Helen of Troy
Annual Report 2016

Plain-text annual report

Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549 FORM 10-K ☑ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended February 29, 2016 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-14669 HELEN OF TROY LIMITED(Exact name of the registrant as specified in its charter) Bermuda 74-2692550(State or other jurisdiction of (I.R.S. Employerincorporation or organization) Identification No.) Clarendon House2 Church StreetHamilton, Bermuda (Address of principal executive offices) 1 Helen of Troy Plaza El Paso, Texas 79912(Registrant’s United States MailingAddress ) (Zip Code) Registrant's telephone number, including area code: (915) 225-8000Securities registered pursuant to Section 12(b) of the Act: Title of each class Name of each exchange on which registeredCommon Shares, $0.10 par value per share The NASDAQ Stock Market, LLC Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☑ No ☐ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☑ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 duringthe preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirementsfor the past 90 days. Yes ☑ No ☐ Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that theregistrant was required to submit and post such files). Yes ☑ No ☐ Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will notbe contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or anyamendment to this Form 10- K. ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See thedefinitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☑Accelerated filer ☐Non-accelerated filer ☐(Do not check if a smaller reporting company)Smaller reporting company ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑ The aggregate market value of the voting and non-voting common shares held by non-affiliates of the registrant as of August 31, 2015, based upon the closingprice of the common shares as reported by The NASDAQ Global Select Market on such date, was approximately $2,386,142,154. As of April 21, 2016 there were 27,752,690 common shares, $0.10 par value per share, outstanding. DOCUMENTS INCORPORATED BY REFERENCE Certain information required for Part III of this annual report will be set forth in and incorporated herein by reference into Part III of this report from theCompany’s definitive Proxy Statement for the 2016 Annual General Meeting of Shareholders. Table of ContentsTABLE OF CONTENTS PAGE PART I Item 1.Business5 Item 1A.Risk Factors19 Item 1B.Unresolved Staff Comments32 Item 2.Properties33 Item 3.Legal Proceedings34 Item 4.Mine Safety Disclosures35 PART II Item 5.Market for Registrant's Common Equity, Related Shareholder Matters and IssuerPurchases of Equity Securities36 Item 6.Selected Financial Data40 Item 7.Management's Discussion and Analysis of Financial Condition and Results ofOperations42 Item 7A.Quantitative and Qualitative Disclosures About Market Risk73 Item 8.Financial Statements and Supplementary Data78 Item 9.Changes in and Disagreements with Accountants on Accounting and FinancialDisclosure129 Item 9A.Controls and Procedures129 PART III Item 10.Directors, Executive Officers and Corporate Governance130 Item 11.Executive Compensation130 Item 12.Security Ownership of Certain Beneficial Owners and Management and RelatedShareholder Matters130 Item 13.Certain Relationships and Related Transactions, and Director Independence130 Item 14.Principal Accounting Fees and Services130 PART IV Item 15.Exhibits, Financial Statement Schedules131 Signatures134 1 Table of ContentsCERTAIN CONVENTIONS USED IN THIS REPORT In this report and the accompanying consolidated financial statements and notes, unless otherwise indicated orthe context suggests otherwise, references to “the Company”, “our Company”, “Helen of Troy”, “we”, “us”, or“our” refer to Helen of Troy Limited and its subsidiaries. We refer to the Company’s common shares, par value $0.10per share, as “common stock.” References to “OXO” refer to the operations of OXO International and certain of itsaffiliated subsidiaries that comprise our Housewares segment. References to “Kaz” refer to the operations of Kaz,Inc. and its subsidiaries, which comprise a segment within the Company referred to as the Health & Home segment(formerly referred to as “Healthcare / Home Environment”). References to “Healthy Directions” refer to theoperations of Healthy Directions, LLC and its subsidiaries, acquired on June 30, 2014, that comprise the NutritionalSupplements segment. Our Beauty Segment was formerly referred to as “Personal Care.” References to “EMEA”refer to the combined geographic markets of Europe, the Middle East and Africa. We use product and service namesin this report for identification purposes only and they may be protected in the United States and other jurisdictions bytrademarks, trade names, service marks, and other intellectual property rights of the Company and other parties. Theabsence of a specific attribution in connection with any such mark does not constitute a waiver of any such right. Alltrademarks, trade names, service marks, and logos referenced herein belong to their respective owners. References to“the FASB” refer to the Financial Accounting Standards Board. References to “GAAP” refer to U.S. generallyaccepted accounting principles. References to “ASU” refer to the codification of GAAP in the Accounting StandardsUpdates issued by the FASB. References to “ASC” refer to the codification of GAAP in the Accounting StandardsCodification issued by the FASB. 2 Table of ContentsINFORMATION REGARDING FORWARD-LOOKING STATEMENTS Certain written and oral statements made by our Company and subsidiaries of our Company may constitute"forward-looking statements" as defined under the Private Securities Litigation Reform Act of 1995. This includesstatements made in this report, in other filings with the Securities and Exchange Commission (the "SEC"), in pressreleases, 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 othersimilar words identify forward-looking statements. All statements that address operating results, events or developmentsthat we expect or anticipate will occur in the future, including statements related to sales, earnings per share results, andstatements expressing general expectations about future operating results, are forward-looking statements and are basedupon our current expectations and various assumptions. We believe there is a reasonable basis for our expectations andassumptions, but there can be no assurance that we will realize our expectations or that our assumptions will provecorrect. 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 risksinclude but are not limited to the risks described in this report under Item 1A., “Risk Factors” and that are otherwisedescribed from time to time in our SEC reports as filed. As described later in this report, such risks, uncertainties andother important factors include, among others: ·our ability to deliver products to our customers in a timely manner and according to their fulfillment standards; ·our relationships with key customers and licensors; ·the costs of complying with the business demands and requirements of large sophisticated customers; ·our dependence on the strength of retail economies and vulnerabilities to any prolonged economic downturn; ·the retention and recruitment of key personnel; ·expectations regarding our recent and future acquisitions, including our ability to realize anticipated cost savings,synergies and other benefits along with our ability to effectively integrate acquired businesses; ·foreign currency exchange rate fluctuations; ·disruptions in U.S., Euro zone, Venezuela, and other international credit markets; ·risks associated with weather conditions, the duration and severity of the cold and flu season and other relatedfactors; ·our dependence on foreign sources of supply and foreign manufacturing, and associated operational risksincluding, but not limited to, long lead times, consistent local labor availability and capacity, and timely availabilityof sufficient shipping carrier capacity; ·risks to the Nutritional Supplements segment associated with the availability, purity and integrity of materials usedin the manufacture of vitamins, minerals and supplements; ·the impact of changing costs of raw materials, labor and energy on cost of goods sold and certain operatingexpenses; ·the geographic concentration and peak season capacity of certain U.S. distribution facilities increases our exposureto 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 netincome could vary in a material amount from such projections; ·circumstances which may contribute to future impairment of goodwill, intangible or other long-lived assets; ·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; 3 Table of Contents·increased product liability and reputational risks associated with the formulation and distribution of vitamins,minerals and supplements; ·the risks associated with potential adverse publicity and negative public perception regarding the use of vitamins,minerals and supplements; ·trade barriers, exchange controls, expropriations, and other risks associated with foreign operations; ·debt leverage and the constraints it may impose on our cash resources and ability to operate our business; ·the costs, complexity and challenges of upgrading and managing our global information systems; ·the risks associated with information security breaches; ·the increased complexity of compliance with a number of new government regulations as a result of addingvitamins, minerals and supplements to the Company’s portfolio of products; ·risks associated with product recalls, product liability, other claims, and related litigation against us; ·the risks associated with tax audits and related disputes with taxing authorities; ·the risks of potential changes in laws, including tax laws, health insurance laws and regulations related to conflictminerals 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. 4 Table of ContentsPART I ITEM 1. BUSINESS GENERAL We incorporated as Helen of Troy Corporation in Texas in 1968 and were reorganized as Helen of Troy Limitedin Bermuda in 1994. We are a global consumer products company offering creative solutions for our customers througha strong portfolio of well-recognized and widely trusted brands. We have built our market positions through newproduct innovation, product quality and competitive pricing. People around the world use our products every day tohelp meet their household, health and beauty needs. We have four business segments: ·Housewares. Our Housewares segment provides a broad range of innovative consumer products for the home.Product offerings include food preparation tools and appliances, gadgets, storage containers, cleaning,organization, baby and toddler care products. Key brands include OXO, OXO Good Grips, OXO Soft Works, OXOtot, OXO On and OXO SteeL. ·Health & Home. 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 portableheaters, fans, air purifiers, and insect control devices. Key brands include Vicks, Braun, Honeywell, PUR, Febreze,Stinger, Duracraft, and SoftHeat. ·Nutritional Supplements. Our Nutritional Supplements segment is a leading provider of premium brandedvitamins, minerals and supplements, as well as other health products sold directly to consumers. Key brandsinclude Omega Q Plus Resveratrol, Omega Q Plus, Probiotic Advantage, Vision Essentials, Total Cardio Cover,Joint Advantage Gold®, Triveratrol, Trilane, Berberine+GlucoDefense and OxyRub. ·Beauty. Our Beauty segment’s products include electric hair care, beauty care and wellness appliances; groomingtools and accessories; and liquid-, solid- and powder-based personal care and grooming products. Key brandsinclude Revlon, Sure, Pert Plus, Infusium 23, Brut, Ammens, Hot Tools, Pro Beauty, Bed Head, Karina, Sea Breeze,and Gold ‘N Hot. The Nutritional Supplements segment sells directly to consumers. Our other segments sell their productsprimarily through mass merchandisers, drugstore chains, warehouse clubs, catalogs, grocery stores, and specialtystores. In addition, the Beauty segment sells extensively through beauty supply retailers and wholesalers and the Health& Home segment sells certain of its product lines through medical distributors and other products through homeimprovement stores. We purchase our products from unaffiliated manufacturers, most of which are located in China,Mexico and the United States.5 Table of ContentsFiscal Year 2016 Operating Initiatives In fiscal year 2016, we made the following progress on key initiatives: ·Brand Investment and Growth – Accelerating our growth was a high priority in fiscal year 2016. We have madesignificant progress executing the strategic priorities guiding our multi-year transformation, which led to organicsales growth in fiscal year 2016 of almost 3 percent despite foreign currency headwinds of over 2 percent. Wemade prudent investments in developing and launching new products, go-to-market plans and marketing activitiesfor brands with leading positions or with the potential to grow share. We also intensified our focus on innovation,based on in-depth consumer and competitive research. Examples of progress made within each segment include: oHousewares. The Housewares segment sales grew almost 5 percent in fiscal year 2016, continuing its trackrecord of strong organic growth. The segment’s growth was driven by product innovation, categoryextension, expanded shelf placement, and international growth. Housewares continued to leverage itsexpertise in innovation, product design and category development. The segment successfully introduced anumber of new products including its innovative GreenSaver storage containers, which shipped in theSpring of 2015. GreenSaver, designed to extend the life of fresh produce, has been favorably received andis an example of a product that includes a higher-margin consumable with a repeat purchase cycle. Thisinnovation also illustrates the benefits of increased collaboration across the Company, leveraging Health &Home segment expertise in the use of activated carbon, which is effective in preserving produce. We alsolaunched new OXO On kitchen electrics, which leveraged expertise with electrical appliances in othersegments and entered the metal bakeware category with products featuring thoughtful design details.Additionally, Housewares continues to expand existing categories, evidenced by the OXO Hand-HeldSpiralizer, which turns vegetables and fruits into colorful salad toppings and a new OXO stainless steelprofessional cutlery line. oHealth & Home. Our Health & Home business segment grew in fiscal year 2016 despite the impacts of abelow average cold and flu season and significant foreign currency headwinds. Health & Home saw organicsales growth of almost 5 percent despite an approximately 3 percent negative foreign currency impact. Thesegment continued to expand its reach with several new thermometry products under the Braun brand,which were positively received in key markets. Consumer research indicated a desire to track and sharetemperature readings, so our new Vicks Smart Temp digital stick thermometer uses a smartphone app toconnect wirelessly via Bluetooth to track and share temperatures for multiple users within a family. Anotherexample of innovation is our new Vicks Sweet Dreams humidifier, building on the success of the StarryNight humidifier, which projects night scenes to calm parents and sick children as it provides relief fromcough and cold symptoms. The segment also introduced a new identity for the PUR brand and is launchingnew faucet mount and pitcher water filtration systems in the latter half of fiscal year 2017. We believe thatwater quality has gained increased awareness in the U.S. and our PUR products are category leaders incontaminant removal. Finally, during fiscal year 2016, we acquired fully paid-up licenses of the VicksVapoSteam inhalants and VapoPad scent pads, which strategically complements our U.S. humidifier andvaporizer business with consumable refills in both the liquid and pad form. The vast majority of VicksVapoSteam and VapoPads are used in Vicks humidifiers, vaporizers and other health care devices alreadymarketed by the segment. By combining the businesses of devices and consumables, we can give greatermarketing focus to the category and invest in additional product development. oNutritional Supplements. Our Nutritional Supplements business participates in the premium doctor-brandedvitamins, minerals and supplements category using an education and content driven a direct-to-consumerdistribution model. The segment is focused on acquiring new consumers through online and direct maileducation and marketing, and continues to see significant growth in customer adoption of its continuityprogram, called AutoDelivery, whereby customers can place an order once that is automatically refilledbased upon customer directed timing. The segment continues to work on new product introductions, whilesupporting its best-selling products from our established base of physicians. New products introduced infiscal year 2016 include Probiotic Advantage Bifido Beadlets, MK-7 Artery Circulation and Super HealthyProstate. We are also leveraging the segment’s ability to add new doctors and additional wellness areas.During the fiscal year we added Dr. Daniel Amen and Dr. Luigi Polla to our team. Dr. Amen is a nationallyrecognized6 Table of Contentsbrain health expert and NY Times best-selling author and Dr. Polla offers skin care expertise through hisAlchimie Forever line from Switzerland. These investments contributed to growth in their respective areas,while others are creating a platform for future growth. During fiscal year 2016, we also completed thewarehouse consolidation for Nutritional Supplements, one of our committed cost saving initiatives, whichalso brought more sophisticated direct-to-consumer fulfillment capabilities in-house. oBeauty. In fiscal year 2016 we reorganized the Beauty segment to stabilize the business and deliverconsumer product innovation in pursuit of promising opportunities. We believe the business showed earlysigns of stability with organic growth of almost 1 percent in the face of a foreign currency headwind of over2 percent. The reorganization included a streamlined approach to the retail and professional markets,unifying multiple sales and marketing organizations and key support functions such as finance, creativeservices and marketing. We added internal and external product design capability and selectively investedin new product development, while employing more efficient brand building by redirecting our marketingsupport based on quantitative marketing spend analysis. The first set of product and commercial initiativesdelivered both innovation and improved marketing. In retail appliances, our new Revlon One-Step HairDryer and Styler, was inspired by women searching for convenience and speed. In professional appliances,stylists indicated that longer appliances would make a difference solving needs around longer hair, so underthe Hot Tools professional brand, we launched extra-long versions of our straighteners and curling irons.Additionally, we re-launched our Pro Beauty Tools brand with new products and packaging that we believeappeals to consumers' demand for professional-grade products sold at retail. Finally, we eliminated lowerperforming products, which should improve our working capital efficiency and provides a platform forprofitable growth. ·Transforming the Organization – Our global shared services management structure consists of three sharedservice groups: Global Finance, Global Operations, and Global Legal, Human Resources and CorporateCommunications. We continued to implement new initiatives in connection with this structure, including theestablishment of a Global Leadership Council and made improvements in our information technology organizationand architecture, which is critical to enabling operating efficiencies and best practices. Throughout fiscal year 2016,we brought new talent into the organization, including the additions of a new Global Human Resources VicePresident and Chief Information Officer, and introduced a new compensation program designed to attract, retainand motivate top talent. We are also implementing additional best practices in a variety of areas such as demandplanning, sourcing, distribution automation, and efficiency and inventory management. ·Shareholder Friendly Policies – We are committed to acting in the best interests of shareholders. A key facet ofour shareholder friendly policies is to leverage the strong cash flow generation of our business to make accretiveacquisitions, as well as leverage the organic growth potential of our existing businesses. We effectively used ourcapital structure to make the Healthy Directions acquisition in June 2014 and the VapoSteam acquisition in March2015. Shortly after the end of fiscal year 2016, we closed the acquisition of Hydro Flask, a leading designer,distributor and marketer of high performance insulated stainless steel food and beverage containers for activelifestyles. We also returned capital to shareholders by repurchasing $100 million of our common stock on the openmarket during fiscal year 2016. We will continue to use the strong cash flow generation of our business and thefinancial flexibility of our balance sheet to invest in our core business, search for accretive acquisitions, andconsider return of capital to shareholders. We intend to improve our working capital efficiency through supplychain excellence and product rationalization, which we believe will further strengthen our balance sheet and freeadditional cash flow for capital transactions that benefit our shareholders. 7 Table of ContentsFiscal Year 2016 Developments ·On March 31, 2015, the Company completed the acquisition of the Vicks VapoSteam U.S. liquid inhalant businessfrom The Procter & Gamble Company (“P&G”), which includes a fully paid-up license of P&G’s Vicks VapoSteaminhalants. In a related transaction, the Company acquired a fully paid-up U.S. license of P&G’s Vicks VapoPadscent pads. Our VapoSteam operations are reported in the Health & Home segment. The vast majority of VicksVapoSteam and VapoPads are used in Vicks humidifiers, vaporizers and other health care devices already marketedby the Company. The aggregate purchase price for the two transactions was approximately $42.75 million financedprimarily with borrowings under our credit facility. The VapoSteam acquisition provided incremental net salesrevenue of $7.99 million for the eleven months of operations included in fiscal year 2016. The VapoSteam businessis highly seasonal with peak sales occurring in our third fiscal quarter. ·In March 2015, we announced the introduction of a premium line of kitchen electrics under the OXO On brand.The initial line consists of motorized toasters, coffee makers, a coffee grinder, an electric kettle, an immersionblender, and a hand mixer. The line shipped initially in the U.S. offering several unique features, as well asthoughtful design elements based on OXO’s universal design ethos. We believe OXO On appliances will providethe simplicity, functionality, and thoughtfulness consumers have come to expect from the OXO brand. The linebegan shipments to retail stores in the third quarter of fiscal year 2016. ·In August 2015, we repurchased 556,591 shares of our common stock in the open market at an average price of$89.93 per share for a total cost of $50 million. In January 2016, we repurchased 570,205 shares of our commonstock in the open market at an average price of $87.69 per share for a total cost of $50 million. ·During fiscal year 2016, we transitioned the Nutritional Supplements order fulfillment operations to our Southaven,Mississippi distribution facility. ·During fiscal year 2016, we consolidated and reorganized our Beauty segment’s organizational structure,eliminating certain overlapping functions to more efficiently leverage our scale, better focus on consumer-centricinnovation and best serve our professional and retail customers. The entire segment is now served by a commonshared service structure for marketing, financial and other back-office support. We believe this is a critical step inour efforts to stabilize and ultimately grow the Beauty segment. ·On November 12, 2015, the Company settled a lawsuit with its former CEO, which resulted in the payment ofseverance compensation due under his employment and separation agreements. The severance compensation waspreviously accrued and disclosed in fiscal year 2014 and was paid through the issuance of common shares of theCompany on November 17, 2015. The Company also transferred ownership of a life insurance policy on the livesof its former CEO and his spouse as part of the settlement. As a result of the transfer of the policy and otherexpenses incurred in connection with the settlement, the Company recorded CEO succession costs of $6.71 million($4.64 million after tax), or $0.16 per fully diluted share, in fiscal year 2016..·On January 22, 2016, a jury ruled against the Company in a case that involved claims by Exergen Corporation,headquartered in Watertown, MA. The case alleges patent infringement related to two forehead thermometermodels sold by our subsidiary, Kaz USA, Inc., in the United States. Exergen was awarded damages of $14.6million with respect to a period of approximately seven years of sales. The Company could be liable for payment ofroyalties on any future sales of the two products. As a result of the jury verdict, the Company recorded a fourthquarter charge, including legal fees and other related expenses, of $17.83 million ($17.79 million after tax). Theoutcome of the case is not yet final and the Company disagrees with the verdict, which will be subject to severalpost-trial motions and an appeal. The forehead thermometers involved in this case represent less than 1 percent ofconsolidated net sales for fiscal year 2016. ·During fiscal year 2016, we recorded non-cash asset impairment charges of $6.00 million ($5.31 million after tax).The charges relate to a trademark in our Beauty segment, which was written down to its estimated fair value.8 Table of Contents·As further discussed in Note (2) to the accompanying consolidated financial statements and under Item. 7.,“Management’s Discussion and Analysis of Financial Condition and Results of Operations – Overview,” wechanged the rate used to re-measure our Venezuelan financial statements as of February 29, 2016 to the SIMADIrate of approximately 205 Bolivars per U.S. Dollar, which was the lowest rate in a three-tiered exchange system inplace at the time. Shortly after the end of fiscal year 2016, the Venezuelan government introduced a new ratereferred to as DICOM that is intended to be market-based and was initially set at a rate very similar to that ofSIMADI. Absent further changes to the exchange systems, or unless future developments call for further changes,we intend to use DICOM to re-measure our financial statements on a go-forward basis. Consolidated net salesrevenue includes sales for our operations in Venezuela of $21.97 and $10.31 million in fiscal years 2016 and 2015,respectively. Operating income (loss) in Venezuela was ($9.95) and $2.87 million in fiscal years 2016 and 2015,respectively. The fiscal year 2016 operating loss includes re-measurement related charges totaling $18.73 million.At the current DICOM exchange rate, we expect that fiscal year 2017 U.S. Dollar reported net sales and operatingincome from Venezuela will no longer be meaningful to our consolidated and Beauty segment results. Recent Development On March 18, 2016, the Company acquired Steel Technology, LLC, doing business as Hydro Flask (“HydroFlask”). Hydro Flask is a leading designer, distributor and marketer of high performance insulated stainless steel foodand beverage containers for active lifestyles. Hydro Flask adds a fast growing brand that has built equity amongoutdoor and active lifestyle enthusiasts with a product lineup, innovation pipeline and margin profile that complements,and will operate in, our Housewares segment. The acquisition extends the segment’s reach into the outdoor and athleticspecialty, natural foods and e-commerce channels. Hydro Flask’s products have a carefully cultivated brand heritagerooted in the outdoor mecca of Bend, Oregon. The aggregate purchase price for the transaction was approximately$210 million in cash, subject to customary adjustments. The purchase price was funded with borrowings under ourcredit facility. Hydro Flask calendar year 2015 revenue was approximately $54 million. 9 Table of ContentsCompany Strategies As we look to the future, we have adopted a new way of looking at our strategic choices to improve the focus ofour business segments and corporate shared service organization. These choices will guide us regarding where we willoperate and how we will achieve our goals in markets around the world. The overall design of our business andorganizational plan is intended to create sustainable growth and improve organizational capability. ·Invest in our core businesses. We have developed a portfolio of brands that are clear market leaders or have apath to grow their market position in attractive categories. We believe that prudent investment in new products,new go-to-market plans and new marketing activities can grow them organically. During fiscal year 2016, weincreased our investment in those brands with the most promising potential. ·Strategic, disciplined mergers and acquisitions. We have a track record of successful acquisitions and arecontinually looking for new businesses and opportunities to expand in categories and geographies where webelieve we have critical mass and can develop a competitive advantage. We also seek to increase our brandreach through new licensing opportunities. We constantly assess our full suite of businesses to ensure each is agood fit with our long-term plans. ·Invest in consumer-centric innovation. We have a long history of developing or acquiring new technologies,new products that improve consumers’ lives and new designs to differentiate our products from competitors.We continue to increase our focus on innovation both in our core categories and product adjacencies. We alsofocus on initiatives that create commercial value for existing leadership products in order to increase theirappeal and accelerate their organic growth. ·Improve our organization and people systems. Our employees are our most valuable asset. Attracting,retaining and developing talent is a key focus of our company. To help us deliver strong business results, wehave recently transformed our organizational structure in an effort to increase collaboration across theenterprise, implement best practices across divisions and departments and better leverage our scale. We havealso adopted new compensation programs that we believe will promote greater accountability, better alignmanagement and shareholder interests and help attract and retain talent. ·Best in class shared services. We have developed an outstanding, diversified base of suppliers in NorthAmerica, China and Mexico. We have also invested heavily in our distribution centers and informationtechnology systems. We continuously strive to improve our existing supplier base and infrastructure, and todevelop new manufacturing partners to ensure our products are innovative, on time, on cost, and on quality. Weare applying similar disciplines and best practices to achieve operational excellence and leverage scale in ourback-office functions including customer service, product development, finance, legal services, humanresources, investor relations, and corporate communications. ·Asset efficiency. As we manage our businesses for long-term growth and success in the marketplace, we arealso looking to manage our overall base of assets and capital structure to increase shareholder value. We arefocused on maximizing cash flow, controlling our costs, increasing the efficiency of the capital we deploy, andoptimizing working capital assets such as inventory and accounts receivable through improved systems. Wealso seek to optimize our capital structure, with the selective use of leverage to invest in acquisitions and, whereappropriate, provide a return of capital to shareholders. We present financial information by operating segment in Note (20) to the accompanying consolidated financialstatements. The matters discussed in this Item 1., “Business,” pertain to all existing operating segments, unlessotherwise specified.10 Table of ContentsTRADEMARKS, PATENTS AND PRODUCTS We sell certain of our products under trademarks licensed from third parties. We also market products under anumber of trademarks that we own. The following is a representative listing of some of the more important trademarksby segment and major product category: SEGMENTPRODUCT CATEGORYOWNED TRADEMARKSLICENSEDTRADEMARKS HousewaresFood Preparation and StorageOXO®, Good Grips®, OXOOn® Cleaning, Bath and GardenSoftWorks®, OXO SteeL® Infant and ToddlerOXO tot®Heath & HomeHealthcareSoftHeat®, Protec®, SmartTemp®Braun®, Vicks® Water FiltrationPUR® Home EnvironmentDuracraft®, Stinger®, Nosquito®Honeywell®, Febreze® Nutritional Supplements Vitamins, Minerals andOmega Q Plus Resveratrol®, Trilane® SupplementsJoint Advantage Gold®, OxyRub®, Probiotic Advantage®, Triveratrol®, Omega Q Plus®, Vision Essentials®, Total Cardio Cover®, Berberine+GlucoDefense® Beauty Retail and ProfessionalPRO Beauty Tools®, Karina®,Revlon ®, Appliances and AccessoriesHot Tools®, Gold ‘N Hot®,Vidal Sassoon®, Carel®, Comare®,Dr. Scholls®, Shear Technology®, DCNL®Bed Head® Grooming, Skin CareBrut®, Infusium 23®,Sea Breeze® and Hair CarePert Plus®, Sure®, Ammens®, Ogilvie®, Final Net® Licensed Trademarks The Beauty and Health & Home segments depend upon the continued use of trademarks licensed under variousagreements for a substantial portion of their net sales revenue. New product introductions under licensed trademarksrequire approval from the respective licensors. The licensors must also approve the product packaging. Many of ourlicense agreements require us to pay minimum royalties, meet minimum sales volumes and some require us to makeminimum levels of advertising expenditures. If we decide to renew upon expiration of their current terms, we may berequired to pay renewal fees at the time of that election or we may be unable to renegotiate acceptable terms that willallow for renewal. We believe our principal trademarks, both owned and licensed, have high levels of brand name recognitionamong retailers and consumers throughout the world. Through our favorable association with our licensors, we believewe have developed stable, enduring relationships that provide access to unique brands that complement our owned andinternally developed trademarks. We believe all our brands have an established reputation for quality, reliability andvalue.11 Table of ContentsPatents, Other Intellectual Property and Infringement Considerations Helen of Troy maintains utility and design patents in the United States and several foreign countries. We believethe loss of the protection afforded by any one of these patents would not have a material adverse effect on our businessas a whole. We also protect certain details about our processes, products and strategies as trade secrets, keepingconfidential the information that we believe provides us with a competitive advantage. We monitor and protect our brands against infringement, as we deem practical and appropriate; however, ourability to enforce patents, copyrights, licenses, and other intellectual property is subject to general litigation risks, aswell as uncertainty as to the enforceability of various intellectual property rights in various jurisdictions. Products We market and sell Housewares, Health & Home, Nutritional Supplements, and Beauty products that weacquire, design, formulate or otherwise develop. The following table summarizes the types of products we sell bybusiness segment: SEGMENTPRODUCT CATEGORYSIGNIFICANT PRODUCTSHousewaresFood Preparation and StorageFood preparation tools and gadgets, food storage containers, baking tools, bakeware, barware, salt and pepper grinders and mills, hydration products, small kitchen appliances, and storage and organization products Cleaning, Bath and GardenHousehold cleaning sponges, brushes, brooms, mops, sinkware, soap dispensers, laundry and bathroom accesories, and gardening tools Infant and ToddlerFeeding and drinking products, cleaning tools, bath accessories, nursery accessories, and child seatingHealth & HomeHealthcareThermometers, blood pressure monitors, humidifiers, heating pads, and hot/cold wraps Water FiltrationFaucet mount water filtration systems and pitcher based water filtration systems Home EnvironmentAir purifiers, heaters, fans, humidifiers, dehumidifiers, and insect control devicesNutritional SupplementsVitamins, Minerals andHeart health supplements, digestive health supplements, multi-vitamins, Supplementsjoint health supplements, blood sugar support supplements, sleep health supplements, topical skin care and safe beauty products, brain health supplements, vision health supplements, and topical analgesicsBeautyRetail and ProfessionalCurling and straightening irons, hot air brushes, hand-held dryers, hard Appliances and Accessoriesand soft-bonnet hair dryers, hair setters, facial/skin care appliances, foot care appliances, hair clippers and trimmers, mirrors, hair brushes, hair styling implements, and decorative hair accessories Grooming, Skin CareLiquid hair styling products, treatments and conditioners, shampoos, and Hair Careliquid and/or medicated skin care products, fragrances, deodorants, and antiperspirants 12 Table of ContentsInnovation is a core strategy of the Company. We continue to develop new products, respond to marketinnovations and enhance existing products with the objective of improving our market positions. Overall, in fiscal year2016, we shipped approximately 325 new products across all of our categories. Currently, approximately 300additional new products are in our product development pipeline for expected introduction in fiscal year 2017. SALES AND MARKETING We market our products in approximately 84 countries throughout the world. Sales within the United Statescomprised approximately 80, 79 and 77 percent of total net sales revenue in fiscal years 2016, 2015 and 2014,respectively. Our segments primarily sell their products through mass merchandisers, drugstore chains, warehouseclubs, home improvement stores, catalogs, grocery stores, specialty stores, beauty supply retailers, e-commerceretailers, wholesalers, and various types of distributors, as well as directly to consumers. We collaborate extensivelywith our retail customers and in many instances produce specific versions of our product lines with exclusive designsand packaging for their stores, which are appropriately priced for their respective customer bases. We market productsprincipally through the use of outside sales representatives and our own internal sales staff, supported by our internalmarketing, category management, engineering, creative services, and customer and consumer service staff. Thesegroups work closely together to develop pricing and distribution strategies, to design packaging and to help developproduct line extensions and new products. The Nutritional Supplements segment sells directly to consumers through highly targeted catalog and otherprinted collateral mailings, internet websites and direct response print, radio and television media. The segment alsosells over the telephone through a number of customer call centers. The segment maintains exclusive development andmarketing relationships with several medical and wellness professionals, who provide research and advocacy forCompany products and are key components of its marketing and customer outreach programs. The NutritionalSupplements segment does not have any material formal relationships with any re-distributors, nor does it maintain anyfield sales force outside of its call centers. The companies from whom we license many of our brand names promote those names extensively. TheHoneywell, Braun, Vicks, Febreze, Revlon, Vidal Sassoon, Dr. Scholl's, Scholl, Bed Head, and Toni&Guy trademarksare widely recognized because of the licensors’ advertising and the sale of a variety of products in categories other thanours. We believe we benefit from the name recognition associated with a number of our licensed trademarks and seekto further improve the name recognition and perceived quality of all trademarks under which we sell products throughour own advertising and product development efforts. We also promote our non-licensed products through televisionadvertising and various media, including consumer and trade magazines, extensive in-store and customer cooperativeadvertising, company websites, social media websites, other digital media, and various industry trade shows. 13 Table of ContentsMANUFACTURING AND DISTRIBUTION We contract with unaffiliated manufacturers, primarily in China and Mexico, to manufacture a significantportion of our finished goods for the Beauty appliances, Housewares, Healthcare, Water Filtration, and HomeEnvironment product categories. The Nutritional Supplements segment and the U.S. region of the Grooming, Skin andHair Care category of the Beauty segment source most of their products from U.S. manufacturers. For a discussionregarding our dependency on third party manufacturers, see Item 1A., “Risk Factors.” For fiscal years 2016, 2015 and2014, finished goods manufactured by vendors in the Far East comprised approximately 68, 67 and 69 percent,respectively, of total finished goods purchased. Many of our key Far East manufacturers have been doing business with us for over 30 years. In some instances,we are now working with the second generation of entrepreneurs from the same families. We believe these relationshipsgive us a stable and sustainable advantage over many of our competitors. Manufacturers who produce our products useformulas, molds and certain other tooling, some of which we own, in manufacturing those products. We employnumerous technical and quality control personnel responsible for ensuring high product quality. Most of our productsmanufactured outside the countries in which they are sold are subject to import duties, which increase the amount wepay to obtain such products. The Nutritional Supplements segment owns most of the formulations used in products it sells, with the majorityhaving formulations that are proprietary, and in some cases, include ingredient combinations that are exclusive to thesegment. The segment relies predominantly on clinically studied ingredients to validate efficacy and dosage. Thesegment engages in, and has completed multiple clinical studies on key proprietary formulations. Quality is paramountto the efficacy of our products and a competitive differentiator in nutritional supplements. Products are formulated andmanufactured under the direction of the Company, which adheres to a rigorous triple testing method to ensure thestability, purity, potency, and safety of all finished products. Our retail customers seek to minimize their inventory levels and often demand that we fulfill their orders withinrelatively short time frames. Consequently, our policy is to maintain several months of supply of inventory in order tomeet our customers’ needs. Accordingly, we order products substantially in advance of the anticipated time of their saleto our customers. While we have limited formal long-term arrangements with our suppliers, in most instances, we placepurchase orders for products several months in advance of receipt of orders from our customers. Our relationships andarrangements with most of our manufacturers allow for some flexibility in modifying the quantity, composition anddelivery dates of orders. Because of long lead times for most of our foreign sourced products, from time to time, wemust discount end of model product or sell it through closeout sales channels to eliminate excess inventories. Mostpurchase orders are in U.S. Dollars. In total, we occupy approximately 3,392,000 square feet of distribution space in various locations to supportour operations, which includes a 1,200,000 square foot distribution center in Southaven, Mississippi, and a 1,300,000square foot distribution center in Olive Branch, Mississippi, used to support a significant portion of our domesticdistribution. We ship Housewares, Nutritional Supplements and Beauty grooming, skin care and hair care solutionsproducts out of the Southaven facility. We ship Health & Home and Beauty segment appliance products out of theOlive Branch facility.During fiscal year 2016, we relocated the Nutritional Supplement segment’s distribution operations to our Southavenfacility. As a result of the relocation, approximately 73 percent of our consolidated gross sales volume shipped fromthese two facilities in fiscal year 2016. For a further discussion of the risks associated with our distribution capabilities,see Item 1A., “Risk Factors.” For further information about our distribution and office facilities, see Item 2.,“Properties.” Products that are manufactured in the Far East and sold in North America are shipped to the West Coast of theUnited States and Canada. The products are then shipped by truck or rail service to distribution centers in El Paso,Texas; Southaven, Mississippi; Olive Branch, Mississippi; and Toronto, Canada, or directly to customers. We shipsubstantially all products to North American customers from these distribution centers by ground transportationservices. The Nutritional Supplement segment’s products are shipped almost exclusively through U.S. mail and parceldelivery services. Products sold outside the United States and Canada are shipped from manufacturers, primarily in theFar East, to14 Table of Contentsdistribution centers in Belgium, the United Kingdom, Mexico, and Hong Kong or directly to customers. We then shipproducts stored at these international distribution centers to distributors or retailers. CUSTOMERS Sales to Wal-Mart Stores, Inc. (including its worldwide affiliates) accounted for approximately 16, 18 and 19percent of our consolidated net sales revenue in fiscal years 2016, 2015 and 2014, respectively. Sales to our secondlargest customer, Target Corporation, accounted for approximately 8, 9 and 11 percent of our consolidated net salesrevenue in fiscal years 2016, 2015 and 2014, respectively. No other customers accounted for 10 percent or more ofconsolidated net sales revenue during those fiscal years. Sales to our top five customers accounted for approximately40, 41 and 43 percent of our consolidated net sales revenue in fiscal years 2016, 2015 and 2014, respectively. TheNutritional Supplement segment maintains a database of over 600,000 customers to whom it actively markets. A largeproportion of these customers take advantage of the segment’s auto-delivery service that periodically ships a re-supplyof product, resulting in a more stable and less seasonal order flow. ORDER BACKLOG When placing orders, our individual consumer, retail and wholesale customers usually request that we ship therelated products within a short time frame. As such, there usually is no significant backlog of orders in any of ourdistribution channels. COMPETITIVE CONDITIONS The markets in which we sell our products are very competitive and mature. The rapid growth of large massmerchandisers, together with changes in consumer shopping patterns, have contributed to a significant consolidation ofthe consumer products retail industry and the formation of dominant multi-category retailers with strong negotiatingpower. The growth in internet sales both by traditional retailers and pure online retailers, such as Amazon, has begun toerode market share at “brick-and-mortar” retailers. Current trends among retailers include fostering high levels ofcompetition among suppliers, insisting on maintaining or reducing prices, requiring delivery of products in shorter leadtimes, and a significant number of North American store closings by underperforming retail chains. Certain retailerscontinue to source and sell products under their own private label brands that compete with our Company’s products.We believe that we have certain key competitive advantages, such as well recognized brands, engineering expertise andinnovation, sourcing and supply chain know-how, and productive co-development relationships with our Far Eastmanufacturers, some of which have been built over 30 years or more of working together. We believe these advantagesallow us to bring our retailers a value proposition in our products that can significantly out-perform private labelproducts in most categories. Maintaining and gaining market share depends heavily