PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HELEN OF TROY LIMITED AND SUBSIDIARIES

Condensed Consolidated ~~Condensed~~ Balance Sheets (Unaudited)

November 30,

February 28,
(in thousands, except shares and par value)

2017

2017
Assets

Assets, current:

Cash and cash equivalents

$
21,157

$
23,087
Receivables - principally trade, less allowances of $9,624 and $5,656

302,390

229,928
Inventory

285,594

289,122
Prepaid expenses and other current assets

13,505

11,699
Income taxes receivable

-

2,242
Total assets, current

622,646

556,078

Property and equipment, net of accumulated depreciation of $118,485 and $106,561

132,989

134,935
Goodwill

602,320

698,929
Other intangible assets, net of accumulated amortization of $184,937 and $165,388

369,201

419,489
Deferred tax assets, net

44,590

1,955
Other assets, net of accumulated amortization of $1,999 and $1,930

3,149

1,710
Total assets

$
1,774,895

$
1,813,096

Liabilities and Stockholders' Equity

Liabilities, current:

Accounts payable, principally trade

$
109,196

$
111,763
Accrued expenses and other current liabilities

174,532

153,200
Income taxes payable

54,538

-
Long-term debt, current maturities

20,860

24,404
Total liabilities, current

359,126

289,367

Long-term debt, excluding current maturities

405,331

461,211
Deferred tax liabilities, net

8,153

20,091
Other liabilities, noncurrent

17,875

21,661
Total liabilities

790,485

792,330

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; 26,960,863 and 27,028,665 shares

issued and outstanding

2,696

2,703
Additional paid in capital

228,143

218,760
Accumulated other comprehensive income (loss)

(1,338)

1,173
Retained earnings

754,909

798,130
Total stockholders' equity

984,410

1,020,766
Total liabilities and stockholders' equity

$
1,774,895

$
1,813,096



(in thousands, except shares and par value)	November 30, 2018		February 28, 2018
Assets
Assets, current:
Cash and cash equivalents	$	19,136	$	20,738
Receivables - principally trade, less allowances of $1,788 and $2,912	339,124		275,565
Inventory	300,648		251,511
Prepaid expenses and other current assets	14,437		9,545
Income taxes receivable	—		349
Total assets, current	673,345		557,708

Property and equipment, net of accumulated depreciation of $122,602 and $115,202	130,940		123,503
Goodwill	602,320		602,320
Other intangible assets, net of accumulated amortization of $178,087 and $167,354	294,565		302,915
Deferred tax assets, net	9,942		16,654
Other assets, net of accumulated amortization of $2,092 and $2,022	14,257		20,617
Total assets	$	1,725,369	$	1,623,717

Liabilities and Stockholders' Equity
Liabilities, current:
Accounts payable, principally trade	$	146,035	$	129,341
Accrued expenses and other current liabilities	184,237		168,261
Income taxes payable	3,181		—
Long-term debt, current maturities	1,884		1,884
Total liabilities, current	335,337		299,486

Long-term debt, excluding current maturities	337,846		287,985
Deferred tax liabilities, net	5,155		7,096
Other liabilities, noncurrent	13,773		14,691
Total liabilities	692,111		609,258

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; 25,593,327 and 26,575,634 shares issued and outstanding	2,534		2,658
Additional paid in capital	244,888		230,676
Accumulated other comprehensive income	5,207		631
Retained earnings	780,629		780,494
Total stockholders' equity	1,033,258		1,014,459
Total liabilities and stockholders' equity	$	1,725,369	$	1,623,717

See accompanying notes to condensed consolidated ~~condensed~~ financial statements.

Table of Contents

HELEN OF TROY LIMITED AND SUBSIDIARIES

Condensed Consolidated ~~Condensed~~ Statements of ~~Operations~~Income (Unaudited)

Three Months Ended November 30,

Nine Months Ended November 30,

(in thousands, except per share data)

2017

2016

2017

2016

Sales revenue, net

$
453,045

$
444,414

$
1,191,112

$
1,160,522

Cost of goods sold

251,271

250,199

664,956

650,912

Gross profit

201,774

194,215

526,156

509,610

Selling, general and administrative expense ("SG&A")

133,894

130,896

387,332

378,506

Asset impairment charges

82,227

-

136,297

7,400

Restructuring charges

1,283

-

1,283

-

Operating income (loss)

(15,630)

63,319

1,244

123,704

Nonoperating income, net

34

106

281

343

Interest expense

(3,619)

(3,625)

(11,327)

(11,142)

Income (loss) before income taxes

(19,215)

59,800

(9,802)

112,905

Income tax expense (benefit):

Current

46,625

4,928

60,188

16,625

Deferred

(35,404)

(2,740)

(54,355)

(8,713)

Net income (loss)

$
(30,436)

$
57,612

$
(15,635)

$
104,993

Earnings (loss) per share:

Basic

$
(1.12)

$
2.10

$
(0.58)

$
3.79

Diluted

$
(1.12)

$
2.07

$
(0.58)

$
3.74

Weighted average shares of common stock used in

computing net earnings per share:

Basic

27,113

27,484

27,140

27,700

Diluted

27,113

27,802

27,140

28,058



	Three Months Ended November 30,						Nine Months Ended November 30,
(in thousands, except per share data)	2018			2017			2018			2017
Sales revenue, net	$	431,081		$	420,841		$	1,179,308		$	1,091,281
Cost of goods sold	249,236			242,703			695,732			638,096
Gross profit	181,845			178,138			483,576			453,185

Selling, general and administrative expense ("SG&A")	120,524			109,633			325,684			310,390
Asset impairment charges	—			—			—			4,000
Restructuring charges	25			1,165			2,609			1,165
Operating income	61,296			67,340			155,283			137,630

Nonoperating income, net	15			34			175			281
Interest expense	(2,971		)	(3,505		)	(8,413		)	(10,984		)
Income before income tax	58,340			63,869			147,045			126,927

Income tax expense	4,020			5,245			10,535			6,423
Income from continuing operations	54,320			58,624			136,510			120,504

Loss from discontinued operations, net of tax	(4,850		)	(89,060		)	(5,231		)	(136,139		)
Net income (loss)	$	49,470		$	(30,436	)	$	131,279		$	(15,635	)

Earnings (loss) per share - basic:
Continuing operations	$	2.08		$	2.16		$	5.19		$	4.44
Discontinued operations	(0.19		)	(3.28		)	(0.20		)	(5.02		)
Total earnings (loss) per share - basic	$	1.90		$	(1.12	)	$	4.99		$	(0.58	)

Earnings (loss) per share - diluted:
Continuing operations	$	2.06		$	2.15		$	5.15		$	4.41
Discontinued operations	(0.18		)	(3.27		)	(0.20		)	(4.99		)
Total earnings (loss) per share - diluted	$	1.88		$	(1.12	)	$	4.95		$	(0.57	)


Weighted average shares of common stock used in computing earnings per share:
Basic	26,057			27,113			26,321			27,140
Diluted	26,366			27,267			26,520			27,304

See accompanying notes to condensed consolidated ~~condensed~~ financial statements.

Table of Contents

HELEN OF TROY LIMITED AND SUBSIDIARIES

Condensed Consolidated ~~Condensed~~ Statements of Comprehensive Income ~~(Loss)~~ (Unaudited)

Three Months Ended November 30,

2017

2016

Before

Tax (Expense)

Net of

Before

Tax (Expense)

Net of
(in thousands)

Tax

Benefit

Tax

Tax

Benefit

Tax
Income (loss)

$
(19,215)

$
(11,221)

$
(30,436)

$
59,800

$
(2,188)

$
57,612

Cash flow hedge activity - interest rate swaps

Changes in fair market value

753

(290)

463

-

-

-
Subtotal

753

(290)

463

-

-

-

Cash flow hedge activity - foreign currency contracts

Changes in fair market value

2,928

(725)

2,203

2,049

(370)

1,679
Settlements reclassified to income

(1,328)

271

(1,057)

(522)

73

(449)
Subtotal

1,600

(454)

1,146

1,527

(297)

1,230
Total other comprehensive income

2,353

(744)

1,609

1,527

(297)

1,230
Comprehensive income (loss)

$
(16,862)

$
(11,965)

$
(28,827)

$
61,327

$
(2,485)

$
58,842

Nine Months Ended November 30,

2017

2016

Before

Tax (Expense)

Net of

Before

Tax (Expense)

Net of
(in thousands)

Tax

Benefit

Tax

Tax

Benefit

Tax
Income (loss)

$
(9,802)

$
(5,833)

$
(15,635)

$
112,905

$
(7,912)

$
104,993

Cash flow hedge activity - interest rate swaps

Changes in fair market value

753

(290)

463

-

-

-
Subtotal

753

(290)

463

-

-

-

Cash flow hedge activity - foreign currency contracts

Changes in fair market value

(1,275)

75

(1,200)

2,319

(412)

1,907
Settlements reclassified to income

(2,208)

434

(1,774)

(505)

20

(485)
Subtotal

(3,483)

509

(2,974)

1,814

(392)

1,422
Total other comprehensive income (loss)

(2,730)

219

(2,511)

1,814

(392)

1,422
Comprehensive income (loss)

$
(12,532)

$
(5,614)

$
(18,146)

$
114,719

$
(8,304)

$
106,415



	Three Months Ended November 30,
	2018									2017
	Before Tax			Tax (Expense) Benefit			Net of Tax			Before Tax			Tax (Expense) Benefit			Net of Tax
(in thousands)	Before Tax			Tax (Expense) Benefit			Net of Tax			Before Tax			Tax (Expense) Benefit			Net of Tax
Income from continuing operations	$	58,340		$	(4,020	)	$	54,320		$	63,869		$	(5,245	)	$	58,624
Loss from discontinued operations	(6,325		)	1,475			(4,850		)	(83,084		)	(5,976		)	(89,060		)
Net income (loss)	52,015			(2,545		)	49,470			(19,215		)	(11,221		)	(30,436		)

Other comprehensive income
Cash flow hedge activity - interest rate swap
Changes in fair market value	(4		)	50			46			753			(290		)	463
Adoption of ASU No. 2018-02	—			—			—			—			—			—
Subtotal	(4		)	50			46			753			(290		)	463

Cash flow hedge activity - foreign currency contracts
Changes in fair market value	(563		)	96			(467		)	2,928			(725		)	2,203
Settlements reclassified to income	1,178			(197		)	981			(1,328		)	271			(1,057		)
Adoption of ASU No. 2018-02	—			—			—			—			—			—
Subtotal	615			(101		)	514			1,600			(454		)	1,146
Total other comprehensive income (loss)	611			(51		)	560			2,353			(744		)	1,609
Comprehensive income (loss)	$	52,626		$	(2,596	)	$	50,030		$	(16,862	)	$	(11,965	)	$	(28,827	)



	Nine Months Ended November 30,
	2018									2017
	Before Tax			Tax (Expense) Benefit			Net of Tax			Before Tax			Tax (Expense) Benefit			Net of Tax
(in thousands)	Before Tax			Tax (Expense) Benefit			Net of Tax			Before Tax			Tax (Expense) Benefit			Net of Tax
Income from continuing operations	$	147,045		$	(10,535	)	$	136,510		$	126,927		$	(6,423	)	$	120,504
Loss from discontinued operations	(6,809		)	1,578			(5,231		)	(136,729		)	590			(136,139		)
Net income (loss)	140,236			(8,957		)	131,279			(9,802		)	(5,833		)	(15,635		)

Other comprehensive income
Cash flow hedge activity - interest rate swap
Changes in fair market value	72			29			101			753			(290		)	463
Adoption of ASU No. 2018-02	—			150			150			—			—			—
Subtotal	72			179			251			753			(290		)	463

Cash flow hedge activity - foreign currency contracts
Changes in fair market value	3,962			(504		)	3,458			(1,275		)	75			(1,200		)
Settlements reclassified to income	1,101			(236		)	865			(2,208		)	434			(1,774		)
Adoption of ASU No. 2018-02	—			2			2			—			—			—
Subtotal	5,063			(738		)	4,325			(3,483		)	509			(2,974		)
Total other comprehensive income (loss)	5,135			(559		)	4,576			(2,730		)	219			(2,511		)
Comprehensive income (loss)	$	145,371		$	(9,516	)	$	135,855		$	(12,532	)	$	(5,614	)	$	(18,146	)

See accompanying notes to condensed consolidated ~~condensed~~ financial statements.

Table of Contents

HELEN OF TROY LIMITED AND SUBSIDIARIES

Condensed Consolidated ~~Condensed~~ Statements of Cash Flows (Unaudited)

Nine Months Ended November 30,
(in thousands)
2017

2016

Cash provided by operating activities:


Net income (loss)
$
(15,635)

$
104,993

Adjustments to reconcile net income (loss) to net cash  provided by operating activities:




Depreciation and amortization

32,362


33,323

Amortization of financing costs

976


876

Provision for doubtful receivables

2,076


1,489

Non-cash share-based compensation

11,130


11,661

Non-cash intangible asset impairment charges

136,297


7,400

Gain (loss) on the sale or disposal of property and equipment

(10)


167

Deferred income taxes and tax credits

(54,355)


(8,769)

Changes in operating capital, net of effects of acquisition of businesses:




Receivables

(74,538)


(66,005)

Inventories

3,528


7,001

Prepaid expenses and other current assets

(2,850)


(2,134)

Other assets and liabilities, net

(1,532)


(3,772)

Accounts payable

(2,532)


29,004

Accrued expenses and other current liabilities

19,075


22,410

Accrued income taxes

53,637


1,496

Net cash provided by operating activities

107,629


139,140





Cash used in investing activities:




Capital and intangible asset expenditures

(19,854)


(14,989)

Proceeds from the sale of property and equipment

13

32

Payments to acquire businesses, net of cash acquired

-


(209,258)

Net cash used in investing activities

(19,841)


(224,215)





Cash used in financing activities:




Proceeds from line of credit

389,500


328,600

Repayment of line of credit

(444,200)


(380,600)

Repayment of long-term debt

(5,700)


(3,800)

Payment of financing costs

-


(89)

Proceeds from share issuances under share-based compensation plans

6,670


7,451

Payment of tax obligations resulting from cashless share award settlements

(6,830)


(507)

Payments for repurchases of common stock

(29,158)


(75,000)

Net cash used in financing activities

(89,718)


(123,945)





Net decrease in cash and cash equivalents

(1,930)


(209,020)

Cash and cash equivalents, beginning balance

23,087


225,800

Cash and cash equivalents, ending balance
$
21,157

$
16,780



	Nine Months Ended November 30,
(in thousands)	2018			2017
Cash provided by operating activities:
Net income (loss)	$	131,279		$	(15,635	)
Less: Loss from discontinued operations	(5,231		)	(136,139		)
Income from continuing operations	136,510			120,504
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization	22,490			25,139
Amortization of financing costs	761			632
Provision for doubtful receivables	725			2,045
Non-cash share-based compensation	17,029			10,619
Non-cash intangible asset impairment charges	—			4,000
Gain on the sale or disposal of property and equipment	(536		)	(10		)
Deferred income taxes and tax credits	4,060			(54,355		)
Changes in operating capital, net of effects of acquisition of businesses:
Receivables	(64,284		)	(77,017		)
Inventories	(49,137		)	2,795
Prepaid expenses and other current assets	(1,149		)	(3,356		)
Other assets and liabilities, net	5,554			(1,184		)
Accounts payable	16,694			(1,961		)
Accrued expenses and other current liabilities	17,809			21,425
Accrued income taxes	2,969			53,637
Net cash provided by operating activities - continuing operations	109,495			102,913
Net cash provided (used) by operating activities - discontinued operations	(5,231		)	4,716
Net cash provided by operating activities	104,264			107,629

Cash used by investing activities:
Capital and intangible asset expenditures	(22,166		)	(10,375		)
Proceeds from the sale of property and equipment	1,125			13
Net cash used by investing activities - continuing operations	(21,041		)	(10,362		)
Net cash used by investing activities - discontinued operations	—			(9,479		)
Net cash used by investing activities	(21,041		)	(19,841		)

Cash used by financing activities:
Proceeds from line of credit	462,350			389,500
Repayment of line of credit	(411,350		)	(444,200		)
Repayment of long-term debt	(1,900		)	(5,700		)
Proceeds from share issuances under share-based compensation plans	7,802			6,670
Payment of tax obligations resulting from cashless share award settlements	(4,660		)	(6,830		)
Payments for repurchases of common stock	(137,067		)	(29,158		)
Net cash used by financing activities - continuing operations	(84,825		)	(89,718		)
Net cash used by financing activities - discontinued operations	—			—
Net cash used by financing activities	(84,825		)	(89,718		)


Net decrease in cash and cash equivalents	(1,602		)	(1,930		)
Cash and cash equivalents, beginning balance	20,738			23,087
Cash and cash equivalents, ending balance	19,136			21,157
Less: Cash and cash equivalents of discontinued operations, ending balance	—			1,232
Cash and cash equivalents of continuing operations, ending balance	$	19,136		$	19,925

See accompanying notes to condensed consolidated ~~condensed~~ financial statements.

Table of Contents

HELEN OF TROY LIMITED AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED ~~CONDENSED~~ FINANCIAL STATEMENTS (Unaudited)

November 30, 2018

~~NOVEMBER 30, 2017~~

Note 1 - Basis of Presentation and Related Information

In this quarterly report on Form 10-Q and the accompanying consolidated condensed financial statements and notes thereto, 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. 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 incorporated as Helen of Troy Corporation in Texas in 1968 and were reorganized as Helen of Troy Limited in Bermuda in 1994. We are a global designer, developer, importer, marketer, and distributor of an expanding portfolio of brand-name consumer products. As of November 30, 2017, we had four segments: Housewares, Health & Home, Nutritional Supplements, and Beauty. Our Housewares segment provides a broad range of innovative consumer products for the home. Product offerings include food preparation tools and storage containers; cleaning, bath and garden tools and accessories; infant and toddler care products; and insulated beverage and food containers. The Health & Home 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. The Nutritional Supplements segment is a leading provider of premium branded vitamins, minerals and supplements, topical skin products and other health products sold directly to consumers, which was divested on December 20, 2017 (see Note 17 to these consolidated condensed financial statements). 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 accompanying condensed consolidated ~~condensed~~ financial statements contain all adjustments (consisting of ~~only~~ normal recurring adjustments) necessary to present fairly our consolidated financial position as of November 30, ~~2017~~2018 and February 28, ~~2017,~~2018, 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, ~~2017,~~2018, and our other reports on file with the Securities and Exchange Commission ~~(the “SEC”~~(“SEC”).

When used in these 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 our common shares, par value $0.10 per share, as “common stock.” References to the "FASB” refer to the Financial Accounting Standards Board. References to “GAAP” refer to United States (“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 incorporated as Helen of Troy Corporation in Texas in 1968 and were reorganized as Helen of Troy Limited in Bermuda in 1994. We are a global designer, developer, importer, marketer, and distributor of an expanding portfolio of brand-name consumer products. We have three segments: Housewares, Health & Home, and Beauty. Our Housewares segment provides a broad range of innovative consumer products for the home. Product offerings include food preparation tools and storage containers; cleaning, bath and garden tools and accessories; infant and toddler care products; and insulated beverage and food containers. The Health & Home segment focuses on health care 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 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.

On December 20, 2017, we completed the divestiture of the Nutritional Supplements segment through the sale of Healthy Directions LLC and its subsidiaries to Direct Digital, LLC. The results of the Nutritional Supplements operations have been reported as discontinued operations for all periods presented in the consolidated financial statements. For more information, see Note 4 to these condensed consolidated financial statements. All other notes present results from continuing operations.

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 30^th. We purchase our products from unaffiliated manufacturers, most of which are located in China, Mexico and the United States.

Our condensed consolidated financial statements are prepared in U.S. Dollars. All intercompany accounts and transactions are eliminated in consolidation.

The preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the amounts reported in our condensed consolidated ~~condensed~~ financial statements and accompanying notes. Actual results may differ materially from those estimates.

~~Our consolidated condensed financial statements are prepared in United States (“U.S.”) Dollars. All intercompany accounts and transactions are eliminated in consolidation.~~

Table of Contents

We have reclassified, combined or separately disclosed certain amounts in the prior years’ condensed consolidated ~~condensed~~ financial statements and accompanying footnotes to conform towith the current ~~year’s presentation.~~

period’s presentation, including discontinued operations (see Note 4) and the adoption of ASU 2014-09,Revenue from Contracts with Customers (Topic 606) (see Notes 2 and 3).

Note 2 – New Accounting Pronouncements

Not Yet Adopted

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842). The new guidance requires the recognition of lease liabilities, representing future minimum lease payments, on a discounted basis, and corresponding right-of-use assets on a balance sheet for most leases, along with requirements for enhanced disclosures to give financial statement users the ability to assess the amount, timing and uncertainty of cash flows arising from leasing arrangements. In July 2018, the FASB issued ASU 2018-10 and 2018-11 which permit application of the new guidance at the beginning of the year of adoption, recognizing a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption, in addition to the method of applying the new guidance retrospectively to each prior reporting period presented. The ASU is effective for us on March 1, 2019. We are currently evaluating the impact this guidance may have on our consolidated financial statements.

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging ~~–Targeted~~- Targeted Improvements to Accounting for Hedging Activities (Topic 815), which amends and simplifies hedge accounting with the intent of better aligning financial reporting for hedging relationships with an entity's risk management activities. The ASU is effective ~~February~~for us on March 1, 2019. We are currently evaluating the ~~effect~~impact this ~~new accounting~~ guidance may have on our consolidated financial ~~position, results~~statements.

In August 2018, the FASB issued ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract. ASU 2018-15 aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The ASU is effective for us on March 1, 2020, and interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact this guidance may have on our consolidated financial statements.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework-Changes to the Disclosure Requirements for Fair Value Measurement. ASU 2018-13 removes certain disclosures, modifies certain disclosures and adds additional disclosures. The ASU is effective for us on March 1, 2020, and interim periods within those fiscal years. Early adoption is permitted. Certain disclosures in ASU 2018-13 would need to be applied on a retrospective basis and others on a prospective basis. We are currently evaluating the impact this guidance may have on our consolidated financial statements.

Adopted

In February 2018, the FASB issued ASU No. 2018-02,Reclassification of ~~operations~~Certain Tax Effects from Accumulated Other Comprehensive Income (Topic 220). The amendments in ASU 2018-02 allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and ~~cash flows.~~Jobs Act of 2017. Adoption of this guidance in the first quarter of fiscal 2019 did not have a material impact on our consolidated financial statements

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In May 2017, the FASB issued ASU 2017-09,Compensation – Stock Compensation (Topic 718): Scope of Modification ~~Accounting.~~Accounting (Topic 718). This update amends the scope of modification accounting surrounding share-based payment arrangements as issued in ASU 2016-09 by providing guidance on the various types of changes which would trigger modification accounting for share-based payment awards. ~~ASU 2017-09 is effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. We do~~Adoption of this guidance in the first quarter of fiscal 2019 did not ~~expect the adoption of ASU 2017-09 to~~ have a material ~~effect~~impact on our consolidated financial ~~position, results~~statements.

In January 2017, the FASB, issued ASU 2017-04,Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment. This guidance provides for a single-step quantitative test to identify and measure impairment, requiring an entity to recognize an impairment charge for the amount by which the goodwill carrying amount exceeds the reporting unit’s fair value. Adoption of ~~operations and cash flows.~~this guidance in the first quarter of fiscal 2018 did not have a material impact on our consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16,Accounting for Income Taxes: Intra–Entity Asset Transfers of Assets Other Than ~~Inventory.~~Inventory (Topic 740). ASU 2016-16 amends accounting guidance for intra-entity transfers of assets other than inventory to require the recognition of taxes when the transfer occurs. The amendment ~~will be~~was effective for us ~~in fiscal 2019.~~on March 1, 2018. A modified retrospective approach ~~will be~~is required for transition to the new guidance, with a cumulative-effect adjustment consisting of the net impact from (1) the write-off of any unamortized expense previously deferred and (2) recognition of any previously unrecognized deferred tax assets, net of any valuation allowance. The new guidance does not include any specific new disclosure requirements. ~~The new guidance may impact our effective tax rate, after adoption. We are currently evaluating the impact~~Adoption of this guidance ~~may~~in the first quarter of fiscal 2019 did not have a material impact on our consolidated financial ~~position, results of operations and cash flows.~~statements.

~~In February 2016, the FASB issued ASU 2016-02,~~ ~~Leases.~~ ASU 2016-02 will require lessees to recognize on their balance sheets “right-of-use assets” and corresponding lease liabilities, measured on a discounted basis over the lease term. Virtually all leases will be subject to this treatment except leases that meet the definition of a “short-term lease.” For expense recognition, the dual model requiring leases to be classified as either operating or finance leases has been retained from the prior standard. Operating leases will result in straight-line expense while finance leases will result in a front-loaded expense pattern. Classification will use criteria very similar to those applied in current lease accounting, but without explicit bright lines. The new lease guidance will essentially eliminate off-balance sheet financing. The guidance is effective for us in fiscal 2020. The new standard must be adopted using a modified retrospective transition and requires the new guidance to be applied at the beginning of the earliest comparative period presented. We are currently evaluating the effect this new accounting guidance may have on our consolidated financial position, results of operations and cash flows.

In May 2014, the FASB issued ASU 2014-09,Revenue from Contracts with Customers (Topic 606)~~, issued as~~. ASU 2014-09 provides a ~~new Topic, ASC Topic 606. The new~~framework for revenue recognition that replaces most existing GAAP revenue recognition guidance. We adopted the guidance in the first quarter of fiscal 2019. See Note 3 for a further discussion regarding the impact of adoption of this guidance on our consolidated financial statements.

Note 3 – Revenue Recognition

We adopted the provisions of ASU 2014-9 in the first quarter of fiscal 2019, and we elected to adopt the standard ~~provides a five-step analysis of transactions to determine when and how revenue is recognized.~~using the retrospective method. The core principle of the guidance is that a company should recognize revenue to depict the transfer of promised goods or services to

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customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. We plan to adopt the new standard on March 1, 2018. If changes in policy or practice are required, we can adopt either retrospectively or as a cumulative effect adjustment as of the date of adoption. We continue to make progress in our assessment and implementation of the new standard.

Our implementation approach has included a survey of revenue recognition policies and practices across each of our global reporting units, and a detailed study of the various types of commercial arrangements that we have with our customers to assess conformance of our current accounting practices with the new standard. While our completion of this assessment is ongoing, based on progress to date, we expect the new standard to primarily impact qualitative disclosure rather than materially effecting our accounting policies or practices. This is because our revenue is primarily generated from the sale of non-customized ~~finished product~~consumer products to customers. ~~Such sales contain a single delivery element and revenue~~Revenue is recognized ~~at a single point in time~~ when ~~ownership, risks~~control of, and ~~rewards transfer. The accounting for these transactions is largely~~title to, the product sold transfers to the customer. Therefore, the timing and amount of revenue recognized was not materially impacted by the new ~~standard.~~

~~Unless otherwise discussed above, we believe~~guidance. We have thus concluded that the ~~impact~~adoption of ~~recently issued standards that are not yet effective will~~the guidance did not have a material impact on our consolidated financial ~~position,~~statements. The provisions of the new guidance did however impact the classification of certain consideration paid to our customers. We therefore, have reclassified an immaterial amount of such payments from SG&A to a reduction of net sales revenue for all periods presented. Also, in accordance with the guidance, we reclassified an immaterial amount of estimated sales returns from a reduction of receivables to accrued expenses and other current liabilities for all periods presented. We elected to adopt the guidance using the full retrospective method.

