Helen of Troy Limited (HELE) 8-K/A Financial statements and exhibits

Exhibit 99.3

HELEN OF TROY LIMITED

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

Basis of Presentation

     On June 1, 2004, Helen of Troy Limited (“Helen of Troy”, “the Company”, “we”, “our”) completed an acquisition of certain assets and liabilities of OXO International from World Kitchen (GHC), LLC, WKI Holding Company, Inc. and World Kitchen, Inc. (collectively, “Seller”) for approximately $273.2 million plus the assumption of certain liabilities totaling approximately $4.0 million.

     The following unaudited pro forma combined condensed balance sheet has been prepared as if the OXO International (“OXO”) assets acquired and liabilities assumed from WKI Holding Company, Inc. and certain of its subsidiaries (“WKI”) on June 1, 2004 had taken place on May 31, 2004. The pro forma combined condensed balance sheet uses information derived from the unaudited financial statements contained in our Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 2004, combined with the unaudited statement of net assets to be acquired for OXO International prepared as of March 28, 2004. We have estimated the fair value of the assets acquired and liabilities assumed on a preliminary basis using available information. Based on the preliminary estimates, the fair value of goodwill is $164,259,000 and the fair value of identifiable intangible assets is $93,190,000. Goodwill is not amortized but will be reviewed for impairment at least annually. The identifiable intangible assets include approximately $17,990,000 allocated to assets having definite useful lives that are subject to straight line amortization (primarily patents and customer lists), and approximately $75,200,000 allocated to the OXO trademark which has an indefinite life and thus is not subject to amortization. These identifiable intangible assets will also be reviewed for impairment at least annually.

     The following unaudited pro forma combined condensed statements of income for the year ended February 29, 2004, and three months ended May 31, 2004, have been prepared as if the acquisition had taken place on March 1, 2003. The statements are intended to show the impact we believe the acquisition of OXO would have had on the last full fiscal year of operations and the latest reported fiscal quarter’s operations, had they been operating as one of our business units during these periods. These pro forma combined condensed statements of income use historical information derived from the audited financial statements and related notes thereto included in our Annual Report on Form 10-K for the fiscal year ended February 29, 2004, and from the unaudited financial statements contained in our Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 2004. These pro forma combined condensed statements of income also use OXO’s historical information derived from the accompanying statements of revenues and direct expenses for the Quarter ended March 28, 2004, and the Year ended December 31, 2003.

     The unaudited pro forma combined condensed financial statements have been prepared by us using certain assumptions as disclosed in the accompanying footnotes. The unaudited pro forma combined condensed financial statements presented herein are shown for illustrative purposes only and are not necessarily indicative of the financial position or future results of operations of our Company, or of our financial position or results of operations that would have actually occurred had the acquisition been in effect as of the date or for the periods presented. Further, interim results are not necessarily indicative of results to be realized for a full year due to the effects of, among other things, seasonality. Finally, the allocation of the purchase price is preliminary and may be subject to further revision.

     The unaudited pro forma combined condensed financial statements should be read in conjunction with our separate historical financial statements and notes contained in our most recent public filings, the historical financial statements and notes of the operations of OXO International contained elsewhere in this filing and in conjunction with the related notes to these unaudited pro forma combined condensed financial statements. In management’s opinion, all adjustments necessary to reflect the effect of this transaction have been made.

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HELEN OF TROY LIMITED AND SUBSIDIARIES

Pro Forma Combined Condensed Balance Sheet as of May 31, 2004
(unaudited)
(in thousands, except shares and par value)

	Helen of Troy			OXO International		Pro Forma			Pro Forma
	May 31, 2004			March 28, 2004		Adjustments			Combined
Assets
Current assets:
Cash and cash equivalents	$	52,819		$	—	$	—		$	52,819
Trading securities, at market value		385			—		—			385
Receivables — principally trade, net		82,653			—		—			82,653
Inventories		105,841			18,356		—			124,197
Prepaid expenses		8,333			353		—			8,686
Deferred income tax benefits		5,447			—		—			5,447
Total current assets		255,478			18,709		—			274,187
Property and equipment, net		70,333			2,963					73,296
Goodwill, net		52,786			72,261		91,998	(a)		217,045
Trademarks, net		52,897			42,000		33,200	(a)		128,097
License agreements, net		30,321			—		—			30,321
Other intangible assets, net		—			17,700		290	(a)		17,990
Other assets		27,077			—		3,593	(b)		30,670
	$	488,892		$	153,633	$	129,081		$	771,606
Liabilities and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt	$	10,000		$	—	$	—		$	10,000
Accounts payable, principally trade		21,774			—		3,593	(b)		25,367
Accrued expenses		18,627			5,948		—			24,575
Income taxes payable		25,448			—		—			25,448
Total current liabilities		75,849			5,948		3,593			85,390
Long-term debt, less current portion		45,000			—		273,173	(a)		318,173
Total liabilities		120,849			5,948		276,766			403,563
Stockholders’ equity
Cumulative preferred stock		—			—		—			—
Common stock		2,951			—		—			2,951
Equity in net assets		—			147,685		(147,685	)(a)		—
Additional paid-in-capital		75,883			—		—			75,883
Retained earnings		290,938			—		—			290,938
Accumulated other comprehensive loss		(1,729	)		—		—			(1,729	)
Total stockholders’ equity		368,043			147,685		(147,685	)		368,043
Commitments and contingencies
	$	488,892		$	153,633	$	129,081		$	771,606