on product development andenhancement, pricing, quality, performance, packaging and availability, brand name recognition, patents, and rapidlyadaptive marketing and distribution approaches. We believe the market for the Nutritional Supplements segment is growing, but highly fragmented. Competitionincludes multi-level marketers, internet sites, specialty and mass retailers, pharmacy, grocery, and membership clubs.The primary competitive factors across these channels are pricing, perceived value and efficacy of ingredients,supporting clinical research, ease of ordering, customer service, and cost of delivery. We believe we compete favorablywith respect to the above factors.15 Table of ContentsThe following table summarizes our primary competitors by business segment: SEGMENTPRODUCT CATEGORYPRIMARY COMPETITORSHousewaresFood Preparation and StorageLifetime Brands, Inc. (KitchenAid), Zyliss AG, Wilton Industries, Inc. (Copco), Simplehuman LLC, Casabella Holdings LLC, Interdesign, Inc., Cleaning, Bath and GardenKuhn Rikon Corporation, Newell Rubbermaid, Inc. (Calphalon Cookware), Boon Inc., Ignite USA, LLC (Contigo), PMI (Aladdin), Infant and ToddlerMunchkin, Inc., Skip Hop, Inc., Chef'n, Progressive International, Stokke AS., and De' Longhi S.p.A.Health & HomeHealthcarePhilips Electronics N.V., Microlife AG Swiss Corporation, Omron Corporation, Medisana AG, Beurer GmbH, Exergen Corporation, Paul Hartmann AG, and Visiomed Group SA (Thermoflash) Water FiltrationThe Clorox Company (Brita), 3M Company (Filtrete), and Zero Technologies LLC (ZeroWater) Home EnvironmentPanasonic Corporation, Sharp Corporation, Jarden Corporation (Sunbeam, Bionair and Holmes), Lasko Products, Inc., De' Longhi S.p.A., Blueair, Inc., and Samsung Electronics Co., Ltd.Nutritional SupplementsVitamins, Minerals andVitacost.com, Inc., Mercola.com, Life Extension, Purity Products, SupplementsSwanson Health Products, LuckyVitamin Corporation, Vitamin Research Products, Stop Aging Now, LLC, and Axe Wellness, LLCBeautyRetail and ProfessionalConair, Farouk Systems Inc. (CHI), International Consulting Associates Appliances and Accessories(InfraShine), Turbo Ion, Inc. (Croc Hair Products), FHI Heat, Inc., Spectrum Brands, Inc. (Remington), John Paul Mitchell Systems, Inc., Goody Products, Inc. a division of Newell Rubbermaid, Inc., Wahl Clipper Corporation, AST Systems, LLC (SalonTech), Bio Ionic, Inc., Homedics-U.S.A., Inc., Jamella Limited (GHD), and T3 Micro, Inc. Grooming, Skin CareThe Procter & Gamble Company, L'Oréal Group, Johnson & Johnson, and Hair CareUnilever N.V., Colgate-Palmolive Company, Henkel AG & Co. KGaA, Beirsdorf AG, Coty Inc., and KAO Brands Company Some of these competitors have significantly greater financial and other resources than we do.16 Table of ContentsSEASONALITY The following table shows our seasonality over the latest three fiscal years. SEASONALITY AS A PERCENTAGE OF ANNUAL NET SALES REVENUE Fiscal Years Ended the Last Day of February, Fiscal Quarter Ended 2016 2015 2014 May 22.3% 21.6% 23.1% August 23.9% 22.1% 24.3% November 28.8% 30.2% 28.9% February 25.0% 26.1% 23.7% The overall sales pattern for our Nutritional Supplements segment is not highly seasonal. Our other segments areseasonal due to different calendar events, holidays and seasonal weather patterns. Historically, the third fiscal quarterproduces the highest net sales revenue during the fiscal year. Seasonality in fiscal year 2015 was skewed in the latterhalf of the year by the inclusion of eight months of net sales revenue from Healthy Directions following its acquisitionon June 30, 2014. Our working capital needs fluctuate during the year because of the impact of the seasonality of ournet sales revenue. GOVERNMENTAL REGULATION AND ENVIRONMENTAL MATTERS Our operations are subject to national, state, local, and provincial jurisdictions’ environmental, health and safetylaws and regulations. These laws and regulations impose workplace standards and regulate the discharge of pollutantsinto the environment. In addition, they establish various standards for the handling, generation, emission, release,discharge, treatment, storage and disposal of materials, and substances including solid and hazardous wastes. Many of the products we sell are subject to a number of product safety laws and regulations in variousjurisdictions. These laws and regulations specify the maximum allowable levels of certain materials that may becontained in our products, provide statutory prohibitions against misbranded and adulterated products, establishingredients and manufacturing procedures for certain products, specify product safety testing requirements, and setproduct identification and labeling requirements.The Nutritional Supplements segment operates almost entirely in theUnited States. Importing, manufacturing, processing, formulating, packaging, labeling, distributing, selling, andadvertising of our Nutritional Supplements segment products may be subject to regulation by one or more federal orstate agencies. The Food and Drug Administration (the “FDA”) has primary jurisdiction over our products pursuant tothe Federal Food, Drug and Cosmetic Act (the “FDCA”) as amended by the Dietary Supplement and Health EducationAct of 1994 (the “DSHEA”), and is responsible for issuing regulations under these and associated laws. The FDCAprovides the regulatory framework for the safety and labeling of dietary supplements, foods and medical foods. Inparticular, the FDA regulates the safety, manufacturing, labeling and distribution of dietary supplements. The FederalTrade Commission (the “FTC”) and the FDA share jurisdiction over the promotion and advertising of dietarysupplements. Pursuant to a memorandum of understanding between the two agencies, the FDA has primary jurisdictionover claims that appear on product labels and labeling and the FTC has primary jurisdiction over product advertising. FDA rules impose requirements on the manufacture, packaging, labeling, holding, and distribution of dietarysupplement products. For example, it requires that companies establish extensive written procedures and controlsgoverning areas such as: (1) personnel, (2) plant and equipment cleanliness, (3) production controls, (4) laboratoryoperations, (5) packaging and labeling, (6) distribution, (7) product returns, and (8) complaint handling. The FDA alsorequires identity testing of all incoming ingredients unless a company successfully petitions for an exemption from thistesting requirement in accordance with the regulations. FDA prescribed good manufacturing practices are designed toensure that dietary supplements and dietary ingredients are not adulterated with contaminants or impurities, and areaccurately labeled to reflect the active ingredients and other ingredients in the products.17 Table of ContentsAdditionally, an emerging trend with both governments and our retail customers is to prescribe public andprivate social accountability reporting requirements regarding our worldwide business activities. In our product space,some requirements have already been mandated and we believe others may become required. Examples of currentrequirements include conflict minerals content reporting and reporting of foreign fair labor practices in connection withour supply chain vendors. We believe that we are in material compliance with these laws, regulations and other reporting requirements.Further, the cost of maintaining compliance has not had a material adverse effect on our business, consolidated resultsof operations and consolidated financial condition, nor do we expect it to do so in the foreseeable future. Due to thenature of our operations and the frequently changing nature of compliance and social reporting standards andtechnology, we cannot predict with any certainty that future material capital or operating expenditures will not berequired in order to comply with applicable laws, regulations and other reporting mandates. EMPLOYEES As of February 29, 2016, we employed approximately 1,610 full-time employees worldwide. We also usetemporary, part-time and seasonal employees as needed. None of our U.S. employees are covered by a collectivebargaining agreement. Certain of our employees in Europe are covered by collective arrangements in accordance withlocal practice. We have never experienced a work stoppage, and we believe that we have satisfactory working relationswith our employees. SEGMENT AND GEOGRAPHIC INFORMATION Note (20) to our accompanying consolidated financial statements contains segment and geographic informationconcerning our net sales revenue, long-lived assets and operating income. AVAILABLE INFORMATION We maintain our main Internet site at the following address: 1H1H1H1H1H1H1H1H1H1H1H1H1H1Hhttp://www.hotus.com. The informationcontained on this website is not included as a part of, or incorporated by reference into, this report. We make availableon or through our main website’s Investor Relations page under the heading “SEC Filings” certain reports andamendments to those reports that we file with, or furnish to, the SEC in accordance with the Securities Exchange Act of1934, as amended (the “Exchange Act”). These include our annual reports on Form 10-K, our quarterly reports onForm 10-Q, our current reports on Form 8-K, our proxy statements on Schedule 14A, amendments to these reports, andthe reports required under Section 16 of the Exchange Act of transactions in Company shares by directors and officers.We make this information available on our website free of charge as soon as reasonably practicable after weelectronically file the information with, or furnish it to, the SEC. Also, on the Investor Relations page, under the heading“Corporate Governance,” are the Company’s Code of Ethics, Corporate Governance Guidelines and the Charters of theCommittees of the Board of Directors.18 Table of ContentsITEM 1A. RISK FACTORS The ownership of our common stock involves a number of risks and uncertainties. When evaluating theCompany before making a decision regarding investment in our securities, potential investors should carefully considerthe risk factors and uncertainties described below, together with other information contained in this report. If any of theevents or circumstances described below or elsewhere in this report actually occur, they could adversely effect ourbusiness and operating results. The risks listed below are not the only risks that we face. Additional risks that arepresently unknown to us or that we currently believe are not significant may also impact our business operations. Our ability to deliver products to our customers in a timely manner and to satisfy our customers’ fulfillment standardsare subject to several factors, some of which are beyond our control. Retailers place great emphasis on timely delivery of our products for specific selling seasons, especially duringour third fiscal quarter, and on the fulfillment of consumer demand throughout the year. We cannot control all of thevarious factors that might affect product delivery to retailers. Vendor production delays, difficulties encountered inshipping from overseas, customs clearance delays, and operational issues with any of the third-party logistics providerswe use in certain countries are on-going risks of our business. We also rely upon third-party carriers for our productshipments from our distribution centers to customers. In certain circumstances, we rely on the shipping arrangementsour suppliers have made in the case of products shipped directly to retailers from the suppliers. Accordingly, we aresubject to risks, including labor disputes, inclement weather, natural disasters, possible acts of terrorism, availability ofshipping containers, and increased security restrictions associated with the carriers’ ability to provide delivery servicesto meet our shipping needs. Failure to deliver products to our retailers in a timely and effective manner, often underspecial vendor requirements to use specific carriers and delivery schedules, could damage our reputation and brandsand result in loss of customers or reduced orders. Our results of operations are dependent on sales to several large customers and the loss of, or substantial decline in,sales to a top customer could have a material adverse effect on our revenues and profitability. A few customers account for a substantial percentage of our net sales revenue. Our financial condition andresults of operations could suffer if we lost all or a portion of the sales to any one of these customers. In particular, salesto our first and second largest customers accounted for approximately 16 and 8 percent, respectively, of ourconsolidated net sales revenue in fiscal year 2016. While only one customer individually accounted for 10 percent ormore of our consolidated net sales revenue in fiscal year 2016, sales to our top five customers accounted forapproximately 40 percent of fiscal year 2016 consolidated net sales revenue. We expect that a small group of customerswill continue to account for a significant portion of our net sales revenue. Although we have long-standing relationshipswith our major customers, we generally do not have written agreements that require these customers to buy from us orto purchase a minimum amount of our products. A substantial decrease in sales to any of our major customers couldhave a material adverse effect on our financial condition and results of operations. We regularly monitor and evaluatethe credit status of our customers and attempt to adjust sales terms as appropriate. Despite these efforts, a deteriorationin the credit worthiness or bankruptcy filing of a key customer could have a material adverse effect on our business,results of operations and financial condition. With the continuing trend towards retail trade consolidation, we are increasingly dependent upon key customerswhose bargaining strength is substantial and growing. We may be negatively affected by changes in the policies of ourcustomers, such as on-hand inventory reductions, limitations on access to shelf space, use of private label brands, pricedemands, and other conditions, which could negatively impact our financial condition and results of operations. 19 Table of ContentsLarge sophisticated customers may take actions that adversely affect our gross profit and results of operations. In recent years, we have observed a consumer trend away from traditional grocery and drugstore channels andtoward mass merchandisers, which includes super centers and warehouse club stores. In addition, the growth in internetsales, both by large traditional retailers and pure online retailers such as Amazon, has begun to reach a critical mass.This trend has resulted in the increased size and influence of these types of customers. Additionally, certain of thesecustomers source and sell products under their own private label brands that compete with our products. As certainlarge customers and online retailers grow even larger and become more sophisticated, they may continue to demandlower pricing, special packaging, shorter lead times for the delivery of products, smaller more frequent shipments, orimpose other requirements on product suppliers. These business demands may relate to inventory practices, logistics orother aspects of the customer-supplier relationship. If we do not effectively respond to these demands, these customerscould decrease their purchases from us. A reduction in the demand for our products by these customers and the costs ofcomplying with their business demands could have a material adverse effect on our business, results of operations andfinancial condition. We are subject to risks related to our dependence on the strength of retail economies and may be vulnerable in theevent of a prolonged economic downturn. Our business depends on the strength of the retail economies in various parts of the world, primarily in NorthAmerica and to a lesser extent EMEA, Asia and Latin America. These retail economies are affected primarily by factorssuch as consumer demand and the condition of the retail industry, which, in turn, are affected by general economicconditions and specific events such as natural disasters, terrorist attacks and political unrest. Consumer spending in anygeographic region is generally affected by a number of factors, including local economic conditions, governmentactions, inflation, interest rates, energy costs, unemployment rates, gasoline prices, and consumer confidence, all ofwhich are beyond our control. Consumer purchases of discretionary items tend to decline during recessionary periods,when disposable income is lower, and may impact sales of our products. Any relapse into recession in the UnitedStates, the United Kingdom, Canada, Mexico or any of the other countries in which we conduct significant business,may continue to cause significant readjustments in both the volume and mix of our product sales, which couldmaterially and adversely affect our business, results of operations and financial condition. The impact of these external factors and the extent to which they may continue is difficult to predict, and one ormore of the factors could adversely impact our business. In recent years, the retail industry in the U.S., and increasinglyelsewhere, has been characterized by intense competition among retailers and the growth in internet sales, both bytraditional retailers and pure online retailers such as Amazon. Because such competition, particularly when weak retaileconomies exist, can cause retailers to struggle or fail, we must continuously monitor, and adapt to changes in, theprofitability, creditworthiness and pricing policies of our customers. A deterioration of any of our key retail economiescould have a material adverse effect on our business, results of operations and financial condition. We rely on our Chief Executive Officer and a limited number of other key senior officers to operate our business. Theloss of any of these individuals could have a material adverse effect on our business. The loss of our Chief Executive Officer or any of our key senior officers could have a material adverse effect onour business, results of operations and financial condition, particularly if we are unable to hire or relocate and integratesuitable replacements on a timely basis or at all. Further, in order to continue to grow our business, we will need toexpand our senior management team. We may be unable to attract or retain these persons. This could hinder our abilityto grow our business and could disrupt our operations or otherwise have a material adverse effect on our business. 20 Table of ContentsExpectations regarding recent acquisitions, and any future acquisitions, including our ability to realize anticipatedcost savings, synergies and other benefits along with our ability to effectively integrate acquired businesses, mayadversely affect the price of our common stock. We continue to look for opportunities to make complementary strategic business and/or brand acquisitions. Pastand future acquisitions, if not favorably received by consumers, shareholders, analysts, and others in the investmentcommunity, could have a material adverse effect on the price of our common stock. In addition, any acquisitioninvolves numerous risks, including: ·difficulties in the assimilation of the operations, technologies, products, and personnel associated with theacquisitions; ·difficulties in integrating distribution channels; ·diversion of management's attention from other business concerns; ·difficulties in transitioning and preserving customer, contractor, supplier, and other important third-partyrelationships; ·difficulties realizing anticipated cost savings, synergies and other benefits related to an acquisition; ·risks associated with subsequent operating asset write-offs, contingent liabilities and impairment of relatedacquired intangible assets; ·risks of entering markets in which we have no or limited experience; and ·potential loss of key employees associated with the acquisitions. Any difficulties encountered with acquisitions could have a material adverse effect on our business, results ofoperations and financial condition. Our operating results may be adversely affected by foreign currency exchange rate fluctuations. Our functional currency is the U.S. Dollar. Changes in the relation of other foreign currencies to the U.S. Dollarwill affect our sales and profitability and can result in exchange losses because the Company has operations and assetslocated outside the United States. The Company transacts a significant portion of its international business in currenciesother than the U.S. Dollar (“foreign currencies”). Such transactions include sales, certain inventory purchases andoperating expenses. As a result, portions of our cash, trade accounts receivable and trade accounts payable aredenominated in foreign currencies. Accordingly, foreign operations will continue to expose us to foreign currencyfluctuations, both for purposes of actual conversion and financial reporting purposes. Additionally, we purchase asubstantial amount of our products from Chinese manufacturers. The Chinese Renminbi has fluctuated against the U.S.Dollar in recent years, devaluing by approximately 6 percent against the U.S. Dollar during fiscal year 2016. If China’scurrency continues to fluctuate against the U.S. Dollar in the short-to-intermediate term, we cannot accurately predictthe impact of those fluctuations on our results of operations. There can be no assurance that foreign exchange rates willbe stable in the future or that fluctuations in Chinese foreign currency markets will not have a material adverse effect onour business, results of operations and financial condition, including increased product costs over time that we may notbe able to pass on to our customers. Where operating conditions permit, we seek to reduce foreign currency risk by purchasing most of ourinventory with U.S. Dollars and by converting cash balances denominated in foreign currencies to U.S. Dollars. Wehave also historically hedged against certain foreign currency exchange rate-risk by using a series of forward contractsdesignated as cash flow hedges to protect against the foreign currency exchange risk inherent in our forecastedtransactions denominated in currencies other than the U.S. Dollar. In these transactions, we execute a forward currencycontract that will settle at the end of a forecasted period. Because the size and terms of the forward contract aredesigned so that its fair market value will move in the opposite direction and approximate magnitude of the underlyingforeign currency’s forecasted exchange gain or loss during the forecasted period, a hedging relationship is created. Tothe extent we forecast21 Table of Contentsthe expected foreign currency cash flows from the period the forward contract is entered into until the date it will settlewith reasonable accuracy, we significantly lower or materially eliminate a particular currency’s exchange risk exposureover the life of the related forward contract. We enter into these types of agreements where we believe we havemeaningful exposure to foreign currency exchange risk and the hedge pricing appears reasonable. It is not practical forus to hedge all our exposures, nor are we able to project in any meaningful way the possible effect and interplay of allforeign currency fluctuations on translated amounts or future net income. This is due to our constantly changingexposure to various currencies, the fact that each foreign currency reacts differently to the U.S. Dollar and thesignificant number of currencies involved. The impact of future exchange rate fluctuations on our results of operations cannot be accurately predicted.Accordingly, there can be no assurance that U.S. Dollar foreign exchange rates will be stable in the future or thatfluctuations in foreign currency markets will not have a material adverse effect on our business, results of operationsand financial condition. Disruptions in U.S., Euro zone and other international credit markets may adversely affect our business, results ofoperations and financial condition. Disruptions in national and international credit markets could result in limitations on credit availability, tighterlending standards, higher interest rates on consumer and business loans, and higher fees associated with obtaining andmaintaining credit availability. Disruptions may also materially limit consumer credit availability and restrict creditavailability to our customer base and the Company. In addition, in the event of disruptions in the financial markets,current or future lenders may become unwilling or unable to continue to advance funds under any agreements in place,increase their commitments under existing credit arrangements or enter into new financing arrangements. The failure ofour lenders to provide sufficient financing may constrain our ability to operate or grow the business and to makecomplementary strategic business and/or brand acquisitions. This could have a material adverse effect on our business,results of operations and financial condition. Our business is subject to weather conditions, the duration and severity of the cold and flu season and other relatedfactors, which can cause our operating results to vary from quarter to quarter. Sales in our Health & Home segment are influenced by weather conditions. Sales volumes for thermometry,humidifiers and heating appliances are higher during, and subject to, the severity of the cold weather months, whilesales of fans, dehumidifiers and insect control devices are higher during, and subject to, weather conditions in springand summer months. Weather conditions can also more broadly impact sales across the organization. For instance,natural disasters (such as hurricanes and ice storms) or unusually severe winter weather may result in temporaryunanticipated reductions in retail traffic and consumer demand, may impact our ability to staff our distribution facilitiesor could otherwise impede timely transport and delivery of product from our distribution facilities. Sales in our Health& Home segment are also impacted by cough, cold and flu seasonal trends, including the duration and severity of thecold and flu season. These factors could have a material adverse effect on our business, results of operations andfinancial condition. 22 Table of ContentsWe are dependent on third-party manufacturers, most of which are located in the Far East, and any inability to obtainproducts from such manufacturers could have a material adverse effect on our business, results of operations andfinancial condition. All of our products are manufactured by unaffiliated companies, most of which are in the Far East, principally inChina. This concentration exposes us to risks associated with doing business globally, including: changing internationalpolitical relations; labor availability and cost; changes in laws, including tax laws, regulations and treaties; changes inlabor laws, regulations and policies; changes in customs duties and other trade barriers; changes in shipping costs;currency exchange fluctuations; local political unrest; an extended and complex transportation cycle; the impact ofchanging economic conditions; and the availability and cost of raw materials and merchandise. The political, legal andcultural environment in the Far East is rapidly evolving, and any change that impairs our ability to obtain products frommanufacturers in that region, or to obtain products at marketable rates, could have a material adverse effect on ourbusiness, results of operations and financial condition. With most of our manufacturers located in the Far East, our production lead times are relatively long. Therefore,we must commit to production in advance of customer orders. If we fail to forecast customer or consumer demandaccurately, we may encounter difficulties in filling customer orders on a timely basis or in liquidating excessinventories. We may also find that customers are canceling orders or returning products. Any of these results couldhave a material adverse effect on our business, results of operations and financial condition. Historically, labor in China has been readily available at relatively low cost as compared to labor costs in NorthAmerica, Europe and other countries. China has experienced rapid social, political and economic change in recentyears. There is no assurance labor will continue to be available in China at costs consistent with historical levels or thatchanges in labor or other laws will not be enacted which would have a material adverse effect on the cost of productsmanufactured in China. Many of our suppliers in China continue to experience labor shortages, which could result infuture supply delays and disruptions and have resulted in a substantial increase in labor costs over the last three fiscalyears. Similarly, evolving government labor regulations and associated compliance standards could cause our productcosts to rise or could cause manufacturing partners we rely on to exit the business. This could have an adverse impacton product availability and quality. The Chinese economy has experienced rapid expansion and highly fluctuating ratesof inflation. Higher general inflation rates will require manufacturers to continue to seek increased product prices. TheChinese Renminbi has fluctuated against the U.S. Dollar in recent years, devaluing by approximately 6 percent againstthe U.S. Dollar during fiscal year 2016. If the Chinese Renminbi appreciates with respect to the U.S. Dollar in thefuture, the Company may experience cost increases on such purchases, and this can adversely impact profitability.Future interventions by China may result in further currency appreciation and increase our product costs over time. TheCompany may not be successful at implementing customer pricing or other actions in an effort to mitigate the relatedeffects of the product cost increases. Although China currently enjoys “most favored nation” trading status with theU.S., the U.S. government has in the past proposed to revoke such status and to impose higher tariffs on productsimported from China. There is no assurance that our business will not be affected by any of the aforementioned risks,each of which could have a material adverse effect on our business, results of operations and financial condition. 23 Table of ContentsThe availability, purity and integrity of raw materials used in the manufacture of the Nutritional Supplementssegment’s products could be compromised. The Nutritional Supplements segment depends on outside suppliers for raw materials, acquiring all of its rawmaterials for the manufacture of its products from third-party suppliers. The segment uses multiple agreements for thesupply of materials used in the manufacture of its products in order to hedge against shortages or potential spikes inmaterial costs. The segment also contracts with third-party manufacturers and suppliers for the production of itsproducts. In the event of a loss of any significant supplier, the segment could experience difficulties in finding ortransitioning to alternative suppliers, which could result in product shortages or product back orders, which could harmits business. There can be no assurance that suppliers will be able to provide the segment with the raw materials in thequantities and at the appropriate level of quality requested or at prices it will be willing to pay. The segment is alsosubject to the delays caused by any interruption in the production of these materials including weather, crop conditions,climate change, transportation interruptions, and natural disasters or other catastrophic events. Occasionally, suppliers have experienced production difficulties with respect to the segment’s products,including the delivery of materials or products that do not meet rigorous quality control standards. These qualityproblems have in the past resulted in, and in the future could result in, stock outages or shortages of our products, andcould harm sales or create inventory write-offs for unusable product. High costs of raw materials and energy may result in increased cost of goods sold and certain operating expenses andadversely affect our results of operations and cash flow. Significant variations in the costs and availability of raw materials and energy may negatively affect our resultsof operations. Our suppliers purchase significant amounts of metals and plastics to manufacture our products. Inaddition, they also purchase significant amounts of electricity to supply the energy required in their productionprocesses. Changes in the cost of fuel as a result of Middle East tensions and related political instabilities may continueto drive up fuel prices resulting in higher transportation prices and product costs. The cost of these raw materials andenergy, in the aggregate, represents a significant portion of our cost of goods sold and certain operating expenses. Ourresults of operations could be adversely affected by future increases in these costs. We have had some success inimplementing price increases to our customers or passing on product cost increases by moving customers to newerproduct models with enhancements that justify higher prices, and we intend to continue these efforts. We can make noassurances that these efforts will be successful in the future or will materially offset the cost increases we may incur. Certain of our U.S. distribution facilities are geographically concentrated and operate during peak shipping periods ator near capacity. These factors increase our risk that disruptions could occur and significantly affect our ability todeliver products to our customers in a timely manner. Such disruptions could have a material adverse effect on ourbusiness. To make our distribution operations more efficient, we have consolidated most of our U.S. distribution,receiving and storage functions into two distribution facilities in northern Mississippi. Approximately 73 percent of ourconsolidated gross sales volume shipped from facilities in this region in fiscal year 2016. For this reason, any disruptionin our distribution process in either of these facilities, even for a few days, could adversely effect our business andoperating results. Additionally, our U.S. distribution operations may incur capacity constraints during peak shipping periods as wecontinue to grow our sales revenue through a combination of organic growth and acquisitions. These and other factorsdescribed above could cause delays in the delivery of our products and increases in shipping and storage costs thatcould have a material and adverse effect on our business, results of operations and financial condition. 24 Table of ContentsOur projections of product demand, sales and net income are highly subjective in nature and our future sales and netincome could vary in a material amount from our projections. From time to time, we may provide projections to our shareholders, lenders, investment community, and otherstakeholders of our future sales and net income. Since we do not require long-term purchase commitments from ourmajor customers and the customer order and ship process is very short, it is difficult for us to accurately predict thedemand for many of our products, or the amount and timing of our future sales and related net income. Our projectionsare based on management’s best estimate of sales using historical sales data and other information deemed relevant.These projections are highly subjective since sales to our customers can fluctuate substantially based on the demands oftheir retail customers and due to other risks described in this report. Additionally, changes in retailer inventorymanagement strategies could make our inventory management more difficult. Because our ability to forecast productdemand and the timing of related sales includes significant subjective input, our future sales and net income could varymaterially from our projections. If our goodwill, indefinite-lived intangible assets or other long-term assets become impaired, we will be required torecord impairment charges, which may be significant. A significant portion of our long-term assets continues to consist of goodwill and other indefinite-livedintangible assets recorded as a result of past acquisitions. We do not amortize goodwill and indefinite-lived intangibleassets, but rather review them for impairment on an annual basis or more frequently whenever events or changes incircumstances indicate that their carrying value may not be recoverable. If such circumstances or conditions exist,further steps are required in order to determine whether the carrying value of each of the individual assets exceeds itsfair market value. If our analysis indicates that an individual asset’s carrying value does exceed its fair market value, thenext step is to record a loss equal to the excess of the individual asset’s carrying value over its fair value. The stepsrequired by GAAP entail significant amounts of judgment and subjectivity. We complete our analysis of the carrying value of our goodwill and other intangible assets during the firstquarter of each fiscal year, or more frequently, whenever events or changes in circumstances indicate their carryingvalue may not be recoverable. Events and changes in circumstances that may indicate there is impairment and whichmay indicate interim impairment testing is necessary include, but are not limited to: strategic decisions to exit a businessor dispose of an asset made in response to changes in economic, political and competitive conditions; the impact of theeconomic environment on our customer base and on broad market conditions that drive valuation considerations bymarket participants; our internal expectations with regard to future revenue growth and the assumptions we make whenperforming our impairment reviews; a significant decrease in the market price of our assets; a significant adversechange in the extent or manner in which our assets are used; a significant adverse change in legal factors or thebusiness climate that could affect our assets; an accumulation of costs significantly in excess of the amount originallyexpected for the acquisition of an asset; and significant changes in the cash flows associated with an asset. We analyzethese assets at the individual asset, reporting unit and company levels. As a result of such circumstances, we may berequired to record a significant charge to net income in our financial statements during the period in which anyimpairment of our goodwill, indefinite-lived intangible assets or other long-term assets is determined. Any suchimpairment charges could have a material adverse effect on our business, results of operations and financial condition. 25 Table of ContentsWe rely on licensed trademarks with third parties and license certain trademarks to third parties in exchange forroyalty income, the loss of which could have a material adverse effect on our revenues and profitability. A substantial portion of our sales revenue comes from selling products under licensed trademarks. As a result,we are dependent upon the continued use of these trademarks, including the Revlon, Vicks, Braun, Honeywell, andVidal Sassoon trademarks. Additionally, we license certain owned trademarks, including OXO and PUR, to third partiesin exchange for royalty income. It is possible that certain actions taken by the Company, its licensors, licensees, orother third parties might diminish greatly the value of any of our licensed trademarks. Some of our licensors andlicensees also have the ability to terminate their license agreements with us at their option subject to each parties’ rightto continue the license for a limited period of time following notice of termination. If we or our licensees were unable tosell products under these licensed trademarks, or one or more of our license agreements were terminated or the value ofthe trademarks were diminished, the effect on our business, results of operations and financial condition could be bothnegative and material. To compete successfully, we must develop and introduce a continuing stream of innovative new products to meetchanging consumer preferences. Our long-term success in the competitive retail environment depends on our ability to develop andcommercialize a continuing stream of innovative new products that meet changing consumer preferences and takeadvantage of opportunities sooner than our competition. We face the risk that our competitors will introduce innovativenew products that compete with our products. Our core initiatives include fostering our culture of innovation and newproduct development, enhancing and extending our existing product categories and developing new allied productcategories. There are numerous uncertainties inherent in successfully developing and commercializing new products ona continuing basis and new product launches may not deliver expected growth in sales or operating income. If we areunable to develop and introduce a continuing stream of new products, it may have an adverse effect on our business,results of operations and financial condition. The Nutritional Supplements segment may be subject to product liability claims, which could materially and adverselyaffect our business, results of operations, and financial condition, or reputation. As a formulator and distributor of products designed for human consumption or use on or in the body, ourNutritional Supplements segment may be subject to product liability claims if the use of our products is alleged to haveresulted in illness or injury or if our products include inadequate instructions or warnings. These products generallyconsist of vitamins, minerals, herbs, and other ingredients that are classified as foods, over-the-counter drugs, dietarysupplements, and medical devices and generally are not subject to pre-market regulatory approval or clearance bygovernmental authorities. In the event products contained spoiled or contaminated substances, or, in the case ofproducts that contain ingredients that do not have long histories of human consumption, previously unknown adversereactions resulting from human consumption of these ingredients could occur. We could also be subject to productliability claims, including among others, that our products include insufficient instructions for use or inadequatewarnings concerning possible side effects or interactions with other substances. Any product liability claim against uscould result in increased costs and adversely affect our reputation with our customers, which in turn could materiallyadversely affect our business, results of operations and financial condition. The Nutritional Supplements segment may be subject to the effects of potential adverse publicity and negative publicperception. Consumer acceptance of the safety, efficacy and quality of the Nutritional Supplements segment’s products, aswell as similar products distributed by other companies can be significantly influenced by scientific research orfindings, national media attention and other publicity about product use. A product may initially be received favorably,resulting in high sales associated with that product that may not be sustainable as consumer preferences change. Inaddition, recent studies have challenged the safety or benefit of certain nutritional supplements and dietary ingredients.Future scientific research or publicity could be unfavorable to the industry or any of our products and may not beconsistent with earlier favorable research or publicity. Any research or publicity that is perceived by consumers as lessthan favorable or that26 Table of Contentsquestions earlier favorable research or publicity could have a material adverse effect on the Nutritional Supplementssegment’s ability to generate revenue. Adverse publicity in the form of published scientific research, statements byregulatory authorities or otherwise, whether or not accurate, that associates consumption of our products or any othersimilar products with illness or other adverse effects, or that questions the benefits of our or similar products, or thatclaims that such products are ineffective, could have a material adverse effect on our business, reputation, financialcondition or results of operations. Our operating results may be adversely affected by trade barriers, exchange controls, expropriations, and other risksassociated with foreign operations. The economies of foreign countries important to our operations, including countries in Asia, EMEA and LatinAmerica, could suffer slower economic growth or economic, social and/or political instability or hyperinflation in thefuture. Our international operations in countries in Asia, EMEA and Latin America, including manufacturing andsourcing operations (and the international operations of our customers), are subject to inherent risks which couldadversely affect us, including, among other things: ·protectionist policies restricting or impairing the manufacturing, sales or import and export of our products; ·new restrictions on access to markets; ·lack of developed infrastructure; ·inflation (including hyperinflation) or recession; ·changes in, and the burdens and costs of compliance with, a variety of foreign laws and regulations, includingtax laws, accounting standards, environmental laws, and occupational health and safety laws; ·social, political or economic instability; ·acts of war and terrorism; ·natural disasters or other crises; ·reduced protection of intellectual property rights in some countries; ·increases in duties and taxation; ·restrictions on transfer of funds or exchange of currencies; ·currency devaluations; ·expropriation of assets; and ·other adverse changes in policies, including monetary, tax or lending policies, encouraging foreign investmentor foreign trade by our host countries. Should any of these events occur, our ability to sell or export our products or repatriate profits could beimpaired, we could experience a loss of sales and profitability from our international operations, and/or we couldexperience a substantial impairment or loss of assets, any of which could materially and adversely affect our business,results of operations and financial condition.27 Table of ContentsWe have incurred significant debt and may incur additional debt to fund future acquisitions, share repurchases andcapital expenditures, which could have an adverse impact on our business and profitability. Our debt levels can adversely affect our financial condition and can add constraints on our ability to operate ourbusiness. Our indebtedness can, among other things: ·increase our vulnerability to general adverse economic conditions; ·limit our ability to obtain necessary financing and to fund future working capital, capital expenditures and othergeneral corporate requirements; ·require us to dedicate a portion of our cash flow from operations to payments on our indebtedness, therebyreducing the availability of our cash flow to fund working capital and capital expenditures, and for othergeneral corporate purposes; ·subject us to higher interest expense (the majority of our debt is floating rate, if interest rates rise and we do not,or are otherwise unable to convert debt to fixed rates through refinancing or the use of derivative instruments,we may be subject to higher interest rates in the future); ·limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate; ·place us at a competitive disadvantage compared to our competitors that have less debt; ·limit our ability to pursue acquisitions or sell assets; and ·limit our ability to borrow additional funds. Any of these events could have a material adverse effect on us. In addition, our debt agreements containrestrictive financial and operational covenants. Significant restrictive covenants include limitations on, among otherthings, our ability under certain circumstances to: ·incur additional debt, including guarantees; ·grant certain types of liens; ·sell or otherwise dispose of assets; ·engage in mergers, acquisitions or consolidations; ·pay dividends on our common stock; ·repurchase our common stock; ·enter into substantial new lines of business; and ·enter into certain types of transactions with our affiliates. Our failure to comply with these and other restrictive covenants could result in an event of default, which if notcured or waived, could have a material adverse effect on us.28 Table of ContentsWe rely on central Global Enterprise Resource Planning (“ERP”) systems and other peripheral information systems.Obsolescence or interruptions in the operation of our computerized systems or other information technologies couldhave a material adverse effect on our operations and profitability. We now conduct most of our businesses using a single ERP system. Our operations are largely dependent onthis system. We continuously make adjustments to improve the effectiveness of the ERP and other