstanding principal payable on March 1, 2022		1,900,000
Outstanding principal payable on March 1, 2023		14,810,000
Unsecured state industrial development loan | Base Rate Loan
Long-term debt
Face amount		$ 37,610,000
Unsecured state industrial development loan | Maximum | Base Rate
Long-term debt
Margin (as a percent)		1.00%
Unsecured state industrial development loan | Maximum | LIBOR
Long-term debt
Margin (as a percent)		2.00%
3.90% unsecured Senior Notes payable
Long-term debt
Face amount		$ 100,000,000
Interest rate (as a percent)		3.90%
Fixed interest rate (as a percentage)		3.90%
Principal payment		$ 20,000,000
Long-term Debt.		60,000,000		60,000,000
Credit Agreement
Long-term debt
Long-term Debt.		$ 345,000,000		$ 337,500,000

XML

Share-Based Compensation Plans (Tables)

3 Months Ended

May. 31, 2015

Share-Based Compensation Plans

Schedule of share-based compensation expense in SG&A (in thousands, except per share data)

	Three Months Ended May 31,
	2015		2014
Stock options	$	693	$	704
Directors stock compensation		175		247
Performance based and other stock awards		1,245		418
Share-based payment expense		2,113		1,369
Less income tax benefits		(319)		(127)
Share-based payment expense, net of income tax benefits	$	1,794	$	1,243
Earnings per share impact of share based payment expense:
Basic	$	0.06	$	0.04
Diluted	$	0.06	$	0.04

XML

Comprehensive Income (Loss) (Tables)

3 Months Ended

May. 31, 2015

Comprehensive Income (Loss)

Schedule of changes in accumulated other comprehensive income (loss) by component (in thousands)

	Unrealized Holding Gains(Losses) on Cash Flow Hedges (1)
Balance at February 28, 2015	$	(76)
Other comprehensive income before reclassification		267
Amounts reclassified out of accumulated other comprehensive income		(119)
Tax effects		(55)
Other Comprehensive Income (Loss)		93
Balance at May 31, 2015	$	17

(1) Represents activity associated with foreign currency contracts. Includes net deferred tax (expense) benefits of ($0.02)and $0.03 million at May 31, 2015 and February 28, 2015, respectively.

XML

Financial Instruments and Risk Management (Details) $ in Thousands	1 Months Ended	3 Months Ended
	Feb. 28, 2013 VEF / $	May. 31, 2015 USD ($) VEF / $	May. 31, 2014 USD ($) VEF / $
SG&A
Foreign Currency Risk and Currency Exchange Uncertainties
Net foreign exchange gains (losses), including the impact of currency hedges and currency swaps | $		$ (880)	$ (30)
Income Tax Expense (Benefit) [Member]
Foreign Currency Risk and Currency Exchange Uncertainties
Net foreign exchange gains (losses), including the impact of currency hedges and currency swaps | $		$ 140	$ 40
Venezuelan Bolivar
Currency Exchange Uncertainties
Value of foreign currency before devaluation (in Bolivars per dollar)	4.30
Value of foreign currency after devaluation (in Bolivars per dollar)	6.30
Foreign currency exchange rate ( in foreign currency per dollar)		6.30
Venezuelan Bolivar | SICAD 1
Currency Exchange Uncertainties
Foreign currency exchange rate ( in foreign currency per dollar)			12
Venezuelan Bolivar | SIMADI Foreign Exchange Mechanism [Member]
Currency Exchange Uncertainties
Foreign currency exchange rate ( in foreign currency per dollar)		199
Geographic concentration | Venezuela
Foreign Currency Risk and Currency Exchange Uncertainties
Percentage of net sales		1.20%	0.60%
Currency Exchange Uncertainties
Net investment | $		$ 11,600
Net sales revenue | Geographic concentration | International operations - transactions denominated in foreign currencies
Foreign Currency Risk and Currency Exchange Uncertainties
Percentage of net sales		14.00%	15.00%

XML

Goodwill and Intangible Assets (Details) - USD ($) $ in Thousands	3 Months Ended
	May. 31, 2015	May. 31, 2014	Feb. 28, 2015
Changes in Goodwill
Cumulative Goodwill Impairments	$ (46,490)		$ (46,490)
Goodwill Net Book Value	582,479		549,727
Changes in intangible assets - finite-lived
Intangible assets - finite-lived, Accumulated Amortization	(116,967)		(111,627)
Goodwill and intangible assets
Gross Carrying Amount	1,144,459		1,106,274
Net Book Value	981,002		948,157
Housewares
Changes in Goodwill
Goodwill Gross Carrying Amount	166,132		166,132
Goodwill Net Book Value	166,132		166,132
Changes in intangible assets - finite-lived
Intangible assets - finite-lived, Accumulated Amortization	(12,646)		(12,331)
Goodwill and intangible assets
Gross Carrying Amount	257,088		257,086
Net Book Value	244,442		244,755
Housewares | Other intangible assets
Changes in intangible assets - finite-lived
Intangible assets - finite-lived, Gross Carrying Amount	15,756		15,754
Intangible assets - finite-lived, Accumulated Amortization	(12,646)		(12,331)
Intangible assets - finite-lived, Net Book Value	3,110		3,423
Housewares | Trademarks
Changes in intangible assets - indefinite-lived
Intangible assets - indefinite-lived, Gross Carrying Amount	75,200		75,200
Healthcare/Home Environment
Changes in Goodwill
Goodwill Gross Carrying Amount	284,510		251,758
Goodwill Net Book Value	284,510		251,758
Changes in intangible assets - finite-lived
Intangible assets - finite-lived, Accumulated Amortization	(56,725)		(53,225)
Goodwill and intangible assets
Gross Carrying Amount	477,440		434,785
Net Book Value	420,715		381,560
Healthcare/Home Environment | Licenses
Changes in intangible assets - finite-lived
Intangible assets - finite-lived, Gross Carrying Amount	15,300		15,300
Intangible assets - finite-lived, Accumulated Amortization	(10,118)		(9,377)
Intangible assets - finite-lived, Net Book Value	5,182		5,923
Healthcare/Home Environment | Other intangible assets
Changes in intangible assets - finite-lived
Intangible assets - finite-lived, Gross Carrying Amount	116,230		113,727
Intangible assets - finite-lived, Accumulated Amortization	(46,607)		(43,848)
Intangible assets - finite-lived, Net Book Value	69,623		69,879
Healthcare/Home Environment | Trademarks
Changes in intangible assets - indefinite-lived
Intangible assets - indefinite-lived, Gross Carrying Amount	58,400		54,000
Nutritional Supplements
Changes in Goodwill
Goodwill Gross Carrying Amount	96,486	$ 96,486
Goodwill Net Book Value	96,486	96,486
Changes in intangible assets - finite-lived
Intangible assets - finite-lived, Accumulated Amortization	(5,736)	(4,171)
Goodwill and intangible assets
Gross Carrying Amount	205,786	205,786
Net Book Value	200,050	201,615
Nutritional Supplements | Other intangible assets
Changes in intangible assets - finite-lived
Intangible assets - finite-lived, Gross Carrying Amount	43,800	43,800
Intangible assets - finite-lived, Accumulated Amortization	(5,736)	(4,171)
Intangible assets - finite-lived, Net Book Value	38,064	39,629
Nutritional Supplements | Brand assets
Changes in intangible assets - indefinite-lived
Intangible assets - indefinite-lived, Gross Carrying Amount	65,500	65,500
Beauty
Changes in Goodwill
Goodwill Gross Carrying Amount	81,841		81,841
Cumulative Goodwill Impairments	(46,490)		(46,490)
Goodwill Net Book Value	35,351		35,351
Changes in intangible assets - finite-lived
Intangible assets - finite-lived, Accumulated Amortization	(41,860)		(41,900)
Goodwill and intangible assets
Gross Carrying Amount	204,145		208,617
Net Book Value	115,795		120,227
Beauty | Trademarks
Changes in intangible assets - finite-lived
Intangible assets - finite-lived, Gross Carrying Amount	150		150
Intangible assets - finite-lived, Accumulated Amortization	(83)		(82)
Intangible assets - finite-lived, Net Book Value	67		68
Beauty | Licenses
Changes in intangible assets - finite-lived
Intangible assets - finite-lived, Gross Carrying Amount	13,696		13,696
Intangible assets - finite-lived, Accumulated Amortization	(11,295)		(11,216)
Intangible assets - finite-lived, Net Book Value	2,401		2,480
Beauty | Other intangible assets
Changes in intangible assets - finite-lived
Intangible assets - finite-lived, Gross Carrying Amount	46,404		47,876
Intangible assets - finite-lived, Accumulated Amortization	(30,482)		(30,602)
Intangible assets - finite-lived, Net Book Value	15,922		17,274
Beauty | Trademarks
Goodwill and intangible assets
Non-cash indefinite-lived intangible assets impairment charges	3,000	9,000
Non-cash indefinite-lived intangible assets impairment charges, net of tax	2,660	$ 8,160
Changes in intangible assets - indefinite-lived
Intangible assets - indefinite-lived, Gross Carrying Amount	51,754		54,754
Beauty | Licenses
Changes in intangible assets - indefinite-lived
Intangible assets - indefinite-lived, Gross Carrying Amount	$ 10,300		$ 10,300

XML

Earnings per Share - Antidilution (Details) - shares shares in Thousands	3 Months Ended
	May. 31, 2015	May. 31, 2014
Employee and Directors stock options
Antidilutive securities, as a result of out of the money
Antidilutive securities (in shares)	197	233