See accompanying notes to pro forma combined financial statements.

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HELEN OF TROY LIMITED AND SUBSIDIARIES

Pro Forma Combined Condensed Statement of Income for the Quarter Ended May 31, 2004
(unaudited)
(in thousands, except per share data)

	Helen of Troy			OXO International
	Quarter Ended			Quarter Ended		Pro Forma			Pro Forma
	May 31, 2004			March 28, 2004		Adjustments			Combined
Net sales	$	107,021		$	23,978	$	(365	)(e)	$	130,205
							(784	)(f)
							355	(g)
Cost of sales		56,781			12,566		(283	)(e)		68,663
							(401	)(f)
Gross profit		50,240			11,412		(110	)		61,542
Selling, general, and administrative expense		31,340			4,820		(758	)(c)		36,303
							(515	)(d)
							(137	)(e)
							(144	)(f)
							355	(g)
							422	(h)
							459	(i)
							232	(j)
							229	(k)
Operating income		18,900			6,592		(253	)		25,239
Other income (expense):
Interest expense		(986	)		—		(1,756	)(l)		(2,742	)
Other income (expense), net		96			—		(238	)(m)		(142	)
Total other income (expense)		(890	)		—		(1,994	)		(2,884	)
Earnings before income taxes		18,010			6,592		(2,247	)		22,355
Income tax expense		3,305			—		797	(n)		4,102
Income from continuing operations	$	14,705		$	6,592	$	(3,044	)	$	18,253
Earnings per share from continuing operations:
Basic	$	0.50				$	0.12	(o)	$	0.62
Diluted	$	0.45				$	0.11	(o)	$	0.56
Weighted average common shares
Basic		29,439								29,439
Diluted		32,724								32,724

See accompanying notes to pro forma combined financial statements.

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HELEN OF TROY LIMITED AND SUBSIDIARIES
Pro Forma Combined Condensed Statement of Income for the Year Ended February 29, 2004
(unaudited)
(in thousands, except per share data)

	Helen of Troy			OXO International
	Year Ended			Year Ended		Pro Forma			Pro Forma
	February 29, 2004			December 31, 2003		Adjustments			Combined
Net sales	$	474,868		$	88,897	$	(1,936	)(e)	$	561,374
							(1,848	)(f)
							1,393	(g)
Cost of sales		257,651			48,703		(263	)(e)		305,079
							(1,012	)(f)
Gross profit		217,217			40,194		(1,116	)		256,295
Selling, general, and administrative expense		131,443			16,094		(1,511	)(c)		148,574
							(2,038	)(d)
							(1,565	)(e)
							(442	)(f)
							1,393	(g)
							1,688	(h)
							1,581	(i)
							865	(j)
							1,066	(k)
Operating income		85,774			24,100		(2,153	)		107,721
Other income (expense):
Interest expense		(4,047	)		—		(6,797	)(l)		(10,844	)
Other income (expense), net		4,312			—		(993	)(m)		3,319
Total other income (expense)		265			—		(7,790	)		(7,525	)
Earnings before income taxes		86,039			24,100		(9,943	)		100,196
Income tax expense		14,477			—		2,382	(n)		16,859
Income from continuing operations	$	71,562		$	24,100	$	(12,325	)	$	83,337
Earnings per share:
Basic	$	2.52				$	0.42	(o)	$	2.94
Diluted	$	2.29				$	0.38	(o)	$	2.67
Weighted average common shares
Basic		28,356								28,356
Diluted		31,261								31,261

See accompanying notes to pro forma combined financial statements.