peripheralinformation systems, including the installation of significant new subsystems. During fiscal year 2014, our Health &Home segment converted from its legacy ERP system onto our global ERP system. During fiscal year 2016, ourNutritional Supplements segment converted certain of its legacy ERP applications onto our global ERP system, withadditional application conversions planned. We are constantly upgrading and adding functionality to the overall systemwith key enhancements currently underway in various functional areas. Testing of any new subsystems before activedeployment often requires significant additional effort across much of our organization. Complications or delays incompleting these projects could cause considerable disruptions to our business and may result in higher implementationcosts than planned, along with a concurrent reallocation of human resources. Any failures or disruptions in the ERP and other information systems or any complications resulting fromongoing adjustments to our systems could cause interruption or loss of data in our information or logistical systems thatcould materially impact our ability to procure products from our factories and suppliers, transport them to ourdistribution centers, and store and deliver them to our customers on time and in the correct amounts. In addition, naturaldisasters or other extraordinary events may disrupt our information systems and other infrastructure, and our datarecovery processes may not be sufficient to protect against loss. Furthermore, application program bugs, system conflictcrashes, user error, data integrity issues, customer data conflicts, and integration issues all pose significant risks. We rely on certain outside vendors to assist us with the upgrade of our software, the ongoing implementation ofnew enhancements to our information systems and the maintenance of some of our information technologyinfrastructure. Should any of these vendors fail to perform as expected, it could adversely affect our service levels andrestrict our ability to conduct business. Information security breaches and any related operational interruptions could have a material adverse effect on ouroperations and profitability. Information systems require constant updates to their security policies and hardware systems to reduce the riskof unauthorized access, malicious destruction of data or information theft. We rely on commercially available systems,software, tools, and monitoring to provide security for processing, transmission and storage of confidential information.Improper activities by third parties, advances in computer and software capabilities and encryption technology, newtools and discoveries, and other events or developments may facilitate or result in a compromise or breach of ourcomputer systems, some of which may go undetected for extended periods. Any such compromise or breach could cause interruptions in our operations, cause damage to our reputationand might require us to spend significant management time and money investigating the event and dealing with localand federal law enforcement. In addition, we could become the subject of litigation and various claims from ourcustomers, employees, suppliers, service providers, and shareholders. Regardless of the merits and ultimate outcome ofthese matters, litigation and proceedings of this type are expensive to respond to and defend, and we could be forced todevote substantial resources and time responding to and defending them, which could have a material adverse effect onour business, results of operations and financial condition.29 Table of ContentsThe products, business practices and manufacturing activities of the Nutritional Supplements segment are subject toextensive government regulations and could be subject to additional laws and regulations in the future. The addition of the Nutritional Supplements segment brings with it requirements to comply with an extensivenew body of regulations by national, state and provincial governmental authorities including regulations issued in theUnited States by the FDA, the FTC, the Consumer Products Safety Commission, and the United Stated Department ofAgriculture. These regulations, and their evolving nature, can from time-to-time require us to reformulate products forspecific markets, conform product labeling to market regulations and register or qualify products or obtain necessaryapprovals with the applicable governmental authorities in order to market products in these markets. Failure to complywith the regulatory requirements of these various governmental agencies and authorities could result in enforcementactions including: cease and desist orders, injunctions, limits on advertising, consumer redress, divestitures of assets,rescission of contracts, or such other relief as may be deemed necessary. Violation of these regulations could result insubstantial financial or other penalties. Any action against us could materially affect our ability to successfully marketnot only the affected products, but other products as well. In the future, we may be subject to additional laws or regulations administered by the FDA or other federal,state, local or regulatory authorities, the repeal or amendment of laws or regulations which we consider favorable and/ormore stringent interpretations of current laws or regulations. We can neither predict the nature of such future laws,regulations, interpretations or applications, nor what effect additional governmental regulations or administrative orders,when and if promulgated, would have on our business. However, they could require reformulation of certain productsto meet new standards, recall or discontinuance of certain products not able to be reformulated, imposition of additionalrecord-keeping requirements, expanded documentation of the properties of certain products, expanded or alteredlabeling and/or scientific substantiation. Any or all such requirements could increase our costs of operating theNutritional Supplements segment, and which could have a material adverse effect on our business, reputation, financialcondition, or results of operations. Our business involves the potential for product recalls, product liability and other claims against us, which couldmaterially and adversely affect our business, results of operations and financial condition. We are, from time to time, involved in various claims, litigation matters and regulatory proceedings that arise inthe ordinary course of our business and that could have a material adverse effect on us. These matters may includepersonal injury and other tort claims, deceptive trade practices disputes, intellectual property disputes, product recalls,contract disputes, warranty disputes, employment and tax matters and other proceedings and litigation, including classactions. It is not possible to predict the outcome of pending or future litigation. As with any litigation, it is possible thatsome of the actions could be decided unfavorably, resulting in significant liability and, regardless of the ultimateoutcome, can be costly to defend. Our results and our business could also be negatively impacted if one of our brandssuffers substantial damage to its reputation due to a significant product recall or other product-related litigation and ifwe are unable to effectively manage real or perceived concerns about the safety, quality, or efficacy of our products. We also face exposure to product liability and other claims in the event that one of our products is alleged tohave resulted in property damage, bodily injury or other adverse effects. Although we maintain liability insurance inamounts that we believe are reasonable, that insurance is, in most cases, subject to large self-insured retentions forwhich we are responsible. We cannot provide assurance that we will be able to maintain such insurance on acceptableterms, if at all in the future, or that product liability or other claims will not exceed the amount of insurance coverage, orthat all such matters would be covered by our insurance. As a result, these types of claims could have a materialadverse effect on our business, results of operations and financial condition.30 Table of ContentsAudits and related disputes with taxing authorities could have an adverse impact on our business. We are involved in tax audits and related disputes in various taxing jurisdictions. Recent acquisitions haveadded considerable complexity to our tax structure, and some have added the risk of liability for past activities underprior ownership. We believe that we have complied with all applicable reporting and tax payment obligations.However, in the past we have sometimes disagreed with taxing authority positions on various issues. Historically, wehave vigorously defended our tax positions through available administrative and judicial avenues. Based on currentlyavailable information, we have established reserves for our best estimate of the probable tax liabilities. Future actions bytaxing authorities may result in tax liabilities that are significantly higher or lower than the reserves established, whichcould have a material effect on our consolidated results of operations or cash flows. For more information about taxaudits and related disputes, see Note (11) to the accompanying consolidated financial statements. Potential changes in laws, including tax laws, and the costs and complexities of compliance with such laws could havean adverse impact on our business. The impact of future legislation in the U.S. or abroad, including such things as employment and healthinsurance laws, climate change related legislation, tax legislation, regulations or treaties is always uncertain. Federal andlocal legislative agendas from time to time contain numerous proposals dealing with taxes, financial regulation, energypolicy, environmental policy, transportation policy and infrastructure policy, among others that, if enacted into law,could increase our costs of doing business. Under current tax law, favorable tax treatment of our non-U.S. income is dependent on our ability to avoidclassification as a Controlled Foreign Corporation. Changes in the composition of our stock ownership could have animpact on our classification. If our classification were to change, it could have a material adverse effect on the largestU.S. shareholders and, in turn, on the Company’s business. A non-U.S. corporation, such as ours, will constitute a “controlled foreign corporation” or “CFC” for U.S.federal income tax purposes if its largest U.S. shareholders (i.e., those owning 10 percent or more of its shares) togetherown more than 50 percent of the stock outstanding. If the IRS or a court determined that we were a CFC, then each ofour U.S. shareholders who own (directly, indirectly, or constructively) 10 percent or more of the total combined votingpower of all classes of our stock on the last day of our taxable year would be required to include in gross income forU.S. federal income tax purposes its pro rata share of our “subpart F income” (and the subpart F income of any of oursubsidiaries determined to be a CFC) for the period during which we (and our non-U.S. subsidiaries) were a CFC. Inaddition, any gain on the sale of our shares realized by such a shareholder may be treated as ordinary income to theextent of the shareholder’s proportionate share of our and our CFC subsidiaries’ undistributed earnings and profitsaccumulated during the shareholder’s holding period of the shares while we were deemed to be a CFC.31 Table of ContentsITEM 1B. UNRESOLVED STAFF COMMENTS None.32 Table of ContentsITEM 2. PROPERTIES As of February 29, 2016, the Company owns, leases or otherwise utilizes through third-party managementservice agreements, a total of 39 properties worldwide, which include selling, procurement, research and development,administrative, distribution facilities, and land held for expansion. All properties operated by the Company are adequatefor their intended purpose. Summarized information regarding the location, number, type and use, segment, ownership,and approximate size of our principal and other properties as of February 29, 2016 is provided in the table below: Location Type and Use Business Segment Approximate Size(Square Feetor Acres)Owned PropertiesEl Paso, Texas, USALand & Building - U.S. HeadquartersAll Segments135,000El Paso, Texas, USALand - Held for Future ExpansionAll Segments4 AcresEl Paso, Texas, USALand & Building - Distribution FacilityHousewares, Health & Home and Beauty408,000Olive Branch, Mississippi, USALand & Building - Distribution FacilityHealth & Home and Beauty1,300,000Southaven, Mississippi, USALand & Building - Distribution FacilityHousewares, Beauty and Nutritional Supplements1,200,000Southaven, Mississippi, USALand - Held for Future ExpansionAll Segments31 AcresSheffield, EnglandLand & Building - Office SpaceHousewares, Health & Home and Beauty10,400Mexico City, MexicoOffice Space - Latin AmericanHeadquartersHealth & Home and Beauty3,900 Leased Properties3 - Facilities WorldwideOffice SpaceHousewares32,6001 - Facility, Hong Kong, ChinaDistribution FacilityHousewares3,0006 - Facilities WorldwideOffice SpaceHealth & Home70,4502 - Facilities WorldwideDistribution FacilitiesHealth & Home62,2751 - Facility, Bethesda, Maryland, USAOffice SpaceNutritional Supplements32,0005 - Facilities WorldwideOffice SpaceBeauty27,2506 - Facilities WorldwideDistribution FacilitiesBeauty161,2001 - Facility, Darwen, EnglandDistribution FacilityHousewares and Beauty80,0002 - Facilities WorldwideOffice SpaceHealth & Home and Beauty5,1001 - Facility, Lausanne, SwitzerlandOffice Space - EMEA HeadquartersHousewares, Health & Home and Beauty8,6002 - Facilities in ChinaOffice Space - Supply Chain OperationsHousewares, Health & Home and Beauty42,4001 - Facility, Genk, BelgiumDistribution FacilityHousewares, Health & Home and Beauty177,700 33 Table of ContentsITEM 3. LEGAL PROCEEDINGS We are involved in various legal claims and proceedings in the normal course of operations. In the opinion ofmanagement, the outcome of these matters will not have a material adverse effect on our consolidated financialposition, results of operations or liquidity.34 Table of ContentsITEM 4. MINE SAFETY DISCLOSURES Not applicable. 35 Table of ContentsPART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED SHAREHOLDER MATTERS ANDISSUER PURCHASES OF EQUITY SECURITIES PRICE RANGE OF COMMON STOCK Our common stock is listed on the NASDAQ Global Select Market (“NASDAQ”) [symbol: HELE]. Thefollowing table sets forth, for the periods indicated, in dollars per share, the high and low sales prices of the commonstock as reported on the NASDAQ. These quotations reflect the inter-dealer prices, without retail markup, markdown orcommission and may not necessarily represent actual transactions. High Low FISCAL YEAR 2016First quarter$92.62$74.95Second quarter100.3380.88Third quarter105.4681.61Fourth quarter106.5082.28 FISCAL YEAR 2015First quarter$70.23$57.48Second quarter62.5553.17Third quarter65.6551.80Fourth quarter79.9060.79 APPROXIMATE NUMBER OF EQUITY SECURITY HOLDERS OF RECORD Our common stock is our only class of equity security outstanding at February 29, 2016. As of April 21, 2016,there were 166 holders of record of the Company's common stock. A substantially greater number of holders of theCompany’s common stock are “street name” or beneficial holders whose shares are held of record by banks, brokersand other financial institutions. CASH DIVIDENDS Our current policy is to retain earnings to provide funds for the operation and expansion of our business,common stock repurchases and for potential acquisitions. We have not paid any cash dividends on our common stocksince inception. Any change in dividend policy will depend upon future conditions, including earnings and financialcondition, general business conditions, any applicable contractual limitations, and other factors deemed relevant by ourBoard of Directors. Generally, our Credit Agreement limits our ability to declare or pay cash dividends to ourshareholders if, (1) the Leverage Ratio (as defined in the Credit Agreement) on a pro forma basis is greater than (a) 3.00to 1.00 if any of our 3.90% Senior Notes due January 2018 are outstanding and (b) 3.25 to 1.00 if our 3.90% SeniorNotes are not outstanding or the maximum leverage ratio permitted under agreements relating to our 3.90% SeniorNotes is increased to 3.50 to 1.00 and (2) unrestricted cash, cash equivalents and availability for borrowings under theCredit Agreement is less than $25 million. ISSUER PURCHASES OF EQUITY SECURITIES In February 2014, our Board of Directors approved a resolution to repurchase $550 million of the Company’soutstanding common stock in keeping with its stated intention to return to shareholders excess capital not otherwisedeployed for strategic acquisitions or other needs. This resolution superseded the previous resolution in place. As ofFebruary 29, 2016, we were authorized to purchase $159.02 million of common stock. These repurchases may includeopen market purchases, privately negotiated transactions, block trades, accelerated stock repurchase transactions, orany combination of such methods. The number of shares purchased and the timing of the purchases will depend on anumber36 Table of Contentsof factors, including share price, trading volume and general market conditions, working capital requirements, generalbusiness conditions, financial conditions, any applicable contractual limitations, and other factors, including alternativeinvestment opportunities. Our current equity compensation plans include provisions that allow for the “net exercise” of stock options byall plan participants. In a net exercise, any required payroll taxes, federal withholding taxes and exercise price of theshares due from option or other share-based award holders can be paid for by having the holder tender back to theCompany a number of shares at fair value equal to the amounts due. Net exercises are accounted for by the Companyas a purchase and retirement of shares. The following table summarizes our share repurchase activity for the periods covered below: SHARE REPURCHASES Fiscal Years Ended the Last Day of February, 2016 2015 2014Common stock repurchased on the open market or through tender offer:Number of shares1,126,796(1)4,102,143(3)33,862Aggregate value of shares (in thousands)$100,000$273,599$1,311Average price per share$88.75$66.70$38.71 Common stock received in connection with share-based compensation:Number of shares117,294(2)71,950(4)112,677Aggregate value of shares (in thousands)$6,411$4,826$6,937Average price per share$54.66$67.08$61.57(1)Includes two open market purchases at a total cost of $50 million each, in the second and fourth quarters of fiscalyear 2016, for 556,591 and 570,205 shares, respectively. (2)On November 17, 2015, in connection with the settlement of the lawsuit discussed in Note (13) to theaccompanyingconsolidated financial statements, the Company issued 276,548 shares of common stock as payment of separationcompensation due to our former CEO under his employment and separation agreements. Our former CEO tendered116,012 shares back to the Company as payment for related federal tax obligations. Under the terms of theemployment and separation agreements, the number of shares issued and tendered was computed based upon avalue of $54.24 per share. This was the fair value of the shares on September 4, 2014, the date the compensationpayment would have been made, if payment had not been delayed by the associated dispute. The Companypreviously accrued and disclosed the separation compensation in fiscal year 2014. The balance of 1,282 shareswere repurchased in connection with net exercises by other Company employees during the first quarter of fiscalyear 2016. (3)Includes a modified “Dutch auction” tender offer completed on March 14, 2014, resulting in the repurchase of3,693,816 shares of our outstanding common stock at a total cost of $247.83 million, including tender offertransaction-related costs. (4)Includes 68,086 shares of common stock having a market value of $67.10 per share, or $4.57 million in theaggregate, which were tendered by our former CEO as payment for related federal tax obligations arising from thevesting and settlement of performance-based restricted stock units and restricted stock awards.37 Table of ContentsThe following schedule sets forth the purchase activity for each month during the three months endedFebruary 29, 2016: ISSUER PURCHASES OF EQUITY SECURITIES FOR THE THREE MONTHS ENDED FEBRUARY 29, 2016 Total Number ofShares Purchased Average PricePaid per ShareTotal Number ofShares Purchasedas Part of Publicly Announced Plansor ProgramsDollar Value ofShares that MayYet be PurchasedUnder the Plansor Programs(in thousands)December 1 through December 31, 2015 - $ - - $209,017January 1 through January 31, 2016 570,205 87.69 570,205 159,017February 1 through February 29, 2016 - - - 159,017Total 570,205 $87.69 570,205 38 Table of ContentsPERFORMANCE GRAPH The graph below compares the cumulative total return of our Company to the NASDAQ Market Index and apeer Group Index, assuming $100 was invested on March 1, 2011. The Peer Group Index is the Dow Jones–U.S.Personal Products, Broad Market Cap, Yearly, and Total Return Index. The comparisons in this table are required by theSEC and are not intended to forecast or be indicative of the possible future performance of our common stock. The Performance Graph shall not be deemed to be “soliciting material” or to be “filed” with the SEC or subjectto the liabilities of Section 18 under the Exchange Act. In addition, it shall not be deemed incorporated by reference byany statement that incorporates this annual report on Form 10-K by reference into any filing under the Securities Act of1933 or the Exchange Act, except to the extent that we specifically incorporate this information by reference. 39 Table of ContentsITEM 6. SELECTED FINANCIAL DATA The selected consolidated statements of income and cash flow data for the years ended on the last day ofFebruary 2016, 2015 and 2014, and the selected consolidated balance sheet data as of the last day of February 2016and 2015, have been derived from our audited consolidated financial statements included in this report. The selectedconsolidated statements of income and cash flow data for the years ended on the last day of February 2013 and 2012,and the selected consolidated balance sheet data as of the last day of February 2014, 2013 and 2012, have been derivedfrom our audited consolidated financial statements, which are not included in this report. This information should beread together with the discussion in “Management’s Discussion and Analysis of Financial Condition and Results ofOperations” and our consolidated financial statements and notes to those statements included in this report. All currencyamounts are denominated in U.S. Dollars. Years Ended the Last Day of February,(in thousands, except per share data) 2016 (1) 2015 (1) 2014 2013 (2) 2012 (2)Income Statement Data:Sales revenue, net$1,545,701$1,445,131$1,317,153$1,288,263$1,181,676Gross profit636,005599,559516,703518,211478,484Asset impairment charges6,0009,00012,049 - -Operating income130,615161,719117,100148,773139,386Interest expense11,09615,02210,19313,34512,917Income tax expense18,59016,05020,88619,84815,718Net income101,228131,16486,248115,666110,374 Earnings per share - basic$3.58$4.59$2.69$3.64$3.52Earnings per share - diluted$3.52$4.52$2.66$3.62$3.48 Weighted average shares outstanding - basic28,27328,57932,00731,75431,340Weighted average shares outstanding - diluted28,74929,03532,38631,93631,705 Cash Flow Data:Depreciation and amortization$42,749$39,653$33,839$34,425$30,178Net cash provided by operating activities185,261178,603154,16587,558103,880Capital and intangible asset expenditures20,6036,52140,46314,68816,051Payments to acquire businesses, net of cash received43,150195,943 - -160,000Net amounts borrowed (repaid)190,700240,600(64,393)(92,100)47,100 Last Day of February,(in thousands) 2016 (1) 2015 (1) 2014 2013 (2) 2012 (2)Balance Sheet Data:Working capital$503,966$302,895$286,122$236,540$109,647Goodwill and other intangible assets958,756948,157775,550808,869829,500Total assets1,869,6431,653,7551,533,3021,474,0041,435,723Long-term debt600,107411,30795,707155,000175,000Stockholders' equity (3)930,043904,5651,029,487926,606796,729Cash dividends - - - - -(1)Fiscal year 2015 includes eight months of operating results for the Nutritional Supplements segment formed whenwe acquired Healthy Directions and fiscal year 2016 includes a full year’s operating results. We acquired HealthyDirections on June 30, 2014 for a net cash purchase price of $195.94 million. The acquisition was funded fromborrowings under our Credit Agreement and cash on hand. In connection with the acquisition, we initially recorded($12.09) in net working capital, $5.96 million of property and equipment, $204.61 million of goodwill and other40 Table of Contentsintangible assets, and $2.54 million of other long-term liabilities. See Notes (6) and (19) to our accompanyingconsolidated financial statements for more information regarding the Healthy Directions acquisition. (2)Fiscal year 2012 includes two months of operating results from PUR and fiscal year 2013 and thereafter includes afull year’s operating results. We acquired PUR on December 30, 2011 for a net cash purchase price of $160million. The acquisition of PUR was funded with $160 million in short-term debt. In connection with theacquisition, we initially recorded $12.50 million of property and equipment, $1.43 million in supplier advances,$178 million of goodwill and other intangible assets, and $31.93 million of deferred tax liabilities. (3)For the fiscal years ended 2016, 2015, 2014, 2013, and 2012, we repurchased and retired 1,244,090, 4,174,093,146,539, 110,552, and 1,124,563 shares of common stock at a total purchase price of $106.41, $278.42, $8.25,$3.39, and $40.05 million, respectively. 41 Table of ContentsITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONS This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”)should be read in conjunction with the other sections of this report, including Part I, Item 1., “Business”; Part II, Item6., “Selected Financial Data”; and Part II, Item 8., “Financial Statements and Supplementary Data.” The varioussections of this MD&A contain a number of forward-looking statements, all of which are based on our currentexpectations. Actual results may differ materially due to a number of factors, including those discussed on page 3 ofthis report in the section entitled “Information Regarding Forward-Looking Statements,” in Item 1A., “Risk Factors,”and in Item 7A., “Quantitative and Qualitative Disclosures About Market Risk.” Throughout MD&A, we refer to certain measures used by management to evaluate financial performance. Wealso 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 correspondingGAAP-based measures and refer to a discussion of their use. We believe these measures provide investors withimportant information that is useful in understanding our business results and trends. Please see “Explanation ofCertain Terms and Measures Used in MD&A” beginning on page 71 for more information on the use and calculationof certain financial measures. OVERVIEW We operate our business under four segments: Housewares, Health & Home (formerly referred to as“Healthcare / Home Environment”), Nutritional Supplements, and Beauty (formerly referred to as “Personal Care”).Our Housewares segment reports the operations of OXO, whose product offerings include food preparation tools andappliances, gadgets and storage containers, cleaning, organization, and baby and toddler care products. The Health &Home segment sells products in the following categories: health care devices, such as thermometers, humidifiers, bloodpressure monitors, and heating pads; water filtration systems; and small home appliances such as portable heaters, fans,air purifiers, and insect control devices. Our Nutritional Supplements segment, formed following our acquisition ofHealthy Directions, LLC and its subsidiaries (“Healthy Directions”) on June 30, 2014, is a leading provider of premiumbranded vitamins, minerals and supplements, as well as other health products sold directly to consumers. Our Beautysegment offers products in three categories: electric hair care, personal care and wellness appliances; grooming toolsand hair accessories; and liquid-, solid- and powder-based personal care and grooming products. The Nutritional Supplements segment sells directly to consumers. Our other segments sell their productsprimarily through mass merchandisers, drugstore chains, warehouse clubs, catalogs, grocery stores, and specialtystores. In addition, the Beauty segment sells extensively through beauty supply retailers and wholesalers, and the Health& Home segment sells certain of its product lines through medical distributors and other products through homeimprovement stores. The overall sales pattern for our Nutritional Supplements segment is not highly seasonal. Our other segments areseasonal due to different calendar events, holidays and seasonal weather patterns. Historically, the third fiscal quarterproduces the highest net sales revenue and operating income during a fiscal year. Seasonality in fiscal year 2015 wasskewed in the latter half of the year by the inclusion of eight months of net sales revenue from Healthy Directionsfollowing its acquisition on June 30, 2014. During the second half of fiscal year 2015, international sales were dampened by the strengthening of the U.S.Dollar against most currencies, in particular the British Pound, Euro, Canadian Dollar, and Mexican Peso. Thesecurrencies weakened against the U.S. Dollar by approximately 3, 10, 8, and 7 percent, respectively, when compared toaverage levels for the second half of fiscal year 2014. The trend continued during fiscal year 2016, with the samecurrencies weakening against the U.S. Dollar by approximately 7, 15, 14, and 21 percent, respectively, when comparedto average levels for fiscal year 2015.42 Table of ContentsWe believe that the growth in the internet as a sales channel continues to erode market share in the traditional“brick and mortar” channels. For fiscal year 2016, sales to our internet-based customers grew approximately 16percent, compared to fiscal year 2015. For fiscal years 2016, 2015 and 2014, sales to our internet-based customerscomprised approximately 10, 9 and 6 percent, respectively, of our total consolidated net sales revenues for each fiscalyear. We believe it will become increasingly important to leverage our domestic distribution capabilities to meet thelogistical challenge of higher frequency, smaller order size shipments, and continue to evolve our distributioncapabilities to adjust to this new form of demand. Our business depends upon discretionary consumer demand for most of our products and primarily operateswithin mature and highly developed consumer markets. The principal driver of our operating performance is thestrength of the U.S. retail economy, as approximately 80, 79 and 77 percent of our net sales were from U.S. shipmentsin fiscal years 2016, 2015 and 2014, respectively. Domestically, we believe that the trend of consumers becomingslightly more relaxed with their discretionary spending continued from fiscal year 2015 due to continued low gasolineprices, low interest rates and improving employment activity. We believe these factors contributed to higher overallcore business net sales revenue in fiscal year 2016, as compared to the prior fiscal year. Seasonal cough/cold/flupatterns also influence sales for the Health & Home segment. In the United States, the season historically runs fromNovember through March, with peak activity normally in January to March. Based upon U.S. Center for DiseaseControl data through March 2016, we believe the most recent season’s cough/cold/flu and fever incidence trends arewell behind the prior year and historical averages, which negatively impacted sales in fiscal year 2016. However, thisimpact was partially offset by the trailing impacts of the stronger than average prior year U.S. cough/cold/flu season,our expanded distribution in Europe and growth in Asian thermometry sales as a result of regional Middle EastRespiratory Syndrome outbreaks. We expect that the weakness in the most recent cough/cold/flu season will have anunfavorable impact on initial replenishment of affected categories during fiscal year 2017 due to high retail inventorylevels. The outlook for our international operations continues to remain uncertain as these operations, particularly thosein Latin America and Europe, serve consumers in more inconsistently recovering economies that are more susceptibleto fiscal and geo-political instabilities. Foreign currency fluctuations continue to expose our international operatingresults to significant variability and uncertainty, which is compounded by weakness in the retail environment in manyof our foreign markets. In February 2016, the Venezuelan government announced further changes to its foreigncurrency exchange system. These changes included an immediate devaluation of its official rate, now known asDIPRO, from 6.30 Bolivars per U.S. Dollar to 10.00 Bolivars per U.S. Dollar. The government also announced thedissolution of its previous alternative exchange rate systems, and the institution of a new alternative exchange systemknown as DICOM governing all other transactions not covered by DIPRO, effective in March 2016. DICOM replacedSIMADI, which was the lowest rate in the previous three-tiered exchange system. SIMADI closed at February 29, 2016at approximately 205 Bolivars per U.S. Dollar. DICOM opened in early March 2016 at approximately 207 Bolivars perU.S. Dollar. As a result of the further devaluation of the official rate, continued economic instability from declines in oilprices and the declaration of an economic emergency, among other factors, we determined that SIMADI was the mostappropriate rate to use to re-measure our financial statements as of February 29, 2016. The determination was furthersubstantiated by the announcement of DICOM as an intended market-based rate, which opened at approximately thesame rate as SIMADI shortly after the end of our fiscal year. As a result of the adoption of SIMADI, we recorded acharge of $9.57 million (before and after tax) in fiscal year 2016 from the re-measurement of our Venezuelan financialstatements at February 29, 2016. In addition to re-measuring Venezuelan monetary assets and liabilities, we alsorecorded $9.16 million of non-cash impairment charges (before and after tax) related to inventory and property andequipment in order to reflect their respective estimated net realizable and fair values as of February 29, 2016. Absent further changes to the exchange systems, or unless future developments call for further changes, weintend to use DICOM to re-measure our financial statements on a go-forward basis. However, even with the recentchanges made by the Venezuelan government, there remains a significant degree of uncertainty as to whether DICOMwill hold its current value or maintain enough liquidity to satisfy demand, or whether the floating exchange mechanismwill survive the existing economic and political instabilities. For fiscal years 2016, 2015 and 2014, sales in Venezuelarepresented 1.4, 0.7 and 0.6 percent, respectively, of the Company’s consolidated net sales revenue at the officialexchange rate of 6.3 Bolivars per U.S. Dollar. For fiscal years 2016, 2015 and 2014, operating income (loss) inVenezuela was ($9.95), $2.87 and $2.67 million, respectively, at the official exchange rate of 6.3 Bolivars per U.S.Dollar. As referred to previously, the43 Table of Contentsfiscal year 2016 operating loss includes re-measurement related charges totaling $18.73 million. At the current DICOMexchange rate, we expect that fiscal year 2017 U.S. Dollar reported net sales and operating income from Venezuela willno longer be meaningful to the Company’s consolidated and Beauty segment results. Other Significant Developments During Fiscal Year 2016 ·On March 31, 2015, the Company completed the acquisition of the Vicks VapoSteam U.S. liquid inhalant businessfrom The Procter & Gamble Company (“P&G”), which includes a fully paid-up license of P&G’s Vicks VapoSteaminhalants. In a related transaction, the Company acquired a fully paid-up U.S. license of P&G’s Vicks VapoPadscent pads. Our VapoSteam operations are reported in the Health & Home segment. The vast majority of VicksVapoSteam and VapoPads are used in Vicks humidifiers, vaporizers and other health care devices already marketedby the Company. The aggregate purchase price for the two transactions was approximately $42.75 million financedprimarily with borrowings under our credit facility. The VapoSteam acquisition provided incremental net salesrevenue of $7.99 million for the eleven months of operations included in fiscal year 2016. The VapoSteam businessis highly seasonal with peak sales occurring in our third fiscal quarter. ·In March 2015, we announced the introduction of a premium line of kitchen electrics under the OXO On brand.The initial line consists of motorized toasters, coffee makers, a coffee grinder, an electric kettle, an immersionblender, and a hand mixer. The line shipped initially in the U.S. offering several unique features, as well asthoughtful design elements based on OXO’s universal design ethos. We believe OXO On appliances will providethe simplicity, functionality, and thoughtfulness consumers have come to expect from the OXO brand. The linebegan shipments to retail stores in the third quarter of fiscal year 2016. ·In August 2015, we repurchased 556,591 shares of our common stock in the open market at an average price of$89.93 per share for a total cost of $50 million. In January 2016, we repurchased 570,205 shares of our commonstock in the open market at an average price of $87.69 per share for a total cost of $50 million. ·During fiscal year 2016, we transitioned the Nutritional Supplements order fulfillment operations to our Southaven,Mississippi distribution facility. ·During fiscal year 2016, we consolidated and reorganized our Beauty segment’s organizational structure,eliminating certain overlapping functions to more efficiently leverage our scale, better focus on consumer-centricinnovation, and best serve our professional and retail customers. The entire segment is now served by a commonshared service structure for marketing, financial and other back-office support. We believe this is a critical step inour efforts to stabilize and ultimately grow the Beauty segment. ·On November 12, 2015, the Company settled a lawsuit with its former CEO, which resulted in the payment ofseverance compensation due under his employment and separation agreements. The severance compensation waspreviously accrued and disclosed in fiscal year 2014 and was paid through the issuance of common shares of theCompany on November 17, 2015. The Company also transferred ownership of a life insurance policy on the livesof its former CEO and his spouse as part of the settlement. As a result of the transfer of the policy and otherexpenses incurred in connection with the settlement, the Company recorded CEO succession costs of $6.71 million($4.64 million after tax), or $0.16 per fully diluted share, in fiscal year 2016..·On January 22, 2016, a jury ruled against the Company in a case that involved claims by Exergen Corporation,headquartered in Watertown, MA. The case alleges patent infringement related to two forehead thermometermodels sold by our subsidiary, Kaz USA, Inc., in the United States. Exergen was awarded damages of $14.6million with respect to a period of approximately seven years of sales. The Company could be liable for payment ofroyalties on any future sales of the two products. As a result of the jury verdict, the Company recorded a fourthquarter charge, including legal fees and other related expenses of $17.83 million ($17.79 million after tax). Theoutcome of the case is not yet final and the Company disagrees with the verdict, which will be subject to severalpost-trial motions and an appeal. The forehead thermometers involved in this case represent less than 1 percent ofconsolidated net sales for fiscal year 2016.44 Table of Contents·During fiscal year 2016, we recorded non-cash asset impairment charges of $6.00 million ($5.31 million after tax).The charges relate to a trademark in our Beauty segment, which was written down to its estimated fair value. Recent Development On March 18, 2016, the Company acquired Steel Technology, LLC, doing business as Hydro Flask (“HydroFlask”). Hydro Flask is a leading designer, distributor and marketer of high performance insulated stainless steel foodand beverage containers for active lifestyles. Hydro Flask adds a fast growing brand that has built equity amongoutdoor and active lifestyle enthusiasts with a product lineup, innovation pipeline and margin profile that complements,and will operate in, our Housewares segment. The acquisition extends the segment’s reach into the outdoor and athleticspecialty, natural foods and e-commerce channels. Hydro Flask’s products have a carefully cultivated brand heritagerooted in the outdoor mecca of Bend, Oregon. The aggregate purchase price for the transaction was approximately$210 million in cash, subject to customary adjustments. The purchase price was funded with borrowings under ourcredit facility. Hydro Flask calendar year 2015 revenue was approximately $54 million. 45 Table of ContentsFinancial Recap of Fiscal Year 2016 ·Consolidated net sales revenue increased 7.0 percent, or $100.57 million, to $1,545.70 million in fiscal year 2016compared to $1,445.13 million in fiscal year 2015. Net sales revenue growth from acquisitions was $60.87 million,or 4.2 percentage points. Core business net sales revenue growth was $39.70 million, or 2.8 percentage points. Netsales revenue in our Housewares segment increased $14.41 million, or 4.9 percent, in fiscal year 2016 compared tofiscal year 2015. Net sales revenue in our Health & Home segment increased $29.48 million, or 4.8 percent, infiscal year 2016 compared to fiscal year 2015. The Nutritional Supplements segment contributed $153.13 millionof net sales revenue for a full fiscal year in 2016, compared to net sales revenue of $100.40 million for its initialeight months of operations in fiscal year 2015. Net sales revenue in our Beauty segment increased $3.95 million, or0.9 percent, in fiscal year 2016 compared to fiscal year 2015. Our fiscal year 2016 net sales revenue includes theunfavorable impact of net foreign exchange fluctuations of approximately $29.80 million, or 2.1 percentage points,compared to fiscal year 2015, nearly all of which impacted the Beauty and Health & Home segments. ·Consolidated gross profit margin as a percentage of net sales revenue decreased 0.4 percentage points to 41.1percent in fiscal year 2016 compared to 41.5 percent in fiscal year 2015. Fiscal year 2016 gross profit marginincludes a non-cash impairment charge of $9.08 million recorded to reflect Venezuelan inventory at its estimatednet realizable value at February 29, 2016, which reduced consolidated gross profit margin by 0.6 percentage points. ·Our SG&A ratio increased 2.6 percentage points to 32.3 percent in fiscal year 2016 compared to 29.7 percent infiscal year 2015. ·Operating margin decreased 2.7 percentage points to 8.5 percent in fiscal year 2016 compared to 11.2 percent infiscal year 2015. Operating income for fiscal year 2016 included non-cash intangible asset impairment chargestotaling $6.00 million compared to $9.00 million in fiscal year 2015. Fiscal year 2016 operating income alsoincludes pre-tax charges for which there were no comparable charges in fiscal year 2015. These charges includedCEO succession costs of $6.71 million, Venezuelan currency re-measurement related charges totaling $18.73million and a patent litigation charge of $17.83 million, which reduced fiscal year 2016 operating margin by 2.8percentage points on a combined basis. ·Adjusted operating margin decreased 0.2 percentage points to 14.0 percent in fiscal year 2016 compared to 14.2percent in fiscal year 2015. ·Income tax expense was $18.59 million, or 15.5 percent of income before taxes, in fiscal year 2016 compared to$16.05 million, or 10.9 percent of income before taxes, in fiscal year 2015. ·Net income was $101.23 million in fiscal year 2016 compared to net income of $131.16 million in fiscal year 2015.Diluted EPS was $3.52 in fiscal year 2016 compared to $4.52 in fiscal year 2015. ·Adjusted income was $179.66 million in fiscal year 2016, compared to $169.92 million in fiscal year 2015. ·Adjusted diluted EPS was $6.25 in fiscal year 2016 compared to $5.85 in fiscal year 2015. ·SG&A, operating income, adjusted operating margin, net income, and adjusted income for fiscal year 2015 includea $7 million gain ($6.98 million after tax) from the amendment of a trademark license agreement with HoneywellInternational Inc. This gain had a $0.24 impact on diluted EPS and adjusted diluted EPS. There was no comparablegain or income in fiscal year 2016. The effect of the Healthy Directions acquisition on net sales revenue is discussed on pages 49 and 51. Adjustedoperating income, adjusted operating margin, adjusted income, and adjusted diluted EPS are non-GAAP financialmeasures as contemplated by SEC Regulation G, Rule 100. These measures are discussed further, and reconciled totheir applicable GAAP-based measures, on pages 58 through 61. 