We measure revenue as the amount of consideration for which we expect to be entitled, in exchange for transferring goods. Certain customers may receive cash incentives such as customer discounts (including volume or trade discounts), advertising discounts and other customer-related programs which are accounted for as variable consideration. In some cases, we apply judgment, such as contractual

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rates and historical payment trends, when estimating variable consideration. In accordance with the guidance, most variable consideration is classified as a reduction to net sales.

Sales taxes and other similar taxes are excluded from revenue. We elected to account for shipping and handling activities as a fulfillment cost as permitted by the guidance. We do not have unsatisfied performance obligations since our performance obligations are satisfied at a single point in time.

The effect of the adoption of ASU 2014-9 on the condensed consolidated financial statements from continuing operations is as follows:



(in thousands)	Before Reclassification				After Reclassification
Balance Sheet	February 28, 2018		Reclassification		February 28, 2018
Receivables	$	273,168	$	2,397	$	275,565
Accrued expenses and other current liabilities	$	165,864	$	2,397	$	168,261



(in thousands)	Before Reclassification					After Reclassification
Statement of Income	Three Months Ended November 30, 2017		Reclassification			Three Months Ended November 30, 2017
Sales revenue, net	$	423,709	$	(2,868	)	$	420,841
SG&A	$	112,501	$	(2,868	)	$	109,633



(in thousands)	Before Reclassification					After Reclassification
Statement of Income	Nine Months Ended November 30, 2017		Reclassification			Nine Months Ended November 30, 2017
Sales revenue, net	$	1,098,900	$	(7,619	)	$	1,091,281
SG&A	$	318,009	$	(7,619	)	$	310,390

Note 4 – Discontinued Operations

In December 2017, we completed the divestiture of the Nutritional Supplements segment through the sale of Healthy Directions LLC and its subsidiaries ("Healthy Directions") to Direct Digital, LLC. The purchase price from the sale was comprised of $46.0 million in cash, which was paid at closing, and a supplemental payment with a target value of $25.0 million, payable on or before August 1, 2019. The final amount of the supplemental payment has been adjusted based on a settlement with respect to the calculation of the performance of Healthy Directions through February 28, 2018. During the third quarter of fiscal 2019, we reduced the estimated value of the supplemental payment to $10.8 million and recorded a corresponding pre-tax charge of $5.8 million ($4.4 million after tax) to discontinued operations. Also, during the third quarter of fiscal 2019, we recorded an additional charge of $0.5 million (before and after tax) to discontinued operations, resulting from the resolution of certain contingencies. In conjunction with the sale of the business, we have agreed to provide certain transition services for up to an eighteen-month period following the closing of the transaction.

There were no balance sheet amounts related to discontinued operations for either period presented. The results of operations ~~and cash flows upon adoption.~~

~~Adopted~~

~~In January 2017, the FASB, issued ASU 2017-04,~~ ~~Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill Impairment.~~ This guidance provides for a single-step quantitative test to identify and measure impairment, requiring an entity to recognize an impairment charge for the amount by which the goodwill carrying amount exceeds the reporting unit’s fair value. We adopted the new guidanceassociated with discontinued operations are presented in the ~~first quarter~~following table:

Table of ~~fiscal 2018, applying it on a prospective basis. The application of this guidance has not had a material impact on our financial position, results of operations or cash flows.~~

Contents



	Three Months Ended November 30,						Nine Months Ended November 30,
(in thousands)	2018			2017			2018			2017
Sales revenue, net	$	—		$	29,337		$	—		$	92,213
Cost of goods sold	—			8,568			—			26,860
Gross profit	—			20,769			—			65,353

Selling, general and administrative expense ("SG&A")	—			21,394			—			69,324
Asset impairment charges (1)	—			82,227			—			132,297
Restructuring charges	—			118			—			118
Operating loss	—			(82,970		)	—			(136,386		)

Gain (loss) on sale before income tax (2)	(6,325		)	—			(6,809		)	—
Interest expense	—			(114		)	—			(343		)
Loss before income tax	(6,325		)	(83,084		)	(6,809		)	(136,729		)

Income tax benefit (expense)	1,475			(5,976		)	1,578			590
Loss from discontinued operations	$	(4,850	)	$	(89,060	)	$	(5,231	)	$	(136,139	)


(1)	Included pre-tax non-cash asset impairment charges consisting of $70.6 million to goodwill and $11.6 million to indefinite-lived brand assets for the three months ended November 30, 2017. Included pre-tax non-cash asset impairment charges consisting of $96.6 million to goodwill and $35.7 million to indefinite-lived brand assets for the nine months ended November 30, 2017.


(2)	Includes adjustments recorded during fiscal 2019 to the initial estimated gain on sale before income tax recorded in the fourth quarter of fiscal 2018.

Note 35 – Supplemental Balance Sheet Information

PROPERTY AND EQUIPMENT

Estimated

Useful Lives

November 30,

February 28,
(in thousands)

(Years)

2017

2017
Land

-

$
12,800

$
12,800
Building and improvements

3
-
40

109,108

109,026
Computer, furniture and other equipment

3
-
15

89,838

81,122
Tools, molds and other production equipment

1
-
10

33,792

31,157
Construction in progress

-

5,936

7,391
Property and equipment, gross

251,474

241,496
Less accumulated depreciation

(118,485)

(106,561)
Property and equipment, net

$
132,989

$
134,935



(in thousands)	Estimated Useful Lives (Years)			November 30, 2018			February 28, 2018
Land		-		$	12,644		$	12,800
Building and improvements	3	-	40	104,227			106,870
Computer, software, furniture and other equipment	3	-	15	81,038			79,657
Tools, molds and other production equipment	1	-	10	36,471			33,466
Construction in progress		-		19,162			5,912
Property and equipment, gross				253,542			238,705
Less accumulated depreciation				(122,602		)	(115,202		)
Property and equipment, net				$	130,940		$	123,503

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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

November 30,

February 28,
(in thousands)

2017

2017
Accrued compensation, benefits and payroll taxes

$
31,311

$
34,917
Accrued sales returns, discounts and allowances

32,050

27,377
Accrued warranty returns

23,653

21,766
Accrued advertising

30,134

23,747
Accrued legal fees and settlements

17,282

16,908
Accrued royalties

10,599

9,553
Accrued property, sales and other taxes

9,509

6,564
Accrued freight and duty

5,480

3,454
Accrued product liability

2,224

2,141
Derivative liabilities, current

2,305

47
Liability for uncertain tax positions

1,024

-
Other

8,961

6,726
Total accrued expenses and other current liabilities

$
174,532

$
153,200

~~OTHER LIABILITIES, NONCURRENT~~

November 30,

February 28,
(in thousands)

2017

2017
Deferred compensation liability

$
5,988

$
6,560
Liability for uncertain tax positions

3,467

6,611
Other liabilities

8,420

8,490
Total other liabilities, noncurrent

$
17,875

$
21,661

~~Note 4 – Acquisitions~~

~~Hydro Flask Acquisition~~ - On March 18, 2016, we completed the acquisition of all membership units of Steel Technology, LLC, doing business as Hydro Flask. Hydro Flask is a leading designer, distributor and marketer of high performance insulated stainless steel food and beverage containers for active lifestyles. The aggregate purchase price for the transaction was approximately $209.3 million, net of cash acquired. Significant assets acquired include receivables, inventory, prepaid expenses, property and equipment, trade names, technology assets, customer relationships, and goodwill. Acquisition-related expenses, incurred during fiscal 2016, were approximately $0.7 million (before and after tax).

We accounted for the acquisition as the purchase of a business and recorded the excess purchase price as goodwill, which is not expected to be deductible for income tax purposes. We completed our analysis of the economic lives of all the assets acquired and determined the appropriate fair values of the acquired assets. We assigned $59.0 million to trade names with indefinite economic lives. We assigned $10.3 million to technology assets and $14.2 million to customer relationships and are amortizing these assets over expected lives of 10 and 24 years, respectively. For technology assets, we considered the average life cycle of the underlying products, which range from 7 - 15 years, and the overall average life of the associated patent portfolio. For the customer relationships, we used historical attrition rates to assign an expected life.



(in thousands)	November 30, 2018		February 28, 2018
Accrued compensation, benefits and payroll taxes	$	32,196	$	37,666
Accrued sales discounts and allowances	34,134		28,311
Accrued sales returns	27,391		24,842
Accrued advertising	31,449		25,324
Accrued legal fees and settlements	2,162		17,243
Other	56,905		34,875
Total accrued expenses and other current liabilities	$	184,237	$	168,261

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~~The following schedule presents the net assets of Hydro Flask recorded at the acquisition date, excluding cash acquired:~~

~~HYDRO FLASK - NET ASSETS RECORDED UPON ACQUISITION AT MARCH 18, 2016~~

~~(in thousands)~~

Assets:

Receivables

$
7,955
Inventory

6,243
Prepaid expenses and other current assets

336
Property and equipment

1,108
Goodwill

116,053
Trade names - indefinite

59,000
Technology assets - definite

10,300
Customer relationships - definite

14,200
Subtotal - assets

215,195

Liabilities:

Accounts payable

2,275
Accrued expenses

3,662
Subtotal - liabilities

5,937
Net assets recorded

$
209,258

The fair values of the above assets acquired and liabilities assumed were estimated by applying income and market approaches. Key assumptions include various discount rates based upon a 12.3% weighted average cost of capital; royalty rates used in the determination of trade names and technology asset values of 6% and 2%, respectively; and a customer attrition rate used in the determination of customer relationship values of approximately 4% per year.

Note 56 – Goodwill and Intangible Assets

~~Impairment Testing in Fiscal 2018~~

~~Nutritional Supplements~~

~~During~~

We perform annual impairment tests each fiscal year during the ~~third~~fourth quarter of fiscal 2018, we continued to evaluate strategic alternatives for our Nutritional Supplements segment, including a transaction to divest the business. Over the short-term, certain of these alternatives may have a disproportionate impact on our income relative to the cost savings or generate other charges or losses.

During the third quarter of fiscal 2018, we received new information regarding the potential fair value of our Nutritional Supplements segment that we concluded should be considered when determining if impairments of our long-lived assets, including goodwill, had occurred. Consequently, we performedand interim impairment ~~testing. As a result~~tests, if and when necessary.

Table of ~~our testing, we recorded pre-tax non-cash asset impairment charges totaling $82.2 million, consisting of $70.6 millionto the segment’s goodwill and $11.6 million to the segment’s indefinite-lived brand assets.~~

During the second quarter of fiscal 2018, we performed additional impairment testing for our Nutritional Supplements segment due to a revised financial projection. As a result of our testing, we recorded pre-tax non-cash asset impairment charges totaling $18.1 million to the segment’s indefinite-lived brand assets.

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During the first quarter of fiscal 2018, we received information regarding the potential fair value of our Nutritional Supplements segment that we concluded should be considered when determining if impairments of our long-lived assets, including goodwill, had occurred. Consequently, we performed

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~~interim impairment testing. As a result of our testing, we recorded pre-tax non-cash asset impairment charges totaling $32.0 million, consisting of $6.0 millionto the segment’s indefinite-lived brand assets and $26.0 million to the segment’s goodwill.~~

~~Beauty~~

~~In our Beauty segment, we~~ performed interim impairment testing ~~in the first quarter of fiscal 2018~~ for a certain brand in our Beauty segment due to a revised financial projection. As a result of our testing, we recorded a pre-tax non-cash asset impairment charge of $4.0 ~~million.~~

The fair values used in our impairment tests were determined using a weighted average of various valuation methods including estimated future discounted cash flows and other market data. The valuation techniques utilized assumptions we believed to be appropriate in the circumstances; however, future circumstances attributable to a strategic change in our business could result in changes to those assumptions and other charges or losses relating our segments may be recorded and could be material. For example, if we determine that a divestiture is a probable outcome of our strategic reviews, we may need to perform additional impairment tests that may include future offer values. We are unable to project the amount of any expense, charge or loss that may be incurred in future periods.

~~Impairment Testing in Fiscal 2017~~

Our annual impairment testing for goodwill and indefinite-lived intangible assets had historically occurred in the first quarter of our fiscal year. In December 2016, we elected to change our annual impairment testing to the fourth quarter of our fiscal year. Accordingly, for fiscal 2017 we completed impairment tests during the first and fourth fiscal quarters. As a result of our testing of indefinite-lived trademarks in the fourth quarter, we recorded non-cash asset impairment charges of $5.0 million~~($3.2~~ ($3.6 million after tax). As a result of our testing of indefinite-lived trademarks in the first quarter, we recorded non-cash asset impairment charges of $7.4 million ($5.1 million after tax). The charges in both quarters were related to certain brand assets and trademarks in our Beauty and Nutritional Supplements segments, which were written down to their estimated fair values, determined on the basis of our estimated future discounted cash flows using the relief from royalty valuation method. The fair values used for our impairment testing in fiscal 2017 were estimated using a weighted average approach, which heavily weighted a valuation derived from a discounted cash flow model based on the Company’s estimates of future cash flows and based on management’s intentions with respect to the business.

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The following table summarizes the carrying amounts and ~~associated~~ accumulated amortization for all intangible assets by ~~operating~~ segment as of the end of the periods ~~shown:~~

~~GOODWILL AND INTANGIBLE ASSETS~~

presented:

November 30, 2017

February 28, 2017

Gross

Cumulative

Gross

Cumulative

Carrying

Goodwill

Accumulated

Net Book

Carrying

Goodwill

Accumulated

Net Book
(in thousands)

Amount

Impairments

Amortization

Value

Amount

Impairments

Amortization

Value
Housewares:

















Goodwill

$
282,056

$
-

$
-

$
282,056

$
282,056

$
-

$
-

$
282,056
Trademarks - indefinite

134,200

-

-

134,200

134,200

-

-

134,200
Other intangibles - finite

40,751

-

(17,074)

23,677

40,393

-

(15,476)

24,917
Total Housewares

457,007

-

(17,074)

439,933

456,649

-

(15,476)

441,173

Health & Home:

Goodwill

284,913

-

-

284,913

284,913

-

-

284,913
Trademarks - indefinite

54,000

-

-

54,000

54,000

-

-

54,000
Licenses - finite

15,300

-

(15,300)

-

15,300

-

(15,300)

-
Licenses - indefinite

7,400

-

-

7,400

7,400

-

-

7,400
Other intangibles - finite

117,473

-

(74,400)

43,073

116,982

-

(66,027)

50,955
Total Health & Home

479,086

-

(89,700)

389,386

478,595

-

(81,327)

397,268

Nutritional Supplements:

Goodwill

96,609

(96,609)

-

-

96,609

-

-

96,609
Brand assets - indefinite

20,432

-

-

20,432

56,020

-

-

56,020
Other intangibles - finite

52,180

-

(22,095)

30,085

44,180

-

(16,715)

27,465
Total Nutritional Supplements

169,221

(96,609)

(22,095)

50,517

196,809

-

(16,715)

180,094

Beauty:

Goodwill

81,841

(46,490)

-

35,351

81,841

(46,490)

-

35,351
Trademarks - indefinite

41,854

-

-

41,854

45,854

-

-

45,854
Trademarks - finite

150

-

(96)

54

150

-

(92)

58
Licenses - indefinite

10,300

-

-

10,300

10,300

-

-

10,300
Licenses - finite

13,696

-

(12,087)

1,609

13,696

-

(11,849)

1,847
Other intangibles - finite

46,402

-

(43,885)

2,517

46,402

-

(39,929)

6,473
Total Beauty

194,243

(46,490)

(56,068)

91,685

198,243

(46,490)

(51,870)

99,883
Total goodwill and intangible assets
$
1,299,557

$
(143,099)

$
(184,937)

$
971,521

$
1,330,296

$
(46,490)

$
(165,388)

$
1,118,418



	November 30, 2018										February 28, 2018
(in thousands)	Gross Carrying Amount		Cumulative Goodwill Impairments			Accumulated Amortization			Net Book Value		Gross Carrying Amount		Cumulative Goodwill Impairments			Accumulated Amortization			Net Book Value
Housewares:
Goodwill	$	282,056	$	—		$	—		$	282,056	$	282,056	$	—		$	—		$	282,056
Trademarks - indefinite	134,200		—			—			134,200		134,200		—			—			134,200
Other intangibles - finite	41,284		—			(18,915		)	22,369		40,828		—			(17,530		)	23,298
Subtotal	457,540		—			(18,915		)	438,625		457,084		—			(17,530		)	439,554

Health & Home:
Goodwill	284,913		—			—			284,913		284,913		—			—			284,913
Trademarks - indefinite	54,000		—			—			54,000		54,000		—			—			54,000
Licenses - finite	17,050		—			(15,315		)	1,735		15,300		—			(15,300		)	—
Licenses - indefinite	7,400		—			—			7,400		7,400		—			—			7,400
Other intangibles - finite	117,763		—			(85,243		)	32,520		117,586		—			(77,128		)	40,458
Subtotal	481,126		—			(100,558		)	380,568		479,199		—			(92,428		)	386,771

Beauty:
Goodwill	81,841		(46,490		)	—			35,351		81,841		(46,490		)	—			35,351
Trademarks - indefinite	30,407		—			—			30,407		30,407		—			—			30,407
Trademarks - finite	150		—			(101		)	49		150		—			(97		)	53
Licenses - indefinite	10,300		—			—			10,300		10,300		—			—			10,300
Licenses - finite	13,696		—			(12,403		)	1,293		13,696		—			(12,166		)	1,530
Other intangibles - finite	46,402		—			(46,110		)	292		46,402		—			(45,133		)	1,269
Subtotal	182,796		(46,490		)	(58,614		)	77,692		182,796		(46,490		)	(57,396		)	78,910
Total	$	1,121,462	$	(46,490	)	$	(178,087	)	$	896,885	$	1,119,079	$	(46,490	)	$	(167,354	)	$	905,235

The following table summarizes the amortization expense attributable to intangible assets recorded in SG&A in the condensed consolidated ~~condensed~~ statements of ~~operations~~income for the periods shown below, as well as our estimated amortization expense for fiscal ~~2018~~2019 through ~~2023.~~

~~AMORTIZATION OF INTANGIBLE ASSETS~~

Aggregate Amortization Expense (in thousands)

For the three months ended
November 30, 2017

$
6,430
November 30, 2016

7,199

Aggregate Amortization Expense (in thousands)

For the nine months ended
November 30, 2017

$
19,578
November 30, 2016

21,625

Estimated Amortization Expense (in thousands)

Fiscal 2018

$
26,095
Fiscal 2019

20,604
Fiscal 2020

19,516
Fiscal 2021

16,926
Fiscal 2022

6,450
Fiscal 2023

4,280

2024:



Aggregate Amortization Expense
For the three months ended (in thousands)
November 30, 2018	$	3,300
November 30, 2017	4,660



Aggregate Amortization Expense
For the nine months ended (in thousands)
November 30, 2018	$	10,822
November 30, 2017	14,198



Estimated Amortization Expense (in thousands)
Fiscal 2019	$	14,110
Fiscal 2020	13,127
Fiscal 2021	10,459
Fiscal 2022	4,047
Fiscal 2023	3,975
Fiscal 2024	3,664

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Note 67 – Share-Based Compensation Plans

We have equity awards outstanding under several share-based compensation plans. During the three- and nine-months ended November 30, ~~2017,~~2018, we had the following share-based compensation activity:

We issued 1,351 and 4,279 shares, respectively, to non-employee Board members with a total grant date fair value of $0.1 and $0.4 million, respectively, and average share prices of $90.80 and $94.26, respectively.

We granted time-vested restricted stock units (“RSUs”) that may be settled for 5,437 and 78,352 shares, respectively, of common stock with average fair values at the grant dates of $93.75 and $89.22 per unit, respectively.

~~We granted performance-based restricted stock units (“PSUs”) for 3,795 and 70,329 shares, respectively, of common stock with average fair values at the grant dates of $92.20 and $91.54 per unit,~~We issued 1,160 and 3,897 shares to non-employee Board members with a total grant date fair value of $0.1 and $0.3 million, respectively, and share prices of $120.70 and $100.08, respectively.

~~Employee RSUs for 1,115 and 35,250 shares vested and settled with a total fair value at settlement of $0.1 and $3.5 million and an average share price of $91.97 and $98.13, respectively.~~

~~Employees exercised stock options to purchase 7,148 and 110,552~~We granted time-vested restricted stock units ("RSUs") that may be settled for 77,834 and 149,632 shares of common stock, respectively. The RSU grants have a weighted average grant price of $125.44 and $106.67 per share, respectively, for a total award fair value at date of grant of $9.8 million and $16.0 million, respectively.

~~During~~

There were no performance-based restricted stock units ("PSUs") granted during the three months ended ~~May 31, 2017, employee~~November 30, 2018. For the nine-months ended November 30, 2018, we granted PSUs that may be settled for ~~149,884~~76,064 shares of common stock with a weighted average grant price of $86.24 per share and a total award fair value at date of grant of $6.6 million.

RSUs for 875 and 37,942 shares vested and settled, respectively, with a total fair value at settlement of ~~$14.3~~$0.1 and $3.4 million and ana weighted average ~~share~~grant price of ~~$95.55.~~

$126.99 and $89.55 per share, respectively.

PSUs for 2,213 and 102,617 shares vested and settled, respectively, with a total grant date fair value of $0.3 and $9.4 million, and a weighted average grant price of $126.94 and $91.88 per share, respectively.

Employees exercised stock options to purchase 9,584 and 120,768 shares of common stock, respectively.

The Helen of Troy Limited 2008 Employee Stock Purchase Plan (“2008 ESPP”) became effective on September 1, 2008, and expired by its terms on September 1, 2018. On August 22, 2018, our shareholders approved the 2018 Employee Stock Purchase Plan (the "2018 ESPP"). The aggregate number of shares of common stock that may be purchased under the 2018 ESPP will not exceed 750,000 shares. Under the terms of the plan, employees may authorize the withholding of up to 15% of their wages or salaries to purchase our shares of common stock, not to exceed $25,000 of the fair market value of such shares for any calendar year. The purchase price for shares acquired under the 2018 ESPP is equal to the lower of 85% of the share's fair market value on either the first day of each option period or the last day of each period. The plan will expire by its terms on September 1, 2028. Shares of common stock purchased under the 2018 ESPP vest immediately at the time of purchase. Accordingly, the fair value award associated with their discounted purchase price is expensed at the time of purchase. For the three months ended November 30, 2018, employees purchased 14,222 shares under the 2018 ESPP.

The Helen of Troy Limited 2008 Stock Incentive Plan (“2008 Stock Incentive Plan”) and the 2008 Non-Employee Directors Stock Incentive Plan ("2008 Directors' Plan") became effective on August 19, 2008, and expired by their terms on August 19, 2018. On August 22, 2018, our shareholders approved the 2018 Stock Incentive Plan (the “2018 Plan”). The 2018 Plan permits the granting of stock options, stock appreciation rights, restricted stock, restricted stock units and other stock-based awards. The aggregate number of shares for issuance under the 2018 Plan will not exceed 2,000,000 shares. As of November 30, 2018, there were 1,922,806 shares remaining for issuance under the 2018 Plan.

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

~~SHARE-BASED COMPENSATION EXPENSE~~

Three Months Ended

Nine Months Ended

November 30,

November 30,
(in thousands, except per share data)

2017

2016

2017

2016
Stock options

$
327

$
629

$
1,289

$
2,036
Directors stock compensation

175

175

575

525
Performance based and other stock awards

4,202

2,151

9,141

8,998
Employee stock purchase plan

-

-

297

258
Share-based compensation expense

4,704

2,955

11,302

11,817
Less income tax benefits

(781)

(706)

(1,862)

(2,920)
Share-based compensation expense, net of income tax benefits

$
3,923

$
2,249

$
9,440

$
8,897

Earnings per share impact of share-based compensation expense:

Basic

$
0.14

$
0.08

$
0.35

$
0.32
Diluted

$
0.14

$
0.08

$
0.35

$
0.32



	Three Months Ended November 30,
(in thousands, except per share data)	2018			2017
Stock options	$	128		$	327
Directors stock compensation	200			175
Performance based and other stock awards	5,419			3,939
Employee stock purchase plan	329			—
Share-based compensation expense	6,076			4,441
Less income tax benefits	(398		)	(781		)
Share-based compensation expense, net of income tax benefits	$	5,678		$	3,660

Impact of share-based compensation on earnings per share from continuing operations:
Basic	$	0.22		$	0.13
Diluted	$	0.22		$	0.13

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	Nine Months Ended November 30,
(in thousands, except per share data)	2018			2017
Stock options	$	655		$	1,289
Directors stock compensation	550			575
Performance based and other stock awards	15,337			8,664
Employee stock purchase plan	651			263
Share-based compensation expense	17,193			10,791
Less income tax benefits	(1,009		)	(1,862		)
Share-based compensation expense, net of income tax benefits	$	16,184		$	8,929

Impact of share-based compensation on earnings per share from continuing operations:
Basic	$	0.61		$	0.33
Diluted	$	0.61		$	0.33

Note 78 – Repurchase of Helen of Troy Common Stock

On May 10, 2017, our Board of Directors authorized the repurchase of up to $400 million of our outstanding common stock. The ~~new~~ authorization is effective for a period of three years and replaced our existing repurchase authorization, of which approximately $82 million remained. These repurchases may include open market purchases, privately negotiated transactions, block trades, accelerated stock repurchase transactions, or any combination of such methods. The number of shares purchased and the timing of the purchases will depend on a number of factors, including share price, trading volume and general market conditions, working capital requirements, general business conditions, financial conditions, any applicable contractual limitations, and other factors, including alternative investment opportunities. As of November 30, ~~2017,~~2018, our repurchase authorization allowed for the purchase of ~~$364.9~~$185.6 million of common stock.

Our current equity-based compensation plans include provisions that allow for the “net exercise” of ~~share settled~~share-settled awards 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~~equity holder can be paid for by having the ~~option~~equity holder tender back to the Company a number of shares at fair value equal to the amounts due. Net exercises are treated as purchases and retirements of shares.