XML

Financial Instruments and Risk Management - Derivative FV (Details) - Designated as cash flow hedging instruments € in Thousands, £ in Thousands, $ in Thousands	May. 31, 2015 CAD	May. 31, 2015 GBP (£)	May. 31, 2015 EUR (€)	May. 31, 2015 USD ($)	Feb. 28, 2015 GBP (£)	Feb. 28, 2015 EUR (€)	Feb. 28, 2015 USD ($)
Prepaid Expenses and Other Current Assets
Fair values of derivative instruments in the consolidated balance sheet
Derivative assets				$ 158			$ 129
Accrued Expenses and Other Current Liability
Fair values of derivative instruments in the consolidated balance sheet
Derivative liabilities				121			240
Foreign currency contracts | Sell | Euros
Fair values of derivative instruments in the consolidated balance sheet
Notional Amount | €			€ 11,000			€ 10,000
Foreign currency contracts | Sell | Euros | Prepaid Expenses and Other Current Assets
Fair values of derivative instruments in the consolidated balance sheet
Derivative assets				15			129
Foreign currency contracts | Sell | Pounds
Fair values of derivative instruments in the consolidated balance sheet
Notional Amount | £		£ 5,700			£ 6,900
Foreign currency contracts | Sell | Pounds | Accrued Expenses and Other Current Liability
Fair values of derivative instruments in the consolidated balance sheet
Derivative liabilities				121			$ 240
Foreign currency contracts | Sell | Canadian
Fair values of derivative instruments in the consolidated balance sheet
Notional Amount | CAD	CAD 13,250
Foreign currency contracts | Sell | Canadian | Prepaid Expenses and Other Current Assets
Fair values of derivative instruments in the consolidated balance sheet
Derivative assets				$ 143

XML

Debt - FV, Limit (Details) $ in Thousands	May. 31, 2015 USD ($)
Long-term debt
Limit on additional debt borrowings	$ 284,600
3.90% unsecured Senior Notes payable | Book value
Long-term debt
Long-term debt	60,000
3.90% unsecured Senior Notes payable | Fair Values | Significant Other Observable Market Inputs (Level 2) | Discounted cash flow analysis
Long-term debt
Long-term debt	$ 61,810

XML

Commitments and Contingencies

3 Months Ended

May. 31, 2015

Commitments and Contingencies

Other Commitments and Contingencies

Note 3 – Commitments and Contingencies

We are involved in various legal claims and proceedings in the normal course of operations. We believe the outcome of these matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity.

Notes 7, 10, 12, and 13 to these consolidated condensed financial statements provide additional information regarding certain of our significant commitments and certain significant contingencies we have provided for in the accompanying consolidated condensed financial statements.

Our products are under warranty against defects in material and workmanship for periods ranging from two to five years. We estimate our warranty accrual using historical trends and believe that these trends are the most reliable method by which we can estimate our warranty liability. The following table summarizes the activity in our warranty accrual for the periods covered below:

ACCRUAL FOR WARRANTY RETURNS

(in thousands)

	Three Months Ended May 31,
	2015 (1)		2014
Beginning balance	$	23,553	$	19,269
Additions to the accrual		13,514		12,686
Reductions of the accrual - payments and credits issued		(16,173)		(12,815)
Ending balance	$	20,894	$	19,140

(1) For the fiscal quarter ended May 31, 2015, the table includes accrual additions of $2.33 million and related payments and credits of $2.39 million, attributed to Healthy Directions.

XML

Goodwill and Intangible Assets - Amortization (Details) - USD ($) $ in Thousands	3 Months Ended
	May. 31, 2015	May. 31, 2014
Goodwill and Intangible Assets
Aggregate Amortization Expense	$ 6,814	$ 5,259
Estimated Amortization Expense
February 2016	27,267
February 2017	26,886
February 2018	23,129
February 2019	18,535
February 2020	16,995
February 2021	$ 14,716

XML

Debt (Tables)

3 Months Ended

May. 31, 2015

Debt

Summary of long-term debt (dollars in thousands)

	Original
	Date	Interest			May 31,		February 28,
	Borrowed	Rates		Matures	2015		2015
$37.61 million unsecured loan with the Mississippi Business Finance Corporation (the "MBFC Loan"), interest is set and payable quarterly at a Base Rate, plus a margin of up to 1.00%, or applicable LIBOR plus a margin of up to 2.00%, as determined by the interest rate elected and the Leverage Ratio. Loan subject to holder's call on or after March 1, 2018. Loan can be prepaid without penalty. (1)	03/13	Floating		03/23	$	33,807	$	35,707
$100 million unsecured Senior Notes payable at a fixed interest rate of 3.90%. Interest payable semi-annually. Annual principal payments of $20 million began in January 2014. Prepayment of notes are subject to a "make whole" premium.	01/11	3.90	%	01/18		60,000		60,000
Credit Agreement	01/15	Floating		01/20		345,000		337,500
Total long-term debt						438,807		433,207
Less current maturities of long-term debt						(23,800)		(21,900)
Long-term debt, excluding current maturities					$	415,007	$	411,307

(1) A  $1.90 million principal payment was made on March 1, 2015. The remaining loan balance is payable as follows: $3.80 million on March 1, 2016; $5.70 million on March 1, 2017; $1.90 million annually on March 1, 2018 through 2022; and $14.81 million on March 1, 2023. Any remaining outstanding principal and interest is due upon maturity on March 1, 2023.

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Acquisitions (Tables)

3 Months Ended

May. 31, 2015

Acquisitions

Schedule of acquisition date fair value of net assets (in thousands)

Assets:
Receivables	$	257
Inventory		6,226
Prepaid expenses and other current assets		1,875
Property and equipment		5,962
Goodwill		95,308
Brand assets - indefinite		65,500
Customer relationships - definite		43,800
Subtotal - assets		218,928
Liabilities:
Accounts payable		6,479
Accrued expenses		13,964
Other long-term liabilities		2,542
Subtotal - liabilities		22,985
Net assets recorded	$	195,943

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Acquisitions (Details) $ in Thousands			3 Months Ended	12 Months Ended
	Mar. 31, 2015 USD ($) item	Jun. 30, 2014 USD ($)	May. 31, 2015 USD ($)	Feb. 28, 2015 USD ($)	May. 31, 2014 USD ($)
Assets
Goodwill			$ 582,479	$ 549,727
Healthcare/Home Environment
Assets
Goodwill			284,510	251,758
Nutritional Supplements
Assets
Goodwill			96,486		$ 96,486
Vicks VapoSteam and VapoPad Acquisition [Member]
Acquisitions
Number of Transactions in Acquisition | item	2
Purchase price	$ 42,750
Vicks VapoSteam and VapoPad Acquisition [Member] | Customer relationships | Healthcare/Home Environment
Acquisitions
Expected weighted average lives of acquired finite-lived intangible assets	19 years 6 months
Vicks VapoSteam and VapoPad Acquisition [Member] | Customer relationships | Significant Unobservable Inputs (Level 3)
Assets
Finite-lived intangible assets	$ 1,200
Vicks VapoSteam and VapoPad Acquisition [Member] | Product formulations | Healthcare/Home Environment
Acquisitions
Expected weighted average lives of acquired finite-lived intangible assets	20 years
Vicks VapoSteam and VapoPad Acquisition [Member] | Product formulations | Significant Unobservable Inputs (Level 3)
Assets
Finite-lived intangible assets	$ 1,200
Vicks VapoSteam and VapoPad Acquisition [Member] | Trademarks | Significant Unobservable Inputs (Level 3)
Assets
Indefinite-lived intangible assets	$ 7,400
Vicks VapoSteam U.S.
Acquisitions
Annual revenues prior to acquisition			$ 10,000
Healthy Directions | Nutritional Supplements
Acquisitions
Acquisition-related expenses incurred				3,610
Acquisition-related expenses incurred after tax				$ 2,310
Assets
Receivables		$ 257
Inventory		6,226
Prepaid expenses and other current assets		1,875
Property and equipment		5,962
Goodwill		95,308
Subtotal - assets		218,928
Liabilities
Accounts payable		6,479
Accrued expenses		13,964
Other long-term liabilities		2,542
Subtotal - liabilities		22,985
Net assets recorded		$ 195,943
Healthy Directions | Significant Unobservable Inputs (Level 3) | Income and market approaches | Nutritional Supplements
Fair value key assumptions
Discount rate (as a percent)		14.60%
Healthy Directions | Customer relationships | Nutritional Supplements
Acquisitions
Expected weighted average lives of acquired finite-lived intangible assets		7 years
Assets
Finite-lived intangible assets		$ 43,800
Healthy Directions | Customer relationships | Significant Unobservable Inputs (Level 3) | Income and market approaches | Nutritional Supplements
Fair value key assumptions
Customer attrition rates (as a percent)		14.00%
Healthy Directions | Brand assets | Nutritional Supplements
Assets
Indefinite-lived intangible assets		$ 65,500
Healthy Directions | Brand assets | Significant Unobservable Inputs (Level 3) | Income and market approaches | Nutritional Supplements
Fair value key assumptions
Royalty rates (as a percent)		5.00%

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Fair Value (Tables)

3 Months Ended

May. 31, 2015

Fair Value

Schedule of fair value hierarchy of financial assets and liabilities carried at fair value and measured on a recurring basis (in thousands)

	Fair Values at
	May 31, 2015
	(Level 2) (1)
Assets:
Money market accounts	$	623
Foreign currency contracts		158
Total assets	$	781
Liabilities:
Fixed rate debt - (2)	$	61,807
Floating rate debt		378,807
Foreign currency contracts		121
Total liabilities	$	440,735

	Fair Values at
	February 28, 2015
	(Level 2) (1)
Assets:
Money market accounts	$	1,692
Foreign currency contracts		129
Total assets	$	1,821
Liabilities:
Fixed rate debt - (2)	$	62,006
Floating rate debt		373,207
Foreign currency contracts		240
Total liabilities	$	435,453

(1) Our financial assets and liabilities are classified as Level 2 because their valuation is dependent on observable inputs and other quoted prices for similar assets or liabilities, or model-derived valuations whose significant value drivers are observable.

(2)  Debt values are reported at estimated fair value in these tables, but are recorded in the accompanying consolidated condensed balance sheets at the undiscounted value of remaining principal payments due.