46 Table of ContentsRESULTS OF OPERATIONS The following table sets forth, for the periods indicated, our selected operating data, in U.S. Dollars, asa percentage of net sales revenue, and as a year-over-year percentage change. SELECTED OPERATING DATA(in thousands) Fiscal Years Ended the Last Day of February,% of Sales Revenue, net (2)% Change 20162015(1)201420162015(1)201416/1515/14 Sales revenue by segment, netHousewares$310,663$296,252$274,47820.1% 20.5% 20.8% 4.9% 7.9% Health & Home642,735613,253568,07541.6% 42.4% 43.1% 4.8% 8.0% Nutritional Supplements153,126100,395 -9.9% 6.9% -% 52.5% * Beauty439,177435,231474,60028.4% 30.1% 36.0% 0.9% (8.3)% Total sales revenue, net1,545,7011,445,1311,317,153100.0% 100.0% 100.0% 7.0% 9.7% Cost of goods sold909,696845,572800,45058.9% 58.5% 60.8% 7.6% 5.6% Gross profit636,005599,559516,70341.1% 41.5% 39.2% 6.1% 16.0% Selling, general and administrative expense (SG&A)499,390428,840387,55432.3% 29.7% 29.4% 16.5% 10.7% Asset impairment charges6,0009,00012,0490.4% 0.6% 0.9% (33.3)% (25.3)% Operating income130,615161,719117,1008.5% 11.2% 8.9% (19.2)% 38.1% Nonoperating income, net299517227 -% -% -% (42.2)% 127.8% Interest expense(11,096)(15,022)(10,193)(0.7)% (1.0)% (0.8)% (26.1)% 47.4% Total other expense(10,797)(14,505)(9,966)(0.7)% (1.0)% (0.8)% (25.6)% 45.5% Income before income taxes119,818147,214107,1347.8% 10.2% 8.1% (18.6)% 37.4% Income tax expense18,59016,05020,8861.2% 1.1% 1.6% 15.8% (23.2)% Net income$101,228$131,164$86,2486.5% 9.1% 6.5% (22.8)% 52.1% * Calculation is not meaningful (1)Includes eight months of operations for Healthy Directions, which was acquired on June 30, 2014. (2)Sales revenue percentages by segment are computed as a percentage of the related segment’s sales revenue, net tototal sales revenue, net. All other percentages are computed as a percentage of total sales revenue, net. Consolidated Net Sales Revenue: Comparison of fiscal year 2016 to fiscal year 2015 Consolidated net sales revenue increased $100.57 million, or 7.0 percentage points, in fiscal year 2016compared to fiscal year 2015. Net sales growth from acquisitions was $60.87 million, or 4.2 percentage points. Corebusiness net sales revenue growth was $39.70 million, or 2.8 percentage points. We experienced net sales revenuegrowth in each of our business segments and core business net sales revenue growth in three of our four segments.Fiscal year 2016 core business net sales in the Nutritional Supplements segment, acquired in fiscal year 2015, wasapproximately flat for the eight months for which comparable information was reported in fiscal year 2015. Housewaressegment net sales revenue increased $14.41 million, or 4.9 percent, in fiscal year 2016 compared to fiscal year 2015.Within the segment, year-over-year unit volume increases had a favorable 5.7 percentage point impact on net salesrevenue. The unit volume increase was slightly offset by a 0.8 percentage point decline in the average unit selling price,primarily due to higher year-over-year promotional discounts. Health & Home segment net sales revenue increased$29.48 million, or 4.8 percent, in fiscal year 2016 compared to fiscal year 2015. Within the segment, year-over-yearunit volume increases had a favorable impact of 5.8 percentage points, partially offset by a 1.0 percentage pointnegative impact of lower average unit selling prices due to a combination of changes in category sales mix, higherpromotional discounts and the unfavorable impact of foreign currency fluctuations year-over-year. Beauty segment netsales revenue increased $3.95 million, or 0.9 percent, in fiscal year 2016 compared to fiscal year 2015. Within thesegment, year-over-year unit volume decreases had an unfavorable impact of 1.3 percentage points on net salesrevenue, while higher average unit selling prices increased net sales revenue47 Table of Contentsby 2.2 percentage points due primarily to a better sales mix and lower promotional discounts. Our fiscal year 2016consolidated net sales revenue includes the unfavorable impact of net foreign exchange fluctuations of approximately$29.80 million, or 2.1 percentage points, compared to fiscal year 2015, nearly all of which impacted our Beauty andHealth & Home segments. Beauty segment net sales revenue includes sales from our operations in Venezuela of $21.97 and $10.31million in fiscal years 2016 and 2015, respectively. As further discussed in Note (2) to the accompanying consolidatedfinancial statements and under “– Overview” above, we changed the rate used to re-measure our Venezuelan financialstatements as of February 29, 2016 to the SIMADI rate of approximately 205 Bolivars per U.S. Dollar, which was thelowest rate in a three-tiered exchange system in place at the time. Shortly after the end of fiscal year 2016, theVenezuelan government introduced a new rate referred to as DICOM that is intended to be market based and wasinitially set at a rate very similar to that of SIMADI. Absent further changes to the exchange systems, or unless futuredevelopments call for further changes, we intend to use DICOM to re-measure our financial statements on a go-forwardbasis. For fiscal years 2016, 2015 and 2014, sales in Venezuela represented 1.4, 0.7 and 0.6 percent, respectively, ofthe Company’s consolidated net sales revenue at the official exchange rate of 6.3 Bolivars per U.S. Dollar. At thecurrent DICOM exchange rate, we expect that fiscal year 2017 U.S. Dollar reported net sales from Venezuela will nolonger be meaningful to our consolidated and Beauty segment net sales revenue. Comparison of fiscal year 2015 to fiscal year 2014 Consolidated net sales revenue increased $127.98 million, or 9.7 percentage points, in fiscal year 2015comparedto fiscal year 2014. Net sales revenue growth from acquisitions was $100.40 million, or 7.6 percentage points. Corebusiness net sales revenue growth was $27.58 million, or 2.1 percentage points. The increase in consolidated corebusiness net sales revenue was driven by Housewares and Health & Home segment growth, which was partially offsetby a decline in Beauty segment net sales revenue. Housewares segment net sales revenue increased $21.77 million, or7.9 percent, in fiscal year 2015 compared to fiscal year 2014. Within the segment, year-over-year unit volume increaseshad a favorable 8.3 percentage point impact on net sales revenue. The unit volume increase was slightly offset by a 0.4percentage point decline in the average unit selling price, primarily due to slightly higher year-over-year promotionaldiscounts. Health & Home segment net sales revenue increased $45.18 million, or 8.0 percent, in fiscal year 2015compared to fiscal year 2014. Within the segment, year-over-year unit volume increases had a favorable impact of 1.5percentage points and higher average unit selling prices, largely due to a more favorable sales mix, contributed 6.5percentage points to net sales revenue growth. The Nutritional Supplements segment contributed net sales revenue of$100.40 million for fiscal year 2015, which included eight months of operations since its acquisition earlier in the fiscalyear. Beauty segment net sales revenue decreased $39.37 million, or 8.3 percent, in fiscal year 2015 compared to fiscalyear 2014. Within the segment, year-over-year unit volume declines had an unfavorable 5.6 percentage point impact onnet sales revenue, and lower average unit selling prices due to changes in sales mix decreased net sales revenue by 2.7percentage points. Our fiscal year 2015 net sales revenue includes the unfavorable impact of net foreign exchangefluctuations of $7.50 million compared to fiscal year 2014, most of which impacted our Beauty and Health & Homesegments. The impact of foreign exchange fluctuations reduced our fiscal year 2015 core business growth rate byapproximately 0.6 percentage points. 48 Table of ContentsSegment Net Sales Revenue: Comparison of fiscal year 2016 to fiscal year 2015 Housewares Segment - Net sales revenue in the Housewares segment for fiscal year 2016 increased $14.41million, or 4.9 percent, to $310.66 million compared to $296.25 million for the same period last year. Within thesegment, year-over-year unit volume increases had a favorable impact of 5.7 percentage points on net sales revenue.The unit volume increase was slightly offset by a 0.8 percentage point decline in the average unit selling price,primarily due to higher year-over-year promotional discounts in support of new product introductions. Year-over-yearinternational sales grew in the low double digits through distribution gains in Western Europe and China, whiledomestic sales grew in the mid-single digits. Growth was strong across most channels, particularly internet, which grewin excess of 25 percent year-over-year. Similar to fiscal year 2015, closeout and club channel sales continued to declineas they have become less important to the segment’s growth strategy. From a product perspective, Housewares had netsales revenue growth through innovative category extensions in small kitchen appliances and metal bakeware. Inaddition, new innovations produced sales gains in its more traditional product lines, including the introduction of itsOXO Good Grips Hand Held Spiralizer and its GreenSaver line of produce containers. OXO tot (Housewares’ infantand toddler product line) also continued making inroads worldwide, resulting in fiscal year 2016 net sales revenuegrowth of approximately 13 percent, compared to the same period last year. Housewares has increased its product linesto over 900 items as of the 2016 fiscal year end and growth continues to be driven by expanded shelf space andassortments at key traditional and internet retailers. Health & Home Segment - Net sales revenue in the Health & Home segment for fiscal year 2016 increased$29.48 million, or 4.8 percent, to $642.74 million compared to $613.25 million for the same period last year. Withinthe segment, year-over-year unit volume increases had a favorable impact of 5.8 percentage points, partially offset by a1.0 percentage point impact of lower average unit selling prices, due to a combination of changes in category sales mixand higher promotional discounts. Health & Home fiscal year 2016 segment sales were unfavorably impacted byforeign currency exchange fluctuations of $18.20 million, or 3.0 percent, compared to the same period last year. Thesegment’s largest net sales revenue gains continue to be realized in its healthcare category, as a result of recent newproduct introductions, particularly in thermometry and humidification, which includes the VapoSteam acquisition.Seasonal cough/cold/flu patterns influence sales for the Health & Home segment. As described above, fiscal year 2016sales have been negatively impacted by a milder cough/cold/flu season and lower fever incidence. However, thisimpact was partially offset for the full fiscal year by the trailing impacts of the stronger than average prior year U.S.cough/cold/flu season, our expanded distribution in Europe and growth in Asian thermometry sales as a result ofregional Middle East Respiratory Syndrome outbreaks. We expect the weakness in the most recent U.S. cough/cold/fluseason will have an unfavorable impact on initial replenishment of affected categories during fiscal year 2017 due tohigh retail inventory levels. During fiscal year 2016, we experienced 3 percent growth in our water filtration businessdriven by enhancements to brand identity and higher consumer demand. We believe that municipal water quality issuesin Flint, Michigan and other cities around the U.S. are increasing consumer awareness of the benefits of PUR brandedwater filtration products and have positively impacted demand. In the home environment category, fan shipmentsachieved high sell-through in the U.S., Canada and Europe due to sustained high summer temperatures. Nutritional Supplements Segment - The Nutritional Supplements segment includes the operating results fromHealthy Directions, which we acquired on June 30, 2014. The Nutritional Supplements segment contributed net salesrevenue of $153.13 million in fiscal year 2016. Core business net sales in the Nutritional Supplements segment for theeight months of comparable operating results since acquisition (July 2015 to February 2016 compared to July 2014 toFebruary 2015) was approximately flat. The segment saw growth in its direct-to-consumer product sales, offset bydeclines in its legacy print newsletter subscription business, which has been de-emphasized as part of the segment’sgrowth strategy. The segment is making strategic changes to drive a higher portion of sales and new buyer file growthfrom online channels, as opposed to the legacy direct mail channel, as its older age demographic becomes moreaccustomed to researching and purchasing online and the segment attempts to attract a younger demographic. We aremaking investments in technology to improve marketing execution, customer conversion rates and enable growthdrivers such as one-click ordering and mobile first websites as the segment crosses the tipping point between desktopand mobile visits. The segment is also testing alternative forms of customer acquisition, such as direct responsetelevision, and will49 Table of Contentscontinue to do so in an effort to identify further growth opportunities and the optimal channel mix. The segmentcontinues to see significant growth in customer adoption of its continuity program, called AutoDelivery, wherecustomers can place an order once and have it automatically refilled based upon customer directed timing. Beauty Segment - Net sales revenue in the Beauty segment for fiscal year 2016 increased $3.95 million, or 0.9percent, to $439.18 million compared with $435.23 million for the same period last year. Lower unit volumes had anunfavorable impact of 1.3 percentage points on net sales revenue, while higher average unit selling prices increased netsales revenue 2.2 percentage points, primarily due to the impact of hyperinflation in Venezuela, a better sales mix andlower promotional discounts. Modest overall gains in beauty appliances and accessories were partially offset bydeclines in personal care grooming categories due to continued competitive pressures and some lost distribution atretail. Additionally, fiscal year 2016 sales were impacted by unfavorable foreign currency exchange fluctuations of$10.34 million, or 2.4 percent, compared to the same period last year. Beginning in fiscal year 2015, the segmentincreased its investment in consumer centric research driven product development, which began to show results infiscal year 2016. The Beauty segment released the Revlon One-Step Hairdryer and Styler and professional straightenersand styling irons with extra-long barrels after identifying an unmet need through research with professional stylists.Additionally, the segment re-launched its Pro Beauty Tools brand with new products and packaging that we believe willappeal to consumers' demand for professional-grade products sold at retail. We expect the segment will continue to facea number of difficulties in the grooming, skin care and haircare category, including the impacts of continuedpromotional pricing following new product rollouts by significantly larger category participants. We also expect adecline in sales in fiscal year 2017 related to our distribution agreement for pedicure products due to competitivepressures and high inventory at retail. Beauty segment net sales revenue includes sales from our operations in Venezuela of $21.97 and $10.31million in fiscal years 2016 and 2015, respectively. As further discussed in Note (2) to the accompanying consolidatedfinancial statements and under “– Overview” above, we changed the rate used to re-measure our Venezuelan financialstatements as of February 29, 2016 to the SIMADI rate of approximately 205 Bolivars per U.S. Dollar, which was thelowest rate in a three-tiered exchange system in place at the time. Shortly after the end of fiscal year 2016, theVenezuelan government introduced a new rate referred to as DICOM that is intended to be market based and wasinitially set at a rate very similar to that of SIMADI. Absent further changes to the exchange systems, or unless futuredevelopments call for further changes, we intend to use DICOM to re-measure our financial statements on a go-forwardbasis. For fiscal years 2016, 2015 and 2014, sales in Venezuela represented 1.4, 0.7 and 0.6 percent, respectively, ofthe Company’s consolidated net sales revenue at the official exchange rate of 6.3 Bolivars per U.S. Dollar. At thecurrent DICOM exchange rate, we expect that fiscal year 2017 U.S. Dollar reported net sales from Venezuela will nolonger be meaningful to our consolidated and Beauty segment net sales revenue. Comparison of fiscal year 2015 to fiscal year 2014 Housewares Segment - Net sales revenue in the Housewares segment for fiscal year 2015 increased $21.77million, or 7.9 percent, to $296.25 million compared to $274.48 million for the same period last year. Year-over-yearunit volume increases had a favorable impact of 8.3 percentage points on net sales revenue. The unit volume increasewas slightly offset by a 0.4 percentage point decline in the average unit selling price, despite a better product sales mixand a better channel mix, primarily due to higher year-over-year promotional discounts. Year-over-year internationalsales grew in the low double digits while domestic sales grew in the mid-to-high single digits. Growth was strong acrossmost channels with the only significant decline occurring in the closeout channel. From a product perspective,Housewares had net sales revenue growth through line extensions in our infant and toddler category and gains in thegadgets, bath, cleaning products, barware, and baking and measuring categories. OXO tot (Housewares’ infant andtoddler product line) continued to gain traction with consumers, resulting in net sales revenue growth of approximately30 percent, compared to the same period last year. Health & Home Segment - Net sales revenue in the Health & Home segment for fiscal year 2015 increased$45.18 million, or 8.0 percent, to $613.25 million compared to $568.08 million for the same period last year. Higherunit volume contributed approximately 1.5 percentage points of growth. An increase in average unit selling prices,largely due to a more favorable sales mix, contributed approximately 6.5 percentage points to the increase in net salesrevenue. The50 Table of Contentssegment experienced growth in the thermometry, air purification and fan product lines. In addition, the humidificationproduct line recovered in the fourth fiscal quarter due to a strong cold/cough/flu season, ending fiscal year 2015 withmid-single digit category growth. Worldwide sales gains continue in thermometry and associated consumables as aresult of new product introductions during the year and a strong flu season, which included a higher incidence of fever.These gains were partially offset by overall declines in water filtration and heater shipments. A relatively warm fall hadthe offsetting effects of improving fan sales and weakening early season heater shipments. Nutritional Supplements Segment - The Nutritional Supplements segment consists of the operating results fromHealthy Directions, which we acquired on June 30, 2014. Net sales revenue for the eight months of its operationduring fiscal year 2015 was $100.40 million. Beauty Segment - Net sales revenue in the Beauty segment for fiscal year 2015 decreased $39.37 million, or8.3 percent, to $435.23 million compared with $474.60 million for the same period last year. Lower unit volumes hadan unfavorable impact of 5.6 percentage points on net sales revenue and a decrease in the average unit selling pricecontributed an additional 2.7 percentage points to the overall decline. The decrease in net sales revenue was spreadacross most major product categories within the segment. The environment for most categories in this segment has beendifficult and highly promotional for a large part of fiscal year 2015 as a result of low demand and a retail and consumerfocus on lower price-point merchandise. The grooming, skin care and hair care category continued to confrontsignificant competitive product launches and promotional spending in hair care. The results for fiscal year 2015 alsoinclude the impact of an inventory reduction in the retail appliances category at our largest customer. The retailappliances category was also negatively impacted by the loss of distribution with a Canadian retailer in the third quarterof fiscal year 2015. The loss of distribution had an ongoing impact on net sales revenue in fiscal year 2016, but theimpact on operating income was not material. In addition, during fiscal year 2015 we experienced an approximate$12.50 million year-over-year decline in our European appliance net sales revenue attributed to a product distributionagreement that did not repeat in fiscal year 2015. Impact of Acquisitions: The following table summarizes, for the periods indicated, the impact that acquisitions had on our net salesrevenue: IMPACT OF ACQUISITIONS ON NET SALES REVENUE(in thousands) Fiscal Years Ended the Last Day of February, 2016 2015 2014 Prior year's sales revenue, net$1,445,131$1,317,153$1,288,263Components of sales revenue change, netCore business39,69827,58328,890Incremental net sales revenue from acquisitions (non-core business):Healthy Directions (four and eight months in fiscal years 2016 and 2015, respectively)52,885100,395 -Vicks VapoSteam (eleven months in fiscal year 2016)7,987 - -Change in sales revenue, net100,570127,97828,890Total sales revenue, net$1,545,701$1,445,131$1,317,153 Total net sales revenue growth7.0% 9.7% 2.2% Core business2.8% 2.1% 2.2% Acquisitions4.2% 7.6% 0.0% In the above table, core business is net sales revenue associated with product lines or brands after the firsttwelve months from the date the product line or brand was acquired. Net sales revenue from internally developedbrands or product lines is always considered core business. Net sales revenue from acquisitions is net sales revenueassociated with product lines or brands that we have acquired and operated for less than twelve months during eachperiod presented.51 Table of ContentsGeographic Net Sales Revenue: The following table sets forth, for the periods indicated, our net sales revenue by geographic region, in U.S.Dollars, as a percentage of net sales revenue, and the year-over-year percentage change in each region. Fiscal Years Ended the Last Day of February,% of Sales Revenue, net (2)% Change(in thousands) 2016 2015(1) 2014 2016 2015(1) 2014 16/15 15/14 Sales revenue, net by geographic regionUnited States$1,233,464$1,139,959$1,019,52579.8% 78.9% 77.4% 8.2% 11.8%Canada57,48269,99669,1903.7% 4.8% 5.3% (17.9)% 1.2%EMEA191,485181,147176,67412.4% 12.5% 13.4% 5.7% 2.5%Latin America63,27054,02951,7644.1% 3.7% 3.9% 17.1% 4.4%Total sales revenue, net$1,545,701$1,445,131$1,317,153100.0% 100.0% 100.0% 7.0% 9.7% (1)Includes eight months of operations for Healthy Directions, acquired on June 30, 2014, which sells almost entirelyin the U.S. (2)Percentages of net sales revenue by geographic region are computed as a percentage of the geographic region’s netsales revenue to consolidated total net sales revenue. Comparison of fiscal year 2016 to fiscal year 2015 In fiscal year 2016, Canada, EMEA, and Latin America operations (collectively “international operations”) eachaccounted for approximately 18, 61 and 20 percent of total international net sales revenue, respectively. The U.S.contributed 6.5 percentage points to consolidated net sales revenue growth, or $93.51 million, which included fourmonths of incremental net sales revenue totaling $52.89 million from our Nutritional Supplements segment, acquiredJune 30, 2014, which sells almost entirely in the U.S. International operations contributed 0.5 percentage points, or $7.06million, to consolidated net sales revenue growth. Canadian operations accounted for a 0.9 percentage point decrease inour consolidated net sales revenue, or $12.51 million. EMEA accounted for a 0.7 percentage point increase in ourconsolidated net sales revenue, or $10.34 million. Latin American operations accounted for a 0.6 percentage pointincrease in our consolidated net sales revenue, or $9.24 million. In addition to relatively weaker international consumereconomies, overall international net sales revenue performance was hurt by the impact of net unfavorable exchange ratefluctuations, which decreased our overall reported international net sales by approximately $29.80 million in fiscal year2016, compared to the same period last year. In our Health & Home segment, where our EMEA and Canadianoperations comprise a high proportion of foreign revenues, foreign exchange fluctuations had an $18.20 millionunfavorable impact on reported net sales revenues, compared to the same period last year. In our Beauty segment,where our Canadian and Latin American operations comprise a high proportion of foreign revenues, foreign exchangefluctuations had a $10.34 million unfavorable impact on reported net sales revenue, compared to the same period lastyear. The unfavorable impact on reported net sales revenue in the Housewares segment was $1.25 million in fiscal year2016, compared to the same period last year. Latin America region net sales revenue includes sales from our operations in Venezuela of $21.97, $10.31 and$8.47 million in fiscal years 2016, 2015 and 2014, respectively. As further discussed in Note (2) to the accompanyingconsolidated financial statements and under “– Overview” above, we changed the rate used to re-measure ourVenezuelan financial statements as of February 29, 2016 to the SIMADI rate of approximately 205 Bolivars per U.S.Dollar, which was the lowest rate in a three-tiered exchange system in place at the time. Shortly after the end of fiscalyear 2016, the Venezuelan government introduced a new rate referred to as DICOM that is intended to be market basedand was initially set at a rate very similar to that of SIMADI. Absent further changes to the exchange systems, or unlessfuture developments call for further changes, we intend to use DICOM to re-measure our financial statements on a go-forward basis. For fiscal years 2016, 2015 and 2014, sales in Venezuela represented 1.4, 0.7 and 0.6 percent,respectively, of the Company’s consolidated net sales revenue at the official exchange rate of 6.3 Bolivars per U.S.Dollar. At the current52 Table of ContentsDICOM exchange rate, we expect that fiscal year 2017 U.S. Dollar reported net sales from Venezuela will no longer bemeaningful to our consolidated and Beauty segment net sales revenue. Comparison of fiscal year 2015 to fiscal year 2014 In fiscal year 2015, Canada, EMEA, and Latin America operations each accounted for approximately 23, 59and 18 percent of total international net sales revenue, respectively. The U.S. contributed 9.1 percentage points toconsolidated net sales revenue growth or $120.43 million, primarily due to $100.40 million of sales from the additionof the Nutritional Supplements segment, which transacts almost entirely in the U.S. International operations contributed0.6 percentage points, or $7.55 million, to consolidated net sales revenue growth. Canadian operations accounted for a0.1 percentage point increase in our consolidated net sales revenue, or $0.81 million. EMEA accounted for a 0.3percentage point increase in our consolidated net sales revenue, or $4.47 million, despite the approximate $12.50million year-over-year decline in our European Beauty appliance net sales revenue attributed to a product distributionagreement that did not repeat in fiscal year 2015. Latin American operations accounted for a 0.2 percentage pointincrease in our consolidated net sales revenue, or $2.27 million. In addition to relatively weaker international consumereconomies, overall international net sales revenue performance was hurt by the impact of net unfavorable exchange ratefluctuations, which decreased our overall reported international net sales by approximately $7.50 million in fiscal year2015, compared to the same period in the previous year. In our Beauty segment, where our Canadian and LatinAmerican operations comprise a high proportion of foreign revenues, foreign exchange fluctuations had a $3.61 millionunfavorable impact on reported net sales revenues, compared to the same period in the previous year. In our Health &Home segment, where our EMEA and Canadian operations comprise a high proportion of foreign revenues, foreignexchange fluctuations had a $4.15 million unfavorable impact on reported net sales revenues, compared to the sameperiod in the previous year. Gross Profit Margin: A significant portion of the products we sell are purchased from third-party manufacturers in China. TheChinese Renminbi has fluctuated against the U.S. Dollar in recent years, devaluing by approximately 6 percent againstthe U.S. Dollar during fiscal year 2016. If China’s currency continues to fluctuate against the U.S. Dollar in the short-to-intermediate term, we cannot accurately predict the impact of those fluctuations on our results of operations. There canbe no assurance that foreign exchange rates will be stable in the future, or that fluctuations in Chinese foreign currencymarkets will not have a material adverse effect on our product gross profit margins. Comparison of fiscal year 2016 to fiscal year 2015 Consolidated gross profit as a percentage of net sales revenue decreased 0.4 percentage points to 41.1 percentin fiscal year 2016 from 41.5 percent in fiscal year 2015. The year-over-year decrease in consolidated gross profitmargin reflects the following: ·a re-measurement related charge of $9.08 million with respect to Venezuelan inventory at February 29, 2016,which reduced consolidated gross profit margin by 0.6 percentage points; and ·the impact of net unfavorable foreign currency fluctuations, partially offset by; ·an incremental four months of operating results from the Nutritional Supplements segment, which increasedconsolidated gross profit margin by 1.1 percentage points. Because of the nature of its products and direct-to-consumer business model, the Nutritional Supplementssegment’s spending patterns differ from our other segments. Higher gross margins are partially offset by comparativelyhigher percentages of spending devoted to selling, promotional and distribution activities. 53 Table of ContentsComparison of fiscal year 2015 to fiscal year 2014 Consolidated gross profit as a percentage of net sales revenue increased 2.3 percentage points to 41.5 percent infiscal year 2015 from 39.2 percent in fiscal year 2014. The addition of eight months of operations of the NutritionalSupplements segment had a favorable impact of 2.3 percentage points on the consolidated gross profit margin. Becauseof the nature of its products and direct-to-consumer business model, this segment’s spending patterns differ from ourcore business. As a result, higher gross margins are partially offset by comparatively higher percentages of spendingdevoted to selling, promotional and distribution activities. The overall fiscal year 2015 gross profit margin for our corebusiness was flat compared to fiscal year 2014, despite an approximate $7.50 million unfavorable impact on net salesrevenue from foreign currency exchange rate fluctuations. Selling, General and Administrative Expense: Comparison of fiscal year 2016 to fiscal year 2015 Our SG&A ratio increased 2.6 percentage points to 32.4 percent of net sales revenue for fiscal year 2016,compared to 29.7 percent for the same period last year. The year-over-year increase in the SG&A ratio is primarily dueto the following items: ·Venezuelan re-measurement related charges of $9.57 million, which increased the SG&A ratio by 0.6 percentagepoints; ·the impact of a $17.83 million patent litigation charge recorded in the fourth quarter of fiscal year 2016, whichincreased the SG&A ratio by 1.2 percentage points; ·the impact of $6.71 million of CEO succession costs recorded during the third quarter of fiscal year 2016 as resultof the lawsuit settlement with our former CEO, which increased the SG&A ratio by 0.4 percentage points; ·the unfavorable comparison resulting from a $7 million gain from the amendment of a trademark license agreementin the third quarter of fiscal year 2015, which decreased the comparative period SG&A ratio by 0.5 percentagepoints; and ·an incremental four months of operating results from the Nutritional Supplements segment, which operates with ahigher SG&A ratio than our other segments. These factors were partially offset by: ·lower year-over-year foreign currency revaluation losses, partially due to the increase in the use of cash flowhedges and a cross-currency debt swap; ·lower outbound freight costs; and ·the impact that higher overall net sales had on operating leverage. 54 Table of ContentsComparison of fiscal year 2015 to fiscal year 2014 Our SG&A ratio increased 0.3 percentage points to 29.7 percent of net sales revenue for fiscal year 2015,compared to 29.4 percent for the same period last year. The year-over-year increase in the SG&A ratio is primarily dueto the following items: ·the Nutritional Supplements segment operates with a higher SG&A ratio than our core business. The addition ofeight months of operations of this segment, excluding the acquisition-related expenses discussed below, increasedthe consolidated SG&A ratio by 2.3 percentage points; ·expenses of $3.61 million incurred in connection with the Healthy Directions acquisition during the second fiscalquarter increased our SG&A ratio for fiscal year 2015 by 0.2 percentage points; and·a year-over-year decrease of 2.2 percentage points in the SG&A ratio for the core business due to a combination of:the impact of CEO succession costs of $18.23 million in fiscal year 2014, with no comparable cost in fiscal year2015; and the impact of a $7 million gain from the amendment of our trademark license agreement with HoneywellInternational Inc. in fiscal year 2015; partially offset by $5.01 million of higher media and advertising expenses andapproximately $4.77 million of higher foreign currency exchange losses in fiscal year 2015. Asset Impairment Charges: A significant portion of our long-term assets continues to consist of goodwill and other indefinite-livedintangible assets recorded because of past acquisitions. The Company conducts its annual test of impairment ofgoodwill and indefinite-lived intangible assets in the first quarter of each fiscal year. The Company also tests forimpairment if events or circumstances indicate a more frequent evaluation is necessary. The steps required by GAAP totest for impairment entail significant amounts of judgment and subjectivity. The results of our annual testing may resultin us recording declines in asset value that are not apparent until all test work is completed. Any such impairmentcharges could have a material adverse effect on our business, results of operations and financial condition. Fourth Quarter of Fiscal Year 2016 - The Company performed interim impairment testing in the fourthquarter of fiscal year 2016 for certain of its brands as a result of revised growth outlooks. As a result of its testing, theCompany recorded a non-cash impairment charge of $3.00 million ($2.66 million after tax). The charge was related to atrademark in our Beauty segment which was written down to fair value, determined on the basis of future discountedcash flows using the relief from royalty valuation method. First Quarter of Fiscal Year 2016 - The Company performed its annual evaluation of goodwill and indefinite-lived intangible assets for impairment during the first quarter of fiscal year 2016. As a result of our testing of indefinite-lived trademarks, we recorded a non-cash asset impairment charge of $3.00 million ($2.66 million after tax). Thecharge was related to a trademark in our Beauty segment, which was written down to its estimated fair value,determined on the basis of future discounted cash flows using the relief from royalty valuation method. First Quarter of Fiscal Year 2015 - The Company performed its annual evaluation of goodwill andindefinite-lived intangible assets for impairment during the first quarter of fiscal year 2015. As a result of our testing ofindefinite-lived trademarks and licenses, we recorded a non-cash asset impairment charge of $9.00 million ($8.16million after tax) during the first quarter of fiscal year 2015. The charge was related to certain trademarks in our Beautysegment, which were written down to their estimated fair value, determined based on future discounted cash flowsusing the relief from royalty valuation method. First Quarter of Fiscal Year 2014 - The Company performed its annual evaluation of goodwill and indefinite-lived intangible assets for impairment during the first quarter of fiscal year 2014. As a result of our testing of indefinite-lived trademarks and licenses, we recorded a non-cash intangible asset impairment charge of $12.05 million ($12.03million after tax). The charge was related to certain trademarks in our Beauty segment, which were written down to theirestimated fair value, as a result of lower revenue outlooks due to competitive factors. Fair values were determined basedon future discounted cash flows using the relief from royalty valuation method.55 Table of ContentsOperating Income by Segment: Operating income by segment for fiscal years 2016, 2015 and 2014 was as follows: Fiscal Years Ended the Last Day of February, % of Sales Revenue, net (2) % Change (in thousands) 2016 2015(1) 2014 2016 2015(1) 2014 16/15 15/14 Housewares $56,659 $59,392 $50,828 18.2% 20.0% 18.5% (4.6)% 16.8%Health & Home 38,078 50,821 20,764 5.9% 8.3% 3.7% (25.1)% 144.8%Nutritional Supplements 11,446 9,512 - 7.5% 9.5% -% 20.3 * Beauty 24,432 41,994 45,508 5.6% 9.6% 9.6% (41.8)% (7.7)%Total operating income $130,615 $161,719 $117,100 8.5% 11.2% 8.9% (19.2)% 38.1%* Calculation is not meaningful (1)Includes eight months of operations for Healthy Directions, which was acquired on June 30, 2014. (2)Percentages by segment are computed as a percentage of the segments’ net sales revenue. We compute segment operating income based on net sales revenue, less cost of goods sold, SG&A and anyasset impairment charges associated with the segment. The SG&A used to compute each segment’s operating income isdirectly associated with the segment, plus shared service and corporate overhead expenses that are allocable to thesegment. In fiscal year 2016, we began making an allocation of shared service and corporate overhead costs to theNutritional Supplements segment. For fiscal year 2016, these allocations totaled $4.69 million. Comparison of fiscal year 2016 to fiscal year 2015 Housewares - The Housewares segment’s operating income decreased $2.73 million, or 4.6 percent, for fiscalyear 2016 compared to fiscal year 2015. Segment operating margin decreased 1.8 percentage points to 18.2 percent,compared to 20.0 percent for the same period last year. The decrease in operating margin was due to higherpromotional spending, increased media advertising in support of new products and categories, higher compensationexpense incurred to support category expansion and increased operating capacity, lower margin kitchen electric sales,and an allocation of CEO succession costs. Health & Home - The Health & Home segment’s operating income decreased $12.74 million, or 25.1 percent,for fiscal year 2016 compared to fiscal year 2015. Segment operating margin decreased 2.4 percentage points to 5.9percent, compared to 8.3 percent for the same period last year. The decrease in operating margin is primarily due to theunfavorable impact of foreign currency fluctuations on U.S. Dollar reported net sales, allocated CEO succession costsof $2.72 million, and a patent litigation charge of $17.83 million recorded in the fourth quarter of fiscal year 2016. Inaddition, the year-over-year comparison is negatively impacted by a $7.00 million gain from the amendment of atrademark license agreement recorded in fiscal year 2015. Nutritional Supplements Segment - The Nutritional Supplements segment’s operating income reflects theoperating results from Healthy Directions, which we acquired on June 30, 2014. Operating margin for fiscal year 2016was 7.5% compared to an operating margin of 9.5% for the 8 months of operating results included in the same periodlast year. The decline in operating margin is primarily due to: ·a decline of 3.1 percentage points from an allocation of $4.69 million of shared service and corporate overheadexpenses that were not made in fiscal year 2015, the year of acquisition; ·an unfavorable impact of 0.5 percentage points from allocated CEO succession costs; and ·increased investments in promotions, advertising, customer acquisition, and online sales channel development. 56 Table of ContentsThese factors were partially offset by the comparative impact of $3.61 million of acquisition-related expenses recordedin the same period last year, which reduced operating margin by 3.6 percentage points in fiscal year 2015. Beauty Segment - The Beauty segment’s operating income decreased $17.56 million, or 41.8 percent, for fiscalyear 2016 compared to fiscal year 2015. Segment operating margin decreased 4.0 percentage points to 5.6 percent,compared to 9.6 percent for the same period last year. The decrease in operating margin is primarily due to: ·Venezuelan currency re-measurement related charges totaling $18.73 million in fiscal year 2016, which reducedoperating margin by 4.3 percentage points; ·the unfavorable impact of foreign currency fluctuations on U.S. Dollar reported net sales revenue; and ·allocated CEO succession costs of $1.93 million in fiscal year 2016, which reduced operating margin by 0.4percentage points. These factors were partially offset by a decrease in non-cash asset impairment charges of $3 million year-over-year. Comparison of fiscal year 2015 to fiscal year 2014 Housewares - The Housewares segment’s operating income increased $8.56 million, or 16.8 percent, for fiscalyear 2015 compared to fiscal year 2014. Segment operating margin increased 1.5 percentage points to 20.0 percent,compared to 18.5 percent for the same period last year. The year-over-year improvement in operating margin isprimarily due to $3.64 million of allocated CEO succession costs in fiscal year 2014, for which there was nocomparable cost in fiscal year 2015. The increase in segment operating margin was also due to higher net sales revenueand an increase in operating leverage, partially offset by a slightly lower margin mix and certain product cost increasescompared to the same period last year. Health & Home - The Health & Home segment’s operating income increased $30.06 million, or 144.8 percent,for fiscal year 2015 compared to fiscal year 2014. Segment operating margin increased 4.6 percentage points to 8.3percent, compared to 3.7 percent for the same period last year. The increase in segment operating margin was due tohigher net sales revenue and a lower operating expense ratio year-over-year. The lower operating expense ratio wasprimarily due to $7.92 million of allocated CEO succession costs in fiscal year 2014, for which there was nocomparable cost in fiscal year 2015, and a $7 million gain recognized in connection with the amendment of ourtrademark license agreement with Honeywell International Inc. in fiscal year 2015. These operating expense reductionswere partially offset by an increase in foreign exchange losses year-over-year. Nutritional Supplements Segment - The Nutritional Supplements segment’s operating income includes eightmonths of operating results from Healthy Directions, which we acquired on June 30, 2014. The segment’s operatingincome was $9.51 million, resulting in an operating margin of 9.5 percent. The fiscal year-to-date operating incomeincludes expenses of $3.61 million incurred in connection with the acquisition. Beauty Segment - The Beauty segment’s operating income decreased $3.51 million, or 7.7 percent, for fiscalyear 2015 compared to fiscal year 2014. Segment operating margin remained flat at 9.6 percent for both fiscal year2015 and 2014. The flat operating margin was due to $6.67 million of allocated CEO succession costs in fiscal year2014, for which there was no comparable cost in fiscal year 2015, offset by higher advertising and other marketingexpenses and higher foreign exchange losses. Operating income includes non-cash intangible asset impairment chargestotaling $9.00 million and $12.05 million for fiscal years 2015 and 2014, respectively, as previously described. As discussed above, a significant amount of the variation in operating income can be attributed to the combinedeffects of the following significant items: non-cash asset impairment charges, CEO succession costs, acquisition-relatedexpenses, Venezuelan re-measurement related charges, patent litigation charges, amortization of intangible assets, andnon-cash share-based compensation, as applicable. The tables on the following page help to provide a betterunderstanding of the comparative impact of these items on operating income for each segment and consolidatedoperating income.57 Table of ContentsADJUSTED OPERATING INCOME AND OPERATING MARGIN(in thousands) Year Ended February 29, 2016 Housewares Health & Home NutritionalSupplements (8) Beauty Total Operating income, as reported (GAAP)$56,65918.2%$38,0785.9%$11,4467.5%$24,4325.6%$130,6158.5%Asset impairment charges (1) - -% - -% - -%6,0001.4%6,0000.4%CEO succession costs (2)1,3480.4%2,7220.4%7040.5%1,9330.4%6,7070.4%Acquisition-related expenses (3)6980.2% - -% - -% - -%6980.0%Venezuelan re-measurement related charges (4) - -% - -% - -%18,7334.3%18,7331.2%Patent litigation charge (5) - -%17,8302.8% - -% - -%17,8301.2%Subtotal58,70518.9%58,6309.1%12,1507.9%51,09811.6%180,58311.7%Amortization of intangible assets (6)1,3250.4%14,4382.2%6,2594.1%5,7511.3%27,7731.8%Non-cash share-based compensation (7)1,3440.4%2,4700.4%1,3190.9%3,3500.8%8,4830.5%Adjusted operating income (non-GAAP)$61,37419.8%$75,53811.8%$19,72812.9%$60,19913.7%$216,83914.0% Year Ended February 28, 2015 Housewares Health & Home NutritionalSupplements (8) Beauty Total Operating income, as reported (GAAP)$59,39220.0%$50,8218.3%$9,5129.5%$41,9949.6%$161,71911.2%Asset impairment charges (1) - -% - -% - -%9,0002.1%9,0000.6%Acquisition-related expenses (3) - -% - -%3,6113.6% - -%3,6110.2%Subtotal59,39220.0%50,8218.3%13,12313.1%50,99411.7%174,33012.1%Amortization of intangible assets (6)1,3450.5%13,8782.3%4,1714.2%5,9341.4%25,3281.8%Non-cash share-based compensation (7)7580.3%1,1150.2%4990.5%3,6020.8%5,9740.4%Adjusted operating income (non-GAAP)$61,49520.8%$65,81410.7%$17,79317.7%$60,53013.9%$205,63214.2% Year Ended February 28, 2014 Housewares Health & Home NutritionalSupplements (8) Beauty Total Operating income, as reported (GAAP)$50,82818.5%$20,7643.7%$ - -%$45,5089.6%$117,1008.9%Asset impairment charges (1) - -% - -% - -%12,0492.5%12,0490.9%CEO succession costs (2)3,6441.3%7,9161.4% - -%6,6681.4%18,2281.4%Subtotal54,47219.8%28,6805.0% - -%64,22513.5%147,37711.2%Amortization of intangible assets (6)1,3220.5%14,3502.5% - -%5,9401.3%21,6121.6%Non-cash share-based compensation (7)2,4000.9%4,9660.9% - -%6,8661.4%14,2321.1%Adjusted operating income (non-GAAP)$58,19421.2%$47,9968.4%$ - -%$77,03116.2%$183,22113.9%In the tables above, footnote references (1) to (7) correspond to the notes beginning on page 60 under the table entitled“Adjusted Income and EPS.” (8)The Nutritional Supplements segment includes eight months of operating results for fiscal year 2015, as thesegment was acquired on June 30, 2014. The tables shown above entitled “Adjusted Operating Income and Operating Margin” reports fiscal years 2016,2015 and 2014 operating income and associated operating margin excluding non-cash asset impairment charges, CEOsuccession costs, acquisition-related expenses, Venezuelan re-measurement related charges, patent litigation charges,amortization of intangible assets, and non-cash share-based compensation, as applicable. Adjusted operating incomeand operating margin, as discussed in the preceding tables, may be considered non-GAAP financial measures as setforth in SEC Regulation G, Rule 100. An explanation of the reasons why the Company believes the non-GAAPfinancial information is useful and the nature and limitations of the non-GAAP financial measures, is furnished on page61. 