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

Three Months Ended November 30,

Nine Months Ended November 30,
(in thousands, except per share data)

2017

2016

2017

2016

Common stock repurchased on the open market or through tender offer:

Number of shares


311,100


922,731

311,100


922,731

Aggregate value of shares

$
29,158

$
75,000

$
29,158

$
75,000

Average price per share

$
93.72

$
81.28

$
93.72

$
81.28

Common stock received in connection with share-based compensation:

Number of shares

299

961

72,864

6,235

Aggregate value of shares

$
27

$
83

$
7,000

$
590

Average price per share

$
91.94

$
85.97

$
96.07

$
94.60



	Three Months Ended November 30,				Nine Months Ended November 30,
(in thousands, except share and per share data)	2018		2017		2018		2017
Common stock repurchased on the open market:
Number of shares	813,696		311,100		1,220,721		311,100
Aggregate value of shares	$	100,000	$	29,158	$	137,067	$	29,158
Average price per share	$	122.90	$	93.72	$	112.28	$	93.72

Common stock received in connection with share-based compensation:
Number of shares	1,398		299		58,470		72,864
Aggregate value of shares	$	175	$	27	$	5,348	$	7,000
Average price per share	$	125.03	$	91.94	$	91.47	$	96.07

Note 89 – Restructuring Plan

In October 5, 2017, ~~the Company~~we announced that itwe had approved a restructuring plan (referred to as “Project Refuel”) intended to enhance the performance of primarily the Beauty and former Nutritional Supplements segments. Project Refuel includes a reduction-in-force and the elimination of certain ~~contracts. Following~~contracts and operating expenses. During the ~~divestiture~~first quarter of fiscal 2019, we expanded Project Refuel to include the ~~Nutritional Supplements segment, as discussed in Note 17 to these consolidated condensed financial statements, the Company is~~realignment and streamlining of our supply chain structure. We are targeting total annualized profit improvements of approximately $8.0 to $10.0 million over the duration of the plan. ~~The Company estimates~~We estimate the plan towill be completed by the first quarter of fiscal 2020, and ~~expects~~expect to incur total restructuring charges in the range of approximately ~~$3.2~~$5.0 to ~~$4.8~~$5.5 million ~~over~~during the ~~same period.~~period of the plan. Restructuring provisions are determined based on estimates prepared at the time the restructuring actions are approved by management and are revised periodically.

Restructuring charges ~~also include amounts recognized as incurred.~~

~~During~~for the ~~three- and nine-months~~three months ended November 30, ~~2017,~~2018 were not meaningful. We incurred $2.6 million of pre-tax restructuring charges during the ~~Company~~nine months ended November 30, 2018, related primarily to employee severance and termination benefits. These charges were primarily related to our Beauty segment and shared service supply chain initiatives. Our program to date has incurred ~~$1.3~~$4.5 million of pre-tax restructuring costs ~~of which $1.2 million pertained~~related to employee severance and termination benefits ~~in its Beauty segment~~ and ~~$0.1 million pertained to~~ contract termination ~~costs in its Nutritional Supplements segment. There were no restructuring costs during~~costs.

During the ~~comparable three-~~three and ~~nine-months~~nine months ended November 30, ~~2016. As of November 30, 2017, the Beauty segment had~~2018, we made cash

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restructuring payments of ~~$0.5~~$0.9 and $2.5 million, ~~and~~respectively. We had a remaining liability of ~~$0.7~~$0.8 million as of November 30, 2018.

During the three and ~~the Nutritional Supplements segment had a remaining liability~~nine months ended November 30, 2017, we incurred $1.2 million of ~~$0.1 million.~~

pre-tax restructuring costs related to employee severance and termination benefits for our Beauty segment.

Note 910 – Commitments and Contingencies

Thermometer Patent Litigation – In January 2016, a jury ruled against ~~the Company~~us in a case that involved claims by Exergen Corporation. The case involved the alleged patent infringement related to two forehead thermometer models sold by our subsidiary, Kaz USA, Inc., in the United States. As a result of the jury verdict, we recorded a charge in fiscal 2016 including legal fees and other related expenses, of $17.8 million (before and after tax). In June 2016, certain post-trial motions were concluded with Exergen Corporation being awarded an additional $1.5 million of pre-judgment compensation. We accrued this additional amount in May 2016. In July 2016, we appealed the judgment to the United States Court of Appeals for the Federal Circuit. ~~The Company continues to vigorously pursue its appellate rights~~In March 2018, the Federal Circuit issued a decision, which reversed the district court’s verdict of infringement of one of the two patents at issue and ~~defend against~~remanded the ~~underlying judgment.~~damage award for a determination by the district court of the impact the reversal of infringement has on the damage award. Following the remand, we entered into a settlement agreement, filed a Stipulation of Dismissal with Prejudice and made a settlement payment of $15.0 million on May 31, 2018.

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Other Matters– We are involved in various other legal claims and proceedings in the normal course of ~~operations, including from time to time inquiries and audits from various taxing authorities.~~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, although the estimation of certain loss contingencies inherently involves some amount of uncertainty.~~

~~Product Warranties~~ ~~– Most of our products are under warranty against defects in material~~liquidity. Notes 5, 11, 12 and workmanship for periods ranging from two to five years. We estimate our warranty accrual using our historical experience and believe that this is 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 shown:

~~ACCRUAL FOR WARRANTY RETURNS~~

Three Months Ended November 30,

Nine Months Ended November 30,
(in thousands)

2017

2016

2017

2016
Beginning balance

$
22,094

$
19,459

$
21,766

$
20,622
Additions to the accrual

14,473

14,858

40,655

43,052
Reductions of the accrual - payments and credits issued

(12,914)

(12,457)

(38,768)

(41,814)
Ending balance

$
23,653

$
21,860

$
23,653

$
21,860

~~Notes 3, 10, 11 and 12~~13 to these condensed consolidated ~~condensed~~ financial statements provide additional information regarding certain of our significant commitments and contingencies.

Note 1011 – Long-Term Debt

We have a credit agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent, and other lenders that provided for an unsecured total revolving commitment of $1$1.0 billion as of November 30, ~~2017.~~2018. The commitment under the Credit Agreement terminates on December 7, 2021. 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 November 30, ~~2017,~~2018, the outstanding revolving loan principal balance was ~~$386.0~~$320.4 million (excluding prepaid financing fees) and the face amount of outstanding letters of credit was ~~$7.6~~$9.0 million. For the ~~three-~~three and ~~nine-months~~nine months ended November 30, 2018, borrowings under the Credit Agreement incurred interest charges at rates ranging from 3.1% to 5.3% and 2.8% to 5.3%, respectively. For the three and nine months ended November 30, 2017, borrowings under the Credit Agreement incurred interest charges at rates ranging from 2.5% to 4.5% and 2.3% to 4.8%, respectively. ~~For the three- and nine-months ended November 30, 2016, borrowings under the Credit Agreement incurred interest charges~~

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~~at rates ranging from 2.0% to 4.3% and 1.9% to 4.3%, respectively.~~ As of November 30, ~~2017,~~2018, the amount available for borrowings under the Credit Agreement was ~~$606.4~~$670.6 million. Covenants in our debt agreements limit the amount of total indebtedness we can incur. As of November 30, ~~2017,~~2018, these covenants effectively limited our ability to incur more than ~~$348.2~~$526.5 million of additional debt from all sources, including our Credit ~~Agreement.~~Agreement, or $670.6 million in the event a qualified acquisition is consummated. The following table summarizes our long-term debt as of the end of the periods shown:

LONG-TERM DEBT

Original

Date

Interest

November 30,

February 28,
(dollars in thousands)

Borrowed

Rates

Matures

2017

2017
Mississippi Business Finance Corporation Loan (the "MBFC Loan")(1)

03/13

Floating

03/23

$
24,215

$
29,903
Senior Notes(2)

01/11

3.9
%
01/18

19,976

19,763
Credit Agreement(3)

01/15

Floating

12/21

382,000

435,949
Total long-term debt

426,191

485,615
Less current maturities of long-term debt

(20,860)

(24,404)
Long-term debt, excluding current maturities

$
405,331

$
461,211

~~_____________________~~



(in thousands)	Original Date Borrowed	Interest Rates	Matures	November 30, 2018			February 28, 2018
Mississippi Business Finance Corporation Loan (the "MBFC Loan") (1)	03/13	Floating	03/23	$	22,331		$	24,219
Credit Agreement (2)	01/15	Floating	12/21	317,399			265,650
Total long-term debt				339,730			289,869
Less current maturities of long-term debt				(1,884		)	(1,884		)
Long-term debt, excluding current maturities				$	337,846		$	287,985


(1)		The MBFC Loan is unsecured with an original balance of $37.6 million and incurs floating interest ~~set and payable quarterly at~~based on applicable LIBOR plus a margin of up to 2.0%, or a Base Rate plus a margin of up to 1.0%~~, or applicable LIBOR plus a margin of up to 2.0%~~, as determined by the interest rate elected and the Leverage Ratio. The loan is subject to ~~holder's~~holder’s call on or after March 1, 2018. The loan can be prepaid without penalty.The remaining principal balance ~~of the MBFC Loan~~ is payable as follows: $1.9 million annually on March 1, ~~2018~~2019 through 2022; and $14.8 million on March 1, 2023. Any remaining outstanding principal and interest is due upon maturity on March 1, 2023.


(2)		$100 million unsecured Senior Notes at a fixed interest rate of 3.9% payable semi-annually. Annual principal payments of $20 million began in January 2014. Prepayment of the notes are subject to a "make whole" premium.

⁽³⁾

Floating interest rates are hedged with ~~and~~an interest rate swap to effectively fix interest rates on $100 million of the outstanding principal balance under the Credit Agreement. Notes 1112 and 1213 to these condensed consolidated ~~condensed~~ financial statements provide additional information regarding the interest rate swap.

~~The fair market value of the fixed rate debt at~~

At November 30, ~~2017, computed using a discounted cash flow analysis~~2018 and ~~comparable market rates was $20.0 million, approximately equal to the $20.0 million book value. Our other~~February 28, 2018, our long-term debt has floating interest rates, and its book value approximates its fair ~~value at November 30, 2017.~~

value.

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

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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. We were in compliance with the terms of these agreements as of November 30, ~~2017.~~

2018.

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Note 1112 – Fair Value

We classify our various assets and liabilities recorded or reported at fair value under a hierarchy prescribed by GAAP that prioritizes inputs to fair value measurement techniques into three broad levels:


Level 1:	Observable inputs such as quoted prices for identical assets or liabilities in active markets;


Level 2:	Observable inputs other than quoted prices that are directly or indirectly observable for the asset or liability, including quoted prices for similar assets or liabilities in active markets; quoted prices for similar or identical assets or liabilities in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable; and


Level 3:	Unobservable inputs that reflect the reporting entity’s own assumptions.

Assets and liabilities subject to classification are classified upon acquisition. When circumstances dictate the transfer of an asset or liability to a different level, our policy is to recognize the transfer at the beginning of the reporting period in which the event resulting in the transfer occurred.

The following tables present the fair value of our financial assets and liabilities measured on a recurring basis as of the end of the periods shown:

~~FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES~~



	Fair Values at		Fair Values at
	November 30, 2017		November 30, 2018
(in thousands)	(Level 2)(1)		(Level 2) (1)
Assets:
Money market accounts	$	496	$	646
Interest rate swap and foreign currency contracts		1,023
Interest rate swap			2,553
Foreign currency contracts			4,057
Total assets	$	1,519	$	7,256

Liabilities:
Fixed rate debt(2)	$	20,035
Floating rate debt		406,215	$	339,730
Foreign currency contracts		2,815	64
Total liabilities	$	429,065	$	339,794



	Fair Values at		Fair Values at
	February 28, 2017		February 28, 2018
(in thousands)	(Level 2)(1)		(Level 2) (1)
Assets:
Money market accounts	$	2,711	$	1,107
Interest rate swap			2,481
Foreign currency contracts		2,167	642
Total assets	$	4,878	$	4,230

Liabilities:
Fixed rate debt(2)	$	20,105
Floating rate debt		465,852	$	289,869
Foreign currency contracts		47	2,606
Total liabilities	$	486,004	$	292,475

~~_____________________~~

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(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 balance sheets at the undiscounted value of remaining principal payments due.~~

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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 use derivatives for hedging purposes and our derivatives are primarily interest rate swaps, foreign currency contracts and cross-currency debt swaps. See Notes ~~3, 12~~11 and 13 to these condensed consolidated ~~condensed~~ financial statements for more information on our hedging activities.

We classify our ~~fixed and~~ floating rate debt as a Level 2 ~~items~~item because the estimation of the fair market value ~~of these financial assets~~ requires the use of a discount rate based upon current market rates of interest for obligations with comparable remaining terms. Such comparable rates are considered significant other observable market inputs. The ~~fair market~~book value of the ~~fixed~~floating rate debt was computed using a discounted cash flow analysis and discount rates of 0.3% at November 30, 2017 and 1.8% at February 28, 2017. All other long-term debt has floating interest rates, and its book value approximates its fair value as of the reporting date.

Our other non-financial assets include goodwill and other intangible assets, which we classify as Level 3 items. These assets are measured at fair value on a non-recurring basis as part of our impairment testing. Note 56 to these condensed consolidated ~~condensed~~ financial statements contains additional information ~~regarding impairment testing and~~ related to intangible asset impairments.

Note 1213 – 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 ~~both~~ the ~~three-~~three and ~~nine-months~~nine months ended November 30, 2018 and 2017, ~~and 2016,~~ approximately ~~12%~~13% of our net sales revenue was in foreign ~~currencies.~~currencies, respectively. These sales were primarily denominated in Euros, Canadian Dollars, British Pounds, ~~Euros,~~and Mexican ~~Pesos and Canadian Dollars. We make most of our inventory purchases from the Far East and primarily use the U.S. Dollar for such purchases.~~ Pesos.

In our condensed consolidated ~~condensed~~ statements of ~~operations,~~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.

During the three and nine months ended November 30, 2018, we recorded net foreign exchange gains (losses) from remeasurement, including the impact of foreign currency hedges and cross-currency debt swaps of $0.3 million and $(0.8) million, respectively, in SG&A, and $0.0 million and $0.5 million, respectively, in income tax expense. For the ~~three-~~three and ~~nine-months~~nine months ended November 30, 2017, we recorded net foreign exchange gains (losses) from remeasurement, including the impact of foreign currency hedges and cross-currency debt swaps, of $(2.2) million and $(1.5) million, respectively, in SG&A and $(0.1) million and $(0.7) million, respectively, in income tax expense. For the three- and nine-months ended November 30, 2016, we recorded net foreign exchange gains (losses) from remeasurement, including the impact of foreign currency hedges and cross-currency debt swaps, of $(0.1) and $(0.6) million, respectively, in SG&A, and $(0.2) million and $(0.1) million, respectively, in income tax expense.

We hedge against certain foreign currency exchange rate risk by using a series of forward contracts designated as cash flow hedges and mark-to-market derivatives to manage 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.

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Interest Rate Risk- Interest on our outstanding debt as of November 30, ~~2017~~2018 is ~~both~~based on floating and fixed. Fixed rates are in place on $20 million of Senior Notes at 3.9% and floating rates are in place on the balance of all other debt outstanding, which totaled $410.3 million as of November 30, 2017.interest rates. If short-term interest rates increase, we will incur higher interest ~~rates~~expense on any future outstanding balances of floating rate debt.

~~Borrowings under the Credit Agreement accrue~~ Floating interest ~~(at the Company’s election) based~~rates are hedged with an interest rate swap

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to effectively fix interest rates on either a base rate, plus a margin of up to 1.00%, or the applicable LIBOR plus a margin of up to 2.00%, in each case, as determined by the Company’s leverage ratio, calculated pursuant to the Company’s Credit Agreement. During September 2017, the Company effectively converted $100$100.0 million of the outstanding principal balance under the Credit Agreement, to fixed rate debt using an interest rate swap. The swap converted the total aggregate notional principal from floating LIBOR interest rate payments to fixed interest rate payments at rates ranging from approximately 1.5% to 2.1% for annual periods through December 2021, as compared to the one-month LIBOR rate of approximately 1.4%which totaled $320.4 million (excluding prepaid finance fees) as of November 30, 2017. Changes in the spread between the fixed rate payment side of the swap and the floating rate receipt side of the swap offset 100 percent of the change in any period of the underlying debt’s floating rate payments. Therefore, the swap is considered 100 percent effective.

2018.

The following table summarizes the fair values of our derivative instruments as of the end of the periods shown:

~~FAIR VALUES OF DERIVATIVE INSTRUMENTS~~

November 30, 2017

Prepaid

Accrued

Expenses

Expenses



Final

and Other

and Other

Other
(in thousands)

Settlement

Notional

Current

Other

Current

Liabilities,
Derivatives designated as hedging instruments

Hedge Type

Date

Amount

Assets

Assets

Liabilities

Non-current
Foreign currency contracts - sell Euro

Cash flow

12/2018

€
32,250

$
-

$
2

$
1,381

$
-
Foreign currency contracts - sell Canadian Dollars

Cash flow

12/2018

$
27,750

252

16

-

-
Foreign currency contracts - sell Pounds

Cash flow

01/2019

£
20,400

-

-

765

32
Foreign currency contracts - sell Mexican Pesos

Cash flow

05/2018

$
45,000

-

-

159

-
Interest rate swap

Cash flow

12/2021

$
100,000

134

619

-

-
Subtotal

386

637

2,305

32

Derivatives not designated under hedge accounting

Foreign currency contracts - cross-currency debt swaps - Euro

(1)

4/2020

$
5,280

-

-

-

65
Foreign currency contracts - cross-currency debt swaps - Pound

(1)

4/2020

$
6,395

-

-

-

413
Subtotal

-

-

-

478
Total fair value

$
386

$
637

$
2,305

$
510


	February 28, 2017
					Prepaid				Accrued
					Expenses				Expenses
		Final			and Other				and Other		Other
		Settlement	Notional		Current		Other		Current		Liabilities,
(in thousands)													November 30, 2018
Derivatives designated as hedging instruments	Hedge Type	Date	Amount		Assets		Assets		Liabilities		Non-current		Hedge Type	Final Settlement Date	Notional Amount		Prepaid Expenses and Other Current Assets		Other Assets		Accrued Expenses and Other Current Liabilities		Other Liabilities, Non-current
Foreign currency contracts - sell Euro	Cash flow	2/2018	€	27,500	$	727	$	-	$	-	$	-	Cash flow	11/2019	€	20,500	$	1,759	$	—	$	—	$	—
Foreign currency contracts - sell Canadian Dollars	Cash flow	6/2018	$	26,000		155		32		-		-	Cash flow	01/2020	$	16,000	477		26		—		—
Foreign currency contracts - sell Pounds	Cash flow	2/2018	£	13,500		548		-		-		-	Cash flow	02/2020	£	18,500	1,490		81		—		—
Foreign currency contracts - sell Mexican Pesos	Cash flow	2/2018	$	59,600		-		-		47		-	Cash flow	09/2019	$	40,000	39		—		—		—
Interest rate swap													Cash flow	12/2021	$	100,000	901		1,652		—		—
Subtotal						1,430		32		47		-					4,666		1,759		—		—

Derivatives not designated under hedge accounting
Foreign currency contracts - cross-currency debt swap - Euro	(1)	1/2018	$	10,000		705		-		-		-	(1)	04/2020	$	5,280	—		185		—		—
Foreign currency contracts - cross-currency debt swaps - Pound													(1)	04/2020	$	6,395	—		—		—		64
Subtotal																	—		185		—		64
Total fair value					$	2,135	$	32	$	47	$	-					$	4,666	$	1,944	$	—	$	64

~~_____________________~~



(in thousands)	February 28, 2018
Derivatives designated as hedging instruments	Hedge Type	Final Settlement Date	Notional Amount		Prepaid Expenses and Other Current Assets		Other Assets		Accrued Expenses and Other Current Liabilities		Other Liabilities, Non-current
Foreign currency contracts - sell Euro	Cash flow	07/2019	€	38,000	$	—	$	102	$	1,320	$	—
Foreign currency contracts - sell Canadian Dollars	Cash flow	06/2019	$	27,750	378		101		—		—
Foreign currency contracts - sell Pounds	Cash flow	04/2019	£	19,500	—		56		513		—
Foreign currency contracts - sell Mexican Pesos	Cash flow	05/2018	$	20,000	5		—		—		—
Interest rate swap	Cash flow	12/2021	$	100,000	539		1,942		—		—
Subtotal					922		2,201		1,833		—
Derivatives not designated under hedge accounting
Foreign currency contracts - cross-currency debt swap - Euro	(1)	04/2020	$	5,280	—		—		—		208
Foreign currency contracts - cross-currency debt swaps - Pound	(1)	04/2020	$	6,395	—		—		—		565
Subtotal					—		—		—		773
Total fair value					$	922	$	2,201	$	1,833	$	773


(1)		These are foreign currency contracts for which we have not elected hedge accounting. We refer to them as “cross-currency debt swaps”. They, in effect, adjust the currency denomination of a portion of our outstanding debt to the Euro and British Pound, as applicable, for the notional amounts reported, creating an economic hedge against currency movements.

~~Table of Contents~~

The following table summarizes the pre-tax effect of derivative instruments for the periods shown:

~~PRE-TAX EFFECT OF DERIVATIVE INSTRUMENTS~~

Three Months Ended November 30,

Gain (Loss)

Gain (Loss) Reclassified from

Recognized in OCI

Accumulated Other Comprehensive

Gain (Loss) Recognized

(effective portion)

Income (Loss) into Income

As Income
(in thousands)

2017

2016

Location

2017

2016

Location

2017

2016
Currency contracts - cash flow hedges

$
2,928

$
2,049

SG&A

$
1,328

$
522

$
-

$
-
Interest rate swaps - cash flow hedges

753

-

Interest expense

-

-

Interest expense

(48)

-
Cross-currency debt swaps - principal

-

-

-

-

SG&A

(419)

493
Cross-currency debt swaps - interest

-

-

-

-

Interest Expense

74

-
Total

$
3,681

$
2,049

$
1,328

$
522

$
(393)

$
493

Nine Months Ended November 30,

Gain (Loss)

Gain (Loss) Reclassified from

Recognized in OCI

Accumulated Other Comprehensive

Gain (Loss) Recognized

(effective portion)

Income (Loss) into Income

As Income
(in thousands)

2017

2016

Location

2017

2016

Location

2017

2016
Currency contracts - cash flow hedges

$
(1,275)

$
2,319

SG&A

$
2,208

$
505

$
-

$
-
Interest rate swaps - cash flow hedges

753

-

Interest expense

-

-

Interest expense

(48)

-
Cross-currency debt swaps - principal

-

-

-

-

SG&A

(1,183)

528
Cross-currency debt swaps - interest

-

-

-

-

Interest Expense

74

35
Total

$
(522)

$
2,319

$
2,208

$
505

$
(1,157)

$
563



	Three Months Ended November 30,
	Gain (Loss) Recognized in OCI (effective portion)					Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income						Gain (Loss) Recognized As Income
(in thousands)	2018			2017		Location	2018			2017		Location	2018		2017
Currency contracts - cash flow hedges	$	(563	)	$	2,928	SG&A	$	(1,178	)	$	1,328		$	—	$	—
Interest rate swaps - cash flow hedges	(4		)	753		Interest expense	—			—		Interest expense	136		(48		)
Cross-currency debt swaps - principal	—			—			—			—		SG&A	228		(419		)
Cross-currency debt swaps - interest	—			—			—			—		Interest Expense	73		74
Total	$	(567	)	$	3,681		$	(1,178	)	$	1,328		$	437	$	(393	)

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	Nine Months Ended November 30,
	Gain (Loss) Recognized in OCI (effective portion)					Gain (Loss) Reclassified from Accumulated Other Comprehensive Income (Loss) into Income						Gain (Loss) Recognized As Income
(in thousands)	2018		2017			Location	2018			2017		Location	2018		2017
Currency contracts - cash flow hedges	$	3,962	$	(1,275	)	SG&A	$	(1,101	)	$	2,208		$	—	$	—
Interest rate swaps - cash flow hedges	72		753			Interest expense	—			—		Interest expense	347		(48		)
Cross-currency debt swaps - principal	—		—				—			—		SG&A	894		(1,183		)
Cross-currency debt swaps - interest	—		—				—			—		Interest Expense	147		74
Total	$	4,034	$	(522	)		$	(1,101	)	$	2,208		$	1,388	$	(1,157	)

We expect pre-tax net ~~losses~~gains of ~~$2.1~~$4.7 million associated with foreign currency contracts and interest rate swaps 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 vary and the underlying contracts settle.

Counterparty Credit Risk- Financial instruments, including foreign currency contracts and cross currency debt swaps, 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.

~~Note 13 – Comprehensive Income (Loss)~~

~~The changes in accumulated other comprehensive income (loss) by component and related tax effects for the fiscal 2018 year-to-date are as follows:~~

~~CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT~~

Unrealized Holding Gains (Losses) on Cash Flow Hedges
(in thousands)

Interest Rate Swaps(1)

Foreign Currency Contracts(2)

Total
Balance at February 28, 2017
$
-

$
1,173

$
1,173
Other comprehensive income (loss) before reclassification

753

(1,275)

(522)
Amounts reclassified out of accumulated other comprehensive income (loss)

-

(2,208)

(2,208)
Tax effects

(290)

509

219
Other comprehensive income (loss)

463

(2,974)

(2,511)
Balance at November 30, 2017
$
463

$
(1,801)

$
(1,338)

~~_____________________~~

⁽¹⁾

~~Includes net deferred tax benefits of $0.3 million at November 30, 2017.~~

⁽²⁾

~~Balances at November 30, 2017 and February 28, 2017 include net deferred tax benefit (expense) of $0.3 and $(0.2) million, respectively~~.

~~Table of Contents~~

Note 14 – Segment Information

The following tables present segment information included in continuing operations for the periods shown:

~~THREE MONTHS ENDED~~

(in thousands)

Nutritional

November 30, 2017

Housewares

Health & Home

Supplements


Beauty

Total
Sales revenue, net

$
128,017

$
190,975

$
29,336

$
104,717

$
453,045
Asset impairment charges

-

-

82,227

-

82,227
Restructuring charges

-

-

118

1,165

1,283
Operating income (loss)

29,982

27,897

(83,521)

10,012

(15,630)
Capital and intangible asset expenditures

565

171

1,802

502

3,040
Depreciation and amortization

1,444

4,232

2,374

2,710

10,760


					Nutritional
November 30, 2016	Housewares		Health & Home		Supplements		Beauty		Total
											Three Months Ended November 30, 2018
(in thousands)											Housewares			Health & Home		Beauty		Total
Sales revenue, net	$	124,723	$	179,842	$	32,163	$	107,686	$	444,414	$	142,937		$	187,863	$	100,281	$	431,081
Asset impairment charges		-		-		-		-		-
Restructuring charges		-		-		-		-		-	(20		)	—		45		25
Operating income (loss)		29,223		20,155		(80)		14,021		63,319
Operating income											29,839			19,213		12,244		61,296
Capital and intangible asset expenditures		1,100		1,492		1,558		624		4,774	5,534			3,128		443		9,105
Depreciation and amortization		1,429		5,221		2,108		2,467		11,225	1,408			4,326		1,461		7,195

~~NINE MONTHS ENDED~~

(in thousands)

Nutritional

November 30, 2017

Housewares(1)

Health & Home

Supplements


Beauty

Total
Sales revenue, net

$
341,165

$
489,102

$
92,212

$
268,633

$
1,191,112
Asset impairment charges

-

-

132,297

4,000

136,297
Restructuring charges

-

-

118

1,165

1,283
Operating income (loss)

71,601

$
50,187

$
(138,413)

$
17,869

1,244
Capital and intangible asset expenditures

1,166

1,381

14,561

2,746

19,854
Depreciation and amortization

4,290

12,553

7,223

8,296

32,362


					Nutritional
November 30, 2016	Housewares(1)		Health & Home		Supplements		Beauty		Total
											Three Months Ended November 30, 2017
(in thousands)											Housewares		Health & Home		Beauty		Total
Sales revenue, net	$	315,302	$	470,650	$	101,215	$	273,355	$	1,160,522	$	128,261	$	189,240	$	103,340	$	420,841
Asset impairment charges		-		-		5,000		2,400		7,400
Restructuring charges		-		-		-		-		-	—		—		1,165		1,165
Operating income (loss)		68,956		39,156		(6,581)		22,173		123,704
Operating income											29,809		27,584		9,947		67,340
Capital and intangible asset expenditures		3,938		3,526		3,665		3,860		14,989	1,705		500		565		2,770
Depreciation and amortization		4,200		15,738		6,242		7,143		33,323	1,444		4,232		2,707		8,383

~~_____________________~~

⁽¹⁾

~~The nine months ended November 30, 2017 includes a full nine months of operating results for Hydro Flask compared to eight and one-half months for the nine months ended November 30, 2016.~~

Table of Contents



	Nine Months Ended November 30, 2018
(in thousands)	Housewares		Health & Home		Beauty		Total
Sales revenue, net	$	397,738	$	527,077	$	254,493	$	1,179,308
Restructuring charges	740		358		1,511		2,609
Operating income	80,351		52,501		22,431		155,283
Capital and intangible asset expenditures	12,830		7,783		1,553		22,166
Depreciation and amortization	4,414		12,703		5,373		22,490



	Nine Months Ended November 30, 2017
(in thousands)	Housewares		Health & Home		Beauty		Total
Sales revenue, net	$	342,050	$	483,592	$	265,639	$	1,091,281
Restructuring charges	—		—		1,165		1,165
Asset impairment charges	—		—		4,000		4,000
Operating income	71,085		49,243		17,302		137,630
Capital and intangible asset expenditures	6,463		2,746		1,166		10,375
Depreciation and amortization	4,290		12,553		8,296		25,139

We compute segment operating income based on net sales revenue, less cost of goods sold, SG&A, restructuring charges, and any asset impairment charges associated with the segment. The SG&A used to compute each segment’s operating income ~~(loss)~~ is directly associated with the segment, plus shared service and corporate overhead expenses that are allocable to the segment. We have reallocated corporate overhead that was previously allocated to our former Nutritional Supplements segment. We do not allocate nonoperating income and expense, including interest or income taxes, to operating segments.