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Financial Instruments and Risk Management (Tables)

3 Months Ended

May. 31, 2015

Financial Instruments and Risk Management

Schedule of fair values of derivative instruments (in thousands)

	May 31, 2015
					Prepaid		Accrued
					Expenses		Expenses
		Final			andOther		andOther
		Settlement	Notional		Current		Current
Designated as hedging instruments	HedgeType	Date	Amount		Assets		Liabilities
Foreign currency contracts - sell Canadian Dollars	Cash flow	2/2016	$	13,250	$	143	$	-
Foreign currency contracts - sell Euro	Cash flow	2/2016	€	11,000		15		-
Foreign currency contracts - sell Pounds	Cash flow	2/2016	£	5,700		-		121
Total fair value					$	158	$	121

	February 28, 2015
					Prepaid		Accrued
					Expenses		Expenses
		Final			and Other		and Other
		Settlement	Notional		Current		Current
Designated as hedging instruments	Hedge Type	Date	Amount		Assets		Liabilities
Foreign currency contracts - sell Euro	Cash flow	1/2016	€	10,000	$	129	$	-
Foreign currency contracts - sell Pounds	Cash flow	2/2016	£	6,900		-		240
Total fair value					$	129	$	240

Schedule of pre-tax effect of derivative instruments

	Three Months Ended May 31,
	Gain/(Loss)				Gain/(Loss)Reclassified
	RecognizedinOCI				fromAccumulatedOther
	(effectiveportion)				ComprehensiveIncome(Loss)intoIncome
	2015		2014		Location	2015		2014
Currency contracts - cash flow hedges	$	267	$	78	SG&A	$	119	$	(166)
Interest rate swaps - cash flow hedges		-		12	Interestexpense		-		(914)
Total	$	267	$	90		$	119	$	(1,080)

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New Accounting Pronouncements

3 Months Ended

May. 31, 2015

New Accounting Pronouncements

New Accounting Pronouncements

Note 2 – New Accounting Pronouncements

From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that we adopt according to the various timetables the FASB specifies.  Unless otherwise discussed below, we believe the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial position, results of operations and cash flows upon adoption.

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers”, issued as a new Topic, ASC Topic 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle of the guidance is that a Company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In April 2015, the FASB voted to propose deferral of the effective date of the new revenue standard by one year, but to permit entities to adopt one year earlier if they choose. The proposed deferral is not a final decision. Assuming the proposal is sustained after the FASB’s due process (including their evaluation of resulting public comments), we will be required to adopt the new standard in fiscal year 2019 and can adopt either retrospectively or as a cumulative effect adjustment as of the date of adoption. We are currently evaluating the effect this new accounting guidance will have on our consolidated results of operations, cash flows and financial position.

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Repurchase of Helen of Troy Common Stock (Tables)

3 Months Ended

May. 31, 2015

Repurchase of Helen of Troy Common Stock

Summary of share repurchase activity

	Three Months Ended May 31,
	2015		2014
Common stock repurchased on the open market or through tender offer
Number of shares		-		4,102,143
Aggregate market value of shares (in thousands)	$	-	$	273,599
Average price per share	$	-	$	66.70
Common stock received in connection with share-based compensation
Number of shares		-		70,079
Aggregate market value of shares (in thousands)	$	-	$	4,686
Average price per share	$	-	$	66.87

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Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands	3 Months Ended
	May. 31, 2015	Feb. 28, 2015
PROPERTY AND EQUIPMENT
Property and equipment, gross	$ 209,494	$ 208,222
Less accumulated depreciation	(84,165)	(82,154)
Property and equipment, net	125,329	126,068
Land
PROPERTY AND EQUIPMENT
Property and equipment, gross	12,800	12,800
Building and improvements
PROPERTY AND EQUIPMENT
Property and equipment, gross	$ 102,058	102,058
Building and improvements | Minimum
PROPERTY AND EQUIPMENT
Estimated useful life	3 years
Building and improvements | Maximum
PROPERTY AND EQUIPMENT
Estimated useful life	40 years
Computer, furniture and other equipment
PROPERTY AND EQUIPMENT
Property and equipment, gross	$ 63,837	64,464
Computer, furniture and other equipment | Minimum
PROPERTY AND EQUIPMENT
Estimated useful life	3 years
Computer, furniture and other equipment | Maximum
PROPERTY AND EQUIPMENT
Estimated useful life	15 years
Tools, dies, molds and other production equipment
PROPERTY AND EQUIPMENT
Property and equipment, gross	$ 26,004	25,861
Tools, dies, molds and other production equipment | Minimum
PROPERTY AND EQUIPMENT
Estimated useful life	1 year
Tools, dies, molds and other production equipment | Maximum
PROPERTY AND EQUIPMENT
Estimated useful life	10 years
Construction in progress
PROPERTY AND EQUIPMENT
Property and equipment, gross	$ 4,795	$ 3,039

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Financial Instruments and Risk Management - Derivative tax effect (Details) - Cash flow hedges - USD ($) $ in Thousands	3 Months Ended
	May. 31, 2015	May. 31, 2014
Pre-tax effect of derivative instruments
Gain/ (Loss) Recognized in OCI (effective portion)	$ 267	$ 90
Gain/ (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income	119	(1,080)
Foreign currency contracts
Pre-tax effect of derivative instruments
Losses from foreign currency contracts expected to be reclassified into income over the next twelve months	$ (40)
Net gains currently reported in accumulated other comprehensive income, to be reclassified into income, period of time to transfer	12 months
Foreign currency contracts | SG&A
Pre-tax effect of derivative instruments
Gain/ (Loss) Recognized in OCI (effective portion)	$ 267	78
Gain/ (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income	$ 119	(166)
Interest rate swaps | Interest expenses
Pre-tax effect of derivative instruments
Gain/ (Loss) Recognized in OCI (effective portion)		12
Gain/ (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income		$ (914)

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Consolidated Balance Sheets - USD ($) $ in Thousands	May. 31, 2015	Feb. 28, 2015
Assets, current:
Cash and cash equivalents	$ 15,262	$ 12,295
Receivables - principally trade, less allowances of $5,869 and $5,882	210,001	222,499
Inventory, net	299,300	293,081
Prepaid expenses and other current assets	11,111	9,715
Income taxes receivable	4,707	417
Deferred tax assets, net	25,362	26,753
Total assets, current	565,743	564,760
Property and equipment, net of accumulated depreciation of $84,165 and $82,154	125,329	126,068
Goodwill	582,479	549,727
Other intangible assets, net of accumulated amortization of $116,967 and $111,627	398,523	398,430
Deferred tax assets, net	2,461	2,132
Other assets, net of accumulated amortization of $9,489 and $9,166	12,603	12,638
Total assets	1,687,138	1,653,755
Liabilities, current:
Accounts payable, principally trade	113,384	98,564
Accrued expenses and other current liabilities	131,072	141,201
Deferred tax liabilities, net	186	200
Long-term debt, current maturities	23,800	21,900
Total liabilities, current	268,442	261,865
Long-term debt, excluding current maturities	415,007	411,307
Deferred tax liabilities, net	51,080	52,711
Other liabilities, noncurrent	20,472	23,307
Total liabilities	$ 755,001	$ 749,190
Commitments and contingencies
Stockholders' equity:
Common stock, $0.10 par. Authorized 50,000,000 shares; 28,598,812 and 28,488,411 shares issued and outstanding	$ 2,860	$ 2,849
Additional paid in capital	186,992	179,934
Accumulated other comprehensive income (loss)	17	(76)
Retained earnings	742,268	721,858
Total stockholders' equity	932,137	904,565
Total liabilities and stockholders' equity	$ 1,687,138	$ 1,653,755

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Debt (Details) - Credit Agreement	3 Months Ended
	May. 31, 2015 USD ($) item	May. 31, 2014
Revolving Line of Credit
Unsecured revolving commitment	$ 650,000,000
Number of alternative methods under which interest on borrowings accrue | item	2
Amount available for borrowings	$ 304,220,000
Minimum
Revolving Line of Credit
Interest rate range during each year (as a percent)	1.43%	1.90%
Maximum
Revolving Line of Credit
Interest rate range during each year (as a percent)	4.00%	4.00%
Revolving loan
Revolving Line of Credit
Amount outstanding	$ 345,000,000
Letter of credit
Revolving Line of Credit
Amount outstanding	$ 780,000

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	May. 31, 2015	May. 31, 2014
Cash provided (used) by operating activities:
Net income	$ 20,410	$ 16,398
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	10,354	8,500
Amortization of financing costs	291	257
Provision for doubtful receivables	(46)	118
Non-cash share-based compensation	2,061	1,295
Intangible asset impairment charges	3,000	9,000
Loss on the sale of property and equipment		1
Deferred income taxes and tax credits	(954)	1,321
Changes in operating capital, net of effects of acquisition of business:
Receivables	12,544	(4,479)
Inventories	(6,219)	(9,195)
Prepaid expenses and other current assets	(1,367)	1,641
Other assets and liabilities, net	(2,942)	(2,987)
Accounts payable	14,820	9,233
Accrued expenses and other current liabilities	(10,013)	(23,939)
Accrued income taxes	(4,440)	(4,193)
Net cash provided by operating activities	37,499	2,971
Cash provided (used) by investing activities:
Capital and intangible asset expenditures	(2,717)	(1,822)
Proceeds from the sale or disposal of property and equipment	7
Payment to acquire a business	(42,750)
Net cash used by investing activities	(45,460)	(1,822)
Cash provided (used) by financing activities:
Proceeds from line of credit	121,500	337,700
Repayment of line of credit	(114,000)	(102,700)
Repayment of long-term debt	(1,900)	(1,900)
Payment of financing costs		(1)
Proceeds from share issuances under share-based compensation plans, including tax benefits	5,009	2,935
Payment of tax obligations resulting from cashless share award exercises		(4,569)
Payments for repurchases of common stock		(273,598)
Share-based compensation tax benefit	319	127
Net cash provided (used) by financing activities	10,928	(42,006)
Net increase (decrease) in cash and cash equivalents	2,967	(40,857)
Cash and cash equivalents, beginning balance	12,295	70,027
Cash and cash equivalents, ending balance	$ 15,262	$ 29,170

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Commitments and Contingencies (Details) - USD ($) $ in Thousands	3 Months Ended
	May. 31, 2015	May. 31, 2014
Accrual for warranty returns
Beginning balance	$ 23,553	$ 19,269
Additions to the accrual	13,514	12,686
Reductions of the accrual - payments and credits issued	(16,173)	(12,815)
Ending balance	20,894	$ 19,140
Healthy Directions
Accrual for warranty returns
Additions to the accrual	2,330
Reductions of the accrual - payments and credits issued	$ (2,390)
Minimum
Warranties
Product warranty period	2 years
Maximum
Warranties
Product warranty period	5 years

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Commitments and Contingencies (Tables)

3 Months Ended

May. 31, 2015

Commitments and Contingencies

Summary of activity in warranty accrual (in thousands)

	Three Months Ended May 31,
	2015 (1)		2014
Beginning balance	$	23,553	$	19,269
Additions to the accrual		13,514		12,686
Reductions of the accrual - payments and credits issued		(16,173)		(12,815)
Ending balance	$	20,894	$	19,140

(1) For the fiscal quarter ended May 31, 2015, the table includes accrual additions of $2.33 million and related payments and credits of $2.39 million, attributed to Healthy Directions.