58 Table of ContentsInterest Expense: Interest expense decreased to $11.10 million in fiscal year 2016 compared to $15.02 million in fiscal year 2015.The decrease in interest expense is due to lower interest rates incurred on borrowings under our credit facility and lowerterm debt outstanding in fiscal year 2016, which accrued interest at comparatively higher rates than under our creditfacility. Interest expense increased to $15.02 million in fiscal year 2015 compared to $10.19 million in fiscal year 2014.The increase in interest expense is due to higher levels of debt as a result of borrowings used to fund the repurchase of$278.43 million of the Company’s outstanding common stock in fiscal year 2015 and to fund the $195.94 millionacquisition of Healthy Directions on June 30, 2014. Income Tax Expense: Our fiscal years 2016, 2015 and 2014 income tax expense was $18.59, $16.05 and $20.89 million,respectively, and our effective tax rates were 15.5, 10.9 and 19.5 percent, respectively. The year-over-year comparisonof our effective tax rates was primarily impacted by the mix of taxable income in our various tax jurisdictions. Due tothe Company’s organization in Bermuda and the ownership structure of its foreign subsidiaries, many of which are notowned directly or indirectly by a U.S. parent company, an immaterial amount of the Company’s foreign income issubject to U.S. taxation on a permanent basis under current law. Additionally, the Company’s intellectual property islargely owned by foreign subsidiaries of the Company, resulting in proportionally higher earnings in jurisdictions withlower statutory tax rates, which decreases the Company’s overall effective tax rate. The fiscal year 2016 effective tax rate was also impacted by: the unfavorable effect of Venezuelan currency re-measurement and non-cash impairment charges of $18.73 million, with no related tax benefit; the unfavorable effect ofa patent litigation charge of $17.83 million, with a related tax benefit of $0.05 million; the impact of unfavorableforeign currency exchange fluctuations on income before tax, with no related tax benefit; and tax benefits of $2.05million due to the finalization of certain tax returns and changes in uncertain tax positions. The fiscal year 2015 tax rate was also favorably impacted by a $0.85 million tax benefit associated with a netreduction in the valuation allowance for net operating loss carryforwards, a $0.52 million tax benefit resulting from thefinalization of certain tax returns and tax benefits of $3.00 million related to the resolution of uncertain tax positionsand the impact of foreign currency fluctuations on foreign unrecognized tax benefits. In addition, a $7 million gain($6.98 million after tax) from the amendment of our trademark license agreement with Honeywell International Inc.decreased the effective tax rate by 0.5 percentage points in fiscal year 2015. We expect our effective tax rate for fiscal year 2017 to range between 13.0 and 15.0 percent. Net Income: Comparison of fiscal year 2016 to fiscal year 2015 Our net income was $101.23 million for fiscal year 2016 compared to $131.16 million for fiscal year 2015,a decrease of 22.8 percent. Our diluted earnings per share decreased $1.00, or 22.1 percent, to $3.52 for fiscal year2016 compared to $4.52 for fiscal year 2015. Comparison of fiscal year 2015 to fiscal year 2014 Our net income was $131.16 million for fiscal year 2015 compared to $86.25 million for fiscal year 2014, anincrease of 52.1 percent. Our diluted earnings per share increased $1.86 to $4.52 for fiscal year 2015 compared to$2.66 for fiscal year 2014, an increase of 69.9 percent.59 Table of ContentsAdjusted Income and EPS: In order to provide a better understanding of the impact of certain items on our net income and EPS, the analysisthat follows reports the comparative after tax impact of non-cash asset impairment charges, CEO succession costs,acquisition-related expenses, Venezuelan re-measurement related charges, patent litigation charges, amortization ofintangible assets, and non-cash share-based compensation, as applicable, on our net income, and basic and diluted EPSfor the periods covered below. ADJUSTED INCOME AND EPS(dollars in thousands, except per share data) Fiscal Years Ended theLast Day of February, Basic EPS Diluted EPS 2016 2015 2014 2016 2015 2014 2016 2015 2014Net income as reported (GAAP)$101,228$131,164$86,248$3.58$4.59$2.69$3.52$4.52$2.66Asset impairment charges, net of tax (1)5,3128,15512,0340.190.290.380.180.280.37CEO succession costs, net of tax (2)4,645- 16,3350.16 -0.510.16 -0.51Acquisition-related expenses, net of tax (3)6962,306- 0.030.08 -0.020.08 -Venezuelan re-measurement related charges, net oftax (4)18,733- - 0.66 - -0.65 - -Patent litigation charge, net of tax (5)17,785- - 0.63 - -0.62 - -Subtotal148,399141,625114,6175.254.963.585.164.883.54Amortization of intangible assets, net of tax (6)24,06322,98520,7410.850.800.640.840.790.64Non-cash share-based compensation, net of tax (7)7,1995,31310,4160.250.190.330.250.180.32Adjusted income (non-GAAP)$179,661$169,923$145,774$6.35$5.95$4.55$6.25$5.85$4.50 Weighted average shares of common stock used incomputing basic and diluted EPS (GAAP) 28,273 28,579 32,007 28,749 29,035 32,386Dilutive impact of CEO succession costs (2) - - - - - (42)Weighted average shares of common stock used incomputing adjusted basic and diluted EPS (non-GAAP) 28,273 28,579 32,007 28,749 29,035 32,344(1)For fiscal years 2016, 2015 and 2014, non-cash intangible asset impairment charges were $6.00, $9.00 and $12.05million, respectively, net of taxes of $0.69, $0.84 and $0.02 million, respectively. (2)In fiscal year 2016, CEO succession costs of $6.71 million ($4.65 million after tax) were incurred in connectionwith the settlement of a lawsuit with our former CEO. In fiscal year 2014, CEO succession costs totaling $18.23million ($16.34 million, net of tax) were incurred in connection with the former CEO's separation from theCompany. No comparable expenses were incurred in fiscal year 2015. For additional information, see “OtherSignificant Developments during Fiscal Year 2016” beginning on page 44, and Note (13) “Other Commitments andContingencies – Employment Contracts and Related Matters” in the accompanying consolidated financialstatements. (3)Late in fiscal year 2016, expenses of $0.70 million (before and after tax), were incurred in connection with theacquisition of Hydro Flask. The acquisition subsequently closed on March 18, 2016. For fiscal year 2015, expensesof $3.61 million ($2.31 million after tax) were incurred in connection with the Healthy Directions acquisition. Nocomparable expenses were incurred in fiscal year 2014. For additional information, see “Recent Development”beginning on page 45. (4)Currency re-measurement related charges of $18.73 million recorded in the fourth quarter of fiscal year 2016 dueto a change in the rate used to re-measure our Venezuelan financial statements as of February 29, 2016. Foradditional information, see “– Overview” beginning on page 42 and Note (2) “Significant Accounting Matters” inthe accompanying consolidated financial statements. (5)Includes a $17.83 million ($17.79 million, net of tax) patent litigation charge recorded in the fourth quarter of fiscalyear 2016. For additional information, see “Other Significant Developments During Fiscal Year 2016” beginningon page 44 and Note (13) “Other Commitments and Contingencies – Thermometer Patent Litigation” in theaccompanying consolidated financial statements. 60 Table of Contents(6)For fiscal years 2016, 2015 and 2014, amortization of intangible assets was $27.77, $25.33 and $21.61 millionrespectively, net of taxes of $3.71, $2.34 and $0.87 million, respectively. (7)For fiscal years 2016, 2015 and 2014, non-cash share-based compensation expense totaled $8.48, $5.97 and$14.23 million respectively, net of taxes of $1.28, $0.66 and 3.82 million, respectively. Fiscal year 2014 amountsdo not include $17.45 million ($15.56 million, net of tax) of non-cash share-based compensation expense includedin the settlement of certain CEO succession costs referred to in note (2) above. Comparison of fiscal year 2016 to fiscal year 2015 Adjusted income increased $9.74 million or 5.7 percent for fiscal year 2016 compared to fiscal year 2015.Adjusted diluted EPS was $6.25 for fiscal year 2016 compared to $5.85 for fiscal year 2015. The increase in adjustedincome was primarily due to overall sales growth, lower interest expense, and a slight decline in adjusted operatingmargin of 0.2 percentage points, despite the unfavorable impact of foreign exchange fluctuations in fiscal year 2016and the comparative impact of a $6.98 million after tax gain from the amendment of a trademark license agreementrecorded in fiscal year 2015. The increase in adjusted diluted EPS was due to increased adjusted income and lowerdiluted shares outstanding, when compared to fiscal year 2015. Comparison of fiscal year 2015 to fiscal year 2014 Adjusted income increased $24.15 million or 16.6 percent for fiscal year 2015 compared to fiscal year 2014.Adjusted diluted EPS was $5.85 for fiscal year 2015 compared to $4.50 for fiscal year 2014. The increase in adjustedincome was primarily due to higher overall sales, a lower SG&A ratio, lower income tax expense in the core business,the $6.98 million after tax gain from the amendment of our trademark license agreement with Honeywell International,Inc. and the accretive impact of the Healthy Directions acquisition. The increase in adjusted diluted EPS was due to thecombined effects of increased adjusted income and share repurchases totaling 4,174,093 shares in fiscal year 2015,which resulted in lower diluted shares outstanding, when compared to fiscal year 2014. The tables referred on pages 58 and 60 entitled “Adjusted Operating Income and Operating Margin” and“Adjusted Income and EPS,” respectively report operating income, operating margin, net income and EPS without theimpact of non-cash asset impairment charges, CEO succession costs, acquisition-related expenses, Venezuelan re-measurement related charges, patent litigation charges, amortization of intangible assets, and non-cash share-basedcompensation for the periods presented, as applicable. For additional information on these adjusted measures, see“Explanation of Certain Terms and Measures Used in MD&A” on page 71. These measures may be considered non-GAAP financial information as set forth in SEC Regulation G, Rule 100. The preceding table reconciles these measuresto their corresponding GAAP-based measures presented in our consolidated condensed statements of income. Webelieve that adjusted operating income, adjusted operating margin, adjusted income and EPS provide useful informationto management and investors regarding financial and business trends relating to the Company’s financial condition andresults of operations. We believe that these non-GAAP financial measures, in combination with the Company’sfinancial results calculated in accordance with GAAP, provide investors with additional perspective regarding theimpact of such charges on net income and earnings per share. We also believe that these non-GAAP measures facilitatea more direct comparison of the Company’s performance with its competitors. We further believe that including theexcluded charges would not accurately reflect the underlying performance of the Company’s continuing operations forthe period in which the charges are incurred, even though such charges may be incurred and reflected in theCompany’s GAAP financial results in the near future. The material limitation associated with the use of the non-GAAPfinancial measures is that the non-GAAP measures do not reflect the full economic impact of the Company's activities.The Company’s adjusted operating income, adjusted operating margin, adjusted income and EPS are not prepared inaccordance with GAAP, are not an alternative to GAAP financial information and may be calculated differently thannon-GAAP financial information disclosed by other companies. Accordingly, undue reliance should not be placed onnon-GAAP information.61 Table of ContentsFINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Selected measures of our liquidity and capital utilization for fiscal years 2016 and 2015 are shown below: SELECTED MEASURES OF OUR LIQUIDITY AND CAPITAL UTILIZATION (1) Fiscal Years Ended the Last Day of February, 2016 2015 Accounts Receivable Turnover (Days) 52.4 58.6 Inventory Turnover (Times) 2.9 2.7 Working Capital (in thousands) $503,966 $302,895 Current Ratio 2.9:1 2.2:1 Ending Debt to Ending Equity Ratio 67.1% 47.9% Return on Average Equity (2) 10.9% 15.0% (1)Our computation and use of the measures in this table are further described and explained beginning on page 71. (2)Net income and average equity for fiscal years 2016 and 2015 include after tax non-cash asset impairment chargesof $5.31 and $8.16 million and after tax acquisition-related expenses $0.70 and $2.31 million, respectively. Inaddition, Net income and average equity for fiscal year 2016 include after tax CEO succession costs of $4.65million, after tax Venezuelan currency re-measurement and non-cash impairment charges of $18.73 million and anafter-tax patent litigation charge of $17.79 million. For fiscal years 2016 and 2015, these items had an unfavorableimpact of 4.9 and 0.9 percentage points, respectively, on the return on average equity. Operating Activities: Comparison of fiscal year 2016 to fiscal year 2015 Operating activities provided $185.26 million of cash during fiscal year 2016 compared to $178.60 million ofcash provided during fiscal year 2015. The increase in operating cash flow was primarily due to fluctuations inworking capital components. Accounts receivable decreased $4.96 million to $217.54 million at the end of fiscal year 2016, compared to$222.50 million at the end of fiscal year 2015. Accounts receivable turnover improved to 52.4 days from 58.6 days infiscal year 2015. The change in accounts receivable turnover is primarily due to the impact of an additional four monthsof Nutritional Supplements net sales without a corresponding increase in accounts receivable, as the segment collectsmost of its revenue upon shipment of product. Inventory increased $8.53 million to $301.61 million at the end of fiscal year 2016, compared to $293.08million at the end of fiscal year 2015. Inventory turnover increased to 2.9 times per year from 2.7 times per year infiscal year 2015. We believe the improvement in inventory turnover is due primarily to improvements in our supplychain operations and SKU rationalization efforts over the last fiscal year, as well as the impact of the NutritionalSupplements segment, which turns inventory at a higher rate than the rest of our other segments. Working capital was $503.97 million at the end of fiscal year 2016, compared to $302.90 million at the end offiscal year 2015. The increase in working capital was primarily the result of a $210 million draw shortly before the endof fiscal year 2016 to facilitate the closing of the Hydro Flask acquisition in March 2016. Comparison of fiscal year 2015 to fiscal year 2014 Operating activities provided $178.60 million of cash during fiscal year 2015 compared to $154.17 million ofcash provided during fiscal year 2014. The increase in operating cash flow was primarily due to the increase in netincome.62 Table of ContentsAccounts receivable increased $9.45 million to $222.50 million at the end of fiscal year 2015, compared to$213.05 million at the end of fiscal year 2014. Accounts receivable turnover improved to 58.6 days from 63.7 days infiscal year 2014. The Nutritional Supplements segment carries little to no receivables at any point in time as most of itsnet sales revenue is collected upon shipment. The addition of the segment’s net revenue without a correspondingincrease in receivables outstanding was the primary reason for the improvement in turnover. Inventory increased $3.83 million to $293.08 million at the end of fiscal year 2015, compared to $289.26million at the end of fiscal year 2014. Inventory turnover decreased slightly to 2.7 times per year from 2.8 times peryear in fiscal year 2014. The increase in inventory is primarily due to the acquisition of Healthy Directions, whichcarried $7.34 million of inventory at the end of fiscal year 2015. Working capital was $302.90 million at the end of fiscal year 2015, compared to $286.12 million at the end offiscal year 2014. The increase in working capital over the last twelve months is primarily due to a decrease in currentmaturities of long-term debt as a result of the payment of $75 million on our unsecured floating interest rate SeniorNotes at maturity in June 2014 and the extension of our Credit Agreement to January 2020 in the fourth quarter offiscal year 2014. As a result, our current ratio increased to 2.2:1 at the end of fiscal year 2015, compared to 1.9:1 at theend of fiscal year 2014. Investing Activities: In fiscal year 2016, investing activities used $63.75 million of cash compared with $202.46 and $40.46 millionused in fiscal years 2015 and 2014, respectively. Significant highlights of our fiscal year 2016 investing activities ·We spent $6.41 million on building and improvements, $10.59 million on computers, software implementationsand enhancements, furniture and other equipment, $2.50 million on tools, molds and other capital assetadditions, and $1.10 million on the development of new patents; and ·We paid $42.75 million to acquire the Vicks VapoSteam inhalant business in the Health & Home segment and$0.40 million to acquire certain proprietary brand and formulation rights in our Nutritional Supplementssegment. Significant highlights of our fiscal year 2015 investing activities ·We spent $2.97 million on information technology infrastructure, building and improvements and furniture andother equipment, $2.39 million on tools, molds and other capital asset additions and $1.16 million on thedevelopment of new patents; and ·We paid $195.94 million to acquire Healthy Directions. Significant highlights of our fiscal year 2014 investing activities ·We spent $34.03 million on building, information technology infrastructure, other improvements, furniture andequipment, and new distribution equipment in connection with the construction and outfitting of our newdistribution facility in Olive Branch, Mississippi; and ·We spent an additional $4.52 million on other information technology infrastructure, building andimprovements and other furniture and equipment, $1.57 million on tools, molds and other capital assetadditions and $0.34 million on the development of new patents. 63 Table of ContentsFinancing Activities: During fiscal year 2016, financing activities provided $91.99 million of cash compared with $33.87 and $56.52million used in fiscal years 2015 and 2014, respectively. Significant highlights of our fiscal year 2016 financing activities ·We had draws of $802.60 million against our credit agreement, including $210 million drawn shortly before theend of fiscal year 2016 to facilitate the closing of the Hydro Flask acquisition in March 2016; ·We repaid $590.00 million drawn against our credit agreement; ·We repaid $21.90 million of long-term debt; ·Employees and certain non-employee members of our Board of Directors exercised options to purchase178,102 shares of common stock, and employees purchased 28,433 shares of common stock through ourEmployee Stock Purchase Plan. These programs provided a combined $12.03 million of cash, including taxbenefits; ·We issued 276,548 shares of common stock as payment for $15 million in separation compensation due to ourformer CEO under his employment and separation agreements, which was previously accrued in fiscal year2014. Our former CEO tendered back to the Company 116,012 shares as payment for $12.00 million in relatedfederal income tax withholding obligations. Under the terms of the employment and separation agreements, thenumber of shares issued and tendered were valued at $54.24 per share. This was the fair value of the shares onSeptember 4, 2014, the date the compensation payment would have been made, if payment had not beendelayed by the associated dispute. ·We repurchased and retired 1,244,090 shares of common stock at an average price of $85.53 per share for atotal purchase price of $106.41 million through a combination of the settlement of certain stock awards andopen market purchases; and ·Share-based compensation expense provided $1.28 million in current tax benefits. Significant highlights of our fiscal year 2015 financing activities ·We had draws of $769.00 million against our credit agreement; ·We repaid $431.50 million drawn against our credit agreement; ·We repaid $96.90 million of long-term debt; ·We incurred $4.59 million in debt acquisition costs in connection with various amendments to our creditagreement and certain related guarantees during fiscal year 2015; ·Employees and certain non-employee members of our Board of Directors exercised options to purchase187,286 shares of common stock, and employees purchased 31,128 shares of common stock through ourEmployee Stock Purchase Plan. These programs provided a combined $7.62 million of cash, including taxbenefits; · We paid $4.57 million in tax obligations in connection with the vesting and settlement of certain stock awardsto our former CEO and non-employee members of our Board of Directors; ·We repurchased and retired 4,174,093 shares of common stock at an average price of $66.70 per share for atotalpurchase price of $278.43 million through a combination of a modified "Dutch auction" tender offer, thesettlement of certain stock awards and open market purchases; and ·Share-based compensation expenses provided $0.66 million in current tax benefits. 64 Table of ContentsSignificant highlights of our fiscal year 2014 financing activities ·We had draws of $107.30 million against our credit agreement; ·We repaid $189.30 million drawn against our credit agreement; ·We repaid $20 million of long-term debt; ·We had draws of $37.61 million against new debt to finance the construction of our new distribution facility inOlive Branch, Mississippi; ·We incurred $0.37 million in debt acquisition costs in connection with new long-term debt; ·Employees and certain non-employee members of our Board of Directors exercised options to purchase239,136 shares of common stock, and employees purchased 41,328 shares of common stock through ourEmployee Stock Purchase Plan. These programs provided a combined $10.29 million of cash, including taxbenefits; ·We paid $6.45 million in tax obligations in connection with the vesting and settlement of certain stock awardsto our former CEO and non-employee members of our Board of Directors; ·We repurchased and retired 33,862 shares of common stock at an average price of $38.71 per share for a totalpurchase price of $1.31 million; and ·Share-based compensation expenses provided $5.71 million in current tax benefits. Credit Agreement and Other Debt Agreements: Credit Agreement We have a credit agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent, andother lenders that provides for an unsecured total revolving commitment of $650 million as of February 29, 2016. Thecommitment under the credit agreement terminates on January 16, 2020. Accordingly, borrowings under the CreditAgreement are reported as long-term debt. Borrowings accrue interest under one of two alternative methods asdescribed in the Credit Agreement. With each borrowing against our credit line, we can elect the interest rate methodbased on our funding needs at the time. We also incur loan commitment and letter of credit fees under the CreditAgreement. Outstanding letters of credit reduce the borrowing availability under the Credit Agreement on a dollar-for-dollar basis. In connection with the amendments to our Credit Agreement in fiscal year 2015, we incurred a total of$4.59 million in new debt acquisition costs that are being amortized over the remaining term of the Credit Agreement.As of February 29, 2016, there was $550.10 million in revolving debt and $1.50 million of open letters of creditoutstanding under the Credit Agreement. As of February 29, 2016, the amount available for borrowings under theCredit Agreement was $98.40 million. However, as of February 29, 2016, our debt agreements effectively limited ourability to incur more than $64.34 million of additional debt from all sources, including the Credit Agreement. Other Debt Agreements In addition to the Credit Agreement, at February 29, 2016, we had an aggregate principal balance of $40 millionof 3.90% Senior Notes due January 2018 with two remaining equal installments due in January 2017 and 2018. In March 2014, the Company concluded its borrowings under a loan agreement with the Mississippi BusinessFinance Corporation (the “MBFC Loan”). Under the MBFC Loan, a principal balance of $37.61 million was incurred tofund construction of our Olive Branch, Mississippi distribution facility. $1.90 million in principal payments were madeon March 1, 2015 and 2014, respectively. The remaining loan balance is payable as follows: $3.80 million on March 1,2016; $5.70 million on March 1, 2017; $1.90 million on March 1, 2018 through 2022; and $14.81 million on March 1,2023. Any remaining outstanding principal and interest is due upon maturity on March 1, 2023.65 Table of ContentsOur debt agreements require the maintenance of certain financial covenants, including maximum leverageratios, minimum interest coverage ratios and minimum consolidated net worth levels (as each of these terms are definedin the various agreements). Our debt agreements also contain other customary covenants, including, among otherthings, covenants restricting or limiting the Company, except under certain conditions set forth therein, from (1)incurring debt, (2) incurring liens on its properties, (3) making certain types of investments, (4) selling certain assets ormaking other fundamental changes relating to mergers and consolidations, and (5) repurchasing shares of our commonstock and paying dividends. Our debt agreements also contain customary events of default, including failure to payprincipal or interest when due, among others. Our debt agreements are cross-defaulted to each other. Upon an event ofdefault under our debt agreements, the holders or lenders may, among other things, accelerate the maturity of anyamounts outstanding under our debt. Under the terms of our Credit Agreement, the commitments of the lenders to makeloans to us are several and not joint. Accordingly, if any lender fails to make loans to us, our available liquidity couldbe reduced by an amount up to the aggregate amount of such lender’s commitments under the credit facility. The table below provides the formulas currently in effect under various provisions contained in certain keyfinancial covenants under our debt agreements: Applicable Financial Covenant Credit Agreement and MBFC Loan3.90% Senior Notes $500 MillionMinimum Consolidated Net Worth None+ 25% of Fiscal Quarter Net Earnings After August 31, 2010 (1) EBIT (2)EBIT (2) ÷÷Interest Coverage Ratio Interest Expense (2)Interest Expense (2) Minimum Required: 3.00 to 1.00Minimum Required: 2.50 to 1.00 Total Current and Long Term Debt (3)Total Current and Long Term Debt (3) ÷÷Maximum Leverage Ratio [EBITDA (2) + Pro Forma Effect of[ EBITDA (2) + Pro Forma Effect of Acquisitions ] Acquisitions] Maximum Allowed: 3.25 to 1.00Maximum Allowed: 3.25 to 1.00 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 sothat the EBITDA of the acquired business included in the computation equals its twelvemonth 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. 66 Table of ContentsContractual Obligations Our contractual obligations and commercial commitments in effect as of the end of fiscal year 2016 were: PAYMENTS DUE BY PERIOD - TWELVE MONTHS ENDED THE LAST DAY OF FEBRUARY:(in thousands) 20172018201920202021After Total 1 year 2 years 3 years 4 years 5 years 5 yearsFixed rate debt$40,000$20,000$20,000$ -$ -$ -$ -Floating rate debt583,9073,8005,7001,900552,0001,90018,607Long-term incentive plan payouts14,2856,3785,1252,782 - - -Interest on fixed rate debt2,1321,456676 - - - -Interest on floating rate debt (1)36,8069,3279,2169,1798,112361611Open purchase orders181,953181,953 - - - - -Long-term purchase commitments1,654745606303 - - -Minimum royalty payments66,57212,72512,27112,2538,9388,99811,387Advertising and promotional47,9218,5696,3826,4626,6837,09912,726Operating leases35,8615,8865,2874,7663,3513,05413,517Capital spending commitments3,4903,490 - - - - -Total contractual obligations (2)$1,014,581$254,329$65,263$37,645$579,084$21,412$56,848(1)We estimate our future obligations for interest on our floating rate debt by assuming the weighted average interestrates in effect on each floating rate debt obligation at February 29, 2016 remain constant into the future. This is anestimate, as actual rates will vary over time. In addition, for the Credit Agreement, we assume that the balanceoutstanding as of February 29, 2016 remains the same for the remaining term of the agreement. The actual balanceoutstanding under our Credit Agreement may fluctuate significantly in future periods, depending on the availabilityof cash flow from operations and future investing and financing considerations. (2)In addition to the contractual obligations and commercial commitments in the table above, as of February 29, 2016,we have recorded a provision for uncertain tax positions of $8.74 million. We are unable to reliably estimate thetiming of most of the future payments, if any, related to uncertain tax positions; therefore, we have excluded thesetax liabilities from the table above. Off-Balance Sheet Arrangements We have no existing activities involving special purpose entities or off-balance sheet financing. Current and Future Capital Needs Based on our current financial condition and current operations, we believe that cash flows from operations andavailable 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 ofinventory and to carry normal levels of accounts receivable on our balance sheet. In addition, we continue to evaluateacquisition opportunities on a regular basis. We may finance acquisition activity with available cash, the issuance ofshares of common stock, additional debt, or other sources of financing, depending upon the size and nature of any suchtransaction and the status of the capital markets at the time of such acquisition. The Company may also elect torepurchase additional shares of common stock up to the balance of its current authorization over the next two fiscalyears, subject to limitations contained in its debt agreements and based upon its assessment of a number of factors,including share price, trading volume and general market conditions, working capital requirements, general businessconditions, financial conditions, any applicable contractual limitations, and other factors, including alternativeinvestment opportunities. For additional information, see Part II, Item 2., “Unregistered Sales of Equity Securities andUse of Proceeds” in this report. As of February 29, 2016, the amount of cash and cash equivalents held by theCompany’s foreign subsidiaries was $15.27 million, of which, an immaterial amount was held in foreign countrieswhere the funds may not be readily convertible into other currencies.67 Table of ContentsCRITICAL ACCOUNTING POLICIES The SEC defines critical accounting policies as those that are both most important to the portrayal of acompany's financial condition and results, and require management’s most difficult, subjective or complex judgments,often as a result of the need to make estimates about the effect of matters that are inherently uncertain. We consider thefollowing policies to meet this definition. Income Taxes - We must make certain estimates and judgments in determining income tax expense for financialstatement purposes. These estimates and judgments must be used in the calculation of certain tax assets and liabilitiesbecause of differences in the timing of recognition of revenue and expense for tax and financial statement purposes. Wemust assess the likelihood that we will be able to recover our deferred tax assets. If recovery is not likely, we mustincrease our provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate willnot ultimately be recoverable. As changes occur in our assessments regarding our ability to recover our deferred taxassets, our tax provision is increased in any period in which we determine that the recovery is not probable. In addition, the calculation of our tax liabilities requires us to account for uncertainties in the application ofcomplex tax regulations. We recognize liabilities for uncertain tax positions based on the two-step process prescribedwithin GAAP. The first step is to evaluate the tax position for recognition by determining if the weight of availableevidence indicates that it is more likely than not that the position will be sustained on audit based upon its technicalmerits, including resolution of related appeals or litigation processes, if any. The second step requires us to estimate andmeasure the tax benefit as the largest amount that has greater than a 50 percent likelihood of being realized uponultimate settlement. It is inherently difficult and subjective to estimate such amounts, as this requires us to determine theprobability of various possible outcomes. We reevaluate these uncertain tax positions on a quarterly basis. Thisevaluation is based on factors including, but not limited to, changes in facts or circumstances, changes in tax law,effectively settled issues under audit, historical experience with similar tax matters, guidance from our tax advisors, andnew audit activity. A change in recognition or measurement would result in the recognition of a tax benefit or anadditional charge to the tax provision in the period in which the change occurs. Estimates of Credits to be Issued to Customers - We regularly receive requests for credits from retailers forreturned products or in connection with sales incentives, such as cooperative advertising and volume rebateagreements. We reduce sales or increase SG&A, depending on the nature of the credits, for estimated future credits tocustomers. Our estimates of these amounts are based on either historical information about credits issued, relative tototal sales, or on specific knowledge of incentives offered to retailers. This process entails a significant amount ofsubjectivity and uncertainty. Valuation of Inventory – We currently record inventory on our balance sheet at average cost, or net realizablevalue, if it is below our recorded cost. Determination of net realizable value requires us to estimate the point in time atwhich an item's net realizable value drops below its recorded cost. We regularly review our inventory for slow-movingitems and for items that we are unable to sell at prices above their original cost. When we identify such an item, wereduce its book value to the net amount that we expect to realize upon its sale. This process entails a significant amountof inherent subjectivity and uncertainty. Goodwill and Indefinite-Lived Intangibles – As a result of acquisitions, we have significant intangible assets onour balance sheet that include goodwill and indefinite-lived intangibles (primarily trademarks and licenses). Accountingfor business combinations requires the use of estimates and assumptions in determining the fair value of assets acquiredand liabilities assumed in order to properly allocate the purchase price. The estimates of the fair value of the assetsacquired and liabilities assumed are based upon assumptions believed to be reasonable using established valuationtechniques that consider a number of factors, and when appropriate, valuations performed by independent third-partyappraisers. We consider whether circumstances or conditions exist which suggest that the carrying value of our goodwilland other long-lived assets might be impaired. If such circumstances or conditions exist, further steps are required inorder to determine whether the carrying value of each of the individual assets exceeds its fair market value. If analysisindicates68 Table of Contentsthat an individual asset’s carrying value does exceed its fair market value, the next step is to record a loss equal to theexcess of the individual asset’s carrying value over its fair value. The steps entail significant amounts of judgment andsubjectivity. We complete our analysis of the carrying value of our goodwill and other intangible assets during the firstquarter of each fiscal year, or more frequently whenever events or changes in circumstances indicate that their carryingvalue may not be recoverable. Considerable management judgment is necessary in reaching a conclusion regarding the reasonableness of fairvalue estimates, evaluating the most likely impact of a range of possible external conditions, considering the resultingoperating changes and their impact on estimated future cash flows, determining the appropriate discount factors to use,and selecting and weighting appropriate comparable market level inputs. The Company continues to monitor its reporting units for any triggering events or other signs of impairment.For both the goodwill and indefinite-lived intangible assets in its reporting units, the recoverability of these amounts isdependent upon achievement of the Company’s projections and the continued execution of key initiatives related torevenue growth and improved profitability. The rates used in our projections are management’s estimate of the mostlikely results over time, given a wide range of potential outcomes. The assumptions and estimates used in ourimpairment testing involve significant elements of subjective judgment and analysis by the Company’s management.While we believe that the assumptions we use are reasonable at the time made, changes in business conditions or otherunanticipated events and circumstances may occur that cause actual results to differ materially from projected resultsand this could potentially require future adjustments to our asset valuations. Carrying Value of Other Long-Lived Assets - We consider whether circumstances or conditions exist thatsuggest that the carrying value of a long-lived asset might be impaired. If such circumstances or conditions exist,further steps are required in order to determine whether the carrying value of the asset exceeds its fair market value. Ifanalysis indicates that the asset’s carrying value does exceed its fair market value, the next step is to record a loss equalto the excess of the asset’s carrying value over its fair value. The steps entail significant amounts of judgment andsubjectivity. Economic Useful Life of Intangible Assets - We amortize intangible assets, such as licenses, trademarks,customer lists and distribution rights over their economic useful lives, unless those assets' economic useful lives areindefinite. If an intangible asset’s economic useful life is deemed indefinite, that asset is not amortized. When weacquire an intangible asset, we consider factors such as the asset's history, our plans for that asset and the market forproducts associated with the asset. We consider these same factors when reviewing the economic useful lives of ourpreviously acquired intangible assets as well. We review the economic useful lives of our intangible assets at leastannually. The determination of the economic useful life of an intangible asset requires a significant amount of judgmentand entails significant subjectivity and uncertainty. We complete our analysis of the remaining useful economic lives ofour intangible assets during the first quarter of each fiscal year. Share-Based Compensation - We account for share-based employee compensation plans under the fair valuerecognition and measurement provisions in accordance with applicable accounting standards, which require all share-based payments to employees, including grants of stock options, restricted stock awards (“RSAs”), restricted stock units(“RSUs”) and performance restricted stock units (“PSUs”), to be measured based on the grant date fair value of theawards. The resulting expense is recognized over the periods during which the employee is required to perform servicein exchange for the award. The estimated number of PSU’s that will ultimately vest requires judgment, and to the extentactual results or updated estimates differ from our current estimates, such amounts will be recorded as a cumulativeadjustment in the period estimates are revised. Stock options are recognized in the financial statements based on their fair values using an option pricing modelat the date of grant. We use a Black-Scholes option-pricing model to calculate the fair value of options. This modelrequires various judgmental assumptions including volatility, forfeiture rates and expected option life. All share-based compensation expense is recorded net of estimated forfeitures in our consolidated statements ofincome and as such is recorded for only those share-based awards that we expect to vest. We estimate the forfeiture ratebased on historical forfeitures of equity awards and adjust the rate to reflect changes in facts and circumstances, if any.69 Table of ContentsWe revise our estimated forfeiture rate if actual forfeitures differ from our initial estimates. Changes in any of ourestimates and assumptions may cause us to realize material changes in stock-based compensation expense in the future. For a more comprehensive list of our accounting policies, we encourage you to read Note (1) included in theaccompanying consolidated financial statements. Note (1) describes several other policies, including policies governingthe timing of revenue recognition, that are important to the preparation of our consolidated financial statements, but donot meet the SEC's definition of critical accounting policies because they do not involve subjective or complexjudgments. NEW ACCOUNTING GUIDANCE Refer to Note (1) in the accompanying consolidated financial statements for a discussion of any new accountingpronouncements and the potential impact to our consolidated results of operations and financial position.70 Table of ContentsEXPLANATION OF CERTAIN TERMS AND MEASURES USED IN MD&A Accounts receivable turnover: Twelve-month trailing net sales revenue divided by the average of the current and priorfour fiscal quarters’ ending accounts receivable balances. This result is divided into 365 to express turnover in terms ofaverage days outstanding. Adjusted diluted EPS (non-GAAP): Adjusted income divided by the weighted average shares of common stockoutstanding plus the effect of dilutive securities. Adjusted income (non-GAAP): Net income as reported under GAAP excluding the following items net of theirapplicable tax effects: non-cash asset impairment charges, CEO succession costs, acquisition-related expenses,Venezuelan re-measurement related charges, patent litigation charges, amortization of intangible assets, and non-cashshare-based compensation, as applicable. Adjusted operating income (non-GAAP): Operating income for the Company or a segment as reported under GAAPexcluding non-cash asset impairment charges, CEO succession costs, acquisition-related expenses, Venezuelan re-measurement related charges, patent litigation charges, amortization of intangible assets, and non-cash share-basedcompensation, as applicable. Adjusted operating margin (non-GAAP): Adjusted Operating income for the Company or a segment divided bythe related net sales revenue for the Company or a segment. Core business: Core business is net sales revenue and related operations associated with product lines or brands afterthe first twelve months from the date the product line or brand was acquired. Net sales revenue and related operationsfrom internally developed product lines or brands are always considered core business. Corporate overhead costs: General corporate managerial and related administrative compensation costs, legal,accounting, and regulatory compliance costs, together with associated operating overhead that is not directlyattributable to any one operating segment, but benefits the Company as a whole. These charges are allocated to eachoperating segment based upon a number of factors depending on the nature of the expense. Such factors includerelative revenues, estimates of relative labor expenditures for each segment and certain intangible asset levels held byeach segment. Current ratio: Current assets divided by current liabilities at the end of a reporting period, expressed as a ratio. Ending debt to ending equity ratio: Total interest bearing short- and long-term debt divided by shareholders’ equity. Weuse this as a leverage metric to indicate what proportion of debt and equity we are using to finance assets. Growth from acquisitions: Net sales revenue growth associated with product lines or brands that we have acquired andoperated for less than twelve months during each period presented. Inventory turnover: Twelve-month trailing cost of goods sold divided by the average of the current and prior four fiscalquarters’ ending inventory balances. Operating expense ratio: Total operating expense (SG&A plus asset impairment charges) for the Company or a segmentdivided by the related net sales revenue for the Company or a segment. Operating leverage: The improvement in operating margin that the Company achieves with sales growth, due to thefixed nature of certain operating expenses. Operating margin: Operating income for the Company or a segment divided by the related net sales revenue for theCompany or a segment. Return on average equity: Twelve month trailing net income divided by the average of the current and prior four fiscalquarters’ ending shareholders’ equity. Segment operating income: We compute segment operating income based on net sales revenue, less cost of goods sold,SG&A, and any asset impairment charges associated with the segment. The SG&A used to compute each segment’soperating income is directly associated with the segment. We then deduct allocations for operational shared servicesand71 Table of Contentscorporate overhead costs. We do not allocate nonoperating income and expense, including interest or income taxes tooperating segments. SG&A ratio: This is total SG&A for the Company or a segment divided by the related net sales revenue for theCompany or a segment. Working capital: Current assets less current liabilities.72 Table of Contents ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Changes in currency exchange rates and interest rates are our primary financial market risks. Foreign Currency Risk Our functional currency is the U.S. Dollar. By operating internationally, we are subject to foreign currency riskfrom transactions denominated in currencies other than the U.S. Dollar (“foreign currencies”). Such transactions includesales, certain inventory purchases and operating expenses. As a result of such transactions, portions of our cash, tradeaccounts receivable and trade accounts payable are denominated in foreign currencies. For the fiscal years 2016, 2015and 2014, approximately 14, 14 and 15 percent, respectively, of our net sales revenue was in foreign currencies. Thesesales were primarily denominated in British Pounds, Euros, Mexican Pesos, Canadian Dollars, and VenezuelanBolivars. We make most of our inventory purchases from the Far East and use the U.S. Dollar for such purchases. Inour consolidated statements of income, exchange gains and losses resulting from the remeasurement of foreign taxesreceivable, taxes payable, deferred tax assets, and deferred tax liabilities, are recognized in their respective income taxlines, and all other foreign exchange gains and losses are recognized in SG&A. As further discussed below, we also recorded a charge of $9.57 million in fiscal year 2016 due to a change inthe rate used to re-measure our Venezuelan monetary assets and liabilities as of February 29, 2016 from the officialexchange rate of 6.3 Bolivars per U.S. Dollar to the SIMADI rate of approximately 205 Bolivars per U.S. Dollar. We identify foreign currency risk by regularly monitoring our foreign currency-denominated transactions andbalances. Where operating conditions permit, we reduce foreign currency risk by purchasing most of our inventory withU.S. Dollars and by converting cash balances denominated in foreign currencies to U.S. Dollars. We hedge against certain foreign currency exchange rate-risk by using a series of forward contracts designatedas cash flow hedges and mark-to-market derivatives to protect against the foreign currency exchange risk inherent inour forecasted transactions denominated in currencies other than the U.S. Dollar. In these transactions, we execute aforward currency contract that will settle at the end of a forecasted period. Because the size and terms of the forwardcontract are designed so that its fair market value will move in the opposite direction and approximate magnitude of theunderlying foreign currency’s forecasted exchange gain or loss during the forecasted period, a hedging relationship iscreated. To the extent that we forecast the expected foreign currency cash flows from the period we enter into theforward contract until the date it will settle with reasonable accuracy, we significantly lower or materially eliminate aparticular currency’s exchange risk exposure over the life of the related forward contract. We have also entered intocertain foreign currency contracts we refer to as “cross-currency debt swaps.” Cross-currency debt swaps have beenused with respect to $5 million of our 3.90% Senior Notes, creating an economic hedge against currency movements.We have elected not to designate these contracts as fair value hedges. Accordingly, the net unrealized mark-to-marketgain or loss on these derivatives are recognized in SG&A as incurred, and associated net fixed interest payments arerecognized as an adjustment to interest expense. We enter into these types of agreements where we believe we havemeaningful exposure to foreign currency exchange risk and the hedge pricing appears reasonable. It is not practical forus to hedge all our exposures, nor are we able to project in any meaningful way the possible effect and interplay of allforeign currency fluctuations on translated amounts or future earnings. This is due to our constantly changing exposureto various currencies, the fact that each foreign currency reacts differently to the U.S. Dollar and the significant numberof currencies involved. Accordingly, we will always be subject to foreign exchange rate-risk on exposures we have nothedged, and these risks may be material. We do not enter into any forward exchange contracts or similar instrumentsfor trading or other speculative purposes. We expect that as currency market conditions warrant, and our foreigndenominated transaction exposure grows, we will continue to execute additional contracts in order to hedge againstcertain potential foreign exchange losses.73 Table of ContentsVenezuelan Bolivar Currency Exchange Uncertainties and Related Recent Developments - In February 2013,the Venezuelan government devalued its currency from 4.30 to 6.30 Bolivars per U.S. Dollar for all goods and services.In March 2013, the Venezuelan government announced an additional complementary auction-based exchange ratemechanism known as SICAD, which was made available to certain companies that operate in designated industries.Through February 2016, SICAD was being used in limited circumstances, which we believe precluded us fromaccessing such rates. In February 2015, the Venezuelan government unveiled another foreign exchange mechanismknown as SIMADI, which was the lowest rate in its then three-tier foreign exchange system. SIMADI was a somewhatless restrictive auction system whose value was intended to be determined by market forces. SIMADI underwent a trialperiod and accounted for a small percentage of Venezuela’s foreign exchange. During its availability, a number ofcircumstances precluded us from accessing such rates. In February 2016, the Venezuelan government announced further changes to its foreign currency exchangesystem. These changes included an immediate devaluation of its official rate, now known as DIPRO, from 6.30 Bolivarsper U.S. Dollar to 10.00 Bolivars per U.S. Dollar. The changes also included the dissolution of its previous alternativeexchange rate systems, and the institution of a new alternative exchange system known as DICOM governing all othertransactions not covered by DIPRO. DICOM replaced SIMADI, which was the lowest rate in the previous exchangesystem. SIMADI closed at February 29, 2016 at approximately 205 Bolivars per U.S. Dollar. DICOM opened in earlyMarch 2016 at approximately 207 Bolivars per U.S. Dollar. As a result of the further devaluation of the official rate, continued economic instability from declines in oilprices and the declaration of an economic emergency, among other factors, we determined that SIMADI was the mostappropriate rate to use to re-measure our financial statements as of February 29, 2016. The determination was furthersubstantiated by the announcement of DICOM as an intended market-based rate, which opened at approximately thesame rate as SIMADI shortly after the end of our fiscal year. As a result of the adoption of SIMADI, we recorded acharge of $9.57 million (before and after tax) from the re-measurement of our Venezuelan monetary assets andliabilities at February 29, 2016. In addition to re-measuring our monetary holdings in Venezuela, we recorded $9.16 million of non-cashimpairment charges (before and after tax) with respect to inventory and property and equipment in order to reflect theirrespective estimated net realizable and fair values as of February 29, 2016. The following table summarizes the financial impact of the adjustments described above, made during thefourth quarter of fiscal year 2016: IMPACT OF VENEZUELAN RE-MEASUREMENT RELATED CHARGES(in thousands) Balance at February 29, 2016 BeforeAdjustment Adjustments AfterAdjustment Location of IncomeStatement ImpactCash and cash equivalents $1,302 $(1,292) $10 SG&AOther net assets, principally working capital other than inventory 8,120 (8,284) (164) SG&AInventory 9,378 (9,078) 300 Cost of goods soldProperty and equipment, net 82 (79) 3 SG&ANet investment in Venezuelan operations $18,882 $(18,733) $149 Absent further changes to the exchange systems, or unless future developments call for further changes, weintend to use DICOM to re-measure our financial statements on a go-forward basis. However, even with the recentchanges made by the Venezuelan government, there remains a significant degree of uncertainty as to whether DICOMwill hold its current value or maintain enough liquidity to satisfy demand, or whether the floating exchange mechanismwill survive the existing economic and political instabilities. 