~~Table of Contents~~

Note 15 – Income Taxes

Due to ~~the Company’s~~our organization in Bermuda and the ownership structure of ~~its~~our foreign subsidiaries, many of which are not owned directly or indirectly by a U.S. parent company, an immaterial amount of our foreign income is subject to U.S. taxation on a permanent basis under current law. Additionally, our intellectual property is largely owned by our foreign subsidiaries, resulting in proportionally higher earnings in jurisdictions with lower statutory tax rates, which decreases our overall effective tax rate.

On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was enacted into law. Among other changes, the Tax Act lowered the U.S. corporate income tax rate from 35% to 21% and established a modified territorial system requiring mandatory deemed repatriation tax on undistributed earnings of certain foreign subsidiaries. The Tax Act also has an impact on certain executive compensation that is no longer deductible.

For interim periods, our income tax expense and resulting effective tax rate are based upon an estimated annual effective tax rate adjusted for the effects of items required to be treated as discrete to the period, including changes in tax laws, changes in estimated exposures for uncertain tax positions and other items. We considered the provisions of the Tax Act in calculating the estimated annual effective tax rate.

We continue to apply the guidance in Staff Accounting Bulletin No. 118 (“SAB 118”) and as of November 30, 2018, we have not completed the accounting for all the tax effects enacted under Tax Act. We made reasonable estimates of those effects during fiscal 2018 and fiscal 2019 year-to-date. We will continue to refine our estimates as additional guidance and information becomes available.

Table of Contents

For the three months ended November 30, ~~2017,~~2018, income tax expense as a percentage of ~~pre-tax loss~~income before income tax was ~~(58.4)%,~~6.9% compared to ~~expense of 3.7%~~8.2% for the same period last ~~year,~~year. The year-over-year decline in the effective tax rate is primarily due to shifts in the ~~recognition~~mix of taxable income in our various tax ~~benefits from impairment charges over the course of the year in relation to pre-tax income, as opposed to the periods in which the charges were incurred.~~

jurisdictions.

For the nine months ended November 30, ~~2017,~~2018, income tax expense as a percentage of ~~pre-tax loss~~income before income tax was (59.5)% compared to expense of 7.0% for the same period last year, primarily due to the recognition of tax benefits from impairment charges over the course of the year in relation to pre-tax income as opposed to the periods in7.2%, which the charges were incurred. As a result, the expected tax benefit from impairment charges of $52.8 million will be recognized entirely in the fourth quarter of fiscal 2018 relative to pre-tax income. Income taxes for the nine months ended November 30, 2017 also included:

~~$2.6 million in excess tax benefits from share-based compensation settlements and exercises; and~~

~~$2.8~~included $0.7 million of ~~tax benefits related to the resolution of uncertain tax positions.~~

~~Income taxes for the nine months ended November 30, 2016 included tax benefits of $1.4 million related the resolution of uncertain tax positions, $1.6 million in excess~~ tax benefits from share-based compensation settlements and ~~exercises, and $1.2~~a tax benefit of $0.8 million infrom the lapse of the statute of limitations related to an uncertain tax position. Income tax expense as a percentage of income before income tax was 5.1% for the same period last year, which included $2.6 million tax benefits ~~due~~from share-based compensation settlements and a tax benefit of $2.8 million related to the ~~finalization~~resolution of uncertain tax positions.

During fiscal 2017, we received an assessment from a state tax authority which adjusted taxable income applicable to the particular state resulting from interpretations of certain state income tax ~~returns.~~

provisions applicable to our legal structure. We believe we have accurately reported our taxable income and are vigorously protesting the assessment through administrative processes with the state. We believe it is unlikely that the outcome of these matters will have a material adverse effect on our consolidated financial position, results of operations, or liquidity.

Note 16 – 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 options to purchase common stock and issued and contingently issuable unvested ~~restricted share units (“RSUs”)~~RSUs and ~~performance-based restricted share units (“PSUs”). Due~~PSUs. See Note 7 to ~~the net loss~~these condensed consolidated financial statements for ~~the three~~more information regarding RSUs, PSUs and nine months ended November 30, 2017, 154,255 and 164,017 incremental shares from share-based compensation arrangements were excluded from the computation of diluted weighted average shares outstanding, respectively, because their effect would be anti-dilutive.other performance based stock awards. Options for common stock are excluded from the computation of diluted earnings per share if their effect is antidilutive. ~~See Note 6 to these consolidated condensed financial statements for more information regarding share-based compensation awards.~~

~~Table of Contents~~

The following table presents our weighted average basic and diluted shares for the periods shown:

~~WEIGHTED AVERAGE DILUTED SECURITIES~~

Three Months Ended November 30,

Nine Months Ended November 30,
(in thousands)

2017

2016

2017

2016
Weighted average shares outstanding, basic

27,113

27,484

27,140

27,700
Incremental shares from share-based compensation arrangements

-

318

-

358
Weighted average shares outstanding, diluted

27,113

27,802

27,140

28,058

Dilutive securities, stock options

222

325

236

401
Dilutive securities, unvested or unsettled stock awards

82

163

100

163
Antidilutive securities

354

149

344

142

~~Note 17 – Subsequent Events~~

~~Divestiture of the Nutritional Supplements Segment~~

On December 20, 2017, the Company completed the sale of Healthy Directions LLC and its subsidiaries to Direct Digital, LLC. The purchase price from the sale is comprised of $46 million in cash, paid at closing, and a supplemental payment with a target value of $25 million, payable on or before August 1, 2019. The final amount of the supplemental payment may be adjusted up or down based on the performance of Healthy Directions through February 28, 2018. The final purchase price is also subject to a customary working capital adjustment. The transaction is not reflected in our consolidated condensed financial statements as of and for the period ended November 30, 2017.

~~Tax Reform~~

The Tax Cuts and Jobs Act was signed into law in December 2017, which represents significant U.S. federal tax reform legislation that includes a permanent reduction to the U.S. federal corporate income tax rate. The permanent reduction to the federal corporate income tax rate will have the effect of a one-time impact to the value of our deferred tax assets and liabilities. Additionally, we expect that the tax reform legislation will subject certain of our cumulative foreign earnings and profits to U.S. income taxes through a deemed repatriation. We are reviewing the recently enacted tax reform’s effects on our deferred tax assets and the taxation of certain foreign earnings and profits, and we expect to recognize the impact in the fourth quarter of fiscal 2018.



	Three Months Ended November 30,		Nine Months Ended November 30,
(in thousands)	2018	2017	2018	2017
Weighted average shares outstanding, basic	26,057	27,113	26,321	27,140
Incremental shares from share-based compensation arrangements	309	154	199	164
Weighted average shares outstanding, diluted	26,366	27,267	26,520	27,304

Antidilutive securities	137	354	281	344

Table of Contents

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

This management’s discussion and analysis (“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 for the fiscal year ended February 28, ~~2017 (Form 10-K)~~2018 (“Form 10-K”) and its other filings with the Securities and Exchange Commission (the “SEC”). This discussion should be read in conjunction with our condensed consolidated ~~condensed~~ financial statements included under Part I, Item 1. of this report. When used in the MD&A, 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. Throughout MD&A, we refer to our Leadership Brands, which are brands that have number-one and number-two positions in their respective categories and ~~include OXO®, Honeywell®, Braun®, PUR®,~~consist of the OXO, Honeywell, Braun, PUR, Hydro ~~Flask®, Vicks®,~~Flask, Vicks, and Hot ~~Tools®.~~

Tools brands.

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 refer 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.

~~OVERVIEW~~

OVERVIEW

We incorporated as Helen of Troy Corporation in Texas in 1968 and were reorganized as Helen of Troy Limited in Bermuda in 1994. We are a leading global consumer products company offering creative products and solutions for our customers through a diversified portfolio of well-recognized and widely-trusted brands. We have built leading market positions through new product innovation, product quality and competitive pricing. We currently operate in ~~four~~three segments consisting of Housewares, Health & Home, ~~Nutritional Supplements,~~ and Beauty. In fiscal 2015, we launched a transformational strategy to improve the performance of our business segments and strengthen our shared service capabilities. We believe we continue to make progress on achieving our strategic objectives.

~~Significant Trends Impacting the Business~~

~~Sale of the Nutritional Supplements Business~~

~~On December 20,~~

In October 2017, the Company completed the sale of Healthy Directions LLC and its subsidiaries to Direct Digital, LLC. The purchase price from the sale is comprised of $46 million in cash, paid at closing, and a supplemental payment with a target value of $25 million, payable on or before August 1, 2019. The final amount of the supplemental payment may be adjusted up or down based on the performance of Healthy Directions through February 28, 2018. As a result, at this time, we are unable to accurately determine the amount of the supplemental payment the Company will receive. The final purchase price is also subject to a customary working capital adjustment. The transaction is not reflected in our consolidated condensed financial statements as of and for the period ended November 30, 2017.

During the third quarter of fiscal 2018, we received information regarding the potential fair value of our Nutritional Supplements business that we concluded should be considered when determining if impairments of our long-lived assets, including goodwill, had occurred. As a result of our testing, we recorded pre-tax non-cash asset impairment charges totaling $82.2 million, consisting of $70.6 million to the segment’s goodwill and $11.6 million to the segment’s indefinite-lived brand assets.

~~Table of Contents~~

In the first and second quarters of fiscal 2018, we recorded pre-tax non-cash asset impairment charges related to the Nutritional Supplements segment totaling $32.0 million and $18.1 million, respectively. For additional information regarding impairment testing and related intangible asset impairments, see Note 5 to the accompanying consolidated condensed financial statements.

The fair values used in our impairment tests were determined using a weighted average of various valuation methods including estimated future discounted cash flows and other market data. The valuation techniques utilized assumptions we believe to be appropriate in the circumstances; however, future circumstances attributable to a strategic change in the Nutritional Supplements segment, such as the sale of the business, could result in changes to those assumptions and other charges or losses relating to the segment may be recorded and could be material.

~~Restructuring Plan~~

~~On October 5, 2017, the Company~~ announced that itwe had approved a restructuring plan (referred to as “Project Refuel”) intended to enhance the performance of primarily the Beauty and former Nutritional Supplements segments. Project Refuel includes a reduction-in-force and the elimination of certain ~~contracts. Following~~contracts and operating expenses. During the first quarter of fiscal 2019, we expanded Project Refuel to include the realignment and streamlining of our supply chain structure. For additional information regarding Project Refuel, see Note 9 to the accompanying condensed consolidated financial statements.

In December 2017, we completed the divestiture of the Nutritional Supplements segment ~~as discussed~~through the sale of Healthy Directions LLC and its subsidiaries ("Healthy Directions") to Direct Digital, LLC. The purchase price from the sale is comprised of $46.0 million in ~~Note 17~~cash, which was paid at closing, and a supplemental payment with a target value of $25.0 million, payable on or before August 1, 2019. The final amount of the supplemental payment has been adjusted based on a settlement with respect to the ~~accompanying consolidated condensed financial statements, the Company is targeting total annualized profit improvements of approximately $8.0 million over the duration~~calculation of the ~~plan. The Company estimates~~performance of Healthy Directions through February 28, 2018. During the ~~plan to be completed by the first~~third quarter of fiscal ~~2020,~~2019, we reduced the estimated value of the supplemental payment to $10.8 million and ~~expects~~recorded a corresponding pre-tax charge of $5.8 million ($4.4 million after tax) to ~~incur total restructuring charges~~discontinued operations. Also, during the third quarter of fiscal 2019, we recorded an additional charge of $0.5 million (before and after tax) to discontinued operations, resulting from the resolution of certain contingencies. Following the sale, we no longer consolidate our former Nutritional Supplements segment's operating results. Unless otherwise indicated, all results presented are from continuing operations.

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Significant Trends Impacting the Business

Potential Impact of Tariffs

We purchase our products from unaffiliated manufacturers, most of which are located in China, Mexico and the United States. This concentration exposes us to risks associated with doing business globally, including changes in tariffs. The Office of the United States Trade Representative ("USTR") identified certain Chinese imported goods for additional tariffs to address China’s trade policies and practices. The tariffs, could have a material adverse effect on our business and results of operations. This potential impact could be mitigated by a variety of factors. The USTR may also reduce the list of impacted tariff lines before the tariffs are implemented and later may grant specific product exclusions. We are unable to give any assurance as to the scope, duration, or impact of the tariffs, how successful our mitigation efforts will be, or the extent to which mitigation will be necessary.

The tariff increases that have been implemented by the USTR began to impact our cost of goods sold in the ~~range~~third quarter of ~~approximately $3.2 to $4.8 million over~~fiscal 2019. While we have implemented pricing actions in the ~~same period. Restructuring provisions are determined based on estimates prepared at~~various product categories impacted by the ~~time~~tariffs, the ~~restructuring~~bulk of these actions ~~are approved by management and are revised periodically. Restructuring charges also include amounts recognized as incurred. For~~did not become meaningfully effective during the three- and nine-months ended November 30, 2017, the Company incurred $1.3 million of pre-tax restructuring costs, of which $1.2 million related to employee severance and termination benefits and $0.1 million related to contract termination costs.

~~Tax Reform~~

The Tax Cuts and Jobs Act was signed into law in December 2017, which represents significant U.S. federal tax reform legislation that includes a permanent reduction to the U.S. federal corporate income tax rate. The permanent reduction to the federal corporate income tax ratethird quarter. Our pricing actions will have the effect of a one-time impact to the value of our deferred tax assets and liabilities. Additionally, we expect that the tax reform legislation will subject certain of our cumulative foreign earnings and profits to U.S. income taxes through a deemed repatriation. We are reviewing the recently enacted tax reform’s effects on our deferred tax assets and the taxation of certain foreign earnings and profits, and we expect to recognize the impact inlargely become effective during the fourth quarter of fiscal ~~2018.~~

2019 and the first quarter of 2020. This is due to the negotiation and notice periods involved in taking pricing actions with our retail customers. Although our pricing actions are intended to offset the full gross profit impact of tariff increases, there are no assurances that the pricing action will not reduce retail consumption or customer orders in the short-term. Additionally, we have not resolved pricing with one key retailer in two product categories. We expect some disruption to customer orders and retail consumption from pricing actions in the short-term, including the fourth quarter of fiscal 2019. However, we believe these pricing actions are the right choices for the long-term health of the business.

Foreign Currency Exchange Rate Fluctuations

Due to the nature of our operations, we have exposure to the impact of fluctuations in exchange rates from transactions that are denominated in a currency other than our reporting currency (the U.S. Dollar). The most significant currencies affecting our operating results are the ~~British Pound,~~ Euro, Canadian Dollar, British Pound, and Mexican Peso.

For the three months ended November 30, ~~2017,~~2018, changes in foreign currency exchange rates had ~~a favorable~~an unfavorable impact on consolidated U.S. ~~dollar~~Dollar reported net sales revenue of approximately $1.8 million, or 0.4%, compared to a favorable impact of $2.8 million, or 0.6%., for the same period last year. For the nine months ended November 30, ~~2017,~~2018, net foreign currency exchange rate fluctuations ~~had a favorable impact on~~favorably impacted our consolidated U.S. dollar reported net sales revenue by approximately $1.4 million, or 0.1%, compared to a favorable impact of ~~approximately~~ $1.1 million, or 0.1%.

, in the same period last year.

~~Table of Contents~~

Consumer Spending and Changes in Shopping Preferences

Our business depends 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 81%,~~economy. Approximately 80% ~~and 79%~~ of our ~~consolidated~~ net sales were from U.S. shipments ~~in fiscal~~for the three months ended November 30, 2018, compared to approximately 79% for the same period last year. For the nine months ended November 30, 2018 and 2017, ~~2016 and 2015, respectively.~~ U.S. shipments were approximately 78% of our net sales.

Additionally, the shift in consumer shopping preferences to online or multichannel shopping experiences has ~~shifted~~changed the concentration of our sales. For ~~fiscal 2017, 2016~~the three and ~~2015, our net sales to retail customers fulfilling end-consumer online orders and online sales directly to consumers comprised approximately 13%, 10% and 9%~~, ~~respectively, of our total consolidated net sales revenue for each fiscal year and grew over 30%in fiscal 2017. For the third quarter and first~~ nine months ~~of fiscal~~ended November 30, 2018, our net sales to retail customers fulfilling end-consumer online orders and online sales directly to consumers comprised approximately ~~17%~~18% and ~~16%~~17%, respectively, of our total consolidated net sales revenue, and grew approximately ~~19%~~6% and ~~21%~~16%, respectively, ~~compared~~over the same period last year.

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For the three and nine months ended November 30, 2017, our net sales to retail customers fulfilling end-consumer online orders and online sales directly to consumers comprised approximately 18% and 15%, respectively, of our total consolidated net sales revenue, and grew approximately 30% and 31%, respectively, over the same periods last year.

With the continued growth in online sales across the retail landscape, many brick and mortar retailers are aggressively looking for ways to improve their customer delivery capabilities to be able to meet customer expectations. As a result, it will become increasingly important for us to leverage our distribution capabilities in order to meet the changing demands of our customers, as well as to increase our online capabilities to support our direct-to-consumer sales channels and online channel sales by our retail customers.

Variability of the Cough/Cold/Flu Season

Sales in several of our Health & Home segment categories are highly correlated to the severity of winter weather and cough/cold/flu incidence. In the U.S., the cough/cold/flu season historically runs from November through March, with peak activity normally in January to March. For the ~~2016-2017~~2017-2018 season, fall and winter weather was ~~mild~~unseasonably cold and ~~reports of~~ cough/cold/flu incidence ~~were below~~was significantly higher than the ~~2015-2016~~2016-2017 season, which was a below average season. We expect that the weakness in the 2016-2017 cough/cold/flu season will have an unfavorable impact on initial replenishment of affected categories during fiscal 2018, due to high retail inventory levels.

Third Quarter Fiscal ~~2018~~2019 Financial Results

~~Consolidated net sales revenue increased 1.9%, or $8.6 million, to $453.0 million for the three months ended November 30, 2017, compared to $444.4 million for the same period last year.~~

Consolidated operating loss was $(15.6) million for the three months ended November 30, 2017, compared to operating income of $63.3 million in the same period last year. Consolidated operating income for the three months ended November 30, 2017 includes a pre-tax non-cash asset impairment charge of $82.2 million and pre-tax restructuring charges of $1.3 million associated with Project Refuel. There were no comparable charges in the same period last year.

Consolidated adjusted operating income increased 7.5%, or $5.5 million, to $79.0 million for the three months ended November 30, 2017, compared to $73.4 million in the same period last year. Consolidated adjusted operating margin increased 0.9 percentage points to 17.4% of consolidated net sales revenue in the three months ended November 30, 2017, compared to 16.5% in the same period last year.

Consolidated net sales revenue increased 2.4%, or $10.2 million, to $431.1 million for the three months ended November 30, 2018, compared to $420.8 million for the same period last year. Net sales from our Leadership Brands were $343.4 million for the three months ended November 30, 2018, compared to $327.3 million for the same period last year, representing growth of 4.9%.

Net loss was $(30.4) million for the three months ended November 30, 2017, compared to net income of $57.6 million for the same period last year. Diluted loss per share was $(1.12) for the three months ended November 30, 2017, compared to diluted earnings per share of $2.07 in the same period last year.

Consolidated operating income was $61.3 million for the three months ended November 30, 2018, compared to $67.3 million for the same period last year. Consolidated operating income for the three months ended November 30, 2017 included pre-tax restructuring charges of $1.2 million.

Consolidated adjusted operating income decreased 8.9%, or $6.9 million, to $70.6 million for the three months ended November 30, 2018, compared to $77.6 million for the same period last year. Consolidated adjusted operating margin decreased 2.0 percentage points to 16.4% of consolidated net sales revenue for the three months ended November 30, 2018, compared to 18.4% for the same period last year.

Income from continuing operations was $54.3 million for the three months ended November 30, 2018, compared to $58.6 million for the same period last year. Diluted earnings per share (“EPS”) from continuing operations was $2.06 for the three months ended November 30, 2018, compared to $2.15 for the same period last year.

Adjusted income from continuing operations decreased 7.1% to $63.2 million for the three months ended November 30, 2018, compared to $68.1 million for the same period last year. Adjusted diluted EPS from continuing operations decreased 4.0% to $2.40 for the three months ended November 30, 2018, compared to $2.50 for the same period last year.

Loss from discontinued operations was $4.9 million, or $0.18 per diluted share, for the three months ended November 30, 2018, compared to a loss of $89.1 million, or $3.27 per diluted share, for the same period last year.

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~~Adjusted income increased 4.3% to $68.8 million in the three months ended November 30, 2017, compared to $66.0 million in~~Net income was $49.5 million for the three months ended November 30, 2018, compared to a net loss of $30.4 million for the same period last year. Diluted EPS was $1.88 for the three months ended November 30, 2018 compared to a loss of $1.12 per diluted share for the same period last year. ~~Adjusted diluted earnings per share increased 6.3% to $2.52 in the three months ended November 30, 2017, compared to $2.37 in the same period last year.~~

Year-To-Date Fiscal ~~2018~~2019 Financial Results

~~Consolidated net sales revenue increased 2.6%, or $30.6million, to $1,191.1 million for the nine months ended November 30, 2017, compared to $1,160.5 million for the same period last year.~~

Consolidated operating income was $1.2 million for the nine months ended November 30, 2017, compared to operating income of $123.7 million in the same period last year. Consolidated operating income for the nine months ended November 30, 2017 includes: (i) pre-tax non-cash asset impairment charges of $136.3 million; (ii) a $3.6 million charge related to the bankruptcy of Toys “R” Us (“TRU”); and (iii) pre-tax restructuring charges of $1.3 million associated with Project Refuel. The nine months ended November 30, 2016 includes pre-tax non-cash impairment charges of $7.4 million.

~~Consolidated adjusted operating income increased 4.4%, or $7.3 millionto $173.1~~Consolidated net sales revenue increased 8.1%, or $88.0 million, to $1,179.3 million for the nine months ended November 30, 2018, compared to $1,091.3 million for the same period last year. Net sales from our Leadership Brands were $943.2 million for the nine months ended November 30, 2018, compared to $837.0 million for ~~the nine months ended November 30, 2017, compared to $165.9 million~~in the same period last year. ~~Consolidated adjusted operating margin increased 0.2 percentage points to 14.5%of consolidated net sales revenue for the nine months ended November 30, 2017, compared to 14.3% in the same period last year.~~

~~Net loss was $(15.6) million~~for the nine months ended November 30, 2017, compared to net income of $105.0 million for the same period last year. Diluted loss per share was $(0.58) for the nine months ended November 30, 2017, compared to diluted earnings per share of $3.74 in the same period last year.

~~Adjusted income increased 9.0% to $151.5 million for the nine months ended November 30, 2017, compared to $138.9 million~~ i~~n the same period last year. Adjusted diluted earnings per share increased 12.1% to $5.55for the nine months ended November 30, 2017, compared to $4.95in the same period last year.~~

Consolidated operating income was $155.3 million for the nine months ended November 30, 2018, compared to $137.6 million for the same period last year. Consolidated operating income for the nine months ended November 30, 2018 included pre-tax restructuring charges of $2.6 million related to Project Refuel. Consolidated operating income for the nine months ended November 30, 2017 included pre-tax non-cash impairment charges of $4.0 million, a pre-tax charge of $3.6 million related to the bankruptcy of Toys "R" Us ("TRU"), and pre-tax restructuring charges of $1.2 million.

Consolidated adjusted operating income increased 8.5%, or $14.5 million, to $185.7 million for the nine months ended November 30, 2018, compared to $171.2 million for the same period last year. Consolidated adjusted operating margin increased 0.1 percentage points to 15.8% of consolidated net sales revenue for the nine months ended November 30, 2018, compared to 15.7% for the same period last year.

Income from continuing operations was $136.5 million for the nine months ended November 30, 2018, compared to $120.5 million for the same period last year. Diluted EPS from continuing operations was $5.15 for the nine months ended November 30, 2018, compared to $4.41 for the same period last year.

Adjusted income from continuing operations increased 9.2% to $165.5 million for the nine months ended November 30, 2018, compared to $151.6 million for the same period last year. Adjusted diluted EPS from continuing operations increased 12.4% to $6.24 for the nine months ended November 30, 2018, compared to $5.55 for the same period last year.

Loss from discontinued operations, net of tax, was $5.2 million for the nine months ended November 30, 2018, compared to a loss of $136.1 million for the same period last year. Loss from discontinued operations was $0.20 per diluted share for the nine months ended November 30, 2018 compared to a loss of $4.99 per diluted share for the same period last year.

Net income was $131.3 million for the nine months ended November 30, 2018 compared to a net loss of $15.6 million for the same period last year. Diluted EPS was $4.95 for the nine months ended November 30, 2018 compared to a loss of $0.57 per diluted share for the same period last year.

Adjusted operating income, adjusted operating margin, adjusted income ~~and~~from continuing operations, adjusted diluted ~~earnings per share~~EPS from continuing operations and Leadership Brands net sales, as discussed above and on the pages that follow, are non‐GAAP financial measures ~~and~~as contemplated by SEC Regulation G, Rule 100. These measures are discussed further and reconciled to their applicable GAAP‐based measures contained in ~~each respective section below. An explanation of the reasons why the Company believes the non-GAAP financial information is useful~~this MD&A on pages 27, 30, 31, 33, 34, 37, 38, 39, 40 and ~~the nature and limitations of the non-GAAP financial measures, is furnished in the section below entitled, “~~42.~~Explanation of Non-GAAP Financial Measures~~”.