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Earnings per Share (Details) - shares shares in Thousands	3 Months Ended
	May. 31, 2015	May. 31, 2014
Weighted average diluted securities
Weighted average shares outstanding, basic	28,520	29,105
Incremental shares from share-based payment arrangements	568	511
Weighted average shares outstanding, diluted	29,088	29,616
Employee and Directors stock options
Weighted average diluted securities
Dilutive securities (in shares)	798	728
Restricted stock (RSA)
Weighted average diluted securities
Dilutive securities (in shares)	294	231

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Segment Information (Tables)

3 Months Ended

May. 31, 2015

Segment Information

Schedule of segment information (in thousands)

			Healthcare / Home		Nutritional
May 31, 2015 (thousands)	Housewares		Environment		Supplements		Beauty		Total
Sales revenue, net	$	65,186	$	143,042	$	39,440	$	97,677	$	345,345
Asset impairment charges		-		-		-		3,000		3,000
Operating income		11,183		8,418		2,620		4,322		26,543
Capital and intangible asset expenditures		325		300		1,131		961		2,717
Depreciation and amortization		1,008		5,063		1,968		2,315		10,354

			Healthcare / Home		Nutritional
May 31, 2014 (thousands)	Housewares		Environment		Supplements		Beauty		Total
Sales revenue, net	$	66,756	$	142,489	$	-	$	102,533	$	311,778
Asset impairment charges		-		-		-		9,000		9,000
Operating income		13,035		8,717		-		1,371		23,123
Capital and intangible asset expenditures		824		406		-		592		1,822
Depreciation and amortization		888		5,232		-		2,380		8,500

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Basis of Presentation and Conventions Used in this Report

3 Months Ended

May. 31, 2015

Basis of Presentation and Conventions Used in this Report

Basis of Presentation and Conventions Used in this Report

Note 1 - Basis of Presentation and Conventions Used in this Report

The accompanying consolidated condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly our consolidated financial position as of May 31, 2015 and February 28, 2015, and the results of our consolidated operations for the interim periods presented.We follow the same accounting policies when preparing quarterly financial data as we use for preparing annual data. These statements should be read in conjunction with the consolidated financial statements and the notes included in our latest annual report on Form 10-K for the fiscal year ended February 28, 2015, and our other reports on file with the Securities and Exchange Commission (the “SEC”).

In this report and the accompanying consolidated condensed financial statements and notes, unless otherwise indicated or the context suggests otherwise, references to “the Company”, “our Company”, “Helen of Troy”, “we”, “us”, or “our” refer to Helen of Troy Limited and its subsidiaries. We refer to the Company's common shares, par value $0.10 per share, as “common stock.” References to “OXO” refer to the operations of OXO International and certain of its affiliated subsidiaries that comprise our Housewares segment. References to “Kaz” refer to the operations of Kaz, Inc. and its subsidiaries, which comprise a segment within the Company referred to as the Healthcare / Home Environment segment. References to “Healthy Directions” refer to the operations of Healthy Directions, LLC and its subsidiaries, acquired on June 30, 2014, that comprise the Nutritional Supplements segment. We use product and service names in this report for identification purposes only and they may be protected in the United States and other jurisdictions by trademarks, trade names, service marks, and other intellectual property rights of the Company and other parties. The absence of a specific attribution in connection with any such mark does not constitute a waiver of any such right. All trademarks, trade names, service marks, and logos referenced herein belong to their respective owners. References to “the FASB” refer to the Financial Accounting Standards Board. References to “GAAP” refer to U.S. generally accepted accounting principles. References to “ASU” refer to the codification of GAAP in the Accounting Standards Updates issued by the FASB. References to “ASC” refer to the codification of GAAP in the Accounting Standards Codification issued by the FASB.

We are a global designer, developer, importer, marketer, and distributor of an expanding portfolio of brand-name consumer products. We have four segments: Housewares, Healthcare / Home Environment, Nutritional Supplements, and Beauty (formerly referred to as “Personal Care”). Our Housewares segment provides a broad range of innovative consumer products for the home. Product offerings include food preparation tools, gadgets, storage containers, cleaning, organization, and baby and toddler care products. The Healthcare / Home Environment segment focuses on healthcare devices such as thermometers, humidifiers, blood pressure monitors, and heating pads; water filtration systems, and small home appliances such as portable heaters, fans, air purifiers, and insect control devices. Our Nutritional Supplements segment is a leading provider of premium branded vitamins, minerals and supplements, as well as other health products sold directly to consumers. Our Beauty segment products include electric hair care, beauty care and wellness appliances; grooming tools and accessories; and liquid-, solid- and powder-based personal care and grooming products.

Our business is seasonal due to different calendar events, holidays and seasonal weather patterns. Historically, our highest sales volume and operating income occur in our third fiscal quarter ending November 30th. We purchase our products from unaffiliated manufacturers, most of which are located in China, Mexico and the United States.

Our consolidated condensed financial statements are prepared in U.S. Dollars and in accordance with GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. We have reclassified, combined or separately disclosed certain amounts in the prior period’s consolidated condensed financial statements and accompanying footnotes to conform to the current period’s presentation.

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	May. 31, 2015	Feb. 28, 2015
Consolidated Balance Sheets
Receivables - principally trade, allowances (in dollars)	$ 5,869	$ 5,882
Property and equipment, accumulated depreciation (in dollars)	84,165	82,154
Other intangible assets, accumulated amortization (in dollars)	116,967	111,627
Other assets, accumulated amortization (in dollars)	$ 9,489	$ 9,166
Cumulative preferred stock, non-voting, par (in dollars per share)	$ 1.00	$ 1.00
Cumulative preferred stock, non-voting, Authorized shares	2,000,000	2,000,000
Cumulative preferred stock, non-voting, issued shares	0	0
Common stock, par (in dollars per share)	$ 0.10	$ 0.10
Common stock, Authorized shares	50,000,000	50,000,000
Common stock, shares issued	28,598,812	28,488,411
Common stock, shares outstanding	28,598,812	28,488,411

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Income Taxes

3 Months Ended

May. 31, 2015

Income Taxes

Income Taxes

Note 11 – Income Taxes

Income tax expense for the fiscal quarter ended May 31, 2015 was 14.2 percent of income before income taxes, compared to 17.0 percent for the same period last year. The year-over-year comparison of our effective tax rates was primarily impacted by shifts in the mix of taxable income in our various tax jurisdictions.Our effective tax rates were unfavorably impacted by asset impairment charges of $3.00 million for the fiscal quarter ended May 31, 2015, and $9.00 million for the fiscal quarter ended May 31,2014, for which the related tax benefits were $0.34 and $0.86 million, respectively.

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Document and Entity Information - shares	3 Months Ended
	May. 31, 2015	Jul. 06, 2015
Document and Entity Information
Entity Registrant Name	HELEN OF TROY LTD
Entity Central Index Key	0000916789
Document Type	10-Q
Document Period End Date	May 31, 2015
Amendment Flag	false
Current Fiscal Year End Date	--02-29
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		28,617,758
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	Q1

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Fair Value

3 Months Ended

May. 31, 2015

Fair Value

Fair Value

Note 12 – Fair Value

The fair value hierarchy of our financial assets and liabilities carried at fair value and measured on a recurring basis is as follows:

FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES

(in thousands)

	Fair Values at
	May 31, 2015
	(Level 2) (1)
Assets:
Money market accounts	$	623
Foreign currency contracts		158
Total assets	$	781
Liabilities:
Fixed rate debt - (2)	$	61,807
Floating rate debt		378,807
Foreign currency contracts		121
Total liabilities	$	440,735

	Fair Values at
	February 28, 2015
	(Level 2) (1)
Assets:
Money market accounts	$	1,692
Foreign currency contracts		129
Total assets	$	1,821
Liabilities:
Fixed rate debt - (2)	$	62,006
Floating rate debt		373,207
Foreign currency contracts		240
Total liabilities	$	435,453

(1) Our financial assets and liabilities are classified as Level 2 because their valuation is dependent on observable inputs and other quoted prices for similar assets or liabilities, or model-derived valuations whose significant value drivers are observable.

(2)  Debt values are reported at estimated fair value in these tables, but are recorded in the accompanying consolidated condensed balance sheets at the undiscounted value of remaining principal payments due.

The carrying amounts of cash and cash equivalents, receivables and accounts payable approximate fair value because of the short maturity of these items.  Money market accounts are included in cash and cash equivalents in the accompanying consolidated condensed balance sheets and are classified as Level 2 items.

We classify our fixed and floating rate debt as Level 2 liabilities because the estimation of their fair market value requires the use of discount rates based upon current market rates of interest for debt with comparable terms. These discount rates are significant other observable market inputs. The fair market value of the fixed rate debt was computed using a discounted cash flow analysis and discount rates of 1.96 percent at May 31, 2015 and 2.05 percent at February 28, 2015. All other long-term debt has floating interest rates, and its book value approximates its fair value as of the reporting date.

We use derivatives for hedging purposes. As of May 31, 2015, our derivatives consist of foreign currency contracts. We determine the fair value of our derivative instruments based on Level 2 inputs in the fair value hierarchy. See Notes 6, 7 and 13 to these consolidated condensed financial statements for more information on our hedging activities.

The Company’s other non-financial assets include goodwill and other intangible assets, which we classify as Level 3 assets. These assets are measured at fair value on a non-recurring basis as part of the Company’s impairment assessments and as circumstances require. As discussed in Note 8 to these consolidated condensed financial statements, in connection with our annual impairment testing during the fiscal quarter ended May 31, 2015, we recorded a non-cash asset impairment charge of $3.00 million ($2.66 million after tax). The charge related to a trademark in our Beauty segment, which was written down to its estimated fair value, determined on the basis of future discounted cash flows using the relief from royalty valuation method.