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HELEN OF TROY LIMITED AND SUBSIDIARIES
NOTES TO PRO FORMA COMBINED CONDENSED BALANCE SHEET AND
STATEMENTS OF INCOME
For the Quarter Ended May 31, 2004 and the Year ended February 29, 2004

Notes for Pro Forma Combined Condensed Balance Sheets:

(a)

Adjustments and reclassifications, including estimated purchase price allocations, to record all assets acquired and liabilities assumed from WKI as if the purchase had taken place on May 31, 2004. Additionally, the adjustment records the related acquisition indebtedness incurred upon acquisition which consisted of $200,000,000 under a Term Loan Credit Agreement, and $73,173,000 under a Revolving Line of Credit Agreement. Borrowings under the Term Loan Credit Agreement and $25,000,000 under the Revolving Line of Credit Agreement were subsequently paid off with the proceeds of the funding of $225,000,000 Floating Rate Senior Notes on June 29, 2004. Additional information regarding these financing transactions is contained in the Notes 15 and 16 to Helen of Troy’s unaudited financial statements contained in our Quarterly Report on Form 10-Q for the fiscal quarter ended May 31, 2004.

(b)

Adjustments to record additional deferred financing costs incurred after May 31, 2004 in connection with the incurrence of acquisition indebtedness. With this adjustment, deferred financing costs in connection with the acquisition of OXO totaled $5,618,000. These costs are to be amortized over the lives of the underlying debt instruments. Future annual amortization to be incurred with this debt is as follows (in thousands):

Year 1	$	993
Years 2 through 5		954
Years 6 through 7		250
Years 8 through 10		103

Notes for Pro Forma Combined Condensed Statements of Income:

(c)	Adjustments to reflect the removal of certain of OXO’s employee benefits and incentive expenses that were recorded in the pre-acquisition statements of income based upon the various programs OXO participated in as a subsidiary of WKI. Under Helen of Troy’s ownership, as discussed in Note (i) below, OXO’s employee benefits and incentive expenses will be adjusted to conform to certain programs that Helen of Troy offers.
(d)	Adjustments to reflect the removal of OXO’s patent amortization expense which was recorded in the pre-acquisition statements of income based upon pre-acquisition book values and estimated useful lives. As discussed in Note (h) below, intangible asset amortization has been adjusted to account for the estimated fair values and useful lives of intangible assets as of the date of acquisition.
(e)	Adjustments to reflect sales of OXO products to WKI factory stores on an “arms-length” wholesale basis under Helen of Troy’s ownership. Accordingly, retail sales markups have been removed from net sales, certain additional retail related distribution costs have been removed from cost of sales, and retail store operating costs have been removed from selling, general and administrative expense.
(f)	Adjustments to eliminate revenues, cost of sales and selling, general and administrative expenses incurred by certain WKI international subsidiaries whose businesses were not transferred to Helen of Troy in the acquisition. Going forward, Helen of Troy has entered into third party distribution agreements with these subsidiaries and will receive a royalty on all related sales made through these subsidiaries. Accordingly, all revenues, cost of sales, selling, general and administrative expenses associated with these subsidiaries have been eliminated and comparable royalty revenue has been recorded to properly reflect the new relationship.

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(g)	Adjustments to reclass OXO’s domestic distribution related royalty revenues in order to conform with Helen of Troy’s existing reporting policy for this type of revenue.
(h)	Adjustments to reflect the amortization of certain identifiable intangible assets with an estimated fair value $17,990,000 at acquisition allocated to assets having definite useful lives ranging from 2 to 13 years and subject to straight line amortization (primarily patents and customer lists). It is Helen of Troy’s accounting policy to record these expenses under selling, general and administrative expense.
(i)	Adjustments to reflect certain employee benefits and incentive expenses that we will accrue to the benefit of OXO’s employees as employees of a Helen of Troy subsidiary.
(j)	Adjustments to reflect the incremental corporate overhead expenses we estimate we will incur related to the operations of OXO. These expenses include such items as executive, legal, treasury, accounting, human resources, purchasing, and information technology services.
(k)	Adjustments to record the impact of the acquisition’s accretive earnings on Helen of Troy’s existing executive incentive compensation plan.
(l)	Adjustments to reflect the interest expense that will be incurred on new acquisition indebtedness consisting of $48,173,000 as a Revolving Line of Credit and $225,000,000 Floating Rate Senior Notes. Interest during the periods presented was computed using an average rate of approximately 2.5 percent for the new acquisition indebtedness. For the purposes of these pro forma income statements, we assumed that the Revolving Line of credit would grow an additional $12,000,000 in the first 90 days of ownership to fund working capital requirements caused by the build up in OXO’s accounts receivable and accounts payable. All interest expense computations assume no pay down on the Revolving Line of Credit.
(m)	Adjustments to record the amortization of deferred financing costs incurred in connection with the acquisition of OXO.
(n)	Adjustments to reflect income taxes on the incremental pre tax earnings resulting from OXO’s acquisition and continuing operations using Helen of Troy’s expected tax rates.
(o)	The pro forma earnings per share from continuing operations is the per share net effect of OXO’s operations for the period presented, combined with the net effect of all pro forma adjustments (c) through (n).

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