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RESULTS OF OPERATIONS

The following tables ~~set forth, for the periods indicated, our~~provide selected operating data, in U.S. Dollars, as a ~~year-over-year~~ percentage ~~change~~of net sales

revenue, and as a year-over-year percentage ~~of net sales revenue. We will refer to this table in the discussion of results of operations which follows:~~

change:

Three Months Ended November 30,

% of Sales Revenue, net

(In thousands)

2017

2016

$ Change

% Change

2017

2016

Sales revenue by segment, net

Housewares

$
128,017

$
124,723

$
3,294

2.6
%

28.3
%
28.1
%
Health & Home

190,975

179,842

11,133

6.2
%

42.2
%
40.5
%
Nutritional Supplements

29,336

32,163

(2,827)

(8.8)
%

6.5
%
7.2
%
Beauty

104,717

107,686

(2,969)

(2.8)
%

23.1
%
24.2
%
Total sales revenue, net

453,045

444,414

8,631

1.9
%

100.0
%
100.0
%
Cost of goods sold

251,271

250,199

1,072

0.4
%

55.5
%
56.3
%
Gross profit

201,774

194,215

7,559

3.9
%

44.5
%
43.7
%
Selling, general and administrative expense

133,894

130,896

2,998

2.3
%

29.6
%
29.5
%
Asset impairment charges

82,227

-

82,227

*

18.1
%
-
%
Restructuring charges

1,283

-

1,283

*

0.3
%
-
%
Operating income (loss)

(15,630)

63,319

(78,949)

(124.7)
%

(3.4)
%
14.2
%
Nonoperating income, net

34

106

(72)

(67.9)
%

-
%
-
%
Interest expense

(3,619)

(3,625)

6

(0.2)
%

(0.8)
%
(0.8)
%
Total other expense

(3,585)

(3,519)

(66)

1.9
%

(0.8)
%
(0.8)
%
Income (loss) before income taxes

(19,215)

59,800

(79,015)

(132.1)
%

(4.2)
%
13.5
%
Income tax expense

11,221

2,188

9,033

*

2.5
%
0.5
%
Net income (loss)

$
(30,436)

$
57,612

$
(88,048)

(152.8)
%

(6.7)
%
13.0
%


	Nine Months Ended November 30,								% of Sales Revenue, net
	2017		2016		$ Change		% Change		2017		2016		Three Months Ended November 30,											% of Sales Revenue, net
(in thousands)													2018			2017			$ Change			% Change		2018		2017
Sales revenue by segment, net
Housewares(1)	$	341,165	$	315,302	$	25,863	8.2	%	28.6	%	27.2	%
Housewares													$	142,937		$	128,261		$	14,676		11.4	%	33.2	%	30.5	%
Health & Home		489,102		470,650		18,452	3.9	%	41.1	%	40.6	%	187,863			189,240			(1,377		)	(0.7	)%	43.6	%	45.0	%
Nutritional Supplements		92,212		101,215		(9,003)	(8.9)	%	7.7	%	8.7	%
Beauty		268,633		273,355		(4,722)	(1.7)	%	22.6	%	23.6	%	100,281			103,340			(3,059		)	(3.0	)%	23.3	%	24.6	%
Total sales revenue, net		1,191,112		1,160,522		30,590	2.6	%	100.0	%	100.0	%	431,081			420,841			10,240			2.4	%	100.0	%	100.0	%
Cost of goods sold		664,956		650,912		14,044	2.2	%	55.8	%	56.1	%	249,236			242,703			6,533			2.7	%	57.8	%	57.7	%
Gross profit		526,156		509,610		16,546	3.2	%	44.2	%	43.9	%	181,845			178,138			3,707			2.1	%	42.2	%	42.3	%
Selling, general and administrative expense		387,332		378,506		8,826	2.3	%	32.5	%	32.6	%
Selling, general and administrative expense ("SGA")													120,524			109,633			10,891			9.9	%	28.0	%	26.1	%
Asset impairment charges		136,297		7,400		128,897	*		11.4	%	0.6	%	—			—			—			—	%	—	%	—	%
Restructuring charges		1,283		-		1,283	*		0.1	%	-	%	25			1,165			(1,140		)	(97.9	)%	—	%	0.3	%
Operating income		1,244		123,704		(122,460)	(99.0)	%	0.1	%	10.7	%	61,296			67,340			(6,044		)	(9.0	)%	14.2	%	16.0	%
Nonoperating income, net		281		343		(62)	(18.1)	%	-	%	-	%	15			34			(19		)	(55.9	)%	—	%	—	%
Interest expense		(11,327)		(11,142)		(185)	1.7	%	(1.0)	%	(1.0)	%	(2,971		)	(3,505		)	534			(15.2	)%	(0.7	)%	(0.8	)%
Total other expense		(11,046)		(10,799)		(247)	2.3	%	(0.9)	%	(0.9)	%
Income (loss) before income taxes		(9,802)		112,905		(122,707)	(108.7)	%	(0.8)	%	9.7	%
Income before income tax													58,340			63,869			(5,529		)	(8.7	)%	13.5	%	15.2	%
Income tax expense		5,833		7,912		(2,079)	(26.3)	%	0.5	%	0.7	%	4,020			5,245			(1,225		)	(23.4	)%	0.9	%	1.2	%
Income from continuing operations													54,320			58,624			(4,304		)	(7.3	)%	12.6	%	13.9	%
Loss from discontinued operations (1)													(4,850		)	(89,060		)	84,210			*		(1.1	)%	(21.2	)%
Net income (loss)	$	(15,635)	$	104,993	$	(120,628)	(114.9)	%	(1.3)	%	9.0	%	$	49,470		$	(30,436	)	$	79,906		*		11.5	%	(7.2	)%

~~_____________________~~



	Nine Months Ended November 30,											% of Sales Revenue, net
(in thousands)	2018			2017			$ Change			% Change		2018		2017
Sales revenue by segment, net
Housewares	$	397,738		$	342,050		$	55,688		16.3	%	33.7	%	31.3	%
Health & Home	527,077			483,592			43,485			9.0	%	44.7	%	44.3	%
Beauty	254,493			265,639			(11,146		)	(4.2	)%	21.6	%	24.3	%
Total sales revenue, net	1,179,308			1,091,281			88,027			8.1	%	100.0	%	100.0	%
Cost of goods sold	695,732			638,096			57,636			9.0	%	59.0	%	58.5	%
Gross profit	483,576			453,185			30,391			6.7	%	41.0	%	41.5	%
SGA	325,684			310,390			15,294			4.9	%	27.6	%	28.4	%
Asset impairment charges	—			4,000			(4,000		)	(100.0	)%	—	%	0.4	%
Restructuring charges	2,609			1,165			1,444			123.9	%	0.2	%	0.1	%
Operating income	155,283			137,630			17,653			12.8	%	13.2	%	12.6	%
Nonoperating income, net	175			281			(106		)	(37.7	)%	—	%	—	%
Interest expense	(8,413		)	(10,984		)	2,571			(23.4	)%	(0.7	)%	(1.0	)%
Income before income tax	147,045			126,927			20,118			15.9	%	12.5	%	11.6	%
Income tax expense	10,535			6,423			4,112			64.0	%	0.9	%	0.6	%
Income from continuing operations	136,510			120,504			16,006			13.3	%	11.6	%	11.0	%
Loss from discontinued operations (1)	(5,231		)	(136,139		)	130,908			*		(0.4	)%	(12.5	)%
Net income (loss)	$	131,279		$	(15,635	)	$	146,914		*		11.1	%	(1.4	)%


(1)		~~The nine months ended November 30, 2017 includes approximately one-half month of incremental operating results from Hydro Flask,~~During fiscal 2018, we divested our Nutritional Supplements segment, which ~~was acquired on March 18, 2016.~~ is reported as discontinued operations for all periods presented. For more information see Note 4 to the accompanying condensed consolidated financial statements.

* Calculation is not ~~meaningful~~

meaningful.

Table of Contents

Comparison of Third Quarter Fiscal ~~2018~~2019 to Third Quarter Fiscal ~~2017~~

2018

Consolidated and Segment Net Sales

The following table summarizes the impact that core business, foreign exchange and acquisitions, as applicable, had on our net sales revenue by segment:

Three Months Ended November 30,

(in thousands)

Housewares

Health & Home

Nutritional Supplements

Beauty

Total

Fiscal 2017 sales revenue, net
$
124,723

$
179,842

$
32,163

$
107,686

$
444,414

Core business

3,074

9,323

(2,827)

(3,731)

5,839

Impact of foreign currency

220

1,810

-

762

2,792

Change in sales revenue, net

3,294

11,133

(2,827)

(2,969)

8,631

Fiscal 2018 sales revenue, net
$
128,017

$
190,975

$
29,336

$
104,717

$
453,045

Total net sales revenue growth

2.6
%

6.2
%

(8.8)
%

(2.8)
%

1.9
%
Core business

2.5
%

5.2
%

(8.8)
%

(3.5)
%

1.3
%
Impact of foreign currency

0.2
%

1.0
%

-
%

0.7
%

0.6
%

~~_____________________~~



	Three Months Ended November 30,
(in thousands)	Housewares			Health & Home			Beauty			Total
Fiscal 2018 sales revenue, net	$	128,261		$	189,240		$	103,340		$	420,841
Core business growth (decline)	14,828			(313		)	(2,458		)	12,057
Impact of foreign currency	(152		)	(1,064		)	(601		)	(1,817		)
Change in sales revenue, net	14,676			(1,377		)	(3,059		)	10,240
Fiscal 2019 sales revenue, net	$	142,937		$	187,863		$	100,281		$	431,081

Total net sales revenue growth	11.4		%	(0.7		)%	(3.0		)%	2.4		%
Core business growth (decline)	11.6		%	(0.2		)%	(2.4		)%	2.9		%
Impact of foreign currency	(0.1		)%	(0.6		)%	(0.6		)%	(0.4		)%

In the above table, core business refers to our net sales revenue associated with product lines or brands after the first twelve months from the date the product line or brand is acquired, excluding the

impact that foreign currency had on reported net sales. Net sales revenue from internally developed brands or product lines is considered core business activity.

Leadership Brand and Other Net Sales

The following table summarizes our leadership brand and other net sales:



	Three Months Ended November 30,
(in thousands)	2018		2017		$ Change			% Change
Leadership Brand sales revenue, net	$	343,364	$	327,288	$	16,076		4.9	%
All other sales revenue, net	87,717		93,553		(5,836		)	(6.2	)%
Total sales revenue, net	$	431,081	$	420,841	$	10,240		2.4	%

Consolidated Net Sales Revenue

Consolidated net sales revenue increased ~~$8.6~~$10.2 million, or ~~1.9%~~2.4%, to ~~$453.0~~$431.1 million for the three months ended November 30, ~~2017,~~2018, compared to ~~$444.4~~$420.8 million for the same period last year. The ~~growth~~increase was primarily driven by ~~new product introductions, online customer growth, incremental distribution,~~a core business increase of $12.1 million, or 2.9%, reflecting an increase in brick and mortar sales in our Housewares segment and growth in ~~international sales,~~consolidated online sales. These factors were partially offset by the discontinuation of certain brands and products in our Beauty segment and a ~~favorable~~decline in the personal care category within the segment, a deceleration of growth in China ecommerce, and the unfavorable impact from foreign currency ~~partially offset by:~~

~~a decline in the Nutritional Supplements segment of $2.8 million, or 8.8%;~~

fluctuations of approximately $1.8 million, or 0.4%. Net sales from our Leadership Brands were $343.4 million for the three months ended November 30, 2018, compared to $327.3 million for the same period last year, representing growth of 4.9%.

~~a decline in our Beauty segment of $3.0 million or 2.8%, primarily attributable to the personal care category; and~~

~~the impact of lower store traffic and soft consumer spending at traditional brick and mortar retail.~~

Segment Net Sales Revenue

Housewares

Net sales revenue in the Housewares segment increased ~~$3.3~~$14.7 million, or ~~2.6%~~11.4%, to ~~$128.0~~$142.9 million for the three months ended November 30, ~~2017,~~2018, compared to ~~$124.7~~$128.3 million for the same period last year. ~~The growth~~Growth was primarily driven by ana core business increase ~~in online sales,~~of $14.8 million, or 11.6%, due to point of sale growth and incremental distribution with existing domestic customers, ~~international growth,~~an increase in overall online sales and new product ~~introductions for both the Hydro Flask and OXO brands.~~introductions. These factors were partially offset by ~~the unfavorable~~lower club channel sales and a

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reduction in inventory by a key online retailer. The impact of ~~lower store traffic and soft consumer spending at traditional brick and mortar retail, and the unfavorable comparative impact of strong sales into the club channel in the same period last year.~~

net foreign currency fluctuations was not meaningful.

Health & Home

Net sales revenue in the Health & Home segment ~~increased $11.1~~decreased $1.4 million, or ~~6.2%~~0.7%, to ~~$191.0~~$187.9 million for the three months ended November 30, ~~2017,~~2018, compared to ~~$179.8~~$189.2 million for the same period last year. The ~~growth~~decline was primarily driven by ~~online sales, expanded international distribution, and incremental distribution with existing customers. Segment net sales also benefitted from~~ the ~~favorable~~unfavorable impact of net

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foreign currency fluctuations of ~~approximately $1.8~~$1.1 million, or ~~1.0%~~0.6%, and a core business decline of $0.3 million, or 0.2%. The core business decline primarily reflects the unfavorable comparative impact from international distribution gains in the prior year period, compounded by a deceleration of growth in China ecommerce and a corresponding buildup of inventory in the channel. These factors were partially offset by ~~lower royalty revenue~~incremental distribution and ~~lower store traffic at traditional brick~~shelf space gains with existing domestic customers and ~~mortar retail outlets.~~

~~Nutritional Supplements~~

strong seasonal category growth.

Beauty

Net sales revenue in the ~~Nutritional Supplements~~Beauty segment decreased ~~$2.8~~$3.1 million, or ~~8.8%~~3.0%, to ~~$29.3~~$100.3 million for the three months ended November 30, ~~2017,~~2018, compared to ~~$32.2~~$103.3 million for the same period last year. The ~~decrease~~decline was primarily driven by a decrease in core business sales of $2.5 million, or 2.4%, reflecting a decrease in brick and mortar sales, a decline in ~~auto-delivery revenue resulting primarily from~~ the ~~transition to new order management~~personal care category and ~~customer relationship management systems, partially~~the discontinuation of certain brands and products. These factors more than offset ~~by increases in direct mail and third-party retail sales.~~

~~Beauty~~

~~Net sales revenue~~growth in the ~~Beauty segment decreased 2.8% to $104.7~~online channel, an increase in international sales, and new product introductions in the retail appliance category. Segment net sales were unfavorably impacted by net foreign currency fluctuations of approximately $0.6 million, or 0.6%.

Consolidated Gross Profit Margin

Consolidated gross profit margin for the three months ended November 30, ~~2017,~~2018 decreased 0.1 percentage point to 42.2%, compared to ~~$107.7 million~~42.3% for the same period last year. ~~Solid~~The decrease in consolidated gross profit margin is primarily due to less favorable product mix and the impact of tariff increases, partially offset by the favorable margin impact from growth in ~~both retail and professional appliance sales, particularly~~our Leadership Brands.

Consolidated SG&A

Our consolidated SG&A ratio increased 1.9 percentage points to online retail customers, was offset by declines in the personal care category. Segment net sales benefitted from the favorable impact of net foreign currency fluctuations of approximately $0.8 million, or 0.7%.

~~Gross Profit Margin~~

~~Consolidated gross profit as a percentage of net sales revenue~~28.0% for the three months ended November 30, ~~2017 increased 0.8% percentage points to 44.5%,~~2018, compared to ~~43.7%~~26.1% for the same period last year. The increase in the consolidated ~~gross profit margin was~~SG&A ratio is primarily due to ~~favorable~~higher advertising expense, increased freight costs, increased share-based compensation expense and higher product ~~mix, growth in our Leadership Brands and~~ claim expense.

These factors were partially offset by:

•the favorable comparative impact of ~~net~~ foreign currency ~~fluctuations, partially offset by~~ exchange and forward contract settlements;

the ~~unfavorable~~favorable comparative impact ~~that the revenue declines~~of restructuring charges in the ~~Nutritional Supplements segment~~same period last year; and

lower amortization expense.

Asset Impairment Charges

We perform annual impairment tests each fiscal year during the ~~personal care category had on consolidated gross profit margin.~~

~~Selling, General~~fourth quarter and ~~Administrative Expense (“SG&A”)~~

~~Our consolidated SG&A ratio, defined as consolidated SG&A expense as a percent of consolidated net sales, increased 0.1% percentage points to 29.6% for~~interim impairment tests, if and when necessary. We did not record any asset impairment charges in continuing operations during the three months ended November 30, ~~2017,~~2018 or 2017.

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Restructuring Charges

During the three months ended November 30, 2018, we incurred an insignificant amount of pre-tax restructuring charges compared to ~~29.5%~~$1.2 million for the same period last year. The ~~increase in consolidated SG&A ratio was~~charges related primarily ~~due to:~~

~~higher incentive compensation expense; and~~

~~the unfavorable comparative impact of foreign currency revaluations year-over-year.~~

~~These factors were partially offset by:~~

~~lower advertising expense;~~

~~a decline in product liability expense;~~

~~improved distribution and logistics efficiency and lower outbound freight costs; and~~

~~the impact that higher overall net sales had on operating leverage.~~

~~Asset Impairment Charges~~

As previously discussed under the heading “Significant Trends Impacting the Business”, we performed interim impairment testing in the third quarter of fiscal 2018. As a result of our testing, we recorded pre-tax non-cash asset impairment charges of $82.2 millionto employee severance and termination benefits in our ~~Nutritional Supplements segment, of~~

Beauty segment.

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~~which $70.6 million relates to the segment’s goodwill and $11.6 million relates to the segment’s indefinite-lived brand assets.~~

Operating ~~Income (Loss), Operating Margin, Adjusted Operating Income~~income, operating margin, adjusted operating income (non-GAAP), and ~~Adjusted Operating Margin~~adjusted operating margin (non-GAAP) by ~~Segment~~

segment

In order to provide a better understanding of the comparative impact of certain items on operating income, the tables that follow report the comparative before tax impact of ~~non~~‐~~cash~~non-cash asset impairment charges, the TRU bankruptcy charge, restructuring charges, amortization of intangible assets, and non‐cash share‐based compensation, as applicable, on operating income ~~(loss)~~ and operating margin for each segment and in total for the periods covered below.

Three Months Ended November 30, 2017

(In thousands)

Housewares

Health & Home

Nutritional
Supplements

Beauty

Total

Operating income (loss), as reported (GAAP)

$
29,982

23.4
%

$
27,897

14.6
%

$
(83,521)

(284.7)
%

$
10,012

9.6
%

$
(15,630)

(3.4)
%
Asset impairment charges

-

-
%

-

-
%

82,227

280.3
%

-

-
%

82,227

18.1
%
Restructuring charges(1)

-

-
%

-

-
%

118

0.4
%

1,165

1.1
%

1,283

0.3
%
Subtotal

29,982

23.4
%

27,897

14.6
%

(1,176)

(4.0)
%

11,177

10.7
%

67,880

15.0
%
Amortization of intangible assets

489

0.4
%

2,797

1.5
%

1,770

6.0
%

1,374

1.3
%

6,430

1.4
%
Non-cash share-based compensation

1,527

1.2
%

1,632

0.9
%

467

1.6
%

1,025

1.0
%

4,651

1.0
%
Adjusted operating income (non-GAAP)

$
31,998

25.0
%

$
32,326

16.9
%

$
1,061

3.6
%

$
13,576

13.0
%

$
78,961

17.4
%

Three Months Ended November 30, 2016

(In thousands)

Housewares

Health & Home

Nutritional
Supplements

Beauty

Total

Operating income (loss), as reported (GAAP)

$
29,223

23.4
%

$
20,155

11.2
%

$
(80)

(0.2)
%

$
14,021

13.0
%

$
63,319

14.2
%
Amortization of intangible assets

658

0.5
%

3,546

2.0
%

1,571

4.9
%

1,424

1.3
%

7,199

1.6
%
Non-cash share-based compensation

671

0.5
%

872

0.5
%

369

1.1
%

991

0.9
%

2,903

0.7
%
Adjusted operating income (non-GAAP)

$
30,552

24.5
%

$
24,573

13.7
%

$
1,860

5.8
%

$
16,436

15.3
%

$
73,421

16.5
%

~~_____________________~~

⁽¹⁾

~~Charges incurred in conjunction with the Company’s restructuring plan for the three months ended November 30, 2017, with no comparable charges in the same period last year.~~

Adjusted operating income and adjusted operating margin may be considered non-GAAP financial ~~measures. 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~~as contemplated by SEC Regulation G, Rule 100. These measures are discussed further in ~~the section below entitled, “~~this MD&A on page 42.~~Explanation of Non-GAAP Financial Measures~~”.



	Three Months Ended November 30, 2018
(In thousands)	Housewares					Health & Home				Beauty				Total
Operating income, as reported (GAAP)	$	29,839		20.9	%	$	19,213	10.2	%	$	12,244	12.2	%	$	61,296	14.2	%
Asset impairment charges	—			—	%	—		—	%	—		—	%	—		—	%
Restructuring charges	(20		)	—	%	—		—	%	45		—	%	25		—	%
Subtotal	29,819			20.9	%	19,213		10.2	%	12,289		12.3	%	61,321		14.2	%
Amortization of intangible assets	489			0.3	%	2,721		1.4	%	90		0.1	%	3,300		0.8	%
Non-cash share-based compensation	2,293			1.6	%	2,548		1.4	%	1,175		1.2	%	6,016		1.4	%
Adjusted operating income (non-GAAP)	$	32,601		22.8	%	$	24,482	13.0	%	$	13,554	13.5	%	$	70,637	16.4	%



	Three Months Ended November 30, 2017
(In thousands)	Housewares				Health & Home				Beauty				Total
Operating income, as reported (GAAP)	$	29,809	23.2	%	$	27,584	14.6	%	$	9,947	9.6	%	$	67,340	16.0	%
Asset impairment charges	—		—	%	—		—	%	—		—	%	—		—	%
Restructuring charges	—		—	%	—		—	%	1,165		1.1	%	1,165		0.3	%
Subtotal	29,809		23.2	%	27,584		14.6	%	11,112		10.8	%	68,505		16.3	%
Amortization of intangible assets	489		0.4	%	2,797		1.5	%	1,374		1.3	%	4,660		1.1	%
Non-cash share-based compensation	1,439		1.1	%	1,711		0.9	%	1,239		1.2	%	4,389		1.0	%
Adjusted operating income (non-GAAP)	$	31,737	24.7	%	$	32,092	17.0	%	$	13,725	13.3	%	$	77,554	18.4	%

Consolidated

Consolidated operating ~~loss~~income was ~~$(15.6)~~$61.3 million, or ~~(3.4)%~~14.2% of net sales, compared to ~~$63.3~~$67.3 million, or ~~14.2%~~16.0% of net sales, for the same period last year. The ~~three months ended November 30, 2017 includes pre-tax non-cash asset impairment charges~~decrease was driven by the following factors:

higher advertising expense;

the impact of ~~$82.2 million in our Nutritional Supplements segment~~tariff increases;

higher freight expense; and pre-tax restructuring charges of $1.3 million related to Project Refuel, with no comparable charges in the same period last year. These items unfavorably impacted the year-over-year comparison of operating margin by 18.4 percentage points. The remaining increase in consolidated operating margin primarily reflects:

~~a higher mix of Leadership Brand sales at a higher operating margin;~~

~~lower marketing and advertising expense;~~

increased share-based compensation expense.

~~a decline in product liability expense;~~

~~improved distribution and logistics efficiency and lower outbound freight costs; and~~

~~the impact that higher overall net sales had on operating leverage.~~

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These factors were partially offset by:

~~higher incentive compensation expense; and~~

~~the unfavorable comparative impact of foreign currency revaluations year-over-year.~~

the favorable comparative impact of foreign currency exchange and forward contract settlements;

the net favorable comparative impact of pre-tax restructuring charges of $1.1 million;

lower amortization expense; and

the favorable margin impact from Leadership Brand growth.

Consolidated adjusted operating income ~~increased 7.5%~~decreased 8.9% to ~~$79.0~~$70.6 million, or ~~17.4%~~16.4% of net sales, compared to ~~$73.4~~$77.6 million, or ~~16.5%~~18.4% of net sales, in the same period last year.

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Housewares

The Housewares segment’s operating income was ~~$30.0~~$29.8 million, or ~~23.4%~~20.9% of segment net sales, compared to ~~$29.2~~$29.8 million, or ~~23.4%~~23.2% of segment net sales, for the same period last year. The 2.3 percentage point decrease in segment operating margin ~~was unchanged, reflecting lower~~is primarily due to:

higher advertising expense;

higher annual incentive compensation expense related to current year performance;

higher freight expense; and

higher rent expense related to new office space.

These factors were partially offset by:

the margin impact of more favorable product and channel mix; and

the favorable impact of increased operating leverage from net sales ~~growth, offset by higher marketing, advertising and new product development expense.~~

growth.

Segment adjusted operating income increased ~~4.7%~~2.7% to ~~$32.0~~$32.6 million, or ~~25.0%~~22.8% of segment net sales, compared to ~~$30.6~~$31.7 million, or ~~24.5%~~24.7% of segment net sales, in the same period last year.

Health & Home

The Health & Home segment’s operating income was ~~$27.9~~$19.2 million, or ~~14.6%~~10.2% of segment net sales, compared to ~~$20.2~~$27.6 million, or ~~11.2%~~14.6% of segment net sales in the same period last year. The ~~3.4~~4.4 percentage point decrease in segment operating margin is primarily due to:

higher advertising expense;

increased promotional spending and trade support with retail customers;

the impact of tariff increases;

the margin impact of a less favorable product and channel mix; and

higher personnel expense.

These factors were partially offset by the favorable comparative impact of foreign currency exchange and forward contract settlements.

Segment adjusted operating income decreased 23.7% to $24.5 million, or 13.0% of segment net sales, compared to $32.1 million, or 17.0% of segment net sales, in the same period last year.

Beauty

The Beauty segment’s operating income was $12.2 million, or 12.2% of segment net sales, compared to $9.9 million, or 9.6% of segment net sales, in the same period last year. The 2.6 percentage point increase in segment operating margin is primarily due to:

~~a decline in product liability expense;~~

~~lower legal fee expense;~~

~~improved distribution and logistics efficiency and lower outbound freight costs;~~

the net favorable comparative impact of pre-tax restructuring charges of $1.1 million;

~~a decrease in marketing, advertising~~lower amortization expense; and ~~new product development expense;~~

~~increased operating leverage from net sales growth; and~~

personnel cost savings from Project Refuel.

~~the favorable impact of net foreign currency fluctuations on net sales.~~

These factors were partially offset by:

higher advertising expense; and

higher freight expense.