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Consolidated Statements of Income - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	May. 31, 2015	May. 31, 2014
Consolidated Statements of Income
Sales revenue, net	$ 345,345	$ 311,778
Cost of goods sold	202,026	192,258
Gross profit	143,319	119,520
Selling, general and administrative expense	113,776	87,397
Asset impairment charges	3,000	9,000
Operating income	26,543	23,123
Nonoperating income, net	138	50
Interest expense	(2,892)	(3,417)
Income before income taxes	23,789	19,756
Income tax expense (benefit):
Current	4,014	2,039
Deferred	(635)	1,319
Net income	$ 20,410	$ 16,398
Earnings per share:
Basic (in dollars per share)	$ 0.72	$ 0.56
Diluted (in dollars per share)	$ 0.70	$ 0.55
Weighted average shares of common stock used in computing net earnings per share:
Basic (in shares)	28,520	29,105
Diluted (in shares)	29,088	29,616

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Comprehensive Income (Loss)

3 Months Ended

May. 31, 2015

Comprehensive Income (Loss)

Comprehensive Income (Loss)

Note 6 – Comprehensive Income (Loss)

The table below presents the changes in accumulated other comprehensive income (loss) by component and the amounts reclassified out of accumulated other comprehensive income (loss) for the 2016 fiscal year-to-date:

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT

(in thousands)

	Unrealized Holding Gains(Losses) on Cash Flow Hedges (1)
Balance at February 28, 2015	$	(76)
Other comprehensive income before reclassification		267
Amounts reclassified out of accumulated other comprehensive income		(119)
Tax effects		(55)
Other Comprehensive Income (Loss)		93
Balance at May 31, 2015	$	17

(1) Represents activity associated with foreign currency contracts. Includes net deferred tax (expense) benefits of ($0.02)and $0.03 million at May 31, 2015 and February 28, 2015, respectively.

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Segment Information

3 Months Ended

May. 31, 2015

Segment Information

Segment Information

Note 5 – Segment Information

The following tables contain segment information for the periods covered below:

			Healthcare / Home		Nutritional
May 31, 2015 (thousands)	Housewares		Environment		Supplements		Beauty		Total
Sales revenue, net	$	65,186	$	143,042	$	39,440	$	97,677	$	345,345
Asset impairment charges		-		-		-		3,000		3,000
Operating income		11,183		8,418		2,620		4,322		26,543
Capital and intangible asset expenditures		325		300		1,131		961		2,717
Depreciation and amortization		1,008		5,063		1,968		2,315		10,354

			Healthcare / Home		Nutritional
May 31, 2014 (thousands)	Housewares		Environment		Supplements		Beauty		Total
Sales revenue, net	$	66,756	$	142,489	$	-	$	102,533	$	311,778
Asset impairment charges		-		-		-		9,000		9,000
Operating income		13,035		8,717		-		1,371		23,123
Capital and intangible asset expenditures		824		406		-		592		1,822
Depreciation and amortization		888		5,232		-		2,380		8,500

We compute segment operating income based on net sales revenue, less cost of goods sold, SG&A and any asset impairment charges associated with the segment. The SG&A used to compute each segment’s operating income is directly associated with the segment, plus shared service and corporate overhead expenses that are allocable to the segment.In fiscal year 2016, we began making an allocation of shared service and corporate overhead costs to the Nutritional Supplements segment. For the three months ended May 31, 2015, the allocations totaled $0.74 million. We do not allocate nonoperating income and expense, including interest or income taxes, to operating segments.

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Earnings per Share (Tables)

3 Months Ended

May. 31, 2015

Earnings per Share

Schedule of weighted average securities (in thousands)

	Three Months Ended May 31,
	2015	2014
Weighted average shares outstanding, basic	28,520	29,105
Incremental shares from share-based payment arrangements	568	511
Weighted average shares outstanding, diluted	29,088	29,616
Dilutive securities, stock options	798	728
Dilutive securities, unvested or unsettled share awards	294	231
Antidilutive securities, stock options	197	233

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Financial Instruments and Risk Management

3 Months Ended

May. 31, 2015

Financial Instruments and Risk Management

Financial Instruments and Risk Management

Note 13 – Financial Instruments and Risk Management

Foreign Currency Risk - Our functional currency is the U.S. Dollar. By operating internationally, we are subject to foreign currency risk from transactions denominated in currencies other than the U.S. Dollar (“foreign currencies”). Such transactions include sales, certain inventory purchases and operating expenses. As a result of such transactions, portions of our cash, trade accounts receivable and trade accounts payable are denominated in foreign currencies. During the fiscal quarters ended May 31, 2015 and 2014, approximately 14 and 15 percent, respectively, of our net sales revenue was in foreign currencies. These sales were primarily denominated in British Pounds, Euros, Mexican Pesos, Canadian Dollars, and Venezuelan Bolivars. We make most of our inventory purchases from the Far East and primarily use the U.S. Dollar for such purchases. In our consolidated condensed statements of income, exchange gains and losses resulting from the remeasurement of foreign taxes receivable, taxes payable, deferred tax assets, and deferred tax liabilities, are recognized in their respective income tax lines, and all other foreign exchange gains and losses from remeasurement of the balance sheet are recognized in SG&A. For the fiscal quarter ended May 31, 2015, we recorded net foreign exchange losses, including the impact of currency hedges, of $0.88 million in SG&A and gains of $0.14 million in income tax expense. For the fiscal quarter ended May 31, 2014, we recorded net foreign exchange losses, including the impact of currency hedges, of $0.03 million in SG&A and gains of $0.04 million in income tax expense.

We have historically hedged against certain foreign currency exchange rate risk by using a series of forward contracts designated as cash flow hedges to protect against the foreign currency exchange risk inherent in our forecasted transactions denominated in currencies other than the U.S. Dollar. We do not enter into any forward exchange contracts or similar instruments for trading or other speculative purposes.

Chinese Renminbi Currency Exchange Uncertainties - A significant portion of the products we sell are purchased from third-party manufacturers in China. During fiscal year 2015 and through the end of our first quarter in fiscal year 2016, the Chinese Renminbi remained relatively flat against the U.S. Dollar. However, China’s currency intervention strategy with respect to the U.S. Dollar is continuously evolving. If China’s currency begins to fluctuate against the U.S. Dollar in the short-to-intermediate term, our product costs could increase over time.

Venezuelan Bolivar Currency Exchange Uncertainties - In February 2013, the Venezuelan government devalued its currency from 4.30 to 6.30 Bolivars per U.S. Dollar for all goods and services. In March 2013, the Venezuelan government announced an additional complementary auction-based exchange rate mechanism known as SICAD 1. SICAD 1 was made available to certain companies that operate in designated industry sectors. At May 31, 2015, the SICAD 1 rate was 12 Bolivars to the U.S. Dollar.

In early 2014, the Venezuelan government created a National Center of Foreign Commerce (“CENCOEX”) to control the multiple currency exchange rate mechanisms that may be available for a company to exchange funds.  CENCOEX was granted the authority to determine the sectors that will be allowed to buy U.S. Dollars in SICAD auctions, and subsequently introduced a more accessible market-based, SICAD 2 daily auction exchange market. 

In February 2015, the Venezuelan government unveiled its latest foreign exchange mechanism known as SIMADI, which replaced the SICAD 2 rate as the lowest rate in Venezuela’s three-tier foreign exchange system.  Under the latest program, SICAD 1 (now referred to as “SICAD”) is still being used in limited circumstances, which we believe preclude us from accessing such rates if we chose to do so. SIMADI is a somewhat less restrictive auction system whose value is determined by market forces. SIMADI is currently under a trial period and accounts for a small percentage of Venezuela’s foreign exchange. At May 31, 2015, the SIMADI rate was approximately 199 Bolivars to the U.S. Dollar.

Despite the recent changes made by the Venezuelan government, there remains a significant degree of uncertainty as to which exchange markets might be available to the Company. To date, we have not gained access to U.S. Dollars in Venezuela through either SICAD or SIMADI mechanisms, nor do we intend to do so. As of May 31, 2015, these auctions had not eliminated or changed the official rate of 6.30 Bolivars per U.S. Dollar.

Our business in Venezuela continues to be entirely self-funded with earnings from operations. We have no current need or intention to repatriate Venezuelan earnings and remain committed to the business for the long-term. Within Venezuela, we market primarily liquid-, solid- and powder-based personal care and grooming products, which are sourced almost entirely within the country. We do not have, nor do we foresee having, any need to access SICAD or SIMADI. Accordingly, we continue to utilize the official rate of 6.30 Bolivars per U.S. Dollar to re-measure our Venezuelan financial statements.

For the fiscal quarters ended May 31, 2015 and 2014, sales in Venezuela represented approximately

1.2 and 0.6 percent, respectively, of the Company’s consolidated net sales revenue. At May 31, 2015, we had a U.S. Dollar based net investment in our Venezuelan business of $11.60 million, consisting almost entirely of working capital.

Developments within the Venezuelan economy, including any future governmental interventions, are beyond our ability to control or predict, and we cannot assess impacts, if any, such events may have on our Venezuelan business.  We will continue to closely monitor the applicability and viability of the various exchange mechanisms. 

Interest Rate Risk – Interest on our outstanding debt as of May 31, 2015 is both floating and fixed.  Fixed rates are in place on $60 million of3.90% Senior Notes due January 2018, while floating rates are in place on the balance of all other debt outstanding, which totaled$378.81 million as of May 31, 2015.  If short-term interest rates increase, we will incur higher interest rates on any outstanding balances under our Credit Agreement and the MBFC Loan.

The fair values of our derivative instruments are as follows:

FAIR VALUES OF DERIVATIVE INSTRUMENTS

(in thousands)

	May 31, 2015
					Prepaid		Accrued
					Expenses		Expenses
		Final			andOther		andOther
		Settlement	Notional		Current		Current
Designated as hedging instruments	HedgeType	Date	Amount		Assets		Liabilities
Foreign currency contracts - sell Canadian Dollars	Cash flow	2/2016	$	13,250	$	143	$	-
Foreign currency contracts - sell Euro	Cash flow	2/2016	€	11,000		15		-
Foreign currency contracts - sell Pounds	Cash flow	2/2016	£	5,700		-		121
Total fair value					$	158	$	121

	February 28, 2015
					Prepaid		Accrued
					Expenses		Expenses
		Final			and Other		and Other
		Settlement	Notional		Current		Current
Designated as hedging instruments	Hedge Type	Date	Amount		Assets		Liabilities
Foreign currency contracts - sell Euro	Cash flow	1/2016	€	10,000	$	129	$	-
Foreign currency contracts - sell Pounds	Cash flow	2/2016	£	6,900		-		240
Total fair value					$	129	$	240

The pre-tax effect of derivative instruments for the periods covered in this quarterly report are as follows:

PRE-TAX EFFECT OF DERIVATIVE INSTRUMENTS

(in thousands)

	Three Months Ended May 31,
	Gain/(Loss)				Gain/(Loss)Reclassified
	RecognizedinOCI				fromAccumulatedOther
	(effectiveportion)				ComprehensiveIncome(Loss)intoIncome
	2015		2014		Location	2015		2014
Currency contracts - cash flow hedges	$	267	$	78	SG&A	$	119	$	(166)
Interest rate swaps - cash flow hedges		-		12	Interestexpense		-		(914)
Total	$	267	$	90		$	119	$	(1,080)

We expect net gains of $0.04million associated with foreign currency contracts currently reported in accumulated other comprehensive income, to be reclassified into income over the next twelve months. The amount ultimately realized, however, will differ as exchange rates change and the underlying contracts settle.