74 Table of ContentsOur business in Venezuela continues to be entirely self-funded with earnings from operations. We have nocurrent need or intention to repatriate Venezuelan earnings. Within Venezuela, we market primarily liquid, solid- andpowder-based personal care and grooming products, which are sourced almost entirely within the country. We do nothave, nor do we foresee having, any need to access DICOM. For fiscal years 2016, 2015 and 2014, sales in Venezuela represented 1.4, 0.7 and 0.6 percent, respectively, ofthe Company’s consolidated net sales revenue at the official exchange rate of 6.3 Bolivars per U.S. Dollar. At thecurrent DICOM exchange rate, sales in Venezuela represent less than 0.1 percent of the Company’s consolidated netsales revenue for each period. For fiscal years 2016, 2015 and 2014, operating income (loss) in Venezuela wasapproximately ($9.95), $2.87 and $2.67 million, respectively, at the official exchange rate of 6.3 Bolivars per U.S.Dollar. As referred to previously, the fiscal year 2016 operating loss includes re-measurement and non-cash impairmentcharges totaling ($18.73) million. At the current DICOM exchange rate, we expect that fiscal year 2017 U.S. Dollarreported net sales and operating income from Venezuela will no longer be meaningful to the Company’s consolidatedand Beauty segment results. Developments within the Venezuelan economy, including any future governmental interventions, are beyondour ability to control or predict, and we cannot assess impacts, if any, such events may have on our Venezuelanbusiness. Chinese Renminbi Currency Exchange Uncertainties - A significant portion of the products we sell arepurchased from third-party manufacturers in China. The Chinese Renminbi has fluctuated against the U.S. Dollar inrecent years, devaluing by approximately 6 percent against the U.S. Dollar during fiscal year 2016. If China’s currencycontinues to fluctuate against the U.S. Dollar in the short-to-intermediate term, we cannot accurately predict the impactof those fluctuations on our results of operations. Accordingly, there can be no assurance that foreign exchange rateswill be stable in the future or that fluctuations in Chinese foreign currency markets will not have a material adverseeffect on our business, results of operations and financial condition. Interest Rate Risk Interest on our outstanding debt as of February 29, 2016 is both floating and fixed. Fixed rates are in place on$40 million of Senior Notes at 3.90% and floating rates are in place on the balance of all other debt outstanding, whichtotaled $583.91 million as of February 29, 2016. If short-term interest rates increase, we will incur higher interest rateson any future outstanding balances of floating rate debt. 75 Table of ContentsThe following table summarizes the fair values of our various derivative instruments at the end of fiscal years2016 and 2015 FAIR VALUES OF DERIVATIVE INSTRUMENTS(in thousands) February 29, 2016 PrepaidAccrued ExpensesExpenses Finaland Otherand OtherOther SettlementNotionalCurrentOtherCurrentLiabilities,Derivatives designated as hedging instruments Hedge Type Date Amount Assets Assets Liabilities Non-currentForeign currency contracts - sell EuroCash flow2/2017€27,000$1,066$ -$ -$ -Foreign currency contracts - sell Canadian DollarsCash flow6/2017$28,000 - -4957Foreign currency contracts - sell PoundsCash flow2/2017£3,45094 - - -Foreign currency contracts - sell Australian DollarsCash flow8/2016$1,6506 - - -Subtotal1,166 -4957 Derivatives not designated under hedge accountingForeign currency contracts - cross-currency debt swap(1)1/2018$5,000- 206 - -Total fair value$1,166$206$495$7(1)During fiscal year 2016 we entered into a cross-currency debt swap, which in effect adjusts the currencydenomination of $5 million of our 3.90% Senior Notes due January 2018 to the Euro, creating an economic hedgeagainst currency movements. On this contract, we have not elected hedge accounting. February 28, 2015 PrepaidAccrued ExpensesExpenses Finaland Otherand OtherOther SettlementNotionalCurrentOtherCurrentLiabilities,Derivatives designated as hedging instruments Hedge Type Date Amount Assets Assets Liabilities Non-currentForeign currency contracts - sell EuroCash flow1/2016€10,000$129$ -$ -$ -Foreign currency contracts - sell PoundsCash flow2/2016£6,900 -- 240 -Total fair value$129$ -$240$ - Counterparty Credit Risk Financial instruments, including foreign currency contracts, cross-currency debt swaps and interest rate swaps,expose us to counterparty credit risk for nonperformance. We manage our exposure to counterparty credit risk bydealing with counterparties who are substantial international financial institutions with significant experience using suchderivative instruments. Although our theoretical credit risk is the replacement cost at the then estimated fair value ofthese instruments, we believe that the risk of incurring credit risk losses is remote. Risks Inherent in Cash and Cash Equivalents As the levels of our cash and cash equivalents change, they can become more subject to foreign exchange raterisk, interest rate risk, credit risk, and liquidity risk. Cash consists of interest-bearing, non-interest-bearing and short-term investment accounts. We consider money market accounts, which at February 29, 2016 primarily held short-termU.S. treasury obligations, to be cash equivalents.76 Table of Contents The following table summarizes our cash and cash equivalents at the end of fiscal years 2016 and 2015: CASH AND CASH EQUIVALENTS(in thousands) February 29, 2016 February 28, 2015 Carrying Range of Carrying Range of Amount Interest Rates Amount Interest RatesCash, interest and non-interest-bearing accounts -unrestricted $13,826 0.00 to 0.50% $9,877 0.00 to 0.65%Cash, interest and non-interest-bearing accounts - restricted 10 0.00% 726 0.00 to 0.50%Money market funds 211,964 0.11 to 0.19% 1,692 0.18 to 0.31%Total cash and cash equivalents $225,800 $12,295 Our cash balances at the end of fiscal years 2016 and 2015 include restricted cash of $0.01 and $0.73 million,respectively, denominated in Venezuelan Bolivars, shown above under the heading “Cash, interest and non-interest-bearing accounts - restricted.” The balances arise from our operations within the Venezuelan market. We intend to usethese cash balances in country to continue to fund operations. We do not otherwise rely on these restricted funds as asource of liquidity. As discussed elsewhere in this report, at the end of fiscal year 2016 we re-measured our restrictedcash using the SIMADI exchange rate of 205 Bolivars per U.S. Dollar. Rate Sensitive Financial Instruments The following table shows the approximate potential fair value change in U.S. Dollars that would arise from ahypothetical adverse 10 percent change in certain market based rates underlying our rate sensitive financial instrumentsas of February 29, 2016 and February 28, 2015. CHANGE IN FAIR VALUE DUE TO AN ADVERSE MOVE IN RELATED RATES(in thousands) February 29, 2016 Face or Estimated Notional Carrying Fair Change in Amount Value Value Fair ValueFixed Rate Long-Term Debt (1) $40,000 $(40,000) $(40,914) $(129)Foreign Currency Contracts - cross-currency debt swap $5,000 $206 $206 $(273)Foreign Currency Contracts - Euros (2) €27,000 $1,066 $1,066 $(2,959)Foreign Currency Contracts - Canadian Dollars (2) $28,000 $(502) $(502) $(2,246)Foreign Currency Contracts - Pounds (2) £3,450 $94 $94 $(482)Foreign Currency Contracts - Australian Dollars (2) $1,650 $6 $6 $(118) February 28, 2015 Face or Estimated Notional Carrying Fair Change in Amount Value Value Fair ValueFixed Rate Long-Term Debt (1) $60,000 $(60,000) $(62,006) $(228)Foreign Currency Contracts - Pounds (2) £6,900 $(240) $(240) $(1,306)Foreign Currency ontracts - Euros (2) €10,000 $129 $129 $(994)(1)The underlying interest rates used as a basis for these estimates are rates quoted by our lenders on fixed rate notesof similar term and credit quality as of the balance sheet dates shown. (2)Appreciation in the value of the U.S. Dollar would result in an increase in the fair value of the related foreigncurrency contracts. The table above is for risk analysis purposes and does not purport to represent actual losses or gains in fairvalue that we will incur. It is important to note that the change in value represents the estimated change in the fair valueof the contracts. Actual results in the future may differ materially from these estimated results due to actualdevelopments in the global financial markets. Because the contracts hedge an underlying exposure, we would expect asimilar and opposite change in foreign exchange gains or losses and floating interest rates over the same periods as thecontracts. We expect that as currency market conditions warrant, and if our foreign denominated transaction exposuregrows, we will continue to execute additional contracts in order to hedge against potential foreign exchange losses.77 Table of ContentsITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA INDEX TO CONSOLIDATED FINANCIAL STATEMENTSAND FINANCIAL STATEMENT SCHEDULE PAGE Management’s Report on Internal Control Over Financial Reporting 79 Reports of Independent Registered Public Accounting Firm 80 Consolidated Financial Statements: Consolidated Balance Sheets as of February 29, 2016 and February 28, 2015 82 Consolidated Statements of Income for each of the years in the three-year period ended February 29,2016 83 Consolidated Statements of Comprehensive Income for each of the years in the three-year periodended February 29, 2016 84 Consolidated Statements of Stockholders' Equity for each of the years in the three-year period endedFebruary 29, 2016 85 Consolidated Statements of Cash Flows for each of the years in the three-year period ended February29, 2016 86 Notes to Consolidated Financial Statements 87 Financial Statement Schedule: Schedule II - Valuation and Qualifying Accounts for each of the years in the three-year period endedFebruary 29, 2016 128 All other schedules are omitted as the required information is included in the consolidated financial statements or is notapplicable. 78 Table of ContentsMANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING Helen of Troy’s management is responsible for establishing and maintaining adequate internal control overfinancial reporting as defined by Rules 13a-15(f) or 15d-15(f) under the Securities Exchange Act. Our internal control system is designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with U.S. generally acceptedaccounting principles and includes those policies and procedures that: ·pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions anddispositions of assets;·provide reasonable assurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with generally accepted accounting principles, and that our receipts and expendituresare being made only in accordance with authorizations of our management and Board of Directors; and·provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use ordisposition of our assets that could have a material effect on the financial statements. There are inherent limitations in the effectiveness of internal control over financial reporting, including thepossibility that misstatements may not be prevented or detected. Furthermore, the effectiveness of internal controls maybecome inadequate because of future changes in conditions, or variations in the degree of compliance with our policiesor procedures. Our management assesses the effectiveness of our internal control over financial reporting using the criteria setforth by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in the 2013 InternalControl-Integrated Framework. Based on our assessment, we concluded that our internal control over financialreporting was effective as of February 29, 2016. Our independent registered public accounting firm, Grant Thornton LLP, has issued an audit report on theeffectiveness of the Company's internal control over financial reporting. This report appears on page 80. 79 Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and ShareholdersHelen of Troy Limited and Subsidiaries We have audited the internal control over financial reporting of Helen of Troy Limited and Subsidiaries (the“Company”) as of February 29, 2016, based on criteria established in the 2013 Internal Control—IntegratedFramework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). TheCompany’s management is responsible for maintaining effective internal control over financial reporting and for itsassessment of the effectiveness of internal control over financial reporting, included in the accompanyingManagement’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on theCompany’s internal control over financial reporting based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance aboutwhether effective internal control over financial reporting was maintained in all material respects. Our audit includedobtaining an understanding of internal control over financial reporting, assessing the risk that a material weaknessexists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, andperforming such other procedures as we considered necessary in the circumstances. We believe that our audit providesa reasonable basis for our opinion. A company’s internal control over financial reporting is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financial statements for external purposes inaccordance with generally accepted accounting principles. A company’s internal control over financial reportingincludes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financial statements in accordance withgenerally accepted accounting principles, and that receipts and expenditures of the company are being made only inaccordance with authorizations of management and directors of the company; and (3) provide reasonable assuranceregarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets thatcould have a material effect on the financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detectmisstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that thecontrols may become inadequate because of changes in conditions, or that the degree of compliance with the policies orprocedures may deteriorate. In our opinion, the Company maintained, in all material respects, effective internal control over financialreporting as of February 29, 2016, based on the criteria established in the 2013 Internal Control—IntegratedFramework issued by COSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board(United States), the consolidated financial statements of the Company as of and for the year ended February 29, 2016,and our report dated April 29, 2016 expressed an unqualified opinion on those financial statements. /s/ GRANT THORNTON LLP Dallas, TexasApril 29, 201680 Table of ContentsREPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Board of Directors and ShareholdersHelen of Troy Limited and Subsidiaries We have audited the accompanying consolidated balance sheets of Helen of Troy Limited and Subsidiaries (the“Company”) as of February 29, 2016 and February 28, 2015, and the related consolidated statements of income,comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period endedFebruary 29, 2016. Our audits of the basic consolidated financial statements included the financial statement schedulelisted in the index appearing under Item 15(a)(2). These financial statements and the financial statement schedule arethe responsibility of the Company’s management. Our responsibility is to express an opinion on these financialstatements and financial statement schedule based on our audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance aboutwhether the financial statements are free of material misstatement. An audit includes examining, on a test basis,evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating the overall financialstatement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, thefinancial position of Helen of Troy Limited and Subsidiaries as of February 29, 2016 and February 28, 2015, and theresults of their operations and their cash flows for each of the three years in the period ended February 29, 2016, inconformity with accounting principles generally accepted in the United States of America. Also in our opinion, therelated financial statement schedule, when considered in relation to the basic consolidated financial statements taken asa whole, presents fairly, in all material respects, the information set forth therein. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board(United States), the Company’s internal control over financial reporting as of February 29, 2016, based on criteriaestablished in the 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizationsof the Treadway Commission (“COSO”) and our report dated April 29, 2016 expressed an unqualified opinion. /s/ GRANT THORNTON LLP Dallas, TexasApril 29, 2016 81 Table of ContentsHELEN OF TROY LIMITED AND SUBSIDIARIESConsolidated Balance Sheets(in thousands, except shares and par value) February 29, February 28, 2016 2015Assets Assets, current: Cash and cash equivalents $225,800 $12,295Receivables - principally trade, less allowances of $5,898 and $5,882 217,543 222,499Inventory 301,609 293,081Prepaid expenses and other current assets 9,780 9,715Income taxes receivable 356 417Deferred tax assets, net 17,636 26,753Total assets, current 772,724 564,760 Property and equipment, net of accumulated depreciation of $93,926 and $82,154 130,465 126,068Goodwill 583,005 549,727Other intangible assets, net of accumulated amortization of $137,174 and $111,627 375,751 398,430Deferred tax assets, net 1,605 2,132Other assets, net of accumulated amortization of $10,453 and $9,166 6,093 12,638Total assets $1,869,643 $1,653,755 Liabilities and Stockholders' Equity Liabilities, current: Accounts payable, principally trade $103,713 $98,564Accrued expenses and other current liabilities 141,245 141,201Deferred tax liabilities, net - 200Long-term debt, current maturities 23,800 21,900Total liabilities, current 268,758 261,865 Long-term debt, excluding current maturities 600,107 411,307Deferred tax liabilities, net 44,120 52,711Other liabilities, noncurrent 26,615 23,307Total liabilities 939,600 749,190 Commitments and contingencies Stockholders' equity: Cumulative preferred stock, non-voting, $1.00 par. Authorized 2,000,000 shares; none issued - -Common stock, $0.10 par. Authorized 50,000,000 shares; 27,735,034 and 28,488,411 shares issued and outstanding 2,774 2,849Additional paid in capital 198,077 179,934Accumulated other comprehensive income (loss) 665 (76)Retained earnings 728,527 721,858Total stockholders' equity 930,043 904,565Total liabilities and stockholders' equity $1,869,643 $1,653,755 See accompanying notes to consolidated financial statements.82 Table of ContentsHELEN OF TROY LIMITED AND SUBSIDIARIESConsolidated Statements of Income(in thousands, except per share data) Fiscal Years Ended the Last Day of February, 2016 2015 2014Sales revenue, net $1,545,701 $1,445,131 $1,317,153Cost of goods sold 909,696 845,572 800,450Gross profit 636,005 599,559 516,703 Selling, general and administrative expense ("SG&A") 499,390 428,840 387,554Asset impairment charges 6,000 9,000 12,049Operating income 130,615 161,719 117,100 Nonoperating income, net 299 517 227Interest expense (11,096) (15,022) (10,193)Income before income taxes 119,818 147,214 107,134 Income tax expense 18,590 16,050 20,886Net income $101,228 $131,164 $86,248 Earnings per share: Basic $3.58 $4.59 $2.69Diluted $3.52 $4.52 $2.66 Weighted average shares of common stock used in computing net earnings per share: Basic 28,273 28,579 32,007Diluted 28,749 29,035 32,386 See accompanying notes to consolidated financial statements. 83 Table of ContentsHELEN OF TROY LIMITED AND SUBSIDIARIESConsolidated Statements of Comprehensive Income (in thousands) Fiscal Years Ended the Last Day of February, 201620152014 BeforeNet ofBeforeNet ofBeforeNet of Tax Tax Tax Tax Tax Tax Tax Tax TaxIncome$119,818$(18,590)$101,228$147,214$(16,050)$131,164$107,134$(20,886)$86,248Other comprehensive incomeCash flow hedge activity - interest rateswapsChanges in fair market value- - - 28(10)18(111)39(72)Settlements reclassified to income- - - 1,199(420)7793,707(1,297)2,410Subtotal- - - 1,227(430)7973,596(1,258)2,338 Cash flow hedge activity - foreign currencycontractsChanges in fair market value1,978(314)1,664434(62)372(962)195(767)Settlements reclassified to income(1,203)280(923)(176)22(154)98(31)67Subtotal775(34)741258(40)218(864)164(700)Total other comprehensive income775(34)7411,485(470)1,0152,732(1,094)1,638Comprehensive income$120,593$(18,624)$101,969$148,699$(16,520)$132,179$109,866$(21,980)$87,886 See accompanying notes to consolidated financial statements. 84 Table of ContentsHELEN OF TROY LIMITED AND SUBSIDIARIESConsolidated Statements of Stockholders' Equity(in thousands) Fiscal Years Ended the Last Day of February, 2016 2015 2014Common stock shares Balances, beginning of period 28,488 32,273 31,868Exercise of stock options 178 187 239Restricted share-based compensation 285 71 11Vesting of performance awards - 100 260Issuance of common stock in connection with employee stock purchase plan 28 31 42Common stock repurchased and retired (1,244) (4,174) (147)Balances, end of period 27,735 28,488 32,273 Common stock Balances, beginning of period $2,849 $3,227 $3,187Exercise of stock options 18 19 24Restricted share-based compensation 28 7 1Vesting of performance awards - 10 26Issuance of common stock in connection with employee stock purchase plan 3 3 4Common stock repurchased and retired (124) (417) (15)Balances, end of period $2,774 $2,849 $3,227 Paid in capital Balances, beginning of period $179,934 $180,861 $164,471Adjustments to paid in capital for changes in uncertain tax positions - - 257Stock option share-based compensation 3,513 3,670 2,804Exercise of stock options, including tax benefits of $1,581, $773 and $452 8,304 6,318 6,494Restricted share-based compensation, including tax benefits of $1,894, $0 and$2,921 21,836 9,759 12,285Issuance of common stock in connection with employee stock purchase plan 1,924 1,538 1,346Common stock repurchased and retired (17,434) (22,212) (6,796)Balances, end of period $198,077 $179,934 $180,861 Accumulated other comprehensive loss Balances, beginning of period $(76) $(1,091) $(2,729)Cash flow hedge activity - interest rate swaps, net of tax - 797 2,338Cash flow hedge activity - foreign currency, net of tax 741 218 (700)Balances, end of period $665 $(76) $(1,091) Retained earnings Balances, beginning of period $721,858 $846,490 $761,677Net income 101,228 131,164 86,248Common stock repurchased and retired (94,559) (255,796) (1,435)Balances, end of period $728,527 $721,858 $846,490 Total stockholders' equity $930,043 $904,565 $1,029,487 See accompanying notes to consolidated financial statements. 85 Table of ContentsHELEN OF TROY LIMITED AND SUBSIDIARIESConsolidated Statements of Cash Flows(in thousands) Fiscal Years Ended the Last Day of February, 2016 2015 2014Cash provided (used) by operating activities: Net income $101,228 $131,164 $86,248Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 42,749 39,653 33,839Amortization of financing costs 1,158 1,846 911Provision for doubtful receivables 225 299 400Non-cash share-based compensation 8,483 5,974 31,683Non-cash intangible asset impairment charges 6,000 9,000 12,049Non-cash Venezuelan re-measurement related charges 17,441 - -Loss on the sale of property and equipment 84 49 81Deferred income taxes and tax credits (464) (1,830) (10,109)Changes in operating capital, net of effects of acquisition of businesses: Receivables (3,604) (9,487) 6,265Inventories (17,606) 2,274 (8,383)Prepaid expenses and other current assets (2,412) 2,317 1,166Other assets and liabilities, net 10,668 2,448 (1,867)Accounts payable 7,044 16,502 3,733Accrued expenses and other current liabilities 15,764 (21,135) 8,129Accrued income taxes (1,497) (471) (9,980)Net cash provided by operating activities 185,261 178,603 154,165 Cash provided (used) by investing activities: Capital and intangible asset expenditures (20,603) (6,521) (40,463)Proceeds from the sale of property and equipment 7 - 5Payments to acquire businesses (43,150) (195,943) -Net cash used by investing activities (63,746) (202,464) (40,458) Cash provided (used) by financing activities: Proceeds from line of credit 802,600 769,000 107,300Repayment of line of credit (590,000) (431,500) (189,300)Proceeds from issuance of long-term debt - - 37,607Repayment of long-term debt (21,900) (96,900) (20,000)Payment of financing costs (19) (4,585) (367)Proceeds from share issuances under share-based compensation plans, including taxbenefits 12,025 7,621 10,285Payment of tax obligations resulting from cashless share award exercises - (4,569) (6,445)Payment of tax obligations resulting from cashless share settlement of severanceobligation (12,000) - -Payments for repurchases of common stock (100,000) (273,599) (1,311)Share-based compensation tax benefit 1,284 661 5,709Net cash provided (used) by financing activities 91,990 (33,871) (56,522) Net increase (decrease) in cash and cash equivalents 213,505 (57,732) 57,185Cash and cash equivalents, beginning balance 12,295 70,027 12,842Cash and cash equivalents, ending balance $225,800 $12,295 $70,027 Supplemental cash flow information: Interest paid $9,978 $13,990 $10,632Income taxes paid, net of refunds $15,950 $16,591 $31,289Value of common stock received as exercise price of options $118 $257 $492 See accompanying notes to consolidated financial statements.86 Table of ContentsHELEN OF TROY LIMITED AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTS(in thousands of U.S. Dollars, except share and per share data, unless indicated otherwise) NOTE 1 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a)GeneralWhen used in these notes, unless otherwise indicated or the context suggests otherwise, references to “theCompany”, “our Company”, “Helen of Troy”, “we”, “us”, or “our” refer to Helen of Troy Limited and itssubsidiaries. We refer to the Company’s common shares, par value $0.10 per share, as “common stock.”References to “OXO” refer to the operations of OXO International and certain of its affiliated subsidiaries thatcomprise our Housewares segment. References to “Kaz” refer to the operations of Kaz, Inc. and its subsidiaries,which comprise a segment within the Company referred to as the Health & Home segment (formerly referred toas “Healthcare / Home Environment”). References to “Healthy Directions” refer to the operations of HealthyDirections, LLC and its subsidiaries, acquired on June 30, 2014, that comprise the Nutritional Supplementssegment. Our Beauty segment was formerly referred to as “Personal Care.” We use product and service namesin this report for identification purposes only and they may be protected in the United States and otherjurisdictions by trademarks, trade names, service marks, and other intellectual property rights of the Companyand other parties. The absence of a specific attribution in connection with any such mark does not constitute awaiver of any such right. All trademarks, trade names, service marks, and logos referenced herein belong totheir respective owners. References to “the FASB” refer to the Financial Accounting Standards Board.References to “GAAP” refer to U.S. generally accepted accounting principles. References to “ASU” refer to thecodification of GAAP in the Accounting Standards Updates issued by the FASB. References to “ASC” refer tothe 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 Limitedin Bermuda in 1994. We are a global designer, developer, importer, marketer, and distributor of an expandingportfolio of brand-name consumer products. We have four segments: Housewares, Health & Home, NutritionalSupplements, and Beauty. Our Housewares segment provides a broad range of innovative consumer productsfor the home. Product offerings include food preparation tools and appliances, gadgets and storage containers,cleaning, organization, and baby and toddler care products. The Health & Home segment focuses on healthcaredevices 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. OurNutritional Supplements segment is a leading provider of premium branded vitamins, minerals and supplements,as well as other health products sold directly to consumers. Our Beauty segment products include electric haircare, beauty care and wellness appliances; grooming tools and accessories; and liquid-, solid- and powder-basedpersonal care and grooming products. Our business is seasonal due to different calendar events, holidays and seasonal weather patterns. Historically,our highest sales volume and operating income occur in our third fiscal quarter ending November 30. Wepurchase our products from unaffiliated manufacturers, most of which are located in China, Mexico and theUnited States. Our consolidated financial statements are prepared in U.S. Dollars and in accordance with GAAP, whichrequires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues,expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates.We have reclassified, combined or separately disclosed certain amounts in the prior years’ consolidatedfinancial statements and accompanying footnotes to conform to the current year’s presentation. Thesereclassifications had no effect on previously reported results of operations, working capital or stockholders’equity. 87 thTable of Contents(b)ConsolidationOur consolidated financial statements include the accounts of Helen of Troy Limited and its wholly ownedsubsidiaries. All intercompany accounts and transactions are eliminated in consolidation. (c)Cash and cash equivalentsCash equivalents include all highly liquid investments with an original maturity of three months or less. Wemaintain cash and cash equivalents at several financial institutions, which at times may not be federally insuredor may exceed federally insured limits. We have not experienced any losses in such accounts and believe weare not exposed to any significant credit risks on such accounts.Our cash balances at the end of fiscal years 2016 and 2015 include restricted cash of $0.01 and $0.73 million,respectively, denominated in Venezuelan Bolivars. The balances arise from our operations within theVenezuelan market. Through the end of fiscal year 2016, we were unable to repatriate cash from Venezuela,however, we intend to use these cash balances in country to continue to fund operations. We do not otherwiserely on these restricted funds as a source of liquidity. As further discussed in Note (2), at the end of fiscal year2016, we changed the rate used to re-measure our Venezuelan financial statements, which impacted ourreported cash balances. Notes (4) and (19) contain additional information regarding recent developments inVenezuela and their impact on amounts reported in our consolidated financial statements.We consider money market accounts, which at February 29, 2016 primarily held short-term U.S. treasuryobligations, to be cash equivalents. Cash equivalents comprised $211.96 and $1.69 million of the amountsreported on our consolidated balance sheets as “Cash and cash equivalents” at February 29, 2016 and February28, 2015, respectively. Notes (11) and (12) contain additional information regarding our cash and cashequivalents.(d)Trading securitiesTrading securities, when held, consist of shares of common stock of publicly traded companies and are statedon our consolidated balance sheets at fair value, as determined by the most recent trading price of each securityas of each balance sheet date. We determine the appropriate classification of our investments when thoseinvestments are purchased and reevaluate those determinations at each balance sheet date. Trading securities,when held, are included in the “Assets, current” section of our consolidated balance sheets.All realized and unrealized gains and losses attributable to trading securities, when held, are included in“Nonoperating income (expense), net” in the consolidated statements of income. (e)ReceivablesOur receivables are comprised of trade credit granted to customers, primarily in the retail industry, offsetby two valuation reserves: an allowance for doubtful receivables and an allowance for back-to-stockreturns.Our allowance for doubtful receivables reflects our best estimate of probable losses, determined principallybased on historical experience and specific allowances for known troubled accounts. Our policy is to chargeoff receivables when we have determined they will no longer be collectible. Charge-offs are applied as areduction to the allowance for doubtful accounts and any recoveries of previous charge-offs are netted againstbad debt expense in the period recovered. At February 29, 2016 and February 28, 2015, the allowance fordoubtful receivables was $1.73 and $1.85 million, respectively.Our allowance for back-to-stock returns reflects our best estimate of future customer returns, determinedprincipally based on historical experience and specific allowances for known pending returns. AtFebruary 29, 2016 and February 28, 2015, the allowance for back-to-stock returns was $4.17 and$4.03 million, respectively. The Company had significant concentrations of credit risk with one major customer at February 29, 2016representing approximately 15 percent of gross trade receivables. In addition, as of February 29, 2016 andFebruary 28, 2015, approximately 44 and 42 percent, respectively, of the Company’s gross trade receivableswere due from its five top customers.88 Table of Contents(f)Inventory, net and cost of goods soldOur inventory consists almost entirely of finished goods. We currently record inventory on our balance sheet ataverage cost, or net realizable value, if it is below our recorded cost. Our average costs include the amounts wepay manufacturers for product, tariffs and duties associated with transporting product across national borders,freight costs associated with transporting the product from our manufacturers to our distribution centers, andgeneral and administrative expenses directly attributable to acquiring inventory, as applicable.General and administrative expenses in inventory include all the expenses of operating the Company'ssourcing activities and expenses incurred for production monitoring, product design, engineering, andpackaging. We charged $39.22, $36.37 and $36.23 million of such general and administrative expenses toinventory during fiscal years 2016, 2015 and 2014, respectively. We estimate that $13.05 and $12.52 millionof general and administrative expenses directly attributable to the procurement of inventory were included inour inventory balances on hand at February 29, 2016 and February 28, 2015, respectively.The “Cost of goods sold” line item on the consolidated statements of income is comprised of the book value ofinventory sold to customers during the reporting period. When circumstances dictate that we use net realizablevalue as the basis for recording inventory, we base our estimates on expected future selling prices lessexpected disposal costs.For fiscal years 2016, 2015 and 2014, finished goods purchased from vendors in the Far East comprisedapproximately 68, 67 and 69 percent, respectively, of finished goods purchased. During fiscal year 2016, wehad one vendor who fulfilled approximately 10 percent of our product requirements. Our top two manufacturerscombined fulfilled approximately 17 percent of our product requirements. Over the same period, our top fivesuppliers fulfilled approximately 31 percent of our product requirements.As further discussed in Note (2), we recorded non-cash impairment charges totaling $9.08 million before andafter tax, to reflect Venezuelan inventory at its estimated net realizable value as of February 29, 2016.(g)Property and equipmentThese assets are stated at cost. We capitalize internal labor associated with the cost of development andimplementation of internal use software and significant new website development. Depreciation is recordedon a straight-line basis over the estimated useful lives of the assets. Expenditures for repair and maintenanceof property and equipment are expensed as incurred. For tax purposes, accelerated depreciation methods areused where allowed by tax laws.As further discussed in Note (2), we recorded re-measurement related charges totaling $0.08 million before andafter tax, to reflect Venezuelan property and equipment at its estimated fair value as of February 29, 2016.(h)License agreements, trademarks, patents, and other intangible assetsA significant portion of our consolidated sales are made subject to trademark license agreements with variouslicensors. Our license agreements are reported on our consolidated balance sheets at cost, less accumulatedamortization. The cost of our license agreements represents amounts paid to licensors to acquire the license or toalter the terms of the license in a manner that we believe to be in our best interest. Certain licenses haveextension terms that may require additional payments to the licensor as part of the terms of renewal. TheCompany capitalizes costs incurred to renew or extend the term of a license agreement and amortizes such costson a straight-line basis over the remaining term or economic life of the agreement, whichever is shorter. Royaltypayments are not included in the cost of license agreements. Royalty expense under our license agreements isrecognized as incurred and is included in our consolidated statements of income on the line entitled “Selling,general and administrative expense” (“SG&A”). Net sales revenue subject to trademark license agreementsrequiring royalty payments comprised approximately 41, 42 and 44 percent of consolidated net sales revenuefor fiscal years 2016, 2015 and 2014, respectively. During fiscal year 2016, two licensors accounted for netsales revenue subject to royalty payments of approximately 20 and 12 percent of consolidated net sales,respectively. No other licensors had associated net sales revenue subject to royalty payments that accounted for10 percent or more of consolidated net sales revenue.89 Table of ContentsWe also sell products under trademarks and brand assets that we own. Trademarks and brand assets that weacquire from other entities are generally recorded on our consolidated balance sheets based upon the appraisedfair value of the acquired asset, net of any accumulated amortization and impairment charges. Costs associatedwith developing trademarks internally are recorded as expenses in the period incurred. In certain instanceswhere trademarks or brand assets have readily determinable useful lives, we amortize their costs on a straight-line basis over such lives. In most instances, we have determined that such acquired assets have an indefiniteuseful life. In these cases, no amortization is recorded. Patents acquired through purchase from other entities, ifmaterial, are recorded on our consolidated balance sheets based upon the appraised value of the acquiredpatents and amortized over the remaining life of the patent. Additionally, we incur certain costs, primarily legalfees in connection with the design and development of products to be covered by patents, which are capitalizedas incurred and amortized on a straight-line basis over the life of the patent in the jurisdiction filed, typically 14years.Other intangible assets include customer lists, distribution rights, patent rights, and non-compete agreementsthat we acquired from other entities. These are recorded on our consolidated balance sheets based upon the fairvalue of the acquired asset and amortized on a straight-line basis over the remaining life of the asset asdetermined either through outside appraisal or by the term of any controlling agreements. See Notes (5) and (6)to these consolidated financial statements for additional information on our intangible assets.(i)Goodwill, intangible and other long-lived assets and impairmentsWe complete our analysis of the carrying value of our goodwill and other intangible assets during the firstquarter of each fiscal year, or more frequently whenever events or changes in circumstances indicate that theircarrying value may not be recoverable.Goodwill is recorded as the difference, if any, between the aggregate consideration paid and the fair value ofthe net tangible and intangible assets received in the acquisition of a business. We evaluate goodwill at thereporting unit level (operating segment or one level below an operating segment). We measure the amount ofany goodwill impairment based upon the estimated fair value of the underlying assets and liabilities of thereporting unit, including any unrecognized intangible assets and estimates of the implied fair value ofgoodwill. An impairment charge is recognized to the extent the recorded goodwill exceeds the implied fairvalue of goodwill.We consider whether circumstances or conditions exist that suggest that the carrying value of our goodwill andother long-lived assets might be impaired. If such circumstances or conditions exist, further steps are required inorder to determine whether the carrying value of each of the individual assets exceeds its fair market value. Ifthe analysis indicates that an individual asset’s carrying value does exceed its fair market value, the next step isto record a loss equal to the excess of the individual asset’s carrying value over its fair value. These steps entailsignificant amounts of judgment and subjectivity. When events and changes in circumstances indicate theremay be an impairment, we perform interim testing. Such events and changes in circumstances may includestrategic decisions to exit a business or dispose of an asset made in response to changes in economic, politicaland competitive conditions, the impact of the economic environment on our customer base and on broad marketconditions that drive valuation considerations by market participants, our internal expectations with regard tofuture revenue growth and the assumptions we make when performing our impairment reviews, a significantdecrease in the market price of our assets, a significant adverse change in the extent or manner in which ourassets are used, a significant adverse change in legal factors or the business climate that could affect our assets,an accumulation of costs significantly in excess of the amount originally expected for the acquisition of anasset, and significant changes in the cash flows associated with an asset. We analyze these assets at theindividual asset, reporting unit and Company levels. As further discussed in Note (5) to these consolidated financial statements, in fiscal years 2016, 2015 and 2014,we recorded non-cash impairment charges totaling $6.00 million ($5.31 million after tax), $9.00 million ($8.16million after tax) and $12.05 million ($12.03 million after tax), respectively, in order to reflect the carryingvalue of certain trademarks in our Beauty segment at estimates of their fair value.90 Table of Contents(j)Economic useful lives and amortization of intangible assetsWe amortize intangible assets, such as licenses and trademarks, over their economic useful lives, unless thoseassets' economic useful lives are indefinite. If an intangible asset's economic useful life is deemed indefinite,that asset is not amortized. When we acquire an intangible asset, we consider factors such as the asset's history,our plans for that asset and the market for products associated with the asset. We consider these same factorswhen reviewing the economic useful lives of our existing intangible assets as well. We review the economicuseful lives of our intangible assets at least annually.Intangible assets consist primarily of goodwill, license agreements, trademarks, brand assets, customer lists,distribution rights, patents, and patent licenses. Some of our goodwill is held in jurisdictions that allowdeductions for tax purposes, however, in some of those jurisdictions we have no tax basis for the associatedgoodwill recorded for book purposes. Accordingly, the majority of our goodwill is not deductible for taxpurposes. We amortize certain intangible assets using the straight-line method over appropriate periods rangingfrom 4 to 30 years. We recorded intangible asset amortization totaling $27.77, $25.33 and $21.61 millionduring fiscal years 2016, 2015 and 2014, respectively. See Notes (5) and (6) to these consolidated financialstatements for more information about our intangible assets.