Segment adjusted operating income ~~increased 31.6%~~decreased 1.2% to ~~$32.3~~$13.6 million, or ~~16.9%~~13.5% of segment net sales, compared to ~~$24.6~~$13.7 million, or ~~13.7%~~13.3% of segment net sales, in the same period last year.

~~Nutritional Supplements~~

~~The Nutritional Supplements segment’s operating loss~~

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Interest Expense

Interest expense was ~~$(83.5)~~$3.0 million for the three months ended November 30, ~~2017,~~2018, compared to ~~an operating loss of $(0.1)~~$3.5 million ~~in the same period last year. The increase in the segment operating loss is primarily due to:~~

~~the impact of pre-tax non-cash asset impairment charges of $82.2 million recorded during the three months ended November 30, 2017, with no comparable charges in the same period last year;~~

~~higher promotion, advertising and customer acquisition costs as a percentage of sales;~~

~~pre-tax restructuring charges of $0.1 million associated with Project Refuel; and~~

~~the net sales decline and its unfavorable impact on operating leverage.~~

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~~Segment adjusted operating income was $1.1 million compared to $1.9 million in the same period last year.~~

~~Beauty~~:

~~The Beauty segment’s operating income was $10.0 million, or 9.6% of segment net sales, for the three months ended November 30, 2017, compared to $14.0 million, or 13.0% of segment net sales,~~ in the same period last year. The decrease in ~~operating margin is~~interest expense was primarily due to ~~pre-tax restructuring charges~~lower average levels of $1.2 million associated with Project Refuel, higher incentive compensation expense and the net sales decline in the personal care category and its unfavorable impact on sales mix and operating leverage. These factors weredebt, partially offset ~~by:~~

~~lower media advertising expense; and~~

~~improved distribution and logistics efficiency and lower outbound freight costs.~~

~~Segment adjusted operating income decreased 17.4% to $13.6 million, or 13.0% of segment net sales,~~by higher average interest rates compared to ~~$16.4 million, or 15.3% of segment net sales, in~~ the same period last year.

~~Interest Expense~~

Interest expense was $3.6 million for both the three months ended November 30, 2017 and 2016. Lower average levels of debt held during the three months ended November 30, 2017, were offset by higher overall average interest rates.

Income Tax Expense

The year-over-year comparison of our effective tax ~~rates~~rate is impacted by the mix of taxable income in our various tax jurisdictions. Due to our organization in Bermuda and the ownership structure of our foreign subsidiaries, many of which are not owned directly or indirectly by a U.S. parent company, an immaterial amount of our foreign income is subject to U.S. taxation on a permanent basis under current law. Additionally, our intellectual property is largely owned by our foreign subsidiaries, resulting in proportionally higher earnings in jurisdictions with lower statutory tax rates, which decreases our overall effective tax rate.

Our effective tax rate is also impacted by the Tax Cuts and Jobs Act (“the Tax Act”) enacted into law on December 22, 2017. See Note 15 of the accompanying condensed consolidated financial statements for a further discussion of the Tax Act.

For the three months ended November 30, ~~2017,~~2018, income tax expense as a percentage of ~~pretax loss~~income before income tax was ~~(58.4)%,~~6.9% compared to ~~income tax expense of 3.7%~~8.2% for the same period last ~~year,~~year. The year-over-year decline in the effective tax rate is primarily due to shifts in the ~~recognition~~mix of taxable income in our various tax ~~benefits~~jurisdictions.

During fiscal 2017, we received an assessment from ~~impairment charges over the course of the year in relation to pre-tax~~a state tax authority which adjusted taxable income ~~as opposed~~applicable to the ~~periods in which~~particular state resulting from interpretations of certain state income tax provisions applicable to our legal structure. We believe we have accurately reported our taxable income and are vigorously protesting the ~~charges were incurred. As~~assessment through administrative processes with the state. We believe it is unlikely that the outcome of these matters will have a ~~result, the expected tax benefit~~material adverse effect on our consolidated financial position, results of operations, or liquidity.

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Income from ~~impairment charges of $52.8 million will be recognized entirely in the fourth quarter of fiscal 2018, relative to pre-tax income.~~

~~Net Income (Loss), Earnings (Loss) Per Share, Adjusted Income~~continuing operations, diluted EPS from continuing operations, adjusted income from continuing operations (non-GAAP), and ~~Adjusted Diluted Earnings Per Share~~adjusted diluted EPS from continuing operations (non-GAAP)

In order to provide a better understanding of the impact of certain items on our ~~net~~ income ~~(loss)~~ and ~~earnings (loss) per share,~~EPS from continuing operations, the analysis that follows reports the comparative after tax impact of non‐cash asset impairment charges, the TRU bankruptcy charge, restructuring charges, amortization of intangible assets, and non‐cash share‐based compensation, as ~~applicable.~~

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Three Months Ended November 30, 2017

Income (Loss)

Diluted Earnings (Loss) Per Share
(in thousands, except per share data)

Before tax

Tax

Net of Tax

Before tax

Tax

Net of Tax
As reported (GAAP)

$
(19,215)

$
11,221

$
(30,436)

$
(0.71)

$
0.41

$
(1.12)

Asset impairment charges

82,227

(6,380)

88,607

3.02

(0.23)

3.25
Restructuring charges(1)

1,283

69

1,214

0.05

-

0.04
Subtotal

64,295

4,910

59,385

2.36

0.18

2.18
Amortization of intangible assets

6,430

853

5,577

0.24

0.03

0.20
Non-cash share-based compensation

4,651

781

3,870

0.17

0.03

0.14
Adjusted (non-GAAP)

$
75,376

$
6,544

$
68,832

$
2.76

$
0.24

$
2.52

Weighted average shares of common stock used in computing:

Diluted earnings (loss) per share, as reported

27,113
Adjusted diluted earnings per share (non-GAAP)

27,267

Three Months Ended November 30, 2016

Income

Diluted Earnings Per Share
(in thousands, except per share data)

Before tax

Tax

Net of Tax

Before tax

Tax

Net of Tax
As reported (GAAP)

$
59,800

$
2,188

$
57,612

$
2.15

$
0.08

$
2.07

Asset impairment charges

-

-

-

-

-

-
Restructuring charges(1)

-

-

-

-

-

-
Subtotal

59,800

2,188

57,612

2.15

0.08

2.07
Amortization of intangible assets

7,199

1,009

6,190

0.26

0.04

0.22
Non-cash share-based compensation

2,903

706

2,197

0.10

0.02

0.08
Adjusted (non-GAAP)

$
69,902

$
3,903

$
65,999

$
2.51

$
0.14

$
2.37

Weighted average shares of common stock used in computing:

Diluted earnings per share, as reported

27,802
Adjusted diluted earnings per share (non-GAAP)

27,802

~~_________________~~

⁽¹⁾

~~Charges incurred in conjunction with the Company’s restructuring plan for the three months ended November 30, 2017, with no comparable charges in the same period last year.~~

applicable, on income from continuing operations, and diluted EPS from continuing operations for the periods covered below. Adjusted income from continuing operations and adjusted diluted ~~earnings per share~~EPS from continuing operations may be considered non-GAAP financial ~~measures. 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 in the section below entitled, “~~as contemplated by SEC Regulation G, Rule 100. ~~Explanation of Non-GAAP Financial Measures”~~.

~~Net loss~~



	Three Months Ended November 30, 2018
	Income From Continuing Operations						Diluted EPS
(in thousands, except per share data)	Before Tax		Tax		Net of Tax		Before Tax		Tax		Net of Tax
As reported (GAAP)	$	58,340	$	4,020	$	54,320	$	2.21	$	0.15	$	2.06
Restructuring charges	25		2		23		—		—		—
Subtotal	58,365		4,022		54,343		2.21		0.15		2.06
Amortization of intangible assets	3,300		46		3,254		0.13		—		0.12
Non-cash share-based compensation	6,016		415		5,601		0.23		0.02		0.21
Adjusted (non-GAAP)	$	67,681	$	4,483	$	63,198	$	2.57	$	0.17	$	2.40

Weighted average shares of common stock used in computing diluted EPS											26,366



	Three Months Ended November 30, 2017
	Income From Continuing Operations						Diluted EPS
(in thousands, except per share data)	Before Tax		Tax		Net of Tax		Before Tax		Tax		Net of Tax
As reported (GAAP)	$	63,869	$	5,245	$	58,624	$	2.34	$	0.19	$	2.15
Asset impairment charges	—		—		—		—		—		—
Restructuring charges	1,165		68		1,097		0.04		—		0.04
Subtotal	65,034		5,313		59,721		2.39		0.19		2.19
Amortization of intangible assets	4,660		211		4,449		0.17		0.01		0.16
Non-cash share-based compensation	4,389		498		3,891		0.16		0.02		0.14
Adjusted (non-GAAP)	$	74,083	$	6,022	$	68,061	$	2.72	$	0.22	$	2.50

Weighted average shares of common stock used in computing diluted EPS											27,267

Our income from continuing operations was ~~$(30.4)~~$54.3 million for the three months ended November 30, ~~2017~~2018 compared to ~~net income of $57.6~~$58.6 million for the same period last year. ~~Diluted loss per share~~Our diluted EPS from continuing operations was ~~$(1.12)~~$2.06 for the three months ended November 30, ~~2017~~2018 compared to ~~diluted earnings per share of $2.07~~$2.15 for the same period last year.

Adjusted income ~~increased $2.8~~from continuing operations decreased $4.9 million, or ~~4.3%~~7.1%, to ~~$68.8~~$63.2 million for the three months ended November 30, ~~2017~~2018 compared to ~~$66.0~~$68.1 million the same period last year. Adjusted diluted ~~earnings per share increased 6.3%~~EPS from continuing operations decreased 4.0% to ~~$2.52~~$2.40 for the three months ended November 30, ~~2017~~2018 compared to ~~$2.37~~$2.50 for the same period last year. Adjusted diluted ~~earnings per share increased~~EPS decreased primarily due to ~~the impact of higher adjusted~~lower operating income ~~for~~from our ~~Housewares and~~ Health & Home ~~segments, and lower weighted average diluted shares outstanding~~segment compared to the same period last year.

This was partially offset by higher adjusted operating income from our Housewares segment and the impact of lower weighted average diluted shares outstanding.

Table of Contents

Comparison of First Nine Months of Fiscal ~~2018~~2019 to First Nine Months of Fiscal ~~2017~~

2018

Consolidated and Segment Net Sales

The following table summarizes the impact that core business, foreign exchange and acquisitions, as applicable, had on our net sales revenue by segment:

Nine Months Ended November 30,

(in thousands)

Housewares

Health & Home

Nutritional Supplements

Beauty

Total

Fiscal 2017 sales revenue, net
$
315,302

$
470,650

$
101,215

$
273,355

$
1,160,522

Core business

20,043

17,364

(9,003)

(5,025)

23,379

Impact of foreign currency

(328)

1,088

-

303

1,063

Acquisitions(1)

6,148

-

-

-

6,148

Change in sales revenue, net

25,863

18,452

(9,003)

(4,722)

30,590

Fiscal 2018 sales revenue, net
$
341,165

$
489,102

$
92,212

$
268,633

$
1,191,112

Total net sales revenue growth

8.2
%

3.9
%

(8.9)
%

(1.7)
%

2.6
%
Core business

6.4
%

3.7
%

(8.9)
%

(1.8)
%

2.0
%
Impact of foreign currency

(0.1)
%

0.2
%

0.0
%

0.1
%

0.1
%
Acquisitions

1.9
%

0.0
%

0.0
%

0.0
%

0.5
%

~~_____________________~~

⁽¹⁾

~~Includes approximately one-half month of incremental operating results from Hydro Flask, which was acquired on March 18, 2016.~~



	Nine Months Ended November 30,
(in thousands)	Housewares			Health & Home			Beauty			Total
Fiscal 2018 sales revenue, net	$	342,050		$	483,592		$	265,639		$	1,091,281
Core business growth (decline)	55,414			41,658			(10,432		)	86,640
Impact of foreign currency	274			1,827			(714		)	1,387
Change in sales revenue, net	55,688			43,485			(11,146		)	88,027
Fiscal 2019 sales revenue, net	$	397,738		$	527,077		$	254,493		$	1,179,308

Total net sales revenue growth	16.3		%	9.0		%	(4.2		)%	8.1		%
Core business growth (decline)	16.2		%	8.6		%	(3.9		)%	7.9		%
Impact of foreign currency	0.1		%	0.4		%	(0.3		)%	0.1		%

impact that foreign currency had on reported net sales. Net sales revenue from internally developed brands or product lines is considered core business activity.

Leadership Brand and Other Net Sales

The following table summarizes our leadership brand and other net sales:



	Nine Months Ended November 30,
(in thousands)	2018		2017		$ Change			% Change
Leadership Brand sales revenue, net	$	943,168	$	836,993	$	106,175		12.7	%
All other sales revenue, net	236,140		254,288		(18,148		)	(7.1	)%
Total sales revenue, net	$	1,179,308	$	1,091,281	$	88,027		8.1	%

Consolidated Net Sales Revenue

Consolidated net sales revenue increased ~~$30.6~~$88.0 million, or ~~2.6%~~8.1%, to ~~$1,191.1~~$1,179.3 million for the nine months ended November 30, ~~2017,~~2018, compared to ~~$1,160.5~~$1,091.3 million for the same period last year. The growth was primarily driven by:

~~a core business increase of $23.4 million, or 2.0%, primarily due to new product introductions, online customer growth, incremental distribution and growth in international sales;~~

~~growth from acquisitions of $6.1 million, or 0.5%; and~~

~~the favorable impact from foreign currency fluctuations of approximately $1.1 million, or 0.1%.~~

a core business increase of $86.6 million, or 7.9%, primarily due to point of sale growth in the brick and mortar channel in our Housewares and Health & Home segments, incremental distribution, increased international sales, growth in online sales, and new product introductions; and

the favorable impact from net foreign currency fluctuations of approximately $1.4 million, or 0.1%.

These factors were partially offset ~~by:~~

~~a decline in the Nutritional Supplements segment of $9.0 million;~~

by a decline in the personal care category and the discontinuation of certain brands and products in our Beauty segment. Net sales from our Leadership Brands were $943.2 million for the nine months ended November 30, 2018, compared to $837.0 million for the same period last year, representing growth of 12.7%.

~~a decline in the personal care category within Beauty; and~~

~~the impact of lower store traffic and soft consumer spending at traditional brick and mortar retail.~~

Table of Contents

Segment Net Sales Revenue

Housewares

Net sales revenue in the Housewares segment increased ~~$25.9~~$55.7 million, or ~~8.2%~~16.3%, to ~~$341.2~~$397.7 million for the nine months ended November 30, ~~2017,~~2018, compared to ~~$315.3~~$342.1 millionfor same period last year. ~~The growth~~Growth was primarily driven ~~by:~~

a core business increase of $20.0 million, or 6.4%, due to an increase in online sales, incremental distribution with existing customers, expanded international and U.S. distribution, and new product introductions for both the Hydro Flask and OXO brands; and

~~growth from acquisitions of $6.1 million, or 1.9%, representing an incremental half month of operating results from Hydro Flask, compared to the same period last year.~~

by a core business increase of $55.4 million, or 16.2%, due to point of sale growth with existing domestic customers, higher sales in the club channel, new product introductions and an increase in online sales. These factors were partially offset ~~by:~~

~~lower store traffic and soft consumer spending at traditional brick and mortar retail;~~

by lower closeout sales. Segment net sales benefited from the favorable impact of net foreign currency fluctuations of approximately $0.3 million, or 0.1%.

~~the unfavorable comparative impact of retail pipeline fill and strong sales into the club channel in the prior year period; and~~

~~the unfavorable impact of net foreign currency fluctuations of approximately $0.3 million, or 0.1%.~~

Health & Home

Net sales revenue in the Health & Home segment increased ~~$18.5~~$43.5 million, or ~~3.9%~~9.0%, to ~~$489.1~~$527.1 million for the nine months ended November 30, ~~2017,~~2018, compared to ~~$470.7~~$483.6 million for the same period last year. The growth was primarily driven by ana core business increase of $41.7 million, or 8.6%, due to higher sales of seasonal products, online growth, growth in ~~online~~international sales, and incremental distribution and shelf space gains with existing ~~customers, growth in international~~customers. Segment net sales ~~and~~benefited from the favorable impact of net foreign currency fluctuations of approximately ~~$1.1~~$1.8 million, or ~~0.2%,~~0.4%. These factors were partially offset by ~~lower sales into~~ the ~~club channel~~unfavorable comparative impact from the retail fill-in of a new product introduction in the same period last year and ~~lower royalty revenue.~~

~~Nutritional Supplements~~

declines in the Lawn and Garden category.

Beauty

Net sales revenue in the ~~Nutritional Supplements~~Beauty segment decreased ~~$9.0~~$11.1 million, or ~~8.9%~~4.2%, to ~~$92.2~~$254.5 million for the nine months ended November 30, ~~2017,~~2018, compared to ~~$101.2~~$265.6 million for the same period last year. The change was primarily driven by a core business decline of $10.4 million, or 3.9%, reflecting a decline in ~~auto-delivery revenue resulting primarily from the transition to new order management~~brick and ~~customer relationship management systems, partially offset by increases in direct mail and third-party retail sales.~~

~~Beauty~~

~~Net~~mortar sales, ~~revenue~~a decrease in the ~~Beauty segment decreased $4.7~~personal care category and the discontinuation of certain brands and products. These factors more than offset growth in the online channel, an increase in international sales, and new product introductions in the retail appliance category. Segment net sales were unfavorably impacted by net foreign currency fluctuations of approximately $0.7 million, or ~~1.7%, to $268.6 million~~0.3%.

Consolidated Gross Profit Margin

Consolidated gross profit margin for the nine months ended November 30, ~~2017,~~2018 was 41.0%, compared to $273.4 million for the same period last year. The change was primarily driven by a decline in the personal care category and a decrease in international sales, partially offset by the favorable impact of net foreign currency fluctuations of approximately $0.3 million, or 0.1%. These factors were partially offset by solid growth in both retail and professional appliance sales, particularly to online retail customers.

~~Gross Profit Margin~~

~~Consolidated gross profit as a percentage of net sales revenue for the nine months ended November 30, 2017 was 44.2% compared to 43.9% for the same period last year. The increase is~~

~~Table of Contents~~

primarily due to the favorable impact from growth in our Leadership Brands, a higher margin mix and the favorable impact of net foreign currency fluctuations, which was partially offset by the unfavorable impact from sales declines in the Nutritional Supplements segment and personal care category.

~~Selling, General and Administrative Expense~~

~~Our consolidated SG&A ratio, decreased 0.1% percentage points to 32.5% for the nine months ended November 30, 2017, compared to 32.6%~~41.5% for the same period last year. The decrease in consolidated gross profit margin is primarily due to less favorable channel and product mix, the impact of tariff increases and a higher mix of shipments made on a direct import basis, partially offset by the favorable margin impact from growth in our Leadership Brands and the favorable impact from foreign currency.

Consolidated SG&A

Our consolidated SG&A ratio decreased 0.8% percentage points to 27.6% for the nine months ended November 30, 2018, compared to 28.4% for the same period last year. The decrease in the consolidated SG&A ratio was primarily due to:

lower amortization expense;

the favorable comparative impact of ~~a $1.5 million patent litigation charge in the same period last year;~~

~~improved distribution and logistics efficiency and lower outbound freight expense; and~~

~~the favorable impact that higher overall sales had on operating leverage.~~

~~These factors were partially offset by~~ a $3.6 million charge related to the bankruptcy of TRU in the same period last year;

the favorable impact of a higher mix of shipments made on a direct import basis; and

the impact that higher overall net sales had on operating leverage.

These factors were partially offset by higher advertising expense, higher share-based compensation expense related to long-term incentive plans and higher ~~overall marketing, advertising and new product development expense in support~~freight expense.

Table of ~~our Leadership Brands.~~

Contents

Asset Impairment Charges

~~As previously discussed under~~

We perform annual impairment tests each fiscal year during the ~~heading “Significant Trends Impacting~~fourth quarter and interim impairment tests, if and when necessary. There were no asset impairment charges recorded in continuing operations during the ~~Business”, for~~nine months ended November 30, 2018, compared to a pre-tax non-cash asset impairment charge of $4.0 million recorded during the nine months ended November 30, 2017 in our Beauty segment.

Restructuring Charges

During the nine months ended November 30, 2018, we ~~recorded non-cash asset impairment~~incurred $2.6 million of pre-tax restructuring charges ~~totaling $136.3~~compared to $1.2 million ~~to certain goodwill and intangible assets as further discussed below.~~

~~We performed interim impairment testing in~~of pre-tax restructuring charges during the ~~first quarter of fiscal 2018~~same period last year in connection with our continuing evaluation of strategic alternatives for the Nutritional Supplements segment. We performed interim impairment testing in the second quarter of fiscal 2018 as the result of a revised financial projection for the segment. As a result of our testing, we recorded non-cash asset impairmentProject Refuel. These charges ~~totaling $50.1 million for the six months ended August 31, 2017. During the third quarter of fiscal 2018, we performed interim impairment testing due~~related primarily to ~~the receipt of new information regarding the potential fair value of the business. As a result, we recorded a pre-tax asset impairment charge of $70.6 millionto the segment’s goodwill~~employee severance and ~~$11.6 million to the segment’s indefinite-lived brand assets.~~

~~We also performed interim impairment testing in the first quarter of fiscal 2018 for a certain brand~~termination benefits in our Beauty segment ~~as a result~~during both periods, and for our shared service supply chain operations during fiscal 2019.

Table of ~~a revised financial projection. As a result of our testing, we recorded a non-cash impairment charge of $4.0 million.~~

Contents

segment

In order to provide a better understanding of the comparative impact of certain items on operating income, ~~(loss),~~ the tables that follow report the comparative before tax impact of non‐cash asset impairment charges, ~~restructuring charges,~~ the TRU bankruptcy, ~~charge, patent litigation~~restructuring charges, amortization of intangible assets, and non‐cash share‐based compensation, as applicable, on operating income ~~(loss)~~ and operating margin for each segment and in total for the periods covered below.

~~Table of Contents~~

Nine Months Ended November 30, 2017

(In thousands)

Housewares(2)

Health & Home

Nutritional
Supplements

Beauty

Total

Operating income (loss), as reported (GAAP)

$
71,601

21.0
%

$
50,187

10.3
%

$
(138,413)

(150.1)
%

$
17,869

6.7
%

$
1,244

0.1
%
Asset impairment charges

-

-
%

-

-
%

132,297

143.5
%

4,000

1.5
%

136,297

11.4
%
Restructuring charges(1)

-

-
%

-

-
%

118

0.4
%

1,165

1.1
%

1,283

0.3
%
TRU bankruptcy charge

956

0.3
%

2,640

0.5
%

-

-
%

-

-
%

3,596

0.3
%
Subtotal

72,557

21.3
%

52,827

10.8
%

(5,998)

(6.5)
%

23,034

8.6
%

142,420

12.0
%
Amortization of intangible assets

1,618

0.5
%

8,373

1.7
%

5,380

5.8
%

4,207

1.6
%

19,578

1.6
%
Non-cash share-based compensation

3,579

1.0
%

3,792

0.8
%

980

1.1
%

2,779

1.0
%

11,130

0.9
%
Adjusted operating income (non-GAAP)

$
77,754

22.8
%

$
64,992

13.3
%

$
362

0.4
%

$
30,020

11.2
%

$
173,128

14.5
%

Nine Months Ended November 30, 2016

(In thousands)

Housewares

Health & Home

Nutritional
Supplements

Beauty

Total

Operating income (loss), as reported (GAAP)

$
68,956

21.9
%

$
39,156

8.3
%

$
(6,581)

(6.5)
%

$
22,173

8.1
%

$
123,704

10.7
%
Asset impairment charges

-

-
%

-

-
%

5,000

4.9
%

2,400

0.9
%

7,400

0.6
%
Patent litigation charge

-

-
%

1,468

0.3
%

-

-
%

-

-
%

1,468

0.1
%
Subtotal

68,956

21.9
%

40,624

8.6
%

(1,581)

(1.6)
%

24,573

9.0
%

132,572

11.4
%
Amortization of intangible assets

1,986

0.6
%

10,626

2.3
%

4,713

4.7
%

4,300

1.6
%

21,625

1.9
%
Non-cash share-based compensation

2,404

0.8
%

3,787

0.8
%

1,734

1.7
%

3,736

1.4
%

11,661

1.0
%
Adjusted operating income (non-GAAP)

$
73,346

23.3
%

$
55,037

11.7
%

$
4,866

4.8
%

$
32,609

11.9
%

$
165,858

14.3
%

~~_____________________~~

⁽¹⁾

~~Charges incurred in conjunction with the Company’s restructuring plan for the nine-months ended November 30, 2017 with no comparable charges in the same period last year.~~

⁽²⁾

~~Includes approximately one-half month of incremental operating results from Hydro Flask, which was acquired on March 18, 2016.~~



	Nine Months Ended November 30, 2018
(In thousands)	Housewares				Health & Home				Beauty				Total
Operating income, as reported (GAAP)	$	80,351	20.2	%	$	52,501	10.0	%	$	22,431	8.8	%	$	155,283	13.2	%
Restructuring charges	740		0.2	%	358		0.1	%	1,511		0.6	%	2,609		0.2	%
Subtotal	81,091		20.4	%	52,859		10.0	%	23,942		9.4	%	157,892		13.4	%
Amortization of intangible assets	1,474		0.4	%	8,129		1.5	%	1,219		0.5	%	10,822		0.9	%
Non-cash share-based compensation	6,273		1.6	%	7,030		1.3	%	3,726		1.5	%	17,029		1.4	%
Adjusted operating income (non-GAAP)	$	88,838	22.3	%	$	68,018	12.9	%	$	28,887	11.4	%	$	185,743	15.8	%



	Nine Months Ended November 30, 2017
(In thousands)	Housewares				Health & Home				Beauty				Total
Operating income, as reported (GAAP)	$	71,085	20.8	%	$	49,243	10.2	%	$	17,302	6.5	%	$	137,630	12.6	%
Asset impairment charges	—		—	%	—		—	%	4,000		1.5	%	4,000		0.4	%
TRU bankruptcy charge	956		0.3	%	2,640		0.5	%	—		—	%	3,596		0.3	%
Restructuring charges	—		—	%	—		—	%	1,165		0.4	%	1,165		0.1	%
Subtotal	72,041		21.1	%	51,883		10.7	%	22,467		8.5	%	146,391		13.4	%
Amortization of intangible assets	1,618		0.5	%	8,373		1.7	%	4,207		1.6	%	14,198		1.3	%
Non-cash share-based compensation	3,380		1.0	%	3,971		0.8	%	3,268		1.2	%	10,619		1.0	%
Adjusted operating income (non-GAAP)	$	77,039	22.5	%	$	64,227	13.3	%	$	29,942	11.3	%	$	171,208	15.7	%

Consolidated

Consolidated operating income was ~~$1.2~~$155.3 million, or ~~0.1%~~13.2% of net sales, compared to ~~consolidated operating income of $123.7~~$137.6 million, or ~~10.7%~~12.6% of net sales, for the same period last year. The nine months ended November 30, 2018 includes pre-tax restructuring charges of $2.6 million related to Project Refuel, compared to $1.2 million for the same period last year. Consolidated operating income for the nine months ended November 30, 2017 ~~includes: (i) pre-tax non-cash asset impairment charges totaling $136.3 million; (ii)~~also included a $3.6 million charge related to the TRU ~~bankruptcy;~~bankruptcy and ~~(iii) pre-tax restructuring charges of $1.3 million associated with Project Refuel. The nine months ended November 30, 2016 includes~~a pre-tax non-cash asset impairment ~~charges of $7.4 million and a patent litigation~~ charge of ~~$1.5~~$4.0 million. The effect of these items ~~in both years unfavorably~~favorably impacted the year-over-year comparison of operating margin by ~~a combined 11.3~~0.6 percentage points. The remaining ~~improvement in consolidated~~ operating margin comparison is flat year-over-year primarily ~~reflects:~~

~~a higher mix of Leadership Brand sales at a higher operating margin;~~

reflecting:

~~the favorable comparative impact of a $1.5 million patent litigation charge in the same period last year;~~

~~improved distribution and logistics efficiency and lower outbound freight costs; and~~

a higher mix of Leadership Brand sales at a higher operating margin;

~~the favorable impact that higher overall net sales had on operating leverage.~~

lower amortization expense; and

the favorable impact of increased operating leverage from net sales growth.