Counterparty Credit Risk - Financial instruments, including foreign currency contracts, expose us to counterparty credit risk for nonperformance. We manage our exposure to counterparty credit risk by only dealing with counterparties who are substantial international financial institutions with significant experience using such derivative instruments. Although our theoretical credit risk is the replacement cost at the then-estimated fair value of these instruments, we believe that the risk of incurring credit losses is remote.

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Acquisitions

3 Months Ended

May. 31, 2015

Acquisitions

Acquisitions

Note 9 – Acquisitions

Vicks VapoSteam Acquisition - On March 31, 2015, the Company announced the acquisition of the Vicks VapoSteam U.S. liquid inhalant business from The Procter & Gamble Company (“P&G”), which includes a fully paid-up license of P&G’s Vicks VapoSteam trademarks. In a related transaction, the Company acquired a fully paid-up U.S. license of P&G’s Vicks VapoPad trademarks for scent pads. The vast majority of Vicks VapoSteam and VapoPads are used in Vicks humidifiers, vaporizers and other health care devices already marketed by the Company. The aggregate purchase price for the two transactions was approximately $42.75 million financed primarily with borrowings under the Credit Agreement, as defined in Note 10 to these consolidated condensed financial statements. The acquired VapoSteam business had annual revenues of approximately $10 million in calendar year 2014. VapoSteam operations are reported in the Healthcare / Home Environment segment.

We have completed our analysis of the economic lives of the assets acquired and determined the appropriate allocation of the initial purchase price. We assigned $7.40 million to trademarks with indefinite economic lives. We assigned $1.20 million to customer relationships and $1.20 million to product formulations and will amortize these assets over expected lives of 19.5 and 20.0 years, respectively. For the customer relationships, we used historical attrition rates to assign an expected life. For product formulations, we used our best estimate of the remaining product life. The trademarks are considered to have indefinite lives that are not subject to amortization. Substantially all the remaining balance of the purchase price was assigned to goodwill, which is expected to be deductible for income tax purposes.The fair values of the intangible assets were estimated by applying income and market approaches. These fair value measurements were based on significant inputs that are not observable in the market and, therefore, represent Level 3 measurements.

Healthy Directions Acquisition - On June 30, 2014, we completed the acquisition of Healthy Directions, LLC and its subsidiaries (“Healthy Directions”), a leader in the premium branded vitamin, mineral and supplement market, for a total cash purchase price of $195.94 million. The purchase price was funded primarily with borrowings under the Credit Agreement. The sellers were certain funds controlled by American Securities, LLC and ACI Capital Co., LLC. Significant assets acquired include inventory, property and equipment, customer relationships, brand assets, and goodwill. Acquisition-related expenses incurred during fiscal year 2015 were approximately $3.61 million ($2.31 million after tax). Healthy Directions reports its operations as the Nutritional Supplements segment.

We accounted for the acquisition as the purchase of a business and recorded the excess purchase price as goodwill. The goodwill recognized is expected to be deductible for income tax purposes. As of February 28, 2015, we completed our analysis of the economic lives of all the assets acquired and determined the appropriate allocation of the initial purchase price. We assigned the acquired brand assets an indefinite economic life and are amortizing the customer relationships over an expected weighted average life of approximately seven years. For the customer relationships, we used historical attrition rates to assign an expected life. Since the brand assets acquired are considered to have an indefinite life, they are not subject to amortization.

The following schedule presents the acquisition date fair value of the net assets of Healthy Directions. These balances are preliminary and may be subject to additional adjustment.

HEALTHY DIRECTIONS - NET ASSETS RECORDED UPON ACQUISITION AT JUNE 30, 2014

(in thousands)

Assets:
Receivables	$	257
Inventory		6,226
Prepaid expenses and other current assets		1,875
Property and equipment		5,962
Goodwill		95,308
Brand assets - indefinite		65,500
Customer relationships - definite		43,800
Subtotal - assets		218,928
Liabilities:
Accounts payable		6,479
Accrued expenses		13,964
Other long-term liabilities		2,542
Subtotal - liabilities		22,985
Net assets recorded	$	195,943

The fair values of the above assets acquired and liabilities assumed were estimated by applying income and market approaches. These fair value measurements are based on significant inputs that are not observable in the market and, therefore, represent Level 3 measurements. Key assumptions included various discount rates based upon a 14.6 percent weighted average cost of capital, a royalty rate of 5 percent used in the determination of brand assets, and a customer attrition rate of 14 percent per year used in the determination of customer relationship values.

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Supplemental Balance Sheet Information

3 Months Ended

May. 31, 2015

Supplemental Balance Sheet Information

Supplemental Balance Sheet Information

Note 7 – Supplemental Balance Sheet Information

PROPERTY AND EQUIPMENT

(in thousands)

	Estimated
	Useful Lives			May 31,		February 28,
	(Years)			2015		2015
Land		-		$	12,800	$	12,800
Building and improvements	3	-	40		102,058		102,058
Computer, furniture and other equipment	3	-	15		63,837		64,464
Tools, molds and other production equipment	1	-	10		26,004		25,861
Construction in progress		-			4,795		3,039
Property and equipment, gross					209,494		208,222
Less accumulated depreciation					(84,165)		(82,154)
Property and equipment, net				$	125,329	$	126,068

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

(in thousands)

	May 31,		February 28,
	2015		2015
Accrued compensation, benefits and payroll taxes	$	32,406	$	44,382
Accrued sales returns, discounts and allowances		24,072		24,271
Accrued warranty returns		20,894		23,553
Accrued advertising		23,935		18,930
Accrued product liability, legal and professional fees		6,280		6,001
Accrued royalties		6,392		7,683
Accrued property, sales and other taxes		7,060		6,850
Derivative liabilities, current		121		240
Other		9,912		9,291
Total accrued expenses and other current liabilities	$	131,072	$	141,201

OTHER LIABILITIES, NONCURRENT

(in thousands)

	May 31,		February 28,
	2015		2015
Deferred compensation liability	$	4,357	$	7,091
Liability for uncertain tax positions		10,145		10,295
Other liabilities		5,970		5,921
Total other liabilities, noncurrent	$	20,472	$	23,307

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Goodwill and Intangible Assets

3 Months Ended

May. 31, 2015

Goodwill and Intangible Assets

Goodwill and Intangible Assets

Note 8 – Goodwill and Intangible Assets

Annual Impairment Testing in the First Quarter of Fiscal Year 2016 - We performed our annual evaluation of goodwill and indefinite-lived intangible assets for impairment during the first quarter of fiscal year 2016. As a result of our testing of indefinite-livedtrademarks, we recorded a non-cash asset impairment charge of $3.00 million ($2.66 million after tax). The charge was related to a trademark in our Beauty segment, which was written down to its estimated fair value, determined on the basis of future discounted cash flows using the relief from royalty valuation method.

Annual Impairment Testing in the First Quarter of Fiscal Year 2015 - We performed our annual evaluation of goodwill and indefinite-lived intangible assets for impairment during the first quarter of fiscal year 2015. As a result of our testing of indefinite-lived trademarks and licenses, we recorded a non-cash asset impairment charge of $9.00 million ($8.16 million after tax). The charge was related to certain trademarks in our Beauty segment, which were written down to their estimated fair value, determined on the basis of future discounted cash flows using the relief from royalty valuation method.

A summary of the carrying amounts and associated accumulated amortization for all intangible assets by operating segment follows:

GOODWILL AND INTANGIBLE ASSETS

(in thousands)

	May 31, 2015								February 28, 2015
	Gross		Cumulative						Gross		Cumulative
	Carrying		Goodwill		Accumulated		Net Book		Carrying		Goodwill		Accumulated		Net Book
	Amount		Impairments		Amortization		Value		Amount		Impairments		Amortization		Value
Housewares:
Goodwill	$	166,132	$	-	$	-	$	166,132	$	166,132	$	-	$	-	$	166,132
Trademarks - indefinite		75,200		-		-		75,200		75,200		-		-		75,200
Other intangibles - finite		15,756		-		(12,646)		3,110		15,754		-		(12,331)		3,423
Total Housewares		257,088		-		(12,646)		244,442		257,086		-		(12,331)		244,755
Healthcare / Home Environment:
Goodwill		284,510		-		-		284,510		251,758		-		-		251,758
Trademarks - indefinite		58,400		-		-		58,400		54,000		-		-		54,000
Licenses - finite		15,300		-		(10,118)		5,182		15,300		-		(9,377)		5,923
Licenses - indefinite		3,000		-		-		3,000		-		-		-		-
Other intangibles - finite		116,230		-		(46,607)		69,623		113,727		-		(43,848)		69,879
Total Healthcare / Home Environment		477,440		-		(56,725)		420,715		434,785		-		(53,225)		381,560
Nutritional Supplements:
Goodwill		96,486		-		-		96,486		96,486		-		-		96,486
Brand assets - indefinite		65,500		-		-		65,500		65,500		-		-		65,500
Other intangibles - finite		43,800		-		(5,736)		38,064		43,800		-		(4,171)		39,629
Total Nutritional Supplements		205,786		-		(5,736)		200,050		205,786		-		(4,171)		201,615
Beauty:
Goodwill		81,841		(46,490)		-		35,351		81,841		(46,490)		-		35,351
Trademarks - indefinite		51,754		-		-		51,754		54,754		-		-		54,754
Trademarks - finite		150		-		(83)		67		150		-		(82)		68
Licenses - indefinite		10,300		-		-		10,300		10,300		-		-		10,300
Licenses - finite		13,696		-		(11,295)		2,401		13,696		-		(11,216)		2,480
Other intangibles - finite		46,404		-		(30,482)		15,922		47,876		-		(30,602)		17,274
Total Beauty		204,145		(46,490)		(41,860)		115,795		208,617		(46,490)		(41,900)		120,227
Total	$	1,144,459	$	(46,490)	$	(116,967)	$	981,002	$	1,106,274	$	(46,490)	$	(111,627)	$	948,157

The following table summarizes the amortization expense attributable to intangible assets for the periods covered in this quarterly report, as well as our estimated amortization expense for the fiscal years 2016 through 2021.