(k)Fair value classificationsWe classify our various assets and liabilities recorded or reported at fair value under a hierarchy prescribed byGAAP 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 orliability, including quoted prices for similar assets or liabilities in active markets; quoted prices for similar oridentical assets or liabilities in markets that are not active; and model-derived valuations whose inputs areobservable 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 thetransfer of an asset or liability to a different level, our policy is to recognize the transfer at the beginning of thereporting period in which the event resulting in the transfer occurred. (l)WarrantiesOur products are under warranty against defects in material and workmanship for periods ranging from twoto five years. We estimate our warranty accrual using our historical experience and believe that this is themost reliable method by which we can estimate our warranty liability. The following table summarizes theactivity in the Company's accrual for the past two fiscal years:ACCRUAL FOR WARRANTY RETURNS(in thousands) Fiscal Years Ended the Last Day of February, 2016 2015Beginning balance$23,553 $19,269Additions to the accrual 57,847 57,218Reductions of the accrual - payments and credits issued (60,778) (52,934)Ending balance$20,622 $23,553 91 Table of Contents(m) Financial instrumentsThe carrying amounts of cash and cash equivalents, receivables, accounts payable, accrued expenses, andincome taxes payable approximate fair value because of the short maturity of these items. See Note (10) to theseconsolidated financial statements for our assessment of the fair value of our long-term debt. We have previouslyused interest rate swaps (the “swaps”) to protect our funding costs against rising interest rates. The interest rateswaps allowed us to raise long-term borrowings at floating rates and effectively swap them into fixed rates.Under our previous swaps, we agreed with another party to exchange quarterly the difference between fixed-rate and floating-rate interest amounts calculated by reference to notional amounts that match the amount of ourunderlying debt. Under these swap agreements, we paid the fixed rates and received the floating rates. Theswaps settled quarterly and terminated upon maturity of the related debt in June 2014. We hedge a portion ofour foreign exchange rate risk by entering into forward contracts to exchange foreign currencies for U.S.Dollars at specified rates. Our foreign exchange contracts and interest rate swaps are considered highly effectiveand are accounted for as cash flow hedges. In fiscal year 2016, we entered into a contract we refer to as a“cross-currency debt swap.” The cross-currency debt swap is being used with respect to $5 million of our3.90% Senior Notes, creating an economic hedge against currency movements. We have elected not todesignate this contract as a fair value hedge. Accordingly, the net unrealized mark-to-market gain or loss on thisderivative contract is recognized in SG&A as incurred and associated net fixed interest payments are recognizedas an adjustment to interest expense. See Notes (11), (12) and (17) to these consolidated financial statements formore information on our hedging activities. (n)Income taxes and uncertain tax positionsDeferred income tax assets and liabilities are recognized for the future tax consequences of temporarydifferences between the book and tax bases of applicable assets and liabilities. Generally, deferred tax assetsrepresent future income tax reductions while deferred tax liabilities represent income taxes that we expect to payin the future. We measure deferred tax assets and liabilities using enacted tax rates for the years in which weexpect temporary differences to be reversed or be settled. Changes in tax rates affect the carrying values of ourdeferred tax assets and liabilities, and the effects of any tax rate changes are recognized in the periods whenthey are enacted. The ultimate realization of our deferred tax assets depends upon generating sufficient futuretaxable income during the periods in which our temporary differences become deductible or before our netoperating loss and tax credit carryforwards expire. We recognize the benefit of a tax position if that position will more likely than not be sustained in an audit,based on the technical merits of the position. If the tax position meets the more likely than not recognitionthreshold, the tax effect is recognized at the largest amount of the benefit that has greater than a fifty percentlikelihood of being realized upon ultimate settlement. Liabilities created for unrecognized tax benefits aredisclosed as a separate liability and not combined with deferred tax liabilities or assets. We recognize interestand penalties accrued related to unrecognized tax benefits in the provision for income taxes. Note (10) to theseconsolidated financial statements contains additional information regarding our income taxes. (o)Revenue recognitionSales are recognized when revenue is realized or realizable and has been earned. Sales and shipping terms varyamong our customers, and as such, revenue is recognized when risk and title to the product transfer to thecustomer. Net sales revenue is comprised of gross revenues less estimates of expected returns, trade discountsand customer allowances, which include incentives such as advertising discounts, volume rebates and off-invoice markdowns. Such deductions are recorded and/or amortized during the period the related revenue isrecognized. Sales and value added taxes collected from customers and remitted to governmental authorities areexcluded from net sales revenue reported in the consolidated financial statements. 92 Table of Contents(p)Consideration granted to customersWe offer our customers certain incentives in the form of cooperative advertising arrangements, volume rebates,product markdown allowances, trade discounts, cash discounts, slotting fees, and similar other arrangements. Ininstances where the customer provides us with proof of advertising performance, reductions in amountsreceived from customers under cooperative advertising programs are expensed in our consolidated statementsof income in SG&A. Customer cooperative advertising incentives included in SG&A were $19.36, $17.28 and$16.45 million for the fiscal years 2016, 2015 and 2014, respectively. Reductions in amounts received from customers without proof of advertising performance, markdownallowances, slotting fees, trade discounts, cash discounts, and volume rebates are all recorded as reductions ofnet sales revenue. (q)AdvertisingAdvertising costs, including cooperative advertising discussed in (p) above, are expensed in the period in whichthey are incurred and included in our consolidated statements of income in SG&A. We incurred total advertisingcosts, including amounts paid to customers for cooperative media and print advertising, of $57.17, $53.75 and$46.29 million during fiscal years 2016, 2015 and 2014, respectively. (r)Research and development expensesExpenditures for research activities relating to product design, development and improvement are charged toexpense as incurred and included in our consolidated statements of income in SG&A. We incurred totalresearch and development expenses of $5.11, $4.10 and $2.87 million during fiscal years 2016, 2015 and2014, respectively.(s)Shipping and handling revenues and expensesShipping and handling expenses are included in our consolidated statements of income in SG&A. Theseexpenses include distribution center costs, third-party logistics costs and outbound transportation costs. Ourexpenses for shipping and handling were approximately $89, $88 and $81 million during fiscal years 2016,2015 and 2014, respectively. We bill our customers for charges for shipping and handling on certain sales madedirectly to consumers and retail customers ordering relatively small dollar amounts of product. Such charges arerecorded as a reduction of our shipping and handling expense and are not material in the aggregate. (t)Foreign currency transactions and related derivative financial instrumentsThe U.S. Dollar is the functional currency for the Company and all its foreign subsidiaries; therefore, we do nothave a translation adjustment recorded through accumulated other comprehensive income (loss). All our non-U.S. subsidiaries' transactions involving other currencies have been re-measured in U.S. Dollars using exchangerates in effect on the date each transaction occurred. In our consolidated statements of income, exchange gainsand losses resulting from the remeasurement of foreign taxes receivable, taxes payable, deferred tax assets, anddeferred tax liabilities are recognized in their respective income tax lines and all other foreign exchange gainsand losses are recognized in SG&A. We recorded net exchange gains (losses) from foreign currencyfluctuations, including the impact of currency hedges and a cross-currency debt swap, of ($3.14), ($5.72) and($0.95) million in SG&A and $(0.10), $0.40 and ($0.17) million in income tax expense during fiscal years2016, 2015 and 2014, respectively. As further discussed in Note (2) to these consolidated financial statements,we also recorded are-measurement charge of $9.57 million in fiscal year 2016 due to a change in the rate used to re-measure ourVenezuelan financial statements as of February 29, 2016 from the official exchange rate of 6.3 Bolivars perU.S. Dollar to the SIMADI rate of approximately 205 Bolivars per U.S. Dollar. In order to manage our exposureto changes in foreign currency exchange rates, we use forward currency contracts to exchange foreigncurrencies for U.S. Dollars at specified rates. We account for these transactions as cash flow hedges, whichrequires these derivatives to be recorded on the balance sheet at their fair value and that changes in the fairvalue of the forward exchange contracts are recorded each period in our consolidated statements of income orother comprehensive income (loss), depending on the type of hedging instrument and the effectiveness of thehedges. We evaluate all93 Table of Contentshedging transactions each quarter to determine that they remain effective. Any material ineffectiveness isrecorded as part of SG&A in our consolidated statements of income. In fiscal year 2016, we entered into acontract we refer to as a “cross-currency debt swap.” We have elected not to designate this contract as a fairvalue hedge. Accordingly, the net unrealized mark-to-market gain or loss on this contract is recognized inSG&A as incurred, and associated net fixed interest payments are recognized as an adjustment to interestexpense. All of our contracts are adjusted to their fair market values at the end of each fiscal quarter. See Notes(11), (12) and (17) to these consolidated financial statements for a further discussion of our hedging activities.Notes (4), (12) and (19) contain additional information regarding recent developments in Venezuela and theirimpact on amounts reported in our consolidated financial statements. (u)Share-based compensation plansWe account for share-based employee compensation plans under the fair value recognition and measurementprovisions in accordance with applicable accounting standards, which require all share-based payments toemployees, including grants of stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”),and performance stock units (“PSUs”), to be measured based on the grant date fair value of the awards. Theresulting expense is recognized over the periods during which the employee is required to perform service inexchange for the award. The estimated number of PSU’s that will ultimately vest requires judgment, and to theextent actual results or updated estimates differ from our current estimates, such amounts will be recorded as acumulative adjustment in the period estimates are revised. Stock options are recognized in the financial statements based on their fair values using an option-pricing modelat the date of grant. We use a Black-Scholes option-pricing model to calculate the fair value of options. Thismodel requires various judgmental assumptions including volatility, forfeiture rates and expected option life. All share-based compensation expense is recorded net of estimated forfeitures in our consolidated statements ofincome and as such is recorded for only those share-based awards that we expect to vest. We estimate theforfeiture rate based on historical forfeitures of equity awards and adjust the rate to reflect changes in facts andcircumstances, if any. We revise our estimated forfeiture rate if actual forfeitures differ from our initial estimates. See Note (15) to these consolidated financial statements for more information on our share-based compensationplans. (v)Interest incomeInterest income is included in “Nonoperating income, net” in the consolidated statements of income. Interestincome totaled $0.11, $0.06 and $0.07 million in fiscal years 2016, 2015 and 2014, respectively. Interestincome is normally earned on cash invested in short-term accounts, cash equivalents, and temporary and long-term investments.94 Table of Contents(w)Earnings per shareWe compute basic earnings per share using the weighted average number of shares of common stockoutstanding during the period. We compute diluted earnings per share using the weighted average number ofshares of common stock outstanding plus the effect of dilutive securities. Dilutive securities at any given pointin time may consist of outstanding options to purchase common stock and issued and contingently issuableunvested RSUs and PSUs. See Note (15) to these consolidated financial statements for more informationregarding RSUs, PSUs and other performance based stock awards. Options for common stock are excludedfrom the computation of diluted earnings per share if their effect is antidilutive.For fiscal years 2016, 2015 and 2014, the components of basic and diluted shares were as follows:WEIGHTED AVERAGE DILUTED SECURITIES(in thousands) Fiscal Years Ended the Last Day of February, 2016 2015 2014Weighted average shares outstanding, basic 28,273 28,579 32,007Incremental shares from share-based payment arrangements 476 456 379Weighted average shares outstanding, diluted 28,749 29,035 32,386 Dilutive securities, stock options 317 647 488Dilutive securities, unvested or unsettled stock awards 227 273 322Antidilutive securities, stock options 159 239 441 NOTE 2 –SIGNIFICANT ACCOUNTING MATTERS Fiscal year 2016 Venezuelan re-measurement change In February 2013, the Venezuelan government devalued its currency from 4.30 to 6.30 Bolivars per U.S. Dollar for allgoods and services. In March 2013, the Venezuelan government announced an additional complementary auction-based exchange rate mechanism known as SICAD, which was made available to certain companies that operate indesignated industries. Through February 2016, SICAD was being used in limited circumstances, which we believeprecluded us from accessing such rates. In February 2015, the Venezuelan government unveiled another foreignexchange mechanism known as SIMADI, which was the lowest rate in its then three-tier foreign exchange system.SIMADI was a somewhat less restrictive auction system whose value was intended to be determined by market forces.SIMADI underwent a trial period and accounted for a small percentage of Venezuela’s foreign exchange. During itsavailability, a number of circumstances precluded us from accessing such rates. In February 2016, the Venezuelan government announced further changes to its foreign currency exchange system.These changes included an immediate devaluation of its official rate, now known as DIPRO, from 6.30 Bolivars perU.S. Dollar to 10.00 Bolivars per U.S. Dollar. The changes also included the dissolution of its previous alternativeexchange rate systems, and the institution of a new alternative exchange system known as DICOM governing all othertransactions not covered by DIPRO. DICOM replaced SIMADI, which was the lowest rate in the previous exchangesystem. SIMADI closed at February 29, 2016 at approximately 205 Bolivars per U.S. Dollar. DICOM opened in earlyMarch 2016 at approximately 207 Bolivars per U.S. Dollar. As a result of the further devaluation of the official rate, continued economic instability from declines in oil prices andthe declaration of an economic emergency, among other factors, we determined that SIMADI was the most appropriaterate to use to re-measure our financial statements as of February 29, 2016. The determination was further substantiatedby the announcement of DICOM as an intended market-based rate, which opened at approximately the same rate asSIMADI shortly after the end of our fiscal year. As a result of the adoption of SIMADI, we recorded a charge of $9.57million (before and after tax) from the re-measurement of our Venezuelan monetary assets and liabilities at February 29,2016. 95 Table of ContentsIn addition to re-measuring our monetary holdings in Venezuela, we recorded $9.16 million of non-cash impairmentcharges (before and after tax) with respect to inventory and property and equipment in order to reflect their respectiveestimated net realizable and fair values as of February 29, 2016. The following table summarizes the financial impact of the adjustments described above, made during the fourthquarter of fiscal year 2016: IMPACT OF VENEZUELAN RE-MEASUREMENT RELATED CHARGES(in thousands) Balance at February 29, 2016 BeforeAdjustment Adjustments AfterAdjustment Location of IncomeStatement ImpactCash and cash equivalents $1,302 $(1,292) $10 SG&AOther net assets, principally working capital other than inventory 8,120 (8,284) (164) SG&AInventory 9,378 (9,078) 300 Cost of goods soldProperty and equipment, net 82 (79) 3 SG&ANet investment in Venezuelan operations $18,882 $(18,733) $149 Absent further changes to the exchange systems, or unless future developments call for further changes, we intend touse DICOM to re-measure our financial statements on a go-forward basis. However, even with the recent changes madeby the Venezuelan government, there remains a significant degree of uncertainty as to whether DICOM will hold itscurrent value or maintain enough liquidity to satisfy demand, or whether the floating exchange mechanism will survivethe existing economic and political instabilities. Our business in Venezuela continues to be entirely self-funded with earnings from operations. We have no current needor intention to repatriate Venezuelan earnings. Within Venezuela we market primarily liquid, solid- and powder-basedpersonal care and grooming products, which are sourced almost entirely within the country. We do not have, nor do weforesee having, any need to access DICOM. For fiscal years 2016, 2015 and 2014, sales in Venezuela represented 1.4, 0.7 and 0.6 percent, respectively, of theCompany’s consolidated net sales revenue at the official exchange rate of 6.3 Bolivars per U.S. Dollar. At the currentDICOM exchange rate, sales in Venezuela represent less than 0.1 percent of the Company’s consolidated net salesrevenue for each period. For fiscal years 2016, 2015 and 2014, operating income (loss) in Venezuela wasapproximately ($9.95), $2.87 and $2.67 million, respectively, at the official exchange rate of 6.3 Bolivars per U.S.Dollar. As referred to previously, the fiscal year 2016 operating loss includes re-measurement and non-cash impairmentcharges totaling ($18.73) million. At the current DICOM exchange rate, we expect that fiscal year 2017 U.S. Dollarreported net sales and operating income from Venezuela will no longer be meaningful to the Company’s consolidatedand Beauty segment results. Developments within the Venezuelan economy, including any future governmental interventions, are beyond ourability to control or predict, and we cannot assess the impacts, if any, such events may have on our Venezuelanbusiness. Fiscal year 2015 change in accounting estimate In the third quarter of fiscal year 2015, we revised our product liability estimates to reflect more relevant historicalclaims experience. The effect of the change in estimate was recorded in SG&A. The change increased operatingincome, net income and diluted earnings per share by $2.22 million, $1.36 million and $0.05 per share, respectively,for fiscal year 2015. 96 Table of ContentsNOTE 3 – NEW ACCOUNTING PRONOUNCEMENTS In February 2016, the FASB issued ASU 2016-02, “Leases.” ASU 2016-02 will require lessees to recognize on theirbalance sheets “right-of-use assets” and corresponding lease liabilities, measured on a discounted basis over the leaseterm. 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 beenretained from the prior standard. Operating leases will result in straight-line expense while finance leases will result in afront-loaded expense pattern. Classification will use criteria very similar to those applied in current lease accounting,but without explicit bright lines. Extensive additional quantitative and qualitative disclosures, including significantjudgments made by management, will be required to provide greater insight into the extent of expense recognized andexpected to be recognized. The new lease guidance will essentially eliminate off-balance sheet financing. The guidanceis effective for fiscal years beginning after December 15, 2019. The new standard must be adopted using a modifiedretrospective transition that provides for certain practical expedients and requires the new guidance to be applied at thebeginning of the earliest comparative period presented. We are currently evaluating the effect this new accountingguidance may have on our consolidated results of operations, cash flows and financial position. In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes,” which eliminatesthe current requirement for companies to present deferred tax liabilities and assets as current and noncurrent in aclassified balance sheet. Instead, companies will be required to classify all deferred tax assets and liabilities as non-current. This guidance is effective for annual and interim periods beginning after December 15, 2016. The Companydoes not expect the provisions of ASU 2015-17 to have a material effect on its consolidated financial position, results ofoperations or cash flows. In April 2015, the FASB issued ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” ASU 2015-03changes the presentation of debt issuance costs in financial statements. ASU 2015-03 requires that debt issuance costsrelated to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount ofthat debt liability rather than as an asset. ASU 2015-03 is effective for annual periods and for interim periods withinthose fiscal years, beginning after December 15, 2015. The Company does not expect the provisions of ASU 2015-03to have a material effect on its consolidated financial position, results of operations or cash flows. In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” issued as a new Topic, ASCTopic 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when andhow revenue is recognized. The core principle of the guidance is that a Company should recognize revenue to depictthe transfer of promised goods or services to customers in an amount that reflects the consideration to which the entityexpects to be entitled in exchange for those goods or services. In July 2015, the FASB affirmed its proposal to defer theeffective date of the standard to annual reporting periods beginning after December 15, 2017 (and interim reportingperiods within those years). Accordingly, we will be required to adopt the new standard in our fiscal year 2019 and canadopt either retrospectively or as a cumulative effect adjustment as of the date of adoption. We are currently evaluatingthe effect this new accounting guidance may have on our consolidated results of operations, cash flows and financialposition. Unless otherwise discussed above, the Company's management believes that the impact of other recently issuedstandards that are not yet effective will not have a material impact on its consolidated financial position, results ofoperations and cash flows upon adoption. 97 Table of ContentsNOTE 4 – PROPERTY AND EQUIPMENT A summary of property and equipment is as follows: PROPERTY AND EQUIPMENT(in thousands) Estimated Useful Lives Last Day of February, (Years) 2016 2015Land - $12,800 $12,800Building and improvements 3 -40 108,509 102,058Computer, furniture and other equipment 3 -15 70,778 64,464Tools, molds and other production equipment 1 -10 28,254 25,861Construction in progress - 4,050 3,039Property and equipment, gross 224,391 208,222Less accumulated depreciation (93,926) (82,154)Property and equipment, net $130,465 $126,068 We recorded $14.98, $14.33 and $12.23 million of depreciation expense for fiscal years 2016, 2015 and 2014,respectively. Capital expenditures for property and equipment totaled $19.50, $5.36 and $40.12 million in fiscal years2016, 2015 and 2014, respectively. We lease certain facilities, equipment and vehicles under operating leases, which expire at various dates through fiscalyear 2027. Certain of the leases contain escalation clauses and renewal or purchase options. Rent expense related to ouroperating leases was $5.86, $5.01 and $5.68 million for fiscal years 2016, 2015 and 2014, respectively. As of February 29, 2016, we recorded non-cash impairment charges totaling $0.08 million, before and after tax, toreflect Venezuelan property and equipment at its estimated fair value. See Note (2) to these consolidated financialstatements for additional information regarding the impairment of assets as a result of recent developments inVenezuela.During the second quarter of fiscal year 2016, we substantially completed the transition of our Nutritional Supplementssegment’s distribution operation from a third party logistics provider to our Southaven, Mississippi facility in order tobetter control its operations, more efficiently utilize our facilities and reduce overall distribution costs. Capitalexpenditures for fiscal year 2016 included $1.65 million in connection with this project. During the first quarter of fiscal year 2015, we completed the transition of our domestic Beauty appliance distributionoperation to our facility in Olive Branch, Mississippi. The capital expenditures made in connection with the Beautyappliance transition were not material. During fiscal year 2014, the Company completed construction of a new 1.3 million square foot distribution facility onapproximately 84 acres of land in Olive Branch, Mississippi. Capital expenditures for fiscal year 2014 included $34.03million in connection with this project. The new facility consolidated the distribution operations of our U.S. basedBeauty and Health & Home segment’s appliance businesses. See Note (9) to these consolidated financial statements forrelated information regarding the debt incurred to fund the construction of the distribution facility.98 Table of ContentsNOTE 5 – GOODWILL AND INTANGIBLE ASSETS We do not record amortization expense for goodwill or other intangible assets that have indefinite useful lives.Amortization expense is recorded for intangible assets with definite useful lives. We perform an annual impairmentreview of goodwill and other intangible assets during the first quarter of each fiscal year. We also perform interimimpairment testing, if necessary. We write down any asset deemed to be impaired to its fair value. The Company's traditional impairment test methodology uses primarily estimated future discounted cash flow models(“DCF Models”). The DCF Models use a number of assumptions including expected future cash flows from the assets,volatility, risk free rate, and the expected life of the assets, the determination of which require significant judgmentsfrom management. In determining the assumptions to be used, the Company considers the existing rates on TreasuryBills, yield spreads on assets with comparable expected lives, historical volatility of the Company's common stock andthat of comparable companies, and general economic and industry trends, among other considerations. When stockmarket or other conditions warrant, the Company expands its traditional impairment test methodology to give weight toother methods that provide additional observable market information in order to better reflect the current risk levelbeing incorporated into market prices and in order to corroborate the fair values of each of the Company’s reportingunits. Management will place increased reliance on these additional methods in conjunction with its DCF Models in theevent that the total market capitalization of its stock drops below its consolidated stockholders’ equity balance for asustained period. Considerable management judgment is necessary in reaching a conclusion regarding the reasonableness of fair valueestimates, evaluating the most likely impact of a range of possible external conditions, considering the resultingoperating changes and their impact on estimated future cash flows, determining the appropriate discount factors to use,and selecting and weighting appropriate comparable market level inputs. Impairments in the Fourth Quarter of Fiscal Year 2016 – The Company performed certain interim impairment testingin its fourth quarter of fiscal 2016 for certain of its brands as a result of revised growth outlooks. As a result of itstesting, the Company recorded a non-cash impairment charge of $3.00 million ($2.66 million after tax). The charge wasrelated to a trademark in our Beauty segment which was written down to fair value, determined on the basis of futurediscounted cash flows using the relief from royalty valuation method. Annual Impairment Testing in the First Quarter of Fiscal Year 2016 – The Company performed its annual evaluationofgoodwill and indefinite-lived intangible assets for impairment during the first quarter of fiscal year 2016. As a result ofour testing of indefinite-lived trademarks, we recorded a non-cash asset impairment charge of $3.00 million ($2.66million after tax). The charge was related to a trademark in our Beauty segment, which was written down to itsestimated fair value, determined on the basis of future discounted cash flows using the relief from royalty valuationmethod. Annual Impairment Testing in the First Quarter of Fiscal Year 2015 – The Company performed its annual evaluationof goodwill and indefinite-lived intangible assets for impairment during the first quarter of fiscal year 2015. As a resultof our testing of indefinite-lived trademarks and licenses, we recorded a non-cash asset impairment charge of $9.00million ($8.16 million after tax). The charge was related to certain trademarks in our Beauty segment, which werewritten down to their estimated fair value, determined on the basis of future discounted cash flows using the relief fromroyalty valuation method. Annual Impairment Testing in the First Quarter of Fiscal Year 2014 – The Company performed its annual evaluationof goodwill and indefinite-lived intangible assets for impairment during the first quarter of fiscal year 2014. As a resultof our testing of indefinite-lived trademarks and licenses, we recorded a non-cash asset impairment charge of $12.05million ($12.03 million after tax). The charge was related to certain trademarks in our Beauty segment, which werewritten down to their estimated fair value, determined on the basis of future discounted cash flows using the relief fromroyalty valuation method. 99 Table of ContentsThe following tables summarize the changes in our goodwill and intangible assets by operating segment for fiscal years2016 and 2015: GOODWILL AND INTANGIBLE ASSETS(in thousands) Balances at Balances at WeightedFebruary 28, 2015Year Ended February 29, 2016February 29, 2016 AverageGrossCumulativeAcquisitionGrossCumulative LifeCarryingGoodwilland RetirementCarryingGoodwillAccumulatedNet BookDescription / Life (Years) Amount Impairments Additions Impairments Adjustments Amount Impairments Amortization Value Housewares: Goodwill$166,132$ -$ -$ -$ -$166,132$ -$ -$166,132Trademarks - indefinite75,200 - - - -75,200 - -75,200Other intangibles - finite4.015,754 -446 -(752)15,448 -(12,916)2,532Subtotal257,086 -446 -(752)256,780 -(12,916)243,864 Health & Home:Goodwill251,758 -32,958 -197284,913 - -284,913Trademarks - indefinite54,000 - - - -54,000 - -54,000Licenses - finite1.015,300 - - - -15,300 -(12,750)2,550Licenses - indefinite - -7,400 - -7,400 - -7,400Other Intangibles - finite6.0113,727 -2,848 - -116,575 -(54,913)61,662Subtotal434,785 -43,206 -197478,188 -(67,663)410,525 Nutritional Supplements:Goodwill96,486 - - -12396,609 - -96,609Brand assets - indefinite65,500 -20 - -65,520 - -65,520Other intangibles - finite5.343,800 -380 - -44,180 -(10,431)33,749Subtotal205,786 -400 -123206,309 -(10,431)195,878 Beauty:Goodwill81,841(46,490) - - -81,841(46,490) -35,351Trademarks - indefinite54,754 - -(6,000) -48,754 - -48,754Trademarks - finite12.6150 - - - -150 -(87)63Licenses - indefinite10,300 - - - -10,300 - -10,300Licenses - finite6.813,696 - - - -13,696 -(11,532)2,164Other intangibles - finite2.247,876 - - -(1,474)46,402 -(34,545)11,857Subtotal208,617(46,490) -(6,000)(1,474)201,143(46,490)(46,164)108,489 Total$1,106,274$(46,490)$44,052$(6,000)$(1,906)$1,142,420$(46,490)$(137,174)$958,756 100 Table of ContentsGOODWILL AND INTANGIBLE ASSETS(in thousands) Balances atBalances at WeightedFebruary 28, 2014Year Ended February 28, 2015February 28, 2015 AverageGrossCumulativeAcquisitionGrossCumulative LifeCarryingGoodwilland RetirementCarryingGoodwillAccumulatedNet BookDescription / Life (Years) Amount Impairments AdditionsImpairments AdjustmentsAmount Impairments Amortization Value Housewares:Goodwill$166,132$ -$ -$ -$ -$166,132$ -$ -$166,132Trademarks - indefinite75,200 - - - -75,200 - -75,200Other intangibles - finite1.715,693 -244 -(183)15,754 -(12,331)3,423Subtotal257,025 -244 -(183)257,086 -(12,331)244,755 Health & Home:Goodwill251,758 - - - -251,758 - -251,758Trademarks - indefinite54,000 - - - -54,000 - -54,000Licenses - finite2.015,300 - - - -15,300 -(9,377)5,923Other Intangibles - finite6.7114,490 -912 -(1,675)113,727 -(43,848)69,879Subtotal435,548 -912 -(1,675)434,785 -(53,225)381,560 Nutritional Supplements:Goodwill - -95,308 -1,17896,486 - -96,486Brand assets - indefinite - -65,500 - -65,500 - -65,500Other intangibles - finite6.3 - -43,800 - -43,800 -(4,171)39,629Subtotal - -204,608 -1,178205,786 -(4,171)201,615 Beauty:Goodwill81,841(46,490) - - -81,841(46,490) -35,351Trademarks - indefinite63,754 - -(9,000) -54,754 - -54,754Trademarks - finite13.6150 - - - -150 -(82)68Licenses - indefinite10,300 - - - -10,300 - -10,300Licenses - finite7.818,683 - - -(4,987)13,696 -(11,216)2,480Other intangibles - finite3.249,437 - - -(1,561)47,876 -(30,602)17,274Subtotal224,165(46,490) -(9,000)(6,548)208,617(46,490)(41,900)120,227 Total$916,738$(46,490)$205,764$(9,000)$(7,228)$1,106,274$(46,490)$(111,627)$948,157 In fiscal year 2015, we amended the terms of our trademark licensing agreement with Honeywell International Inc. torelinquish the rights to market Honeywell branded portable air purifiers after December 31, 2015 in twelve selecteddeveloping countries, including China. In exchange for the amendment, we received a one-time cash payment of $7million ($6.98 million after tax), which was recorded as a gain in SG&A. For fiscal years 2015 and 2014, sales into therelinquished countries accounted for approximately 0.3 and 0.2 percent, respectively, of the Health & Home segment’stotal net sales. We plan to market portable air purifiers in the relinquished markets under non-Honeywell brandedtrademarks and retained the rights to market Honeywell portable air purifiers in other countries, including the UnitedStates, Canada and all European countries. For categories such as portable fans, portable heaters and portablehumidifiers, we remain the Honeywell global licensee under the same material terms as our previous agreement. 101 Table of ContentsThe following table summarizes the amortization expense attributable to intangible assets for the fiscal years 2016,2015 and 2014, as well as estimated amortization expense for the fiscal years 2017 through 2021: AMORTIZATION OF INTANGIBLE ASSETS(in thousands)Aggregate Amortization ExpenseFor the fiscal years ended February 2016$27,773February 2015$25,328February 2014$21,612 Estimated Amortization ExpenseFor the fiscal years ended February 2017 $26,537February 2018$23,246February 2019$18,631February 2020$17,309February 2021$14,788 Many of the license agreements under which we sell or intend to sell products with trademarks owned by third partiesrequire that we pay minimum royalties. Some license agreements also require that we make minimum levels ofadvertising expenditures. For fiscal year 2017, estimated minimum royalties due and minimum advertising expendituresunder these license agreements total $12.73 and $5.90 million, respectively. NOTE 6 – ACQUISITIONS Vicks VapoSteam Acquisition – On March 31, 2015, the Company completed the acquisition of the Vicks VapoSteamU.S. liquid inhalant business from The Procter & Gamble Company (“P&G”), which includes a fully paid-up license ofP&G’s Vicks VapoSteam inhalants. In a related transaction, the Company acquired a fully paid-up U.S. license ofP&G’s Vicks VapoPad scent pads. The vast majority of Vicks VapoSteam and VapoPads are used in Vicks humidifiers,vaporizers and other health care devices already marketed by the Company. The aggregate purchase price for the twotransactions was approximately $42.75 million financed primarily with borrowings under the Credit Agreement, asdefined in Note (9) to these consolidated financial statements. Acquisition-related expenses were notmaterial. VapoSteam operations are reported in the Health & Home segment. We have completed our analysis of the economic lives of the assets acquired and determined the appropriate fair valuesof the acquired assets. We assigned $7.40 million to trademark licenses with indefinite economic lives. We assigned$1.04 million to customer relationships and $1.20 million to product formulations and will amortize these assets overexpected lives of 19.5 and 20.0 years, respectively. For the customer relationships, we used historical attrition rates toassign an expected life. For product formulations, we used our best estimate of the remaining product life. Thetrademarks are considered to have indefinite lives that are not subject to amortization. We assigned $32.96 million togoodwill, which is expected to be deductible for income tax purposes. The fair values of the intangible assets wereestimated by applying income and market approaches. These fair value measurements were based on significant inputsthat are not observable in the market. Therefore, they represent Level 3 measurements. Healthy Directions Acquisition – On June 30, 2014, we completed the acquisition of Healthy Directions, a leader in thepremium branded vitamin, mineral and supplement market for a total cash purchase price of $195.94 million. Thepurchase price was funded primarily with borrowings under the Credit Agreement. Significant assets acquired includeinventory, property and equipment, customer relationships, brand assets, and goodwill. Brand assets consist of aportfolio of complementary marketing related assets determined to have indefinite lives that are utilized across multipleproduct lines. Brand assets include trademarks, tradenames, product formulations, proprietary research, doctorendorsements and all other associated elements of brand equity. Acquisition-related expenses incurred in fiscal year2015 were102 Table of Contentsapproximately $3.61 million ($2.31 million after tax). Healthy Directions reports its operations as the NutritionalSupplements segment. We accounted for the acquisition as the purchase of a business and recorded the excess purchase price as goodwill. Thegoodwill recognized is expected to be deductible for income tax purposes. As of February 28, 2015, we completed ouranalysis of the economic lives of all the assets acquired and determined the appropriate allocation of the purchase price.We assigned the acquired brand assets an indefinite economic life, therefore they are not subject to amortization. Weare amortizing the customer relationships over an expected weighted average life of approximately 7 years, determinedusing historical attrition rates. The following table presents the net assets of Healthy Directions as recognized at the acquisition date: HEALTHY DIRECTIONS - NET ASSETS RECORDED UPON ACQUISITION AT JUNE 30, 2014(in thousands)Assets: Receivables$257Inventory6,226Prepaid expenses and other current assets1,875Property and equipment5,962Goodwill95,308Brand assets - indefinite65,500Customer relationships - definite43,800Subtotal - assets218,928 Liabilities:Accounts payable6,479Accrued expenses13,964Other long-term liabilities2,542Subtotal - liabilities22,985 Net assets recorded$195,943 The fair values of the above assets acquired were estimated by applying income and market approaches. The fair valuemeasurement of the intangible assets are based on significant inputs that are not observable in the market and, therefore,represent Level 3 measurements. Key assumptions included various discount rates based upon a 14.6 percent weightedaverage cost of capital, a royalty rate of 5 percent used in the determination of the brand assets fair value, and acustomer attrition rate averaging 14 percent per year used in the determination of customer relationship values.103 Table of ContentsNOTE 7 – ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES A summary of accrued expenses and other current liabilities is as follows: ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES(in thousands) February 29, February 28, 2016 2015Accrued compensation, benefits and payroll taxes $28,912 $44,382Accrued sales returns, discounts and allowances 27,530 24,271Accrued warranty returns 20,622 23,553Accrued advertising 22,087 18,930Accrued legal fees 16,699 1,085Accrued royalties 7,961 7,683Accrued property, sales and other taxes 6,938 6,850Accrued product liability 2,098 2,917Derivative liabilities, current 495 240Liability for uncertain tax positions 536 -Other 7,367 11,290Total accrued expenses and other current liabilities $141,245 $141,201NOTE 8 – OTHER LIABILITIES, NONCURRENT A summary of other noncurrent liabilities is as follows: OTHER LIABILITIES, NONCURRENT(in thousands) February 29, February 28, 2016 2015Deferred compensation liability $8,298 $7,091Liability for uncertain tax positions 8,201 10,295Other liabilities 10,116 5,921Total other liabilities, noncurrent $26,615 $23,307 104 Table of ContentsNOTE 9 – LONG-TERM DEBT We have a credit agreement (the “Credit Agreement”) with Bank of America, N.A., as administrative agent, and otherlenders that provides for an unsecured total revolving commitment of $650 million as of February 29, 2016. Thecommitment under the credit agreement terminates on January 16, 2020. Accordingly, borrowings under the CreditAgreement are reported as long-term debt. Borrowings accrue interest under one of two alternative methods asdescribed in the Credit Agreement. With each borrowing against our credit line, we can elect the interest rate methodbased on our funding needs at the time. We also incur loan commitment and letter of credit fees under the CreditAgreement. Outstanding letters of credit reduce the borrowing availability under the Credit Agreement on a dollar-for-dollar basis. In connection with the amendments to our Credit Agreement in fiscal year 2015, we incurred a total of$4.59 million in new debt acquisition costs that are being amortized over the remaining term of the Credit Agreement.As of February 29, 2016, there was $550.10 million in revolving debt and $1.50 million of open letters of creditoutstanding under the Credit Agreement. As of February 29, 2016, the amount available for borrowings under theCredit Agreement was $98.40 million. A summary of long-term debt is as follows: LONG-TERM DEBT(dollars in thousands) Original Date Interest Last Day of February, Borrowed Rates Matures 2016 2015$37.61 million unsecured loan with the Mississippi Business FinanceCorporation (the "MBFC Loan"), interest is set and payable quarterly at a BaseRate, plus a margin of up to 1.00%, or applicable LIBOR plus a margin of up to2.00%, as determined by the interest rate elected and the Leverage Ratio. Loansubject to holder's call on or after March 1, 2018. Loan can be prepaid withoutpenalty. (1) 03/13 Floating 03/23 $33,807 $35,707$100 million unsecured Senior Notes payable at a fixed interest rate of 3.90%.Interest payable semi-annually. Annual principal payments of $20 millionbegan in January 2014. Prepayment of notes are subject to a "make whole"premium. 01/11 3.90% 01/18 40,000 60,000Credit Agreement 01/15 Floating 01/20 550,100 337,500Total long-term debt 623,907 433,207Less current maturities of long-term debt (23,800) (21,900)Long-term debt, excluding current maturities $600,107 $411,307(1)$1.90 million in principal payments were made on March 1, 2015 and 2014, respectively. The remaining loanbalance is payable as follows: $3.80 million on March 1, 2016; $5.70 million on March 1, 2017; $1.90 million onMarch 1, 2018 through 2022; and $14.81 million on March 1, 2023. Any remaining outstanding principal andinterest is due upon maturity on March 1, 2023. The fair market value of the fixed rate debt at February 29, 2016 computed using a discounted cash flow analysis andcomparable market rates was $40.79 million compared to the $40 million book value and represents a Level 2 liability.Our other long-term debt has floating interest rates, and its book value approximates its fair value at February 29, 2016. All of our debt is unconditionally guaranteed, on a joint and several basis, by the Company and certain of itssubsidiaries. Our debt agreements require the maintenance of certain financial covenants, including maximum leverageratios, minimum interest coverage ratios and minimum consolidated net worth levels (as each of these terms is definedin the various agreements). Our debt agreements also contain other customary covenants, including, among otherthings, covenants restricting or limiting the Company, except under certain conditions set forth therein, from (1)incurring debt, (2) incurring liens on its properties, (3) making certain types of investments, (4) selling certain assets ormaking other fundamental changes relating to mergers and consolidations, and (5) repurchasing shares of our commonstock and paying dividends. As of February 29, 2016, our debt agreements effectively limited our ability to incur morethan $64.34 million105 Table of Contentsof additional debt from all sources, including our Credit Agreement. We were in compliance with the terms of theseagreements as of February 29, 2016. The following table contains information about interest rates on our Credit Agreement and the related weighted averageborrowings outstanding for the periods covered by our consolidated statements of income: INTEREST RATES ON CREDIT AGREEMENT(in thousands) Fiscal Years Ended the Last Day of February, 2016 2015 2014 Average borrowings outstanding (1) $399,800 $300,280 $29,680 Average interest rate during each year (2) 1.6% 2.5% 1.3% Interest rate range during each year 1.4 - 4.0% 1.9 - 4.4% 1.2 - 3.6% Weighted average interest rates on borrowings outstanding at year end 2.8% 1.9% 0.0% (1)Average borrowings outstanding is computed as the average of the current and four prior quarters ending balancesof our credit facility. (2) The average interest rate during each year is computed by dividing the total interest expense associated with ourcredit facility for a fiscal year by the average borrowings outstanding for the same fiscal year. The following table contains a summary of the components of our interest expense for the periods covered by ourconsolidated statements of income: INTEREST EXPENSE(in thousands) Fiscal Years Ended the Last Day of February, 201620152014Interest and commitment fees $9,949 $11,958 $5,610Deferred finance costs 1,158 1,846 911Interest rate swap settlements, net - 1,218 3,672Cross-currency debt swap (11) - -Total interest expense $11,096 $15,022 $10,193106 Table of ContentsNOTE 10 - INCOME TAXES We reorganized the Company in Bermuda in 1994 and many of its foreign subsidiaries are not directly or indirectlyowned by a U.S. parent company. As such, a large portion of the Company's foreign income is not subject to U.S.taxation on a permanent basis under current law. Additionally, the Company's intellectual property is largely owned byforeign subsidiaries of the Company, resulting in proportionally higher earnings in jurisdictions with lower statutory taxrates, which decreases the Company's overall effective tax rate. The taxable income earned in each jurisdiction, whetherU.S. or foreign, is determined by the subsidiary's operating results, and transfer pricing and tax regulations in the relatedjurisdictions. We have indefinitely reinvested $68.49 million of undistributed earnings of our foreign operations outsideof our U.S. tax jurisdiction as of February 29, 2016. No deferred tax liability has been recognized for the remittance ofsuch earnings to the U.S. since it is our intention to utilize these earnings in our foreign operations. Our components of income before income tax expense are as follows: COMPONENTS OF INCOME BEFORE TAXES(in thousands) Fiscal Years Ended the Last Day of February, 2016 2015 2014U.S.