These factors were partially offset by a less favorable channel and product mix, higher ~~marketing,~~ advertising expense, the impact of tariff increases and ~~new product development expense in support of our Leadership Brands.~~

higher freight expense.

Consolidated adjusted operating income increased ~~4.4%~~8.5% to ~~$173.1~~$185.7 million, or ~~14.5%~~15.8% of net sales, compared to ~~$165.9~~$171.2 million, or ~~14.3%~~15.7% of net sales, for the same period last year.

Table of Contents

Housewares

The Housewares segment’s operating income was $80.4 million, or 20.2% of segment net sales, for the nine months ended November 30, 2018, compared to $71.1 million, or 20.8% of segment net sales, in the same period last year.

~~Table of Contents~~

~~Housewares~~

The ~~Housewares segment’s operating income was $71.6 million, or 21.0% of segment net sales, compared to $69.0 million, or 21.9% of segment net sales, for the same period last year. The 0.9~~0.6 percentage point decrease in segment operating margin is primarily due to:

~~higher marketing, advertising and new product development expense; and~~

~~a $1.0 million charge related to the bankruptcy of TRU.~~

higher advertising expense;

higher freight expense;

higher annual incentive compensation related to current year performance;

higher rent expense related to new office space; and

the impact of restructuring charges of $0.7 million.

These factors were partially offset by by:

the favorable ~~margin~~comparative impact ~~from growth~~of a $1.0 million charge related to the bankruptcy of TRU in the ~~Hydro Flask business, improved distribution~~same period last year; and ~~logistics efficiency coupled with lower outbound freight costs, and~~

the favorable impact of increased operating leverage from ~~overall~~net sales growth.

Segment adjusted operating income increased ~~6.0%~~15.3% to ~~$77.8~~$88.8 million, or ~~22.8%~~22.3% of segment net sales, compared to ~~$73.3~~$77.0 million, or ~~23.3%~~22.5% of segment net sales, in the same period last year.

Health & Home

The Health & Home segment’s operating income was ~~$50.2~~$52.5 million, or ~~10.3%~~10.0% of segment net sales, compared to ~~$39.2~~$49.2 million, or ~~8.3%~~10.2% of segment net sales, in the same period last year. The ~~2.0~~0.2 percentage point ~~increase~~decrease in segment operating margin is primarily due to:

~~lower legal fee expense;~~

~~lower amortization expense;~~

~~the comparative impact of a $1.5 million patent litigation charge in the same period last year;~~

the margin impact of a less favorable product mix;

~~improved distribution and logistics efficiency and lower outbound freight costs;~~

the impact of tariff increases;

~~lower royalty expense; and~~

increased promotional spending and trade support with retail customers;

~~the favorable impact that higher overall net sales had on operating leverage.~~

higher advertising expense; and

the impact of restructuring charges of $0.4 million.

These factors were partially offset by:

~~an increase in new product development expense;~~

~~a $2.6 million charge related to the bankruptcy of TRU; and~~

~~an increase in product liability expense.~~

the favorable comparative impact of a $2.6 million charge related to the bankruptcy of TRU in the same period last year; and

the favorable impact of foreign currency exchange and forward contract settlements.

Segment adjusted operating income increased ~~18.1%~~5.9% to ~~$65.0~~$68.0 million, or ~~13.3%~~12.9% of segment net sales, compared to ~~$55.0~~$64.2 million, or ~~11.7%~~13.3% of segment net sales, in the same period last year.

~~Nutritional Supplements~~

Beauty

The ~~Nutritional Supplements~~Beauty segment’s operating ~~loss~~income was ~~$(138.4)~~$22.4 million, or ~~(150.1)%~~8.8% of segment net sales, ~~for the nine months ended November 30, 2017,~~ compared to an operating ~~loss~~income of ~~$6.6~~$17.3 million, or ~~(6.5)%~~6.5% of segment net sales, in the same period last year. The ~~increase~~nine months ended November 30, 2018 included pre-tax restructuring charges of $1.5 million, compared to $1.2 million for the same period last year. Consolidated operating income for the nine months ended November 30, 2017 also included a $4.0 million pre-tax non-cash asset impairment charge. The effect of these items favorably impacted the year-over-year comparison of operating margin by 1.3 percentage points. The remaining improvement in ~~the~~ segment operating ~~loss~~margin is primarily due to:

~~pre-tax non-cash asset impairment charges of $132.3 million recorded during the nine months ended November 30, 2017, compared to $5.0 million recorded in the same period last year;~~

~~pre-tax restructuring charges of $0.1 million related to Project Refuel;~~

cost savings from Project Refuel; and

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~~higher promotion, advertising and customer acquisition costs; and~~

~~the net sales decline and its unfavorable impact on operating leverage.~~

lower amortization expense.

These factors were partially offset ~~by lower personnel~~by:

the margin impact of less favorable product sales mix;

higher freight expense;

higher share-based compensation expense related to long-term incentive plans; and ~~lower royalty expense.~~

the unfavorable impact of decreased operating leverage from the decline in net sales.

Segment adjusted operating income ~~was $0.4~~decreased 3.5% to $28.9 million, or ~~0.4%~~11.4% of segment net sales, compared to ~~segment adjusted operating income of $4.9~~$29.9 million, or ~~4.8%~~11.3% of segment net sales, in the same period last year.

~~Beauty~~

The Beauty segment’s operating income was $17.9 million, or 6.7% of segment net sales, for the nine months ended November 30, 2017, compared to operating income of $22.2 million, or 8.1% of segment net sales, in the same period last year. The 1.4 percentage point decrease in segment operating margin is primarily due to:

~~pre-tax non-cash asset impairment charges of $4.0 million, recorded during the nine months ended November 30, 2017, compared to $2.4 million recorded in the same period last year;~~

~~pre-tax restructuring charges of $1.2 million related to Project Refuel; and~~

~~the net sales decline in the personal care category and its unfavorable impact on gross margin mix and operating leverage.~~

These factors were partially offset by the favorable impact of new product introductions in the appliance category, lower media advertising expense, improved distribution and logistics efficiency coupled with lower outbound freight costs and the favorable impact of foreign currency fluctuations.

~~Segment adjusted operating income decreased 7.9% to $30.0 million, or 11.2% of segment net sales, compared to $32.6 million, or 11.9% of segment net sales, in the same period last year.~~

Interest Expense

Interest expense was ~~$11.3~~$8.4 million for the nine months ended November 30, ~~2017~~2018 compared to ~~$11.1~~$11.0 million in the same period last year. The ~~increase~~decrease in interest expense is due to ~~higher overall average interest rates, partially offset by~~ lower average levels of debt held during the nine months ended November 30, ~~2017.~~

2018, partially offset by higher average interest rates.

Income Tax Expense

Our effective tax rate is also impacted by the Tax Act enacted into law on December 22, 2017. Please see Note 15 of the accompanying condensed consolidated financial statements for a further discussion of the Tax Act.

For the nine months ended November 30, ~~2017,~~2018, income tax expense as a percentage of ~~pre-tax loss~~income before income tax was ~~(59.5)%~~7.2%, ~~compared~~which includes $0.7 million of tax benefits from share-based compensation settlements and a tax benefit of $0.8 million from the lapse of the statute of limitations related to an uncertain tax position. Income tax expense as a percentage of ~~7.0%~~income before income tax was 5.1% for the same period last year, ~~primarily due to the recognition~~which included $2.6 million of tax benefits from ~~impairment charges over the course of the year in relation to pre-tax income, as opposed to the periods in which the charges were incurred. As~~share-based compensation settlements and a ~~result, the expected~~ tax benefit ~~from impairment charges~~ of ~~$52.8 million will be recognized entirely in the fourth quarter of fiscal 2018, relative to pre-tax income.~~

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~~Income taxes for the nine-months ended November 30, 2017 also included:~~

~~$2.6 million in excess tax benefits from share-based compensation settlements and exercises; and~~

~~$2.8 million of tax benefits related to the resolution of uncertain tax positions.~~

~~Income taxes for the nine months ended November 30, 2016 included tax benefits of $1.4~~$2.8 million related to the resolution of uncertain tax ~~positions~~positions.

During fiscal 2017 we received an assessment from a state tax authority which adjusted taxable income

applicable to the particular state resulting from interpretations of certain state income tax provisions

applicable to our legal structure. We believe we have accurately reported our taxable income and ~~$1.3 million in excess tax benefits~~are

vigorously protesting the assessment through administrative processes with the state. We believe it is unlikely that the outcome of these matters will have a material adverse effect on our consolidated financial position, results of operations, or liquidity.

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Income from ~~share-based compensation settlements and exercises.~~

In order to provide a better understanding of the impact of certain items on our ~~net~~ income ~~(loss)~~ and ~~earnings (loss) per share,~~EPS from continuing operations, the analysis that follows reports the comparative after tax impact of non‐cash asset impairment charges, ~~restructuring charges,~~ the TRU bankruptcy charge, ~~patent litigation~~restructuring charges, amortization of intangible assets, and non‐cash share‐based compensation, as ~~applicable.~~

Nine Months Ended November 30, 2017

Income (Loss)

Diluted Earnings (Loss) Per Share
(in thousands, except per share data)

Before tax

Tax

Net of Tax

Before tax

Tax

Net of Tax
As reported (GAAP)

$
(9,802)

$
5,833

$
(15,635)

$
(0.36)

$
0.21

$
(0.58)

Asset impairment charges

136,297

3

136,294

4.99

-

4.99
Restructuring charges(1)

1,283

69

1,214

0.05

-

0.04
Patent litigation charge

-

-

-

-

-

-
TRU bankruptcy charge

3,596

204

3,392

0.13

0.01

0.12
Subtotal

131,374

6,109

125,265

4.81

0.22

4.59
Amortization of intangible assets

19,578

2,625

16,953

0.72

0.10

0.62
Non-cash share-based compensation

11,130

1,862

9,268

0.41

0.07

0.34
Adjusted (non-GAAP)

$
162,082

$
10,596

$
151,486

$
5.94

$
0.39

$
5.55

Weighted average shares of common stock used in computing:

Diluted earnings (loss) per share, as reported

27,140
Adjusted diluted earnings per share (non-GAAP)

27,304

Nine Months Ended November 30, 2016

Income

Diluted Earnings Per Share
(in thousands, except per share data)

Before tax

Tax

Net of Tax

Before tax

Tax

Net of Tax
As reported (GAAP)

$
112,905

$
7,912

$
104,993

$
4.02

$
0.28

$
3.74

Asset impairment charges

7,400

2,303

5,097

0.26

0.08

0.18
Restructuring charges(1)

-

-

-

-

-

-
Patent litigation charge

1,468

4

1,464

0.05

-

0.05
TRU bankruptcy charge

-

-

-

-

-

-
Subtotal

121,773

10,219

111,554

4.34

0.36

3.98
Amortization of intangible assets

21,625

3,005

18,620

0.77

0.11

0.66
Non-cash share-based compensation

11,661

2,920

8,741

0.42

0.11

0.31
Adjusted (non-GAAP)

$
155,059

$
16,144

$
138,915

$
5.53

$
0.58

$
4.95

Weighted average shares of common stock used in computing:

Diluted earnings per share, as reported

28,058
Adjusted diluted earnings per share (non-GAAP)

28,058

~~__________________~~

~~(1)Charges incurred in conjunction with the Company’s restructuring plan~~applicable, on income from continuing operations, and diluted EPS from continuing operations for the ~~nine months ended November 30, 2017, with no comparable charges in the same period last year.~~

periods covered below. Adjusted income from continuing operations and adjusted diluted ~~earnings per share~~EPS from continuing operations may be considered non-GAAP financial ~~measures. 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 in the section below entitled,~~as contemplated by SEC Regulation G, Rule 100. ~~“Explanation of Non-GAAP Financial Measures”~~.



	Nine Months Ended November 30, 2018
	Income From Continuing Operations						Diluted EPS
(in thousands, except per share data)	Before Tax		Tax		Net of Tax		Before Tax		Tax		Net of Tax
As reported (GAAP)	$	147,045	$	10,535	$	136,510	$	5.54	$	0.40	$	5.15
Restructuring charges	2,609		185		2,424		0.10		0.01		0.09
Subtotal	149,654		10,720		138,934		5.64		0.40		5.24
Amortization of intangible assets	10,822		236		10,586		0.41		0.01		0.40
Non-cash share-based compensation	17,029		1,021		16,008		0.64		0.04		0.60
Adjusted (non-GAAP)	$	177,505	$	11,977	$	165,528	$	6.69	$	0.45	$	6.24

Weighted average shares of common stock used in computing diluted EPS											26,520

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~~Consolidated net loss~~
Nine Months Ended November 30, 2017
Income From Continuing Operations Diluted EPS
(in thousands, except per share data) Before Tax Tax Net of Tax Before Tax Tax Net of Tax
As reported (GAAP) $ 126,927
$ 6,423
$ 120,504
$ 4.65
$ 0.24
$ 4.41
Asset impairment charges 4,000
418
3,582
0.15
0.02
0.13
TRU bankruptcy charge 3,596
204
3,392
0.13
0.01
0.12
Restructuring charges 1,165
68
1,097
0.04
—
0.04
Subtotal 135,688
7,113
128,575
4.97
0.26
4.71
Amortization of intangible assets 14,198
658
13,540
0.52
0.02
0.50
Non-cash share-based compensation 10,619
1,178
9,441
0.39
0.04
0.35
Adjusted (non-GAAP) $ 160,505
$ 8,949
$ 151,556
$ 5.88
$ 0.33
$ 5.55

Weighted average shares of common stock used in computing diluted EPS 27,304

Our income from continuing operations was ~~$(15.6)~~$136.5 million for the nine months ended November 30, ~~2017~~2018 compared to ~~net income of $105.0~~$120.5 million for the same period last year. ~~Diluted loss per share~~Our diluted EPS from continuing operations was ~~$(0.58)~~$5.15 for the nine months ended November 30, ~~2017~~2018 compared to ~~diluted earnings per share of $3.74~~$4.41 for the same period last year.

Adjusted income from continuing operations increased ~~$12.6~~$14.0 million, or ~~9.0%~~9.2%, to ~~$151.5~~$165.5 million for the nine months ended November 30, ~~2017~~2018 compared to ~~$138.9~~$151.6 million in the same period last year. Adjusted diluted ~~earnings per share~~EPS from continuing operations increased ~~12.1%~~12.4% to ~~$5.55~~$6.24 for the nine months ended November 30, ~~2017~~2018 compared to ~~$4.95~~$5.55 for the same period last year. Adjusted diluted ~~earnings per share~~EPS increased primarily due to the impact of higher adjusted operating income in ~~the Housewares and~~our Health & Home and Housewares segments,

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lower interest expense and lower weighted average diluted shares outstanding ~~for the nine months ended November 30, 2017~~ compared to the same period last ~~year.~~

year.

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Explanation of Non-GAAP Financial Measures

~~In the~~

The tables ~~above,~~contained in this MD&A, under the headings “Operating ~~Income, Operating Margin, Adjusted Operating Income~~income, operating margin, adjusted

operating income (non-GAAP) and ~~Adjusted Operating Margin~~adjusted operating margin (non-GAAP) by ~~Segment”~~segment" and ~~“Net Income (Loss), Earnings (Loss) Per Share, Adjusted Income~~“Income from continuing operations, diluted EPS from continuing operations, adjusted income from continuing operations (non-GAAP), and ~~Adjusted Diluted Earnings Per Share~~adjusted diluted EPS from continuing operations (non-GAAP),” werespectively, report operating income, ~~(loss),~~ operating margin, ~~net~~ income ~~(loss)~~from continuing operations and diluted earnings ~~(loss)~~ per share from continuing operations without the impact of non-cash asset impairment charges, restructuring charges, the TRU bankruptcy charge, ~~patent litigation charges,~~ amortization of intangible assets, and non-cash share-based compensation for the periods presented, as applicable. In addition, we report our Leadership Brand net sales revenue, which are sales from brands that have number-one and number-two positions in their respective categories and consist of the OXO, Honeywell, Braun, PUR, Hydro Flask, Vicks and Hot Tools brands. These measures may be considered non-GAAP financial information as set forth in SEC Regulation G, Rule 100. The preceding tables reconcile these measures to their corresponding GAAP-based measures presented in our condensed consolidated statements of ~~operations.~~income. We believe that adjusted operating income, adjusted operating margin, adjusted income ~~and~~from continuing operations, adjusted diluted ~~earnings per share~~EPS from continuing operations and Leadership Brand net sales provide useful information to management and investors regarding financial and business trends relating to our financial condition and results of operations. We believe that these non-GAAP financial measures, in combination with our financial results calculated in accordance with GAAP, provide investors with additional perspective regarding the impact of such charges on ~~operating income (loss), operating margin,~~ net income ~~(loss)~~ and earnings ~~(loss)~~ per share. We also believe that these non-GAAP measures facilitate a more direct comparison of our performance ~~with~~to our competitors. We further believe that including the excluded charges would not accurately reflect the underlying performance of our continuing operations for the period in which the charges are incurred, even though such charges may be incurred and reflected in our 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 our activities. Our adjusted operating income, adjusted operating margin, adjusted income ~~and~~from continuing operations, adjusted diluted ~~earnings per share~~EPS from continuing operations and Leadership Brand net sales 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

Selected measures of our liquidity and capital resources are shown for the periods ~~below:~~

~~SELECTED MEASURES OF OUR LIQUIDITY AND CAPITAL UTILIZATION~~

below :



	Nine Months Ended November 30,						Nine Months Ended November 30,
	2017			2016			2018			2017
Accounts Receivable Turnover (Days)(1)		59.1			57.8		69.4			65.4
Inventory Turnover (Times)(1)		2.9			2.8		3.4			2.8
Working Capital (in thousands)	$	263,520		$	292,559
Working Capital (in thousands)							$	338,008		$	263,537
Current Ratio		1.7:1			1.9:1		2.0:1			1.7:1
Ending Debt to Ending Equity Ratio		43.3	%		57.7	%	32.9		%	43.3		%
Return on Average Equity(1)		2.0	%		11.9	%	14.1		%	15.3		%

_____________________


(1)		Accounts receivable turnover, inventory turnover and return on average equity computations use 12 month trailing net sales revenue, cost of goods sold or net income components as required by the particular measure. The current and four prior quarters' ending balances of accounts receivable, inventory and equity are used for the purposes of computing the average balance component as required by the particular measure.

We rely principally on cash flow from operations and borrowings under our credit facility to finance our operations, acquisitions, and capital expenditures. We believe our cash flows from operations and

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availability under our credit facility are sufficient to meet our working capital and capital expenditure needs.

Operating Activities

Operating activities from continuing operations provided ~~$107.6~~net cash of $109.5 million for the nine months ended November 30, 2018 compared to $102.9 million for the same period last year. The increase was primarily driven by an increase in income from continuing operations, higher share-based compensation and an increase in cash from accounts payable. These factors were partially offset by an increase in cash used for inventory and a dispute settlement payment of $15.0 million.

Accounts receivable increased $63.6 million to $339.1 million as of November 30, 2018, compared to $275.6 million at the end of fiscal 2018. Accounts receivable turnover was 69.4 and 65.4 days at November 30, 2018 and 2017, respectively.

Inventory increased $49.1 million to $300.6 million as of November 30, 2018, compared to $251.5 million at the end of fiscal 2018. Inventoryturnover was 3.4 times at November 30, 2018, compared to 2.8 times at the same time last year.

Investing Activities

Investing activities from continuing operations used $21.0 million of cash for the nine months ended November 30, 2018, compared to $10.4 million for the same period last year. During the nine months ended November 30, 2018, we invested in capital expenditures of $22.2 million primarily for leasehold improvements, computers, furniture and other equipment and for tools, molds and other production equipment. The year-over-year increase in capital spending relates primarily to the office relocation of the Housewares segment.

Financing Activities

Financing activities from continuing operations used $84.8 million of cash during the nine months ended November 30, ~~2017~~2018, compared to ~~$139.1~~$89.7 million ~~of cash provided during the same period last year.~~

Accounts receivable increased $72.5 million, to $302.4 million as of November 30, 2017, compared to $229.9 million at the end of fiscal year 2017. Accounts receivable turnover was 59.1 days at November 30, 2017, compared to 57.8 days for the same period last year.

Inventory decreased $3.5 million, to $285.6 million as of November 30, 2017, compared to $289.1 million at the end of fiscal year 2017. Inventory turnover was 2.9 times at November 30, 2017 compared to 2.8 times at November 30, 2016.

Working capital was $263.5 million at November 30, 2017, compared to $292.6 million at November 30, 2016 and our current ratio was 1.7:1 at November 30, 2017, compared to 1.9:1 as of November 30, 2016.

~~Investing Activities~~

Investing activities used $19.8 million of cash during the nine months ended November 30, 2017. We spent $7.1 million on computers, furniture and other equipment, $3.7 million on tools, molds and other capital asset additions, and $9.0 million on patents and certain trademark related assets.

~~Financing Activities~~

~~Financing activities used $89.7 million of cash during the nine months ended November 30, 2017.~~ Highlights of those activities follow:

~~we had draws of $389.5 million against our credit agreement;~~

~~we repaid $444.2 million drawn against our credit agreement;~~

~~we repaid $5.7 million of our long-term debt;~~

we had draws of $462.4 million against our credit agreement;

we repaid $411.4 million drawn against our credit agreement;

we repaid $1.9 million of our long-term debt;

we received $7.8 million of cash from employees exercising stock options and participating in our employee stock purchase plan;

we paid $4.7 million in tax obligations resulting from cashless share award settlements; and

we repurchased $137.1 million of our common stock in the open market.

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~~employees exercised options to purchase 110,552 shares of common stock, providing $5.5 million of cash;~~

~~employees purchased 16,018 shares of common stock for $1.2 million through our employee stock purchase plan; and~~

~~we paid $6.8 million in tax obligations resulting from cashless share award settlements.~~

Credit and Other Debt Agreements

Credit Agreement

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 $1$1.0 billion as of November 30, ~~2017.~~2018. The commitment under the Credit Agreement terminates on December 7, 2021. 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 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 November 30, ~~2017,~~2018, the outstanding revolving loan principal balance was ~~$386.0~~$320.4 million (excluding prepaid financing fees) and the balance of outstanding letters of credit was ~~$7.6~~$9.0 million. As of November 30, ~~2017,~~2018, the amount available for borrowings under the Credit Agreement was ~~$606.4~~$670.6 million. Covenants in our debt agreements limit the amount of total indebtedness we can incur. As of November 30, ~~2017,~~2018, these covenants effectively limited our ability to incur more than ~~$348.2~~$526.5 million of additional debt from all sources, including our Credit ~~Agreement.~~

Agreement, or $670.6 million in the event a qualified acquisition is consummated.

Other Debt Agreements

In addition to the Credit Agreement, at November 30, 2017, we had an aggregate principal balance of $20 million of 3.9% Senior Notes due January 2018 with one remaining installment due in January 2018.

We also have an aggregate principal balance of ~~$24.3~~$22.4 million (excluding prepaid financing fees) under a loan agreement with the Mississippi Business Finance Corporation (the “MBFC Loan”). as of November 30, 2018. The borrowings were used to fund construction of our Olive Branch, Mississippi distribution facility. The remaining loan balance is payable as follows: $1.9 million annually on March 1, ~~2018~~2019 through 2022; and $14.8 million on March 1, 2023. Any remaining outstanding principal and interest is due upon maturity on March 1, 2023.

All of our debt is unconditionally guaranteed, on a joint and several basis, by the Company and several subsidiaries. Our debt agreements require the maintenance of certain key financial covenants, defined in the table below. Our debt agreements also contain other customary covenants, including, among other things, covenants restricting or limiting us, 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. The commitments of the lenders to make loans to us under the Credit Agreement 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 currently in effect for certain key financial covenants as defined under our debt agreements:

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Applicable Financial Covenant	Credit Agreement and MBFC Loan	~~3.9% 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	EBIT (1)+ Interest Expense ~~(2)~~	~~Interest Expense (2)~~ (1)


	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)~~ (2) +
	÷	÷
Maximum Leverage Ratio	[EBITDA ~~(2)~~(1) + Pro Forma Effect of ~~Acquisitions]~~	~~[EBITDA (2) + Pro Forma Effect of Acquisitions]~~ Acquisitions


	Maximum Currently Allowed: ~~3.25~~3.50 to 1.00	~~Maximum Allowed: 3.25 to 1.00~~
		(3)

~~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~~

~~Our contractual obligations~~

Key Definitions:

EBIT: Earnings Before Non-Cash Charges, Interest Expense and ~~commercial commitments~~Taxes

EBITDA: EBIT + Depreciation and Amortization Expense + Share-based Compensation

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 ~~effect as of November 30, 2017, were:~~

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

the computation equals its twelve month trailing total.

2018

2019

2020

2021

2022

After
(in thousands)

Total

1 year

2 years

3 years

4 years

5 years

5 years
Fixed rate debt

$
20,000

$
20,000

$
-

$
-

$
-

$
-

$
-
Floating rate debt

410,307

1,900

1,900

1,900

1,900

387,900

14,807
Long-term incentive plan payouts

10,658

4,972

4,286

1,400

-

-

-
Interest on fixed rate debt

91

91

-

-

-

-

-
Interest on floating rate debt(1)

43,591

10,800

10,750

10,701

10,651

593

96
Open purchase orders

205,399

205,399

-

-

-

-

-
Long-term purchase commitments

1,180

1,180

-

-

-

-

-
Minimum royalty payments

56,970

12,515

12,905

13,067

8,999

8,983

501
Advertising and promotional

48,396

17,586

7,315

7,371

7,450

7,174

1,500
Operating leases

34,343

6,468

5,079

4,524

4,152

3,543

10,577
Capital spending commitments

643

643

-

-

-

-

-
Total contractual obligations(2)

$
831,578

$
281,554

$
42,235

$
38,963

$
33,152

$
408,193

$
27,481
Notes:

~~_____________________~~


(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 November 30, 2017 remain constant into the future. This is an estimate, as actual rates will vary over time. In addition,Computed using totals for the ~~Credit Agreement, we assume that~~latest reported four consecutive fiscal quarters.