AMORTIZATION OF INTANGIBLE ASSETS

(in thousands)

Aggregate Amortization Expense
For the three months ended
May 31, 2015	$	6,814
May 31, 2014	$	5,259

Estimated Amortization Expense
For the fiscal years ended
February 2016	$	27,267
February 2017	$	26,886
February 2018	$	23,129
February 2019	$	18,535
February 2020	$	16,995
February 2021	$	14,716

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Debt

3 Months Ended

May. 31, 2015

Debt

Long-term debt

Note 10 – Debt

We have a Credit Agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent, and other lenders that provides for an unsecured total revolving commitment of $650 million as of May 31, 2015. The commitment under the Credit Agreement terminates on January 16, 2020. Borrowings accrue interest under one of two alternative methods as described in the Credit Agreement. With each borrowing against our credit line, we can elect the interest rate method based on our funding needs at the time. We also incur loan commitment fees and letter of credit fees under the Credit Agreement. Outstanding letters of credit reduce the borrowing availability under the Credit Agreement on a dollar-for-dollar basis.  As of May 31, 2015, the outstanding revolving loan principal balance was $345 million and there were $0.78 million of open letters of credit outstanding against the Credit Agreement. For the fiscal quarter ended May 31, 2015, borrowings under the Credit Agreement incurred interest charges at rates ranging from 1.43 to 4.00 percent. For the fiscal quarter ended May 31, 2014, borrowings under the Credit Agreement incurred interest charges at rates ranging from 1.90 to 4.00 percent. As of May 31, 2015, the amount available for borrowings under the Credit Agreement was $304.22 million.

A summary of our long-term debt is as follows:

LONG-TERM DEBT

(dollars in thousands)

	Original
	Date	Interest			May 31,		February 28,
	Borrowed	Rates		Matures	2015		2015
$37.61 million unsecured loan with the Mississippi Business Finance Corporation (the "MBFC Loan"), interest is set and payable quarterly at a Base Rate, plus a margin of up to 1.00%, or applicable LIBOR plus a margin of up to 2.00%, as determined by the interest rate elected and the Leverage Ratio. Loan subject to holder's call on or after March 1, 2018. Loan can be prepaid without penalty. (1)	03/13	Floating		03/23	$	33,807	$	35,707
$100 million unsecured Senior Notes payable at a fixed interest rate of 3.90%. Interest payable semi-annually. Annual principal payments of $20 million began in January 2014. Prepayment of notes are subject to a "make whole" premium.	01/11	3.90	%	01/18		60,000		60,000
Credit Agreement	01/15	Floating		01/20		345,000		337,500
Total long-term debt						438,807		433,207
Less current maturities of long-term debt						(23,800)		(21,900)
Long-term debt, excluding current maturities					$	415,007	$	411,307

(1) A  $1.90 million principal payment was made on March 1, 2015. The remaining loan balance is payable as follows: $3.80 million on March 1, 2016; $5.70 million on March 1, 2017; $1.90 million annually on March 1, 2018 through 2022; and $14.81 million on March 1, 2023. Any remaining outstanding principal and interest is due upon maturity on March 1, 2023.

The fair market value of the fixed rate debt at May 31, 2015, computed using a discounted cash flow analysis was $61.81 million,compared to the $60 million book value and represents a Level 2 liability. Our other long-term debt has floating interest rates, and its book value approximates its fair value at May 31, 2015.

All of our debt is unconditionally guaranteed, on a joint and several basis, by the Company and certain of its subsidiaries. Our debt agreements require the maintenance of certain financial covenants, including maximum leverage ratios, minimum interest coverage ratios and minimum consolidated net worth levels (as each of these terms is defined in the various agreements).  Our debt agreements also contain other customary covenants, including among other things, covenants restricting or limiting the Company, except under certain conditions set forth therein, from (1) incurring debt, (2) incurring liens on its properties, (3) making certain types of investments, (4) selling certain assets or making other fundamental changes relating to mergers and consolidations, and (5) repurchasing shares of our common stock and paying dividends.

As of May 31, 2015, our debt agreements effectively limited our ability to incur more than $284.60 million of additional debt from all sources, including the Credit Agreement. We were in compliance with the terms of these agreements as of May 31, 2015.  

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Basis of Presentation and Conventions Used in this Report (Details) - $ / shares	May. 31, 2015	Feb. 28, 2015
Basis of Presentation and Conventions Used in this Report
Common shares, par value (in dollars per share)	$ 0.10	$ 0.10

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Financial Instruments and Risk Management - Interest Rate Risk (Details) - May. 31, 2015 - USD ($) $ in Thousands	Total
Financial instruments and risk management
Floating rate debt	$ 378,810
3.90% unsecured Senior Notes payable
Financial instruments and risk management
Fixed rate debt	$ 60,000
Fixed interest rate (as a percent)	3.90%

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Share-Based Compensation Plans

3 Months Ended

May. 31, 2015

Share-Based Compensation Plans

Share-Based Compensation Plans

Note 15 – Share-Based Compensation Plans

We have share-based awards outstanding under several share-based compensation plans.  During the fiscal quarter ended May 31, 2015, the Company had the following share-based compensation activity:

· We granted options to purchase 145,500 shares of common stock to certain employees. The fair values of these options were estimated using the Black-Scholes option pricing model to estimate fair values ranging from $24.34 to $29.68 for grants with terms of four and five  years. The following assumptions were used for the grants: expected lives ranging from 4.05 to 4.35 years; risk-free interest rates ranging from 1.28 to 1.37 percent; zero dividend yield; and expected volatilities ranging from 37.26 to 39.48 percent.

· We issued 1,575 restricted shares to non-employee Board members with total grant date fair values of $0.12 million and a share price of $78.11.

· During the fiscal quarter ended May 31, 2015, we issued 2,000 shares of common stock to our CEO at a fair value of $89.12 per share.  

· Employees exercised stock options to purchase 106,825 shares of common stock.

We recorded the following share-based compensation expense in SG&A for the periods covered below:

SHARE-BASED PAYMENT EXPENSE

(in thousands, except per share data)

	Three Months Ended May 31,
	2015		2014
Stock options	$	693	$	704
Directors stock compensation		175		247
Performance based and other stock awards		1,245		418
Share-based payment expense		2,113		1,369
Less income tax benefits		(319)		(127)
Share-based payment expense, net of income tax benefits	$	1,794	$	1,243
Earnings per share impact of share based payment expense:
Basic	$	0.06	$	0.04
Diluted	$	0.06	$	0.04

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Supplemental Balance Sheet Information (Tables)

3 Months Ended

May. 31, 2015

Supplemental Balance Sheet Information

Schedule of property and equipment (in thousands)

	Estimated
	Useful Lives			May 31,		February 28,
	(Years)			2015		2015
Land		-		$	12,800	$	12,800
Building and improvements	3	-	40		102,058		102,058
Computer, furniture and other equipment	3	-	15		63,837		64,464
Tools, molds and other production equipment	1	-	10		26,004		25,861
Construction in progress		-			4,795		3,039
Property and equipment, gross					209,494		208,222
Less accumulated depreciation					(84,165)		(82,154)
Property and equipment, net				$	125,329	$	126,068

Schedule of accrued expenses and other current liabilities (in thousands)

	May 31,		February 28,
	2015		2015
Accrued compensation, benefits and payroll taxes	$	32,406	$	44,382
Accrued sales returns, discounts and allowances		24,072		24,271
Accrued warranty returns		20,894		23,553
Accrued advertising		23,935		18,930
Accrued product liability, legal and professional fees		6,280		6,001
Accrued royalties		6,392		7,683
Accrued property, sales and other taxes		7,060		6,850
Derivative liabilities, current		121		240
Other		9,912		9,291
Total accrued expenses and other current liabilities	$	131,072	$	141,201

Schedule of other liabilities, noncurrent (in thousands)

	May 31,		February 28,
	2015		2015
Deferred compensation liability	$	4,357	$	7,091
Liability for uncertain tax positions		10,145		10,295
Other liabilities		5,970		5,921
Total other liabilities, noncurrent	$	20,472	$	23,307

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Fair Value (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	May. 31, 2015	May. 31, 2014	Feb. 28, 2015
Beauty | Trademarks
Assets measured at fair value on a non-recurring basis
Non-cash impairment charges	$ 3,000	$ 9,000
Non-cash impairment charges after tax	2,660	8,160
Fair Values | Significant Other Observable Market Inputs (Level 2) | Discounted cash flow analysis | 3.90% unsecured Senior Notes payable
Liabilities:
Long-term debt	$ 61,810
Fair value inputs
Discount rate (as a percent)	1.96%		2.05%
Recurring | Fair Values | Significant Other Observable Market Inputs (Level 2)
Assets:
Total assets	$ 781		$ 1,821
Liabilities:
Total liabilities	440,735		435,453
Recurring | Fair Values | Significant Other Observable Market Inputs (Level 2) | Foreign currency contracts
Assets:
Cash and cash equivalents	158
Derivative assets			129
Liabilities:
Long-term debt	121		240
Recurring | Fair Values | Significant Other Observable Market Inputs (Level 2) | Floating rate debt
Liabilities:
Long-term debt	378,807		373,207
Recurring | Fair Values | Significant Other Observable Market Inputs (Level 2) | 3.90% unsecured Senior Notes payable
Liabilities:
Long-term debt	61,807		62,006
Recurring | Fair Values | Significant Other Observable Market Inputs (Level 2) | Money market accounts
Assets:
Cash and cash equivalents	$ 623		$ 1,692
Non-recurring | Beauty | Trademarks
Assets measured at fair value on a non-recurring basis
Non-cash impairment charges		3,000
Non-cash impairment charges after tax		$ 2,660