$30,874$34,876$38,147Non-U.S.88,944112,33868,987Total$119,818$147,214$107,134 Our components of income tax expense (benefit) are as follows: COMPONENTS OF INCOME TAX EXPENSE (BENEFIT)(in thousands) Fiscal Years Ended the Last Day of February, 2016 2015 2014U.S.Current$12,824$18,525$24,736Deferred(1,239)(3,014)(9,021) 11,58515,51115,715 Non-U.S.Current4,919(645)6,254Deferred2,0861,184(1,083) 7,0055395,171Total$18,590$16,050$20,886107 Table of ContentsOur total income tax expense differs from the amounts computed by applying the U.S. statutory tax rate to incomebefore income taxes. A summary of these differences are as follows: INCOME TAX RATE RECONCILIATION Fiscal Years Ended the Last Day of February, 2016 2015 2014 Expected effective income tax rate at the U.S. statutory rate 35.0% 35.0% 35.0% Impact of U.S. state income taxes 0.5% 0.6% 1.7% Effect of income from non-U.S. operations subject to varying rates 4.1% 0.9% (0.3)% Effect of zero tax rate in Macau (19.3)% (12.4)% (12.3)% Effect of statutory tax rate in Barbados (6.8)% (11.7)% (8.7)% Effect of statutory tax rate in Switzerland (5.7)% (2.9)% (0.9)% Effect of foreign exchange fluctuations 3.3% 0.4% 0.3% Effect of asset impairment charges 1.1% 1.6% 3.9% Other Items 3.3% (0.6)% 0.8% Effective income tax rate 15.5% 10.9% 19.5% The Company's operation in Macau generates income from the sale of the goods that it has sourced and procured and isresponsible for the sourcing and procurement of a large portion of the products that the Company sells. The Companyhas an indefinite tax holiday in Macau conditioned on the Company meeting certain employment and investmentthresholds. We have never experienced any issues in meeting the required thresholds, and are unaware of anyregulatory changes or impending circumstances that would restrict our rights to continue to benefit from the taxholiday. Because the Macau subsidiary is not directly or indirectly owned by a U.S. parent company, there is no U.S.tax liability associated with the income generated in Macau. Each year there are significant transactions or events that are incidental to our core businesses and that by acombination of their nature and jurisdiction, can have a disproportionate impact on our reported effective tax rates.Without these transactions or events, the trend in our effective tax rates would follow a more normalized pattern. The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities asof the last day of February 2016 and 2015 are as follows: COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES(in thousands) Last Day of February, 2016 2015Deferred tax assets, gross: Operating loss carryforwards $15,419 $17,193Accounts receivable 6,332 4,367Inventories 10,372 8,450Accrued expenses and other 10,783 17,734Total gross deferred tax assets 42,906 47,744 Valuation allowance (16,223) (16,982)Deferred tax liabilities: Depreciation and amortization (51,562) (54,788)Total deferred tax liabilities, net $(24,879) $(24,026) In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion orall of the deferred tax assets will not be realized. We consider the scheduled reversal of deferred tax liabilities, expectedfuture taxable income and tax planning strategies in assessing the ultimate realization of deferred tax assets. If recoveryis not likely, we must increase our provision for taxes by recording a valuation allowance against the deferred tax assetsthat we estimate will not be recoverable. In fiscal year 2016, the $0.76 million net decrease in our valuation allowancewas principally due to changes in estimates regarding the value of operating loss carryforwards to be used in the future.108 Table of ContentsAs of February 29, 2016 and February 28, 2015, we have remaining tax-deductible goodwill of $133.12 million and$119.78 million, respectively, resulting from acquisitions. The amortization of this goodwill is deductible over variousperiods ranging up to 13 years. The tax deduction for goodwill for fiscal year 2017 is expected to be approximately$20.17 million. The schedule below shows the composition of our operating loss carryforwards and the approximate future taxableincome we will need to generate in order to utilize all carryforwards prior to their expiration: SUMMARY OF OPERATING LOSS CARRYFORWARDS(in thousands) Balances at February 29, 2016 Tax Year Deferred Operating Expiration Tax Loss Date Range Assets CarryforwardU.S. state operating loss carryforward 2017 - 2035 $300 $7,184Non-U.S. operating loss carryforwards with definite carryover periods 2017 - 2026 1,339 7,271Non-U.S. operating loss carryforwards with indefinite carryover periods Indefinite 13,780 46,599Subtotals 15,419 $61,054Less portion of valuation allowance established for operating loss carryforwards (14,054) Total $1,365 Any future amount of deferred tax asset considered realizable could be reduced in the near term if estimates of futuretaxable income during any carryforward periods are reduced. During fiscal years 2016 and 2015, changes in the total amount of unrecognized tax benefits were as follows: UNRECOGNIZED TAX BENEFITS(in thousands) Fiscal Years Ended the Last Day of February, 20162015Total unrecognized tax benefits, beginning balance$10,295$13,924Tax positions taken during the current period -341Changes in tax positions taken during a prior period278(1,802)Lapse in statute of limitations(1,375)(523)Impact of foreign currency re-measurement(421)(882)Settlements(40)(763)Total unrecognized tax benefits, ending balance8,73710,295Less current unrecognized tax benefits(536) -Noncurrent unrecognized tax benefits$8,201$10,295 Included in the balance of unrecognized tax benefits at the end of fiscal year 2016 were $8.74 million of tax benefits,which, if recognized, would affect our effective tax rate. We do not expect any significant changes to our existingunrecognized tax benefits during the next twelve months resulting from any issues currently pending with taxauthorities. We classify all interest and penalties on uncertain tax positions as income tax expense. As of February 29, 2016 andFebruary 28, 2015, the liability for tax-related interest and penalties included in unrecognized tax benefits was $2.26million and $1.72 million, respectively. Additionally, during the fiscal years ended in 2016, 2015 and 2014, werecognized $0.54, $0.23 and $0.56 million, respectively. We file income tax returns in the U.S. federal jurisdiction and in various states and foreign jurisdictions. We do notexpect that any proposed adjustments from these tax jurisdictions will have a material impact on our results ofoperations or financial position.109 Table of ContentsAs of February 29, 2016, tax years under examination or still subject to examination by material tax jurisdictions are asfollows: Jurisdiction Tax Years Under Examination Open Tax YearsMexico- None -2010-2015United Kingdom- None -2015-2016United States *2003, 2007, 20082003, 2007, 2008, 2013 - 2016Switzerland- None -2009-2016Hong Kong20142009-2016Hungary20092009, 2011 - 2016* Kaz, Inc. and its U.S. subsidiaries are under examination for the 2003, 2007 and 2008 tax years. In February 2016,the examination of Helen of Troy Texas Corporation and its subsidiaries for the 2011 and 2012 tax years wascompleted with no impact to tax expense. NOTE 11 – FAIR VALUE The following tables present the fair value of our financial assets and liabilities carried at fair value and measured on arecurring basis as of the last day of February 2016 and 2015: FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES(in thousands) Fair Values at February 29, 2016 (Level 2) (1)Assets: Money market accounts $211,964Foreign currency contracts 1,372Total assets $213,336 Liabilities: Fixed rate debt (2) $40,785Floating rate debt 583,907Foreign currency contracts 502Total liabilities $625,194 Fair Values at February 28, 2015 (Level 2) (1)Assets: Money market accounts $1,692Foreign currency contracts 129Total assets $1,821 Liabilities: Fixed rate debt (2) $62,006Floating rate debt 373,207Foreign currency contracts 240Total liabilities $435,453(1)Our financial assets and liabilities are classified as Level 2 assets because their valuation is dependent onobservable inputs and other quoted prices for similar assets or liabilities, or model-derived valuations whosesignificant value drivers are observable. (2)Debt values are reported at estimated fair value in these tables, but are recorded in the accompanying consolidatedbalance sheets at the undiscounted value of remaining principal payments due.110 Table of ContentsThe carrying amounts of cash and cash equivalents, receivables and accounts payable approximate fair value becauseof the short maturity of these items. Money market accounts at February 29, 2016 primarily held short-term U.S.treasury obligations and are included in cash and cash equivalents in the accompanying consolidated balance sheets.Money market accounts temporarily held $210 million drawn shortly before the end of fiscal year 2016 in order tofacilitate the closing of the Hydro Flask acquisition in March 2016. We use derivatives for hedging purposes and our derivatives are primarily foreign currency contracts and a cross-currency debt swap. See Notes (1), (12) and (17) to these consolidated financial statements for more information on ourhedging activities. We classify our fixed and floating rate debt as Level 2 items because the estimation of the fair market value of thesefinancial assets requires the use of a discount rate based upon current market rates of interest for obligations withcomparable remaining terms. Such comparable rates are considered significant other observable market inputs. The fairmarket value of the fixed rate debt was computed using a discounted cash flow analysis and discount rates atFebruary 29, 2016 and February 28, 2015 of 2.39 and 2.05 percent, respectively. All other long-term debt has floatinginterest rates, and its book value approximates its fair value as of the reporting date. The Company’s other non-financial assets include goodwill and other intangible assets, which we classify as Level 3items. These assets are measured at fair value on a non-recurring basis as part of the Company’s impairmentassessments and as circumstances require. As discussed in Note (5) to these consolidated financial statements, in fiscalyears 2016 and 2015, we recorded non-cash asset impairment charges totaling $6.00 million ($5.31 million after tax)and $9.00 million ($8.16 million after tax), respectively. The charges related to certain trademarks in our Beautysegment, which were written down to their estimated fair value, determined on the basis of future discounted cash flowsusing the relief from royalty valuation method. The table below presents other non-financial assets measured on a non-recurring basis using significant unobservable inputs (Level 3) for the fiscal years 2016 and 2015: OTHER NON-FINANCIAL ASSETSFAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (Level 3)(in thousands) Fiscal Years Ended the Last Day of February, 20162015Beginning balances$948,157$775,550 Total income (expense): Included in net income - realized(31,547)(34,152) Acquired during the period44,052205,764 Acquisition adjustments and retirements during the period(1,906)995Ending balances$958,756$948,157NOTE 12 – FINANCIAL INSTRUMENTS AND RISK MANAGEMENT Foreign Currency Risk – Our functional currency is the U.S. Dollar. By operating internationally, we are subject toforeign 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. Forthe fiscal years 2016, 2015 and 2014, approximately 14, 14 and 15 percent, respectively, of our net sales revenue wasin foreign currencies. These sales were primarily denominated in British Pounds, Euros, Mexican Pesos, CanadianDollars, and Venezuelan Bolivars. We make most of our inventory purchases from the Far East and use the U.S. Dollarfor such purchases. In our consolidated statements of income, exchange gains and losses resulting from theremeasurement of foreign taxes receivable, taxes payable, deferred tax assets, and deferred tax liabilities, arerecognized in their respective income tax lines, and all other foreign exchange gains and losses are recognized inSG&A. We recorded net exchange gains (losses) from foreign currency fluctuations, including the impact of currencyhedges and the cross-currency debt swap, of ($3.14), ($5.72) and ($0.95) million in SG&A and $(0.10), $0.40 and($0.17) million in income tax expense during fiscal years 2016, 2015 and 2014, respectively. 111 Table of ContentsAs further discussed in Note (2), we also recorded charges of $18.73 million in fiscal year 2016 due to a change in therate used to re-measure our Venezuelan financial statements as of February 29, 2016 from the official exchange rate of6.3 Bolivars per U.S. Dollar to the SIMADI rate of approximately 205 Bolivars per U.S. Dollar. We hedge against certain foreign currency exchange rate-risk by using a series of forward contracts designated as cashflow hedges and mark-to-market derivatives to protect against the foreign currency exchange risk inherent in ourforecasted transactions denominated in currencies other than the U.S. Dollar. We do not enter into any forwardexchange contracts or similar instruments for trading or other speculative purposes. Chinese Renminbi Currency Exchange Uncertainties - A significant portion of the products we sell are purchased fromthird-party manufacturers in China. The Chinese Renminbi has fluctuated against the U.S. Dollar in recent years,devaluing by approximately 6 percent against the U.S. Dollar during fiscal year 2016. If China’s currency continues tofluctuate against the U.S. Dollar in the short-to-intermediate term, we cannot accurately predict the impact of thosefluctuations on our results of operations. There can be no assurance that foreign exchange rates will be stable in thefuture or that fluctuations in Chinese foreign currency markets will not have a material adverse effect on our business,results of operations and financial condition. Interest Rate Risk – Interest on our outstanding debt as of February 29, 2016 is both floating and fixed. Fixed rates arein place on $40 million of Senior Notes at 3.90% and floating rates are in place on the balance of all other debtoutstanding, which totaled $583.91 million as of February 29, 2016. If short-term interest rates increase, we will incurhigher interest rates on any future outstanding balances of floating rate debt.112 Table of ContentsThe following table summarizes the fair values of our various derivative instruments at the end of fiscal years 2016 and2015: FAIR VALUES OF DERIVATIVE INSTRUMENTS(in thousands) February 29, 2016 PrepaidAccrued ExpensesExpenses Finaland Otherand OtherOther SettlementNotionalCurrentOtherCurrentLiabilities,Derivatives designated as hedging instruments Hedge Type Date Amount Assets Assets Liabilities Non-currentForeign currency contracts - sell EuroCash flow2/2017€27,000$1,066$ -$ -$ -Foreign currency contracts - sell CanadianDollarsCash flow6/2017$28,000 - -4957Foreign currency contracts - sell PoundsCash flow2/2017£3,45094 - - -Foreign currency contracts - sell AustralianDollarsCash flow8/2016$1,6506 - - -Subtotal 1,166 - 495 7 Derivatives not designated under hedgeaccounting Foreign currency contracts - cross-currency debtswap(1)1/2018$5,000- 206 - -Total fair value$1,166$206$495$7(1)During fiscal year 2016 we entered into a cross-currency debt swap, which in effect adjusts the currencydenomination of $5 million of our 3.90% Senior Notes due January 2018 to the Euro, creating an economic hedgeagainst currency movements. On this contract, we have not elected hedge accounting. February 28, 2015 PrepaidAccrued ExpensesExpenses Finaland Otherand OtherOther SettlementNotionalCurrentOtherCurrentLiabilities,Derivatives designated as hedging instrumentsHedge TypeDateAmountAssetsAssetsLiabilitiesNon-currentForeign currency contracts - sell EuroCash flow1/2016€10,000$129$ -$ -$ -Foreign currency contracts - sell PoundsCash flow2/2016£6,900 -- 240 -Total fair value$129$ -$240$ - The pre-tax effect of derivative instruments for the fiscal years 2016 and 2015 is as follows: PRE-TAX EFFECT OF DERIVATIVE INSTRUMENTS(in thousands) Fiscal Years Ended the Last Day of February, Gain / (Loss)Gain / (Loss) Reclassified Recognized in OCIfrom Accumulated OtherGain / (Loss) Recognized (effective portion)Comprehensive Income (Loss) into IncomeAs Income 20162015 Location2016 2015 Location2016 2015Currency contracts - cash flow hedges$1,978$434SG&A$1,203$176$ -$ -Interest rate swaps - cash flow hedges -28Interest expense -(1,199) - -Cross-currency debt swaps - principal - - - -SG&A206 -Cross-currency debt swaps - interest - - - -Interest Expense11 -Total$1,978$462$1,203$(1,023)$217$ - We expect net gains of $0.67 million associated with foreign currency contracts currently reported in accumulated othercomprehensive income (loss), to be reclassified into income over the next twelve months. The amount ultimatelyrealized, however, will differ as exchange rates change and the underlying contracts settle. See Notes (1), (11) and (17)to these consolidated financial statements for more information on our hedging activities.113 Table of ContentsCounterparty Credit Risk – Financial instruments, including foreign currency contracts, cross-currency debt swaps andinterest rate swaps, expose us to counterparty credit risk for nonperformance. We manage our exposure to counterpartycredit risk by dealing with counterparties who are substantial international financial institutions with significantexperience using such derivative instruments. Although our theoretical credit risk is the replacement cost at the then-estimated fair value of these instruments, we believe that the risk of incurring credit risk losses is remote. Risks Inherent in Cash and Cash Equivalents – As the levels of our cash and cash equivalents change, they canbecome more subject to foreign exchange rate risk, interest rate risk, credit risk, and liquidity risk. Cash consists ofinterest-bearing, non-interest-bearing and short-term investment accounts. We consider money market accounts, whichat February 29, 2016 primarily held short-term U.S. treasury obligations, to be cash equivalents. The following table summarizes our cash and cash equivalents at the end of fiscal years 2016 and 2015: CASH AND CASH EQUIVALENTS(in thousands) February 29, 2016February 28, 2015 CarryingRange ofCarrying Range of Amount Interest Rates AmountInterest RatesCash, interest and non-interest-bearing accounts - unrestricted$13,8260.00 to 0.50%$9,8770.00 to 0.65%Cash, interest and non-interest-bearing accounts - restricted100.00%7260.00 to 0.50%Money market funds211,9640.11 to 0.19%1,6920.18 to 0.31% Total cash and cash equivalents$225,800$12,295 Our money market balance at the end of fiscal year 2016 includes $210 million drawn shortly before the end of thefiscal year, in order to facilitate the closing of the Hydro Flask acquisition in March 2016. Our cash balances at the end of fiscal years 2016 and 2015 include restricted cash of $0.01 and $0.73 million,respectively, denominated in Venezuelan Bolivars, shown above under the heading “Cash, interest and non-interest-bearing accounts - restricted.” The balances arise from our operations within the Venezuelan market. We intend to usethese cash balances in country to continue to fund operations. We do not otherwise rely on these restricted funds as asource of liquidity. As discussed previously, at the end of fiscal year 2016 we re-measured our restricted cash using theSIMADI exchange rate of 205 Bolivars per U.S. Dollar. 114 Table of ContentsNOTE 13 – OTHER COMMITMENTS AND CONTINGENCIES Indemnity Agreements – Under agreements with customers, licensors and parties from whom we have acquired assetsor entered into business combinations, we indemnify these parties against liability associated with our products.Additionally, we are party to a number of agreements under leases where we indemnify the lessor for liabilitiesattributable to our actions or conduct. The indemnity agreements to which we are a party do not, in general, increaseour liability for claims related to our products or actions and have not materially affected our consolidated financialstatements. Employment Contracts and Related Matters – Until January 2014, we were party to a restated employment agreementwith Gerald J. Rubin, our former Chief Executive Officer and President (the “former CEO”). On January 14, 2014, theCompany and the former CEO entered into a separation agreement (the “Separation Agreement”). Pursuant to theSeparation Agreement, the former CEO ceased serving as the Chief Executive Officer and President and resigned as adirector of the Company, effective January 14, 2014, but remained an employee of the Company through February 28,2014. The former CEO’s employment with the Company was considered a termination without cause under the terms ofhis employment agreement. As a result of the Separation Agreement, the Company recorded a charge of $16.34 million(after tax) in the fourth quarter of fiscal year 2014, which accrued for liabilities and associated legal and administrativecosts as a result of the separation. On November 12, 2015, the Company settled a lawsuit with its former CEO, which resulted in the payment ofseverance compensation due under his employment and separation agreements. The severance compensation waspreviously accrued and disclosed in fiscal year 2014 and was paid through the issuance of common shares of theCompany on November 17, 2015. The Company also transferred ownership of a life insurance policy on the lives of itsformer CEO and his spouse as part of the settlement. As a result of the transfer of the policy and other expensesincurred in connection with the settlement, the Company recorded CEO succession costs of $6.71 million ($4.64million after tax), or $0.16 per fully diluted share, in fiscal year 2016. We have entered into employment contracts with certain officers, including an employment agreement with Mr. JulienMininberg, the Company’s CEO, that was amended and restated on January 7, 2016. The amended and restatedagreement, among other things, extended the term of Mr. Mininberg’s employment agreement from March 1, 2016through February 28, 2019. These agreements provide for minimum salary levels, potential incentive bonuses, and insome cases, performance based awards. These agreements also specify varying levels of salary continuation and/orseverance compensation dependent on certain circumstances such as involuntary termination for other than cause orinvoluntary termination due to a change of control. In some cases, the expiration dates for these agreements are indefinite, unless terminated by either party. At February29, 2016, the estimated aggregate commitment for potential future compensation and/or severance pursuant to allcontinuing employment contracts, was approximately $12.74 million, payable over varying terms up to two years fromthe date of separation. International Trade – We purchase most of our appliances and a significant portion of other products that we sell fromunaffiliated manufacturers located in the Far East, mainly in China. With most of our products being manufactured inthe Far East, we are subject to risks associated with trade barriers, currency exchange fluctuations and social, economicand political unrest. In recent years, increasing labor costs, regional labor dislocations driven by new governmentpolicies, local inflation, changes in ocean cargo carrier capacity and costs, the impact of energy prices ontransportation, and fluctuations in the Chinese Renminbi against the U.S. Dollar have resulted in variability in our costof goods sold. In the past, certain Chinese suppliers have closed operations due to economic conditions that pressuredtheir profitability. Any future supplier closings could cause periodic disruptions in delivery of certain items that canaffect our sales. Although we have multiple sourcing partners for certain products, occasionally we are unable to sourcecertain items on a timely basis due to changes occurring with our suppliers. We believe supplier contraction continuesto be a trend in our industry. We also believe that we could source similar products outside China, if necessary, and wecontinuously explore expanding sourcing alternatives in other countries. However, the relocation of any productioncapacity could require substantial time and increased costs. 115 Table of ContentsCustomer Incentives – We regularly enter into arrangements with customers whereby we offer various incentives,including incentives in the form of volume rebates. Our estimate of the liability for such incentives is included in theaccompanying consolidated balance sheets on the line entitled “Accrued expenses and other current liabilities,” and inNote (8) to these consolidated financial statements included in the lines entitled “Accrued sales returns, discounts andallowances” and “Accrued advertising” and are based on incentives applicable to sales occurring up to the respectivebalance sheet dates. Thermometer Patent Litigation – On January 22, 2016, a jury ruled against the Company in a case that involved claimsby Exergen Corporation, headquartered in Watertown, MA. The case deals with the alleged patent infringement relatedto two forehead thermometer models sold by our subsidiary, Kaz USA, Inc., in the United States. Exergen was awardeddamages of $14.6 million with respect to a period of approximately seven years of sales. The Company could be liablefor payment of royalties on any future sales of the two products. As a result of the jury verdict, the Company recorded afourth quarter charge, including legal fees and other related expenses of $17.83 million ($17.79 million, after tax). Theoutcome of the case is not yet final and the Company disagrees with the verdict, which will be subject to certain post-trial motions and a possible appeal. The forehead thermometers involved in this case represent less than 1 percent ofconsolidated net sales for fiscal year 2016. Other Matters – We are involved in various legal claims and proceedings in the normal course of operations. Webelieve the outcome of these matters will not have a material adverse effect on our consolidated financial position,results of operations, or liquidity. Contractual Obligations and Commercial Commitments – Our contractual obligations and commercial commitments atthe end of fiscal year 2016 were: PAYMENTS DUE BY PERIOD - TWELVE MONTHS ENDED THE LAST DAY OF FEBRUARY:(in thousands) 2017 2018 2019 2020 2021 After Total 1 year 2 years 3 years 4 years 5 years 5 yearsFixed rate debt $40,000 $20,000 $20,000 $ - $ - $ - $ -Floating rate debt 583,907 3,800 5,700 1,900 552,000 1,900 18,607Long-term incentive plan payouts 14,285 6,378 5,125 2,782 - - -Interest on fixed rate debt 2,132 1,456 676 - - - -Interest on floating rate debt (1) 36,806 9,327 9,216 9,179 8,112 361 611Open purchase orders 181,953 181,953 - - - - -Long-term purchase commitments 1,654 745 606 303 - - -Minimum royalty payments 66,572 12,725 12,271 12,253 8,938 8,998 11,387Advertising and promotional 47,921 8,569 6,382 6,462 6,683 7,099 12,726Operating leases 35,861 5,886 5,287 4,766 3,351 3,054 13,517Capital spending commitments 3,490 3,490 - - - - -Total contractual obligations (2) $1,014,581 $254,329 $65,263 $37,645 $579,084 $21,412 $56,848(1)We estimate our future obligations for interest on our floating rate debt by assuming the weighted average interestrates in effect on each floating rate debt obligation at February 29, 2016 remain constant into the future. This is anestimate, as actual rates will vary over time. In addition, for the Credit Agreement, we assume that the balanceoutstanding as of February 29, 2016 remains the same for the remaining term of the agreement. The actual balanceoutstanding under our Credit Agreement may fluctuate significantly in future periods, depending on the availabilityof cash flow from operations and future investing and financing considerations. (2)In addition to the contractual obligations and commercial commitments in the table above, as of February 29, 2016,we have recorded a provision for uncertain tax positions of $8.74 million. We are unable to reliably estimate thetiming of most of the future payments, if any, related to uncertain tax positions; therefore, we have excluded thesetax liabilities from the table above. 116 Table of ContentsNOTE 14 – REPURCHASE OF HELEN OF TROY COMMON STOCK In February 2014, our Board of Directors approved a resolution to repurchase $550 million of the Company’soutstanding common stock in keeping with its stated intention to return to shareholders excess capital not otherwisedeployed for strategic acquisitions or other needs. This resolution superseded the previous resolution in place. As ofFebruary 29, 2016, we were authorized to purchase $159.02 million of common stock. These repurchases may includeopen market purchases, privately negotiated transactions, block trades, accelerated stock repurchase transactions, orany combination of such methods. The number of shares purchased and the timing of the purchases will depend on anumber 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, includingalternative investment opportunities. Our current equity compensation plans include provisions that allow for the “net exercise” of stock options by all planparticipants. In a net exercise, any required payroll taxes, federal withholding taxes and exercise price of the shares duefrom option or other share-based award holders can be paid for by having the holder tender back to the Company anumber of shares at fair value equal to the amounts due. Net exercises are accounted for by the Company as a purchaseand retirement of shares. The following table summarizes our share repurchase activity for the periods covered below: SHARE REPURCHASES Fiscal Years Ended the Last Day of February, 2016 2015 2014Common stock repurchased on the open market or through tender offer:Number of shares1,126,796(1)4,102,143(3)33,862Aggregate value of shares (in thousands)$100,000$273,599$1,311Average price per share$88.75$66.70$38.71 Common stock received in connection with share-based compensation:Number of shares117,294(2)71,950(4)112,677Aggregate value of shares (in thousands)$6,411$4,826$6,937Average price per share$54.66$67.08$61.57(1)Includes two open market purchases at a total cost of $50 million each, in the second and fourth quarters of fiscalyear 2016, for 556,591 and 570,205 shares respectively. (2)On November 17, 2015, in connection with the settlement of the lawsuit previously discussed in Note (3) to theseconsolidated financial statements, the Company issued 276,548 shares of common stock as payment for $15 millionin separation compensation due to our former CEO under his employment and separation agreements, which waspreviously accrued in fiscal year 2014. Our former CEO tendered back to the Company 116,012 shares as paymentfor $12.00 million in related federal income tax withholding obligations. Under the terms of the employment andseparation agreements, the number of shares issued and tendered were valued at $54.24 per share. This was the fairvalue of the shares on September 4, 2014, the date the compensation payment would have been made, if paymenthad not been delayed by the associated dispute. The balance of 1,282 shares were repurchased in connection withnet exercises by other Company employees during the first quarter of fiscal year 2016. (3)Includes a modified “Dutch auction” tender offer completed on March 14, 2014, resulting in the repurchase of3,693,816 shares of our outstanding common stock at a total cost of $247.83 million, including tender offertransaction-related costs. (4)Includes 68,086 shares of common stock having a market value of $67.10 per share, or $4.57 million in theaggregate, which were tendered by our former CEO as payment for related federal tax obligations arising from thevesting and settlement of performance-based restricted stock units and restricted stock awards.117 Table of ContentsNOTE 15 – SHARE-BASED COMPENSATION PLANS We have equity awards outstanding under an expired employee stock option and restricted stock plan adopted in 1998(the “1998 Plan”). We also have equity awards outstanding under three active share-based compensation plans. Theplans consist of the Helen of Troy Limited 2008 Stock Incentive Plan, an employee stock option and restricted stockplan (the “2008 Stock Incentive Plan”), the Helen of Troy Limited 2008 Non-Employee Directors Stock Incentive Plan,a non-employee director restricted stock plan (the “2008 Directors’ Plan”), and the Helen of Troy Limited 2008Employee Stock Purchase Plan (the “2008 Stock Purchase Plan”). These plans are described below. The plans areadministered by the Compensation Committee of the Board of Directors, which consists of non-employee directors whoare independent under the NASDAQ Stock Market listing standards. Expired Plan The 1998 Plan – The plan covered a total of 6,750,000 shares of common stock for issuance to key officers andemployees. The 1998 Plan provided for the grant of options to purchase our common stock at a price equal to or greaterthan the fair market value on the grant date. The 1998 Plan contained provisions for incentive stock options, non-qualified stock options and restricted share grants. Generally, options granted under the 1998 Plan become exercisableover four- or five-year vesting periods and expire on dates ranging from seven to ten years from the date of grant. The1998 Plan expired by its terms on August 25, 2008. As of February 29, 2016, there were 2,100 shares of common stocksubject to options outstanding under the plan. Active Plans The 2008 Stock Incentive Plan – The plan covers a total of 3,750,000 shares of common stock for issuance to keyofficers, employees and consultants of the Company. Under this plan, the Company offers stock-based compensationthat includes stock options, annual restricted share awards, time-vested restricted stock units and performance-basedrestricted stock units. The plan will expire by its terms on August 19, 2018. Stock Options Generally, options granted under the 2008 Stock Incentive Plan will become exercisable over four- or five-year vestingperiods and will expire on dates ranging from seven to ten years from the date of grant. These stock options areexpensed ratably over their vesting terms. As of February 29, 2016, there were 646,775 shares of common stocksubject to options outstanding under the plan. Restricted Stock Awards (“RSAs”) RSAs were awarded in settlement of our former CEO’s annual bonus as a result of the achievement of certainperformance targets specified in his employment agreement. RSAs for 62,304 shares of common stock for fiscal year2014 with a fair value at the date of the award of $67.10 per share, vested during fiscal year 2015. In addition, duringfiscal year 2016, we issued an RSA for 2,000 shares of common stock to our current CEO at a fair value of $89.12 pershare. Restricted Stock Units (“RSUs”) RSUs are awards of time-vested restricted stock units that are independent of stock option grants and are generallysubject to forfeiture if employment terminates prior to vesting. During fiscal years 2016 and 2015, the Companygranted RSUs that may be settled for up to 29,932 and 28,937 shares of common stock, with average fair values at thegrant dates of $76.62 and $58.36 respectively, to the CEO and certain members of the management team. The awardsvest 50 percent on the second anniversary of the grant date and 50 percent on the third anniversary of the grant date.The Company expenses the cost of restricted stock units ratably over their vesting periods.118 Table of ContentsPerformance Restricted Stock Units (“PSUs”) PSUs are performance-based restricted stock unit awards that represent the right to receive unrestricted shares of stockbased on the achievement of Company performance goals over the performance period established by theCompensation Committee of the Company’s Board of Directors. In fiscal year 2014, 100,000 PSUs having a fair valueat the date of grant of $32.88 were earned in accordance with the terms of our former CEO’s employment agreement.During fiscal years 2016 and 2015, the Company granted PSUs that may be settled for up to 130,608 and 178,101shares of common stock with average fair values at the grant date of $76.62 and $58.36, respectively, to the CEO andcertain members of the management team. These awards have three year performance periods ending February 28,2018 and February 28, 2017, respectively. The awards will vest and settle on the date the Compensation Committeecertifies that the performance goals have been achieved. Expense for the new plan must be estimated until earned,subject to a probability assessment of achieving the various performance goals and payout levels. A summary of activity under the 2008 stock incentive plan follows: SUMMARY OF ACTIVITY UNDER THE 2008 STOCK INCENTIVE PLANShares originally authorized 3,750,000Less cumulative stock option grants issued, net of forfeitures(1,213,822)Less restricted share awards previously vested and settled(423,970)Subtotal2,112,208Less maximum RSUs issuable upon vesting (1)(57,364)Less estimated maximum PSUs issuable upon vesting (1)(306,206)Shares available for issuance1,748,638(1)RSUs and PSUs potentially issuable are estimated assuming the maximum payouts adjusted for known actualforfeitures to date. The 2008 Directors’ Plan – The plan covers a total of 175,000 shares of common stock for issuance of restricted stock,restricted stock units or other stock-based awards to non-employee members of our Board of Directors. Awards grantedunder the 2008 Directors' Plan will be subject to vesting schedules and other terms and conditions as determined by theCompensation Committee of the Company’s Board of Directors. The plan will expire by its terms on August 19, 2018.As of February 29, 2016, 73,540 shares of restricted stock have been granted and 101,460 shares remained availablefor future issue under the plan. Under the 2008 Directors’ Plan for the fiscal years ended 2016, 2015 and 2014, theCompany granted 5,649, 9,267 and 10,512 shares of restricted stock, respectively, to certain members of our Board ofDirectors having weighted average fair values at the date of grant of $87.04, $61.72 and $41.26 per share for eachyear, respectively. The restricted stock awards vested immediately, were valued at the fair value of the Company’scommon stock at the date of the grant and accordingly, were expensed at the time of the grants. The 2008 Stock Purchase Plan – The plan covers a total of 350,000 shares of common stock for issuance to ouremployees. Under the terms of the plan, employees may authorize the withholding of up to 15 percent of their wages orsalaries to purchase our shares of common stock. The purchase price for shares acquired under the 2008 StockPurchase Plan is equal to the lower of 85 percent of the share’s fair market value on either the first day of each optionperiod or the last day of each period. The plan will expire by its terms on September 1, 2018. Shares of common stockpurchased under the 2008 Stock Purchase Plan vest immediately at the time of purchase. Accordingly, the fair valueaward associated with their discounted purchase price is expensed at the time of purchase. During fiscal years 2016,2015 and 2014, plan participants acquired a total of 28,433, 31,128 and 41,328 shares of common stock at averageprices of $67.77, $49.49 and $32.66 per share, respectively. As of February 29, 2016, there were 98,652 sharesavailable for future issue under the plan. 119 Table of ContentsThe Company recorded share-based compensation expense in SG&A for each of the fiscal years covered by ourconsolidated statements of income as follows: SHARE-BASED PAYMENT EXPENSE(in thousands, except per share data) Fiscal Years Ended the Last Day of February, 2016 2015 2014Stock options $2,961 $3,279 $2,380Directors stock compensation700816619Performance based and other stock awards (1)4,4781,73213,446CEO separation compensation (2) - -15,000Employee stock purchase plan552391424Share-based payment expense8,6916,21831,869Less income tax benefits(1,284)(661)(5,709)Share-based payment expense, net of income tax benefits$7,407$5,557$26,160 Earnings per share impact of share based payment expense:Basic$0.26$0.19$0.82Diluted$0.26$0.19$0.81(1)Fiscal year 2014 includes RSAs for 62,304 shares of common stock with a fair value at the date of the award of$67.10 per share and PSUs for 100,000 shares of common stock having a fair value at the date of grant of $32.88.These awards, which were granted in accordance with the terms of our former CEO’s employment agreement,vested and settled in April 2014. (2)$15 million in aggregate fair value of shares of common stock, awarded under the terms of the employment andseparation agreements with our former CEO. The fair value of all share-based payment awards are estimated using a Black-Scholes option pricing model with thefollowing assumptions for fiscal years 2016, 2015 and 2014: ASSUMPTIONS USED FOR FAIR VALUE OF STOCK OPTION GRANTS Fiscal Years Ended the Last Day of February, 2016 2015 2014Range of risk free interest rates used0.9% - 1.5%1.2% - 1.5%0.6% - 1.3%Expected dividend rate0.0%0.0%0.0%Weighted average volatility rate39.1%48.0%38.8%Range of expected volatility rates used35.9% - 39.7%35.3% - 50.5%34.0% - 41.7%Range of expected terms used (in years)4.1 - 4.44.1 - 4.44.1 - 4.4 The risk-free interest rate is based on U.S. Treasury securities with maturities equal to the expected life of the share-based payments. The dividend yield is computed as zero because the Company has not historically paid dividends nordoes it expect to do so at this time. Expected volatility is based on a weighted average of the market implied volatilityand historical volatility over the expected life of the underlying share-based payments. The Company uses its historicalexperience to estimate the expected life of each stock-option grant and also to estimate the impact of exercise,forfeitures, termination, and holding period behavior for fair value expensing purposes.120 Table of ContentsA summary of stock option activity under all the Company’s share-based compensation plans follows: SUMMARY OF STOCK OPTION ACTIVITY(in thousands, except contractual term and per share data) Weighted WeightedWeightedAverage AverageAverageRemaining ExerciseGrant DateContractual PriceFair ValueTermIntrinsic Options(per share)(per share)(in years)ValueOutstanding at March 1, 2013864$29.89$11.986.26$6,209Grants26436.4511.61Exercises(239)25.364,663Forfeitures / expirations(50)33.55Outstanding at February 28, 201483933.0312.386.4827,081Grants25763.8425.22Exercises(187)29.706,498Forfeitures / expirations(141)40.67Outstanding at February 28, 201576842.7616.286.5926,008Grants18688.1728.82Exercises(178)37.869,480Forfeitures / expirations(127)59.01Outstanding at February 29, 2016649$53.94$19.526.13$26,847 Exercisable at February 29, 2016128$36.26$14.275.04$7,563 A summary of non-vested stock option activity and changes under all the Company’s share-based compensation plansfollows: NON-VESTED STOCK OPTION ACTIVITY(in thousands, except per share data) Weighted Average Non-Grant Date VestedFair Value Options(per share)Outstanding at March 1, 2013689$12.62Grants26411.61Vested or forfeited(225)11.06Outstanding at February 28, 201472812.74Grants25725.22Vested or forfeited(311)13.87Outstanding at February 28, 201567416.98Grants18628.82Vested or forfeited(339)17.59Outstanding at February 29, 2016521$20.81 121 Table of ContentsA summary of restricted stock award activity under the Company’s 2008 Stock Incentive Plan follows: SUMMARY OF RESTRICTED STOCK AWARD ACTIVITY(in thousands, except per share data) Weighted Average RestrictedGrant Date StockFair ValueFair Value Awards(per share)OutstandingDue for issue at March 1, 2013 (1) 160 $35.55 $5,920Earned (2) 62 67.10 Vested and issued (1) (160) 35.55 Due for Issue at February 28, 2014 62 67.10 4,073Vested and issued (2) (62) 67.10 Due for issue at February 28, 2015 - - -Granted (3) 2 89.12 Vested and issued (3) (2) 89.12 Due for issue at February 29, 2016 - $ - $ -The schedule above includes the following awards earned based on fiscal years 2013 and 2014 performance and vestedin accordance with the terms of our former CEO’s employment agreement: (1)Fiscal year 2013 RSAs, which vested on February 28, 2014. (2)Fiscal year 2014 RSAs, which vested on April 22, 2014. In addition, the following award was granted to our current CEO: (3)Fiscal year 2016 RSA, which was granted and vested on May 8, 2015. For further information regarding the former CEO’s employment agreement, see Note (13) to these consolidatedfinancial statements under the subheading “Employment Contracts and Related Matters.” 122 Table of ContentsA summary of restricted stock unit activity and changes under the Company’s 2008 Stock Incentive Plan follows: SUMMARY OF RESTRICTED STOCK UNIT ACTIVITY(in thousands, except per share data) Weighted Average RestrictedGrant Date StockFair ValueFair Value Units(per share)OutstandingOutstanding at March 1, 2013700$32.88$25,956Vested (1)(100)32.88Forfeited (2)(500)32.88Outstanding at February 28, 2014 (3)10032.886,531Granted (4)11858.35Vested (3)(100)32.88Outstanding at February 28, 201511858.359,041Granted (4)9576.62Vested - -Outstanding at February 29, 2016213$66.50$20,311The schedule above includes the following awards and forfeitures recognized in accordance with the terms of ourformer CEO’s employment agreement: (1)Includes fiscal year 2013 PSUs for 100,000 shares of common stock. On April 22, 2013, PSUs for 33,400 shares ofcommon stock vested and settled at a fair value of $35.55 per share. On February 28, 2014, PSUs for 66,600 sharesof common stock vested and settled at a fair value of $65.31 per share. (2)PSUs for 500,000 shares of common stock were forfeited. (3)Includes fiscal year 2014 PSUs for 100,000 shares of common stock, which were vested and settled on April 22,2014 at a fair value of $67.10 per share. In addition, the following awards were granted to our current CEO and members of management: (4)Includes target level RSUs and PSUs granted in connection with long-term incentive compensation for fiscal years2015 and 2016. A summary of our total unrecognized share-based compensation expense as of February 29, 2016 is as follows: UNRECOGNIZED SHARE-BASED COMPENSATION EXPENSE(in thousands, except weighted average expense period data) Weighted Average UnrecognizedPeriod of CompensationRecognition Expense(in months)Stock options$5,67033.8Restricted stock units (RSUs and PSUs)7,47016.9 NOTE 16 – DEFINED CONTRIBUTION PLANS We sponsor defined contribution savings plans in the U.S. and other countries where we have employees. Totalmatching contributions made to these savings plans for the fiscal years ended 2016, 2015 and 2014 were $3.45, $3.21and $2.89 million, respectively.123 Table of ContentsNOTE 17 – ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The changes in accumulated other comprehensive income (loss) by component and related tax effects for fiscal years2016 and 2015 were as follows: CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(in thousands) Unrealized Holding Gains (Losses) on Cash Flow Hedges Interest Rate Foreign Currency Swaps Contracts (1) TotalBalance at February 28, 2014 $(797) $(294) $(1,091)Other comprehensive income before reclassification 28 434 462Amounts reclassified out of accumulated other comprehensive income 1,199 (176) 1,023Tax effects (430) (40) (470)Other comprehensive income (loss) 797 218 1,015Balance at February 28, 2015 - (76) (76)Other comprehensive income before reclassification - 1,978 1,978Amounts reclassified out of accumulated other comprehensive income - (1,203) (1,203)Tax effects - (34) (34)Other comprehensive income (loss) - 741 741Balance at February 29, 2016 $ - $665 $665(1)Includes net deferred tax benefits (expense) of $0.00 and $0.03 million at the end of fiscal years 2016 and 2015,respectively. See Notes (1), (11) and (12) to these consolidated financial statements for additional information regarding our hedgingactivities.124 Table of ContentsNOTE 18 – SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED) Selected unaudited quarterly financial data is as follows: SELECTED QUARTERLY FINANCIAL DATA(in thousands, except per share data)Fiscal Year 2016: May August November February TotalSales revenue, net $345,345 $369,129 $445,503 $385,724 $1,545,701Gross profit 143,319 148,005 182,524 162,157 636,005Asset impairment charges 3,000 - - 3,000 6,000Net income 20,410 24,452 46,778 9,588 101,228 Earnings per share (1) Basic 0.72 0.86 1.66 0.34 3.58Diluted 0.70 0.84 1.63 0.34 3.52 Fiscal Year 2015: May August November February TotalSales revenue, net $311,778 $319,949 $435,674 $377,730 $1,445,131Gross profit 119,520 133,744 181,411 164,884 599,559Asset impairment charges 9,000 - - - 9,000Net income 16,398 18,839 55,377 40,550 131,164 Earnings per share (1) Basic 0.56 0.66 1.95 1.42 4.59Diluted 0.55 0.65 1.92 1.40 4.52(1)Earnings per share calculations for each quarter are based on the weighted average number of shares outstandingfor each period, and the sum of the quarterly amounts may not necessarily equal the annual earnings per shareamounts. NOTE 19 – FOURTH QUARTER CHARGES / TRANSACTIONS Fiscal Year 2016 – Our results for the fourth quarter of fiscal year 2016 contained the following transactions of a non-routine nature for which pertinent details are made available in various notes to our consolidated financial statements: ·Certain re-measurement related charges totaling $18.73 million (before and after tax), recorded as a result of achange in the rate used to re-measure our Venezuelan financial statements at February 29, 2016, as furtherdiscussed in Notes (1), (4) and (12); ·Acquisition-related expenses of $0.70 million included in connection with the acquisition of Hydro Flask, whichclosed shortly after the end of fiscal year 2016, as further discussed in Note (21); ·A $3.00 million ($2.66 million after tax) impairment of an indefinite-lived trademark, as further discussed in Notes(1) and (5); and ·The recognition of a charge totaling $17.83 million ($17.79 million after tax), associated with thermometer patentlitigation still subject to further post-trial motions and appeal, as discussed in Note (13). Fiscal Year 2015 – Our results for the fourth quarter of fiscal year 2015 