(2)	Computed using the ~~balance outstanding~~ending balances as of ~~November 30, 2017 remains~~ the same for the remaining term of the agreement. The actual balance outstanding under our Credit Agreement may fluctuate significantly in future periods, depending on the availability of cash flow from operations and future investing and financing considerations. latest reported fiscal quarter.

	⁽²⁾
(3)		In ~~addition~~the event a qualified acquisition is consummated, the maximum leverage ratio is 4.25 to the contractual obligations and commercial commitments in the table above, as of November 30, 2017, we have recorded total provisions for our uncertain tax positions totaling $4.5 million. We are unable to reliably estimate the timing of most of the future payments, if any, related to uncertain tax positions. Therefore, we have excluded these tax liabilities from the table above. 1.00.

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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. We may also elect to repurchase additional shares of common stock up to the balance of our current authorization ~~over the next three fiscal years,~~through May 2020, subject to limitations contained in our debt agreements and based upon our 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.

As of November 30, 2018, the amount of cash and cash equivalents held by our foreign subsidiaries was $14.4 million, of which, an immaterial amount was held in foreign countries where the funds may not be readily convertible into other currencies.

New Accounting Guidance

For information on recently adopted and issued accounting pronouncements, see Note 2 to the accompanying condensed consolidated financial statements.

Information Regarding Forward-Looking Statements

Certain written and oral statements in this Form 10-Q 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 may 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 and that are otherwise described from time to time in our SEC reports as filed. We undertake no obligation to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise.

Such risks are not limited to, but may include:

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

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

our relationships with key customers and licensors;

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

our dependence on sales to several large customers and the risks associated with any loss or substantial decline in sales to top customers;

expectations regarding Project Refuel and any other proposed restructurings;

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

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

the retention and recruitment of key personnel;

foreign currency exchange rate fluctuations;

disruptions in U.S., U.K., Eurozone, and other international credit markets;

risks associated with weather conditions, the duration and severity of the cold and flu season and other related factors;

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;

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;

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;

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;

trade barriers, exchange controls, expropriations, and other risks associated with U.S. and foreign operations;

the risks associated with significant tariffs or other restrictions on imports from China or any retaliatory trade measures taken by China;

the risks to our liquidity as a result of changes to capital market conditions and other constraints or events that impose constraints 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 risks associated with product recalls, product liability, other claims, and related litigation against us;

the risks associated with accounting for tax positions, tax audits and related disputes with taxing authorities;

the risks of potential changes in laws in the U.S. or abroad, including tax laws, regulations or treaties, employment and health insurance laws and regulations, laws relating to environmental policy, personal data, financial regulation, transportation policy and infrastructure policy along with the costs and complexities of compliance with such laws; and

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

There have been no material changes in the information provided in the section entitled “Quantitative and Qualitative Disclosures about Market Risk” in our Form 10-K. Additional information regarding risk management activities can be found in Note 1213 to the accompanying condensed consolidated ~~condensed~~ financial statements.

~~Information Regarding Forward-Looking Statements~~

Certain written and oral statements in this Form 10-Q 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 may 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 Item 1A., “Risk Factors” and that are otherwise described from time to time in our SEC reports as filed. As described later in this report, such risks, uncertainties and other important factors include, among others:

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

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

~~our relationship with key customers and licensors;~~

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

~~our dependence on sales to several large customers and the risk associated with any loss or substantial decline in sales to top customers;~~

expectations regarding any proposed restructurings, our recent and future acquisitions or divestitures, including our ability to realize anticipated cost savings, synergies and other benefits along with our ability to effectively integrate acquired businesses or separate divested businesses;

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

~~the retention and recruitment of key personnel;~~

~~foreign currency exchange rate fluctuations;~~

~~disruptions in U.S., U.K., Euro zone, and other international credit markets;~~

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~~risks associated with weather conditions, the duration and severity of the cold and flu season and other related factors;~~

~~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;~~

~~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;~~

~~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;~~

~~trade barriers, exchange controls, expropriations, and other risks associated with U.S. and foreign operations;~~

~~the risks to our liquidity as a result of changes to capital market conditions and other constraints or events that impose constraints 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 risks associated with product recalls, product liability, other claims, and related litigation against us;~~

~~the risks associated with tax positions, tax audits and related disputes with taxing authorities;~~

the risk of potential changes in laws in the U.S. or abroad, including tax laws, regulations or treaties, employment and health insurance laws and regulations, and laws relating to environmental policy, financial regulation, transportation policy and infrastructure policy 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.~~

ITEM 4. CONTROLS AND PROCEDURES

DISCLOSURE CONTROLS AND PROCEDURES

Our management, under the supervision and with the participation of our Chief Executive Officer ~~(CEO)~~(“CEO”) and Chief Financial Officer ~~(CFO)~~(“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.

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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 November 30, ~~2017.~~2018. 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 November 30, ~~2017,~~2018, 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 November 30, ~~2017,~~2018, 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

On May 31, 2018, we settled a patent infringement dispute related to two forehead thermometer models sold by our subsidiary, Kaz USA, Inc., in the United States and made a settlement payment of $15.0 million, which was accrued in prior periods along with related legal fees and other costs. See Note 10 to the accompanying condensed consolidated financial statements for further discussion.

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, ~~2017.~~2018. 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.~~

therein, except for the following:

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If significant tariffs or other restrictions are placed on imports from China or any retaliatory trade measures are taken by China, our business and results of operations could be materially and adversely affected.

We purchase our products from unaffiliated manufacturers, most of which are located in China, Mexico and the United States. This concentration exposes us to risks associated with doing business globally, including changes in tariffs. The Office of the United States Trade Representative identified certain Chinese imported goods for additional tariffs to address China’s trade policies and practices. These tariffs could have a material adverse effect on our business and results of operations. Additionally, the Trump Administration continues to signal that it may alter trade agreements and terms between China and the United States, including limiting trade with China, impose additional tariffs on imports from China and potentially impose other restrictions on exports from China to the United States. Consequently, it is possible further and or higher tariffs will be imposed on products imported from foreign countries, including China, or that our business will be impacted by retaliatory trade measures taken by China or other countries in response to existing or future tariffs. This may cause us to raise prices or make changes to our operations, any of which could have a material adverse effect on our business and results of operations.

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

~~Issuer Purchases of Equity Securities~~

On May 10, 2017, our Board of Directors authorized the repurchase of up to $400 million of our outstanding common stock. The new authorization is effective for a period of three years and replaced our existing repurchase authorization of which approximately $82 million remained. These repurchases may include open market purchases, privately negotiated transactions, block trades, accelerated stock repurchase transactions, or any combination of such methods. The number of shares purchased and the timing of the purchases will depend on a number of factors, including share price, trading volume and general market conditions, working capital requirements, general business conditions, financial conditions, any applicable contractual limitations, and other factors, including alternative investment opportunities. As of November 30, 2017, our repurchase authorization allowed for the purchase of $364.9 million of common stock.

Our current equity-based compensation plans include provisions that allow for the “net exercise” of share settled awards 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. Net exercises are treated as purchases and retirements of shares.

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

~~ISSUER PURCHASES OF EQUITY SECURITIES FOR THE THREE MONTHS ENDED NOVEMBER 30, 2017~~

Total Number of
Shares Purchased

Average Price
Paid per Share

Total Number of
Shares Purchased
as Part of Publicly
Announced Plans
or Programs

Dollar Value of
Shares that May
Yet be Purchased
Under the Plans
or Programs
(in thousands)
September 1 through September 30, 2017


259

$
90.93


259

$
394,090
October 1 through October 31, 2017

311,140

93.72

311,140

364,928
November 1 through November 30, 2017

-

-

-

364,928
Total

311,399

$
93.72

311,399



Period	Total Number of Shares Purchased (1)	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Maximum Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands) (2)
September 1 to September 30, 2018	708	$	123.76	708	$	285,694
October 1 to October 31, 2018	705,716	122.22		705,716	199,442
November 1 to November 30, 2018	108,670	127.31		108,670	185,606
Total	815,094	$	122.90	815,094


(1)	The number of shares above includes shares of common stock acquired from employees who tendered shares to: i) satisfy the tax withholding on equity awards as part of our long-term incentive plans or ii) satisfy the exercise price on stock option exercises. For the three months ended November 30, 2018, 1,398 shares were acquired at a weighted average per share price of $125.03.


(2)	Reflects the remaining dollar value of shares that may yet be purchased under our Stock Repurchase Plan through the end of November 30, 2018 as authorized by the Company's Board of Directors in May 2017. For additional information, see Note 8 to the accompanying condensed consolidated financial statements.

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~~ITEM 6.~~

~~EXHIBITS~~

ITEM 6.

EXHIBITS

~~(a)~~

(a)

Exhibits

31.1*

10.1

Amended and Restated Employment Agreement among Helen of Troy Nevada Corporation, Helen of Troy Limited, a Bermuda company, Helen of Troy Limited, a Barbados company, and Julien Mininberg, effective March 1, 2019 (incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed with the Securities and Exchange Commission on November 7, 2018).

10.2*

Fourth Supplemental Trust Indenture, dated effective as of September 28, 2018, by and between Mississippi Business Finance Corporation and U.S. Bank National Association (successor to Deutsche Bank National Trust Company), as trustee.

10.3*

Fifth Amendment to Guaranty Agreement, dated effective as of September 28, 2018, made by Helen of Troy Limited and certain of its subsidiaries in favor of Bank of America, N.A.

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.

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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:
~~Date:~~ January 9, ~~2018~~ 2019	~~/s/~~ /s/ Julien R. Mininberg
		Julien R. Mininberg
		Chief Executive Officer, Director and Principal Executive Officer

Date:
~~Date:~~ January 9, ~~2018~~ 2019	~~/s/~~/s/ Brian L. Grass
		Brian L. Grass
		Chief Financial Officer, Principal Financial
	Officer and Principal Accounting Officer


~~Bermuda~~		~~74-2692550~~
Bermuda	74-2692550
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

Clarendon 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)



Large accelerated filer☒x	Accelerated filer ☐¨	Non-accelerated filer☐¨	Smaller reporting company ☐¨	Emerging growth company☐¨


		~~PAGE~~
		PAGE

PART 1.I.	FINANCIAL INFORMATION

Item 1.	Financial Statements	2 2

	Note 1 - Basis of Presentation and Related Information	6 6
	Note 2 - New Accounting Pronouncements	7 7
	Note 3 - Revenue Recognition	8
	Note 4 - Discontinued Operations	9
	Note 5 - Supplemental Balance Sheet Information	10 8
	Note ~~4 - Acquisitions~~	9
	~~Note 5~~6 - Goodwill and Intangible Assets	10 10
	Note 67 - Share-Based Compensation Plans	12 13
	Note 78 - Repurchase of Helen of Troy Common Stock	13 14
	Note 89 - Restructuring Plan	14 14
	Note 910 - Commitments and Contingencies	14 15
	Note 1011 - Long-Term Debt	15 15
	Note 1112 - Fair Value	16 17
	Note 1213 - Financial Instruments and Risk Management	17 18
	~~Note 13 - Comprehensive Income (Loss)~~	20
	Note 14 - Segment Information	19 21
	Note 15 - Income Taxes	20 22
	Note 16 - Earnings Per Share	21 22
	~~Note 17 - Subsequent Events~~	23

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	22 24

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	47 47

Item 4.	Controls and Procedures	48 48

PART 2.II.	OTHER INFORMATION

Item 1.	Legal Proceedings	48 50

Item 1A.	Risk Factors	48 50

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	50 51

Item 6.	Exhibits	51 52

SIGNATURES		52 53


	November 30,		February 28,
(in thousands, except shares and par value)	2017		2017
Assets
Assets, current:
Cash and cash equivalents	$	21,157	$	23,087
Receivables - principally trade, less allowances of $9,624 and $5,656		302,390		229,928
Inventory		285,594		289,122
Prepaid expenses and other current assets		13,505		11,699
Income taxes receivable		-		2,242
Total assets, current		622,646		556,078

Property and equipment, net of accumulated depreciation of $118,485 and $106,561		132,989		134,935
Goodwill		602,320		698,929
Other intangible assets, net of accumulated amortization of $184,937 and $165,388		369,201		419,489
Deferred tax assets, net		44,590		1,955
Other assets, net of accumulated amortization of $1,999 and $1,930		3,149		1,710
Total assets	$	1,774,895	$	1,813,096

Liabilities and Stockholders' Equity
Liabilities, current:
Accounts payable, principally trade	$	109,196	$	111,763
Accrued expenses and other current liabilities		174,532		153,200
Income taxes payable		54,538		-
Long-term debt, current maturities		20,860		24,404
Total liabilities, current		359,126		289,367

Long-term debt, excluding current maturities		405,331		461,211
Deferred tax liabilities, net		8,153		20,091
Other liabilities, noncurrent		17,875		21,661
Total liabilities		790,485		792,330

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; 26,960,863 and 27,028,665 shares
issued and outstanding		2,696		2,703
Additional paid in capital		228,143		218,760
Accumulated other comprehensive income (loss)		(1,338)		1,173
Retained earnings		754,909		798,130
Total stockholders' equity		984,410		1,020,766
Total liabilities and stockholders' equity	$	1,774,895	$	1,813,096


	Estimated
	Useful Lives			November 30,		February 28,
(in thousands)	(Years)			2017		2017
Land		-		$	12,800	$	12,800
Building and improvements	3	-	40		109,108		109,026
Computer, furniture and other equipment	3	-	15		89,838		81,122
Tools, molds and other production equipment	1	-	10		33,792		31,157
Construction in progress		-			5,936		7,391
Property and equipment, gross					251,474		241,496
Less accumulated depreciation					(118,485)		(106,561)
Property and equipment, net				$	132,989	$	134,935


Assets:
Receivables	$	7,955
Inventory		6,243
Prepaid expenses and other current assets		336
Property and equipment		1,108
Goodwill		116,053
Trade names - indefinite		59,000
Technology assets - definite		10,300
Customer relationships - definite		14,200
Subtotal - assets		215,195

Liabilities:
Accounts payable		2,275
Accrued expenses		3,662
Subtotal - liabilities		5,937
Net assets recorded	$	209,258


	November 30, 2017								February 28, 2017
	Gross		Cumulative						Gross		Cumulative
	Carrying		Goodwill		Accumulated		Net Book		Carrying		Goodwill		Accumulated		Net Book
(in thousands)	Amount		Impairments		Amortization		Value		Amount		Impairments		Amortization		Value
Housewares:
Goodwill	$	282,056	$	-	$	-	$	282,056	$	282,056	$	-	$	-	$	282,056
Trademarks - indefinite		134,200		-		-		134,200		134,200		-		-		134,200
Other intangibles - finite		40,751		-		(17,074)		23,677		40,393		-		(15,476)		24,917
Total Housewares		457,007		-		(17,074)		439,933		456,649		-		(15,476)		441,173

Health & Home:
Goodwill		284,913		-		-		284,913		284,913		-		-		284,913
Trademarks - indefinite		54,000		-		-		54,000		54,000		-		-		54,000
Licenses - finite		15,300		-		(15,300)		-		15,300		-		(15,300)		-
Licenses - indefinite		7,400		-		-		7,400		7,400		-		-		7,400
Other intangibles - finite		117,473		-		(74,400)		43,073		116,982		-		(66,027)		50,955
Total Health & Home		479,086		-		(89,700)		389,386		478,595		-		(81,327)		397,268

Nutritional Supplements:
Goodwill		96,609		(96,609)		-		-		96,609		-		-		96,609
Brand assets - indefinite		20,432		-		-		20,432		56,020		-		-		56,020
Other intangibles - finite		52,180		-		(22,095)		30,085		44,180		-		(16,715)		27,465
Total Nutritional Supplements		169,221		(96,609)		(22,095)		50,517		196,809		-		(16,715)		180,094

Beauty:
Goodwill		81,841		(46,490)		-		35,351		81,841		(46,490)		-		35,351
Trademarks - indefinite		41,854		-		-		41,854		45,854		-		-		45,854
Trademarks - finite		150		-		(96)		54		150		-		(92)		58
Licenses - indefinite		10,300		-		-		10,300		10,300		-		-		10,300
Licenses - finite		13,696		-		(12,087)		1,609		13,696		-		(11,849)		1,847
Other intangibles - finite		46,402		-		(43,885)		2,517		46,402		-		(39,929)		6,473
Total Beauty		194,243		(46,490)		(56,068)		91,685		198,243		(46,490)		(51,870)		99,883
Total goodwill and intangible assets	$	1,299,557	$	(143,099)	$	(184,937)	$	971,521	$	1,330,296	$	(46,490)	$	(165,388)	$	1,118,418


Aggregate Amortization Expense (in thousands)
For the three months ended
November 30, 2017	$	6,430
November 30, 2016		7,199

Aggregate Amortization Expense (in thousands)
For the nine months ended
November 30, 2017	$	19,578
November 30, 2016		21,625


Estimated Amortization Expense (in thousands)
Fiscal 2018	$	26,095
Fiscal 2019		20,604
Fiscal 2020		19,516
Fiscal 2021		16,926
Fiscal 2022		6,450
Fiscal 2023		4,280


	Three Months Ended				Nine Months Ended
	November 30,				November 30,
(in thousands, except per share data)	2017		2016		2017		2016
Stock options	$	327	$	629	$	1,289	$	2,036
Directors stock compensation		175		175		575		525
Performance based and other stock awards		4,202		2,151		9,141		8,998
Employee stock purchase plan		-		-		297		258
Share-based compensation expense		4,704		2,955		11,302		11,817
Less income tax benefits		(781)		(706)		(1,862)		(2,920)
Share-based compensation expense, net of income tax benefits	$	3,923	$	2,249	$	9,440	$	8,897

Earnings per share impact of share-based compensation expense:
Basic	$	0.14	$	0.08	$	0.35	$	0.32
Diluted	$	0.14	$	0.08	$	0.35	$	0.32


	Original
	Date	Interest			November 30,		February 28,
(dollars in thousands)	Borrowed	Rates		Matures	2017		2017
Mississippi Business Finance Corporation Loan (the "MBFC Loan")(1)	03/13	Floating		03/23	$	24,215	$	29,903
Senior Notes(2)	01/11	3.9	%	01/18		19,976		19,763
Credit Agreement(3)	01/15	Floating		12/21		382,000		435,949
Total long-term debt						426,191		485,615
Less current maturities of long-term debt						(20,860)		(24,404)
Long-term debt, excluding current maturities					$	405,331	$	461,211


	Three Months Ended November 30,
	Gain (Loss)				Gain (Loss) Reclassified from
	Recognized in OCI				Accumulated Other Comprehensive					Gain (Loss) Recognized
	(effective portion)				Income (Loss) into Income					As Income
(in thousands)	2017		2016		Location	2017		2016		Location	2017		2016
Currency contracts - cash flow hedges	$	2,928	$	2,049	SG&A	$	1,328	$	522		$	-	$	-
Interest rate swaps - cash flow hedges		753		-	Interest expense		-		-	Interest expense		(48)		-
Cross-currency debt swaps - principal		-		-			-		-	SG&A		(419)		493
Cross-currency debt swaps - interest		-		-			-		-	Interest Expense		74		-
Total	$	3,681	$	2,049		$	1,328	$	522		$	(393)	$	493


	Nine Months Ended November 30,
	Gain (Loss)				Gain (Loss) Reclassified from
	Recognized in OCI				Accumulated Other Comprehensive					Gain (Loss) Recognized
	(effective portion)				Income (Loss) into Income					As Income
(in thousands)	2017		2016		Location	2017		2016		Location	2017		2016
Currency contracts - cash flow hedges	$	(1,275)	$	2,319	SG&A	$	2,208	$	505		$	-	$	-
Interest rate swaps - cash flow hedges		753		-	Interest expense		-		-	Interest expense		(48)		-
Cross-currency debt swaps - principal		-		-			-		-	SG&A		(1,183)		528
Cross-currency debt swaps - interest		-		-			-		-	Interest Expense		74		35
Total	$	(522)	$	2,319		$	2,208	$	505		$	(1,157)	$	563


		Unrealized Holding Gains (Losses) on Cash Flow Hedges
(in thousands)		Interest Rate Swaps(1)		Foreign Currency Contracts(2)		Total
Balance at February 28, 2017	$	-	$	1,173	$	1,173
Other comprehensive income (loss) before reclassification		753		(1,275)		(522)
Amounts reclassified out of accumulated other comprehensive income (loss)		-		(2,208)		(2,208)
Tax effects		(290)		509		219
Other comprehensive income (loss)		463		(2,974)		(2,511)
Balance at November 30, 2017	$	463	$	(1,801)	$	(1,338)


	Three Months Ended November 30, 2016
(In thousands)	Housewares				Health & Home				Nutritional Supplements				Beauty				Total
Operating income (loss), as reported (GAAP)	$	29,223	23.4	%	$	20,155	11.2	%	$	(80)	(0.2)	%	$	14,021	13.0	%	$	63,319	14.2	%
Amortization of intangible assets		658	0.5	%		3,546	2.0	%		1,571	4.9	%		1,424	1.3	%		7,199	1.6	%
Non-cash share-based compensation		671	0.5	%		872	0.5	%		369	1.1	%		991	0.9	%		2,903	0.7	%
Adjusted operating income (non-GAAP)	$	30,552	24.5	%	$	24,573	13.7	%	$	1,860	5.8	%	$	16,436	15.3	%	$	73,421	16.5	%


	Three Months Ended November 30, 2017
		Income (Loss)					Diluted Earnings (Loss) Per Share
(in thousands, except per share data)	Before tax		Tax		Net of Tax		Before tax		Tax		Net of Tax
As reported (GAAP)	$	(19,215)	$	11,221	$	(30,436)	$	(0.71)	$	0.41	$	(1.12)

Asset impairment charges		82,227		(6,380)		88,607		3.02		(0.23)		3.25
Restructuring charges(1)		1,283		69		1,214		0.05		-		0.04
Subtotal		64,295		4,910		59,385		2.36		0.18		2.18
Amortization of intangible assets		6,430		853		5,577		0.24		0.03		0.20
Non-cash share-based compensation		4,651		781		3,870		0.17		0.03		0.14
Adjusted (non-GAAP)	$	75,376	$	6,544	$	68,832	$	2.76	$	0.24	$	2.52

Weighted average shares of common stock used in computing:
Diluted earnings (loss) per share, as reported												27,113
Adjusted diluted earnings per share (non-GAAP)												27,267


	Three Months Ended November 30, 2016
		Income					Diluted Earnings Per Share
(in thousands, except per share data)	Before tax		Tax		Net of Tax		Before tax		Tax		Net of Tax
As reported (GAAP)	$	59,800	$	2,188	$	57,612	$	2.15	$	0.08	$	2.07

Asset impairment charges		-		-		-		-		-		-
Restructuring charges(1)		-		-		-		-		-		-
Subtotal		59,800		2,188		57,612		2.15		0.08		2.07
Amortization of intangible assets		7,199		1,009		6,190		0.26		0.04		0.22
Non-cash share-based compensation		2,903		706		2,197		0.10		0.02		0.08
Adjusted (non-GAAP)	$	69,902	$	3,903	$	65,999	$	2.51	$	0.14	$	2.37

Weighted average shares of common stock used in computing:
Diluted earnings per share, as reported												27,802
Adjusted diluted earnings per share (non-GAAP)												27,802


	Nine Months Ended November 30, 2017
(In thousands)	Housewares(2)				Health & Home				Nutritional Supplements				Beauty				Total
Operating income (loss), as reported (GAAP)	$	71,601	21.0	%	$	50,187	10.3	%	$	(138,413)	(150.1)	%	$	17,869	6.7	%	$	1,244	0.1	%
Asset impairment charges		-	-	%		-	-	%		132,297	143.5	%		4,000	1.5	%		136,297	11.4	%
Restructuring charges(1)		-	-	%		-	-	%		118	0.4	%		1,165	1.1	%		1,283	0.3	%
TRU bankruptcy charge		956	0.3	%		2,640	0.5	%		-	-	%		-	-	%		3,596	0.3	%
Subtotal		72,557	21.3	%		52,827	10.8	%		(5,998)	(6.5)	%		23,034	8.6	%		142,420	12.0	%
Amortization of intangible assets		1,618	0.5	%		8,373	1.7	%		5,380	5.8	%		4,207	1.6	%		19,578	1.6	%
Non-cash share-based compensation		3,579	1.0	%		3,792	0.8	%		980	1.1	%		2,779	1.0	%		11,130	0.9	%
Adjusted operating income (non-GAAP)	$	77,754	22.8	%	$	64,992	13.3	%	$	362	0.4	%	$	30,020	11.2	%	$	173,128	14.5	%


	Nine Months Ended November 30, 2016
(In thousands)	Housewares				Health & Home				Nutritional Supplements				Beauty				Total
Operating income (loss), as reported (GAAP)	$	68,956	21.9	%	$	39,156	8.3	%	$	(6,581)	(6.5)	%	$	22,173	8.1	%	$	123,704	10.7	%
Asset impairment charges		-	-	%		-	-	%		5,000	4.9	%		2,400	0.9	%		7,400	0.6	%
Patent litigation charge		-	-	%		1,468	0.3	%		-	-	%		-	-	%		1,468	0.1	%
Subtotal		68,956	21.9	%		40,624	8.6	%		(1,581)	(1.6)	%		24,573	9.0	%		132,572	11.4	%
Amortization of intangible assets		1,986	0.6	%		10,626	2.3	%		4,713	4.7	%		4,300	1.6	%		21,625	1.9	%
Non-cash share-based compensation		2,404	0.8	%		3,787	0.8	%		1,734	1.7	%		3,736	1.4	%		11,661	1.0	%
Adjusted operating income (non-GAAP)	$	73,346	23.3	%	$	55,037	11.7	%	$	4,866	4.8	%	$	32,609	11.9	%	$	165,858	14.3	%


			2018		2019		2020		2021		2022		After
(in thousands)	Total		1 year		2 years		3 years		4 years		5 years		5 years
Fixed rate debt	$	20,000	$	20,000	$	-	$	-	$	-	$	-	$	-
Floating rate debt		410,307		1,900		1,900		1,900		1,900		387,900		14,807
Long-term incentive plan payouts		10,658		4,972		4,286		1,400		-		-		-
Interest on fixed rate debt		91		91		-		-		-		-		-
Interest on floating rate debt(1)		43,591		10,800		10,750		10,701		10,651		593		96
Open purchase orders		205,399		205,399		-		-		-		-		-
Long-term purchase commitments		1,180		1,180		-		-		-		-		-
Minimum royalty payments		56,970		12,515		12,905		13,067		8,999		8,983		501
Advertising and promotional		48,396		17,586		7,315		7,371		7,450		7,174		1,500
Operating leases		34,343		6,468		5,079		4,524		4,152		3,543		10,577
Capital spending commitments		643		643		-		-		-		-		-
Total contractual obligations(2)	$	831,578	$	281,554	$	42,235	$	38,963	$	33,152	$	408,193	$	27,481


	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs (in thousands)
September 1 through September 30, 2017	259	$	90.93		259	$	394,090
October 1 through October 31, 2017	311,140		93.72		311,140		364,928
November 1 through November 30, 2017	-		-		-		364,928
Total	311,399	$	93.72		311,399

Outstanding at January 4, ~~2018~~
2019

Common Shares, $0.10 par value, per share

~~26,968,072~~25,594,840 shares