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Supplemental Balance Sheet Information - Liabilities (Details) - USD ($) $ in Thousands	May. 31, 2015	Feb. 28, 2015
ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES
Accrued compensation, benefits and payroll taxes	$ 32,406	$ 44,382
Accrued sales returns, discounts and allowances	24,072	24,271
Accrued warranty returns	20,894	23,553
Accrued advertising	23,935	18,930
Accrued product liability, legal and professional fees	6,280	6,001
Accrued royalties	6,392	7,683
Accrued property, sales and other taxes	7,060	6,850
Derivative liabilities, current	121	240
Other	9,912	9,291
Total accrued expenses and other current liabilities	131,072	141,201
OTHER LIABILITIES, NON CURRENT
Deferred compensation liability	4,357	7,091
Liability for uncertain tax positions	10,145	10,295
Other liabilities	5,970	5,921
Total other liabilities, noncurrent	$ 20,472	$ 23,307

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Consolidated Condensed Statements of Comprehensive Income - USD ($) $ in Thousands	3 Months Ended
	May. 31, 2015	May. 31, 2014
Income, Before Tax	$ 23,789	$ 19,756
Cash flow hedge activity, before tax
Total other comprehensive income, before tax	148	1,170
Comprehensive income, Before Tax	23,937	20,926
Income, Tax	(3,379)	(3,358)
Cash flow hedge activity, tax
Total other comprehensive income, tax	(55)	(369)
Comprehensive income, Tax	(3,434)	(3,727)
Net income	20,410	16,398
Cash flow hedge activity, net of tax
Total other comprehensive income	93	801
Comprehensive income, net of tax	20,503	17,199
Interest rate swaps
Cash flow hedge activity, before tax
Changes in fair market value		12
Settlements reclassified to income		914
Subtotal		926
Cash flow hedge activity, tax
Changes in fair market value		(5)
Settlements reclassified to income		(320)
Subtotal		(325)
Cash flow hedge activity, net of tax
Changes in fair market value		7
Settlements reclassified to income		594
Subtotal		601
Foreign currency contracts
Cash flow hedge activity, before tax
Changes in fair market value	267	78
Settlements reclassified to income	(119)	166
Subtotal	148	244
Cash flow hedge activity, tax
Changes in fair market value	(68)	(17)
Settlements reclassified to income	13	(27)
Subtotal	(55)	(44)
Cash flow hedge activity, net of tax
Changes in fair market value	199	61
Settlements reclassified to income	(106)	139
Subtotal	$ 93	$ 200

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Earnings per Share

3 Months Ended

May. 31, 2015

Earnings per Share

Earnings per Share

Note 4 – Earnings per Share

We compute basic earnings per share using the weighted average number of shares of common stock outstanding during the period.  We compute diluted earnings per share using the weighted average number of shares of common stock outstanding plus the effect of dilutive securities. Dilutive securities at any given point in time may consist of outstanding stock options, issued and contingently issuable unvested restricted share units, and other performance-based share awards. Options for common stock are excluded from the computation of diluted earnings per share if their effect is antidilutive.  See Note 15 to these consolidated condensed financial statements for more information regarding share-based payment arrangements. 

For the periods covered below, the basic and diluted shares are as follows:

WEIGHTED AVERAGE DILUTED SECURITIES

(in thousands)

	Three Months Ended May 31,
	2015	2014
Weighted average shares outstanding, basic	28,520	29,105
Incremental shares from share-based payment arrangements	568	511
Weighted average shares outstanding, diluted	29,088	29,616
Dilutive securities, stock options	798	728
Dilutive securities, unvested or unsettled share awards	294	231
Antidilutive securities, stock options	197	233

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Goodwill and Intangible Assets (Tables)

3 Months Ended

May. 31, 2015

Goodwill and Intangible Assets

Summary of carrying amounts and associated accumulated amortization for all intangible assets by operating segment (in thousands)

	May 31, 2015								February 28, 2015
	Gross		Cumulative						Gross		Cumulative
	Carrying		Goodwill		Accumulated		Net Book		Carrying		Goodwill		Accumulated		Net Book
	Amount		Impairments		Amortization		Value		Amount		Impairments		Amortization		Value
Housewares:
Goodwill	$	166,132	$	-	$	-	$	166,132	$	166,132	$	-	$	-	$	166,132
Trademarks - indefinite		75,200		-		-		75,200		75,200		-		-		75,200
Other intangibles - finite		15,756		-		(12,646)		3,110		15,754		-		(12,331)		3,423
Total Housewares		257,088		-		(12,646)		244,442		257,086		-		(12,331)		244,755
Healthcare / Home Environment:
Goodwill		284,510		-		-		284,510		251,758		-		-		251,758
Trademarks - indefinite		58,400		-		-		58,400		54,000		-		-		54,000
Licenses - finite		15,300		-		(10,118)		5,182		15,300		-		(9,377)		5,923
Licenses - indefinite		3,000		-		-		3,000		-		-		-		-
Other intangibles - finite		116,230		-		(46,607)		69,623		113,727		-		(43,848)		69,879
Total Healthcare / Home Environment		477,440		-		(56,725)		420,715		434,785		-		(53,225)		381,560
Nutritional Supplements:
Goodwill		96,486		-		-		96,486		96,486		-		-		96,486
Brand assets - indefinite		65,500		-		-		65,500		65,500		-		-		65,500
Other intangibles - finite		43,800		-		(5,736)		38,064		43,800		-		(4,171)		39,629
Total Nutritional Supplements		205,786		-		(5,736)		200,050		205,786		-		(4,171)		201,615
Beauty:
Goodwill		81,841		(46,490)		-		35,351		81,841		(46,490)		-		35,351
Trademarks - indefinite		51,754		-		-		51,754		54,754		-		-		54,754
Trademarks - finite		150		-		(83)		67		150		-		(82)		68
Licenses - indefinite		10,300		-		-		10,300		10,300		-		-		10,300
Licenses - finite		13,696		-		(11,295)		2,401		13,696		-		(11,216)		2,480
Other intangibles - finite		46,404		-		(30,482)		15,922		47,876		-		(30,602)		17,274
Total Beauty		204,145		(46,490)		(41,860)		115,795		208,617		(46,490)		(41,900)		120,227
Total	$	1,144,459	$	(46,490)	$	(116,967)	$	981,002	$	1,106,274	$	(46,490)	$	(111,627)	$	948,157

Summary of amortization expense attributable to intangible assets (in thousands)

Aggregate Amortization Expense
For the three months ended
May 31, 2015	$	6,814
May 31, 2014	$	5,259

Schedule of estimated amortization expense of intangible assets (in thousands)

Estimated Amortization Expense
For the fiscal years ended
February 2016	$	27,267
February 2017	$	26,886
February 2018	$	23,129
February 2019	$	18,535
February 2020	$	16,995
February 2021	$	14,716

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Segment Information (Details) - USD ($) $ in Thousands	3 Months Ended
	May. 31, 2015	May. 31, 2014	Feb. 28, 2015
Segment information
Sales revenue, net	$ 345,345	$ 311,778
Asset impairment charges	3,000	9,000
Operating income	26,543	23,123
Identifiable assets	1,687,138		$ 1,653,755
Capital and intangible asset expenditures	2,717	1,822
Depreciation and amortization	10,354	8,500
Housewares
Segment information
Sales revenue, net	65,186	66,756
Operating income	11,183	13,035
Capital and intangible asset expenditures	325	824
Depreciation and amortization	1,008	888
Healthcare/Home Environment
Segment information
Sales revenue, net	143,042	142,489
Operating income	8,418	8,717
Capital and intangible asset expenditures	300	406
Depreciation and amortization	5,063	5,232
Nutritional Supplements
Segment information
Sales revenue, net	39,440
Operating income	2,620
Capital and intangible asset expenditures	1,131
Depreciation and amortization	1,968
Overhead allocation	740
Beauty
Segment information
Sales revenue, net	97,677	102,533
Asset impairment charges	3,000	9,000
Operating income	4,322	1,371
Capital and intangible asset expenditures	961	592
Depreciation and amortization	$ 2,315	$ 2,380

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Repurchase of Helen of Troy Common Stock

3 Months Ended

May. 31, 2015

Repurchase of Helen of Troy Common Stock

Repurchase of Helen of Troy Common Stock

Note 14 – Repurchase of Helen of Troy Common Stock

As of May 31, 2015, we were authorized by our Board of Directors to purchase up to $265.43 million of common stock in the open market or through private transactions. On March 14, 2014, the Company completed a modified “Dutch auction” tender offer resulting in the repurchase of 3,693,816 shares of its outstanding common stock at a total cost of $247.83 million, including tender offer transaction-related costs. The Company also repurchased 408,327 shares of outstanding common stock on the open market at a total cost of $25.77 million during the fiscal quarter ended May 31, 2014.

Our current equity-based compensation plans include provisions that allow for the “net exercise” of stock options by all plan participants. In a net exercise, any required payroll taxes, federal withholding taxes and exercise price of the shares due from the option holder can be paid for by having the option holder tender back to the Company a number of shares at fair value equal to the amounts due. These transactions are accounted for by the Company as a purchase and retirement of shares and are included in the table below as common stock received in connection with share-based compensation.

For the fiscal quarter ended May 31, 2015, we did not repurchase any shares of common stock. Additionally, no shares of common stock were tendered by our employees in "net exercise" transactions. During the fiscal quarter ended May 31, 2014, certain employees tendered 1,993 shares of common stock having a market value of $59.13 per share, or $0.12 million in the aggregate, and our former CEO tendered 68,086 shares of common stock having a market value of $67.10 per share, or $4.57 million in the aggregate, as payment for related federal tax obligations arising from the vesting and settlement of performance-based restricted stock units and restricted stock awards. 

The following table summarizes our share repurchase activity for the periods covered below:

SHARE REPURCHASES

	Three Months Ended May 31,
	2015		2014
Common stock repurchased on the open market or through tender offer
Number of shares		-		4,102,143
Aggregate market value of shares (in thousands)	$	-	$	273,599
Average price per share	$	-	$	66.70
Common stock received in connection with share-based compensation
Number of shares		-		70,079
Aggregate market value of shares (in thousands)	$	-	$	4,686
Average price per share	$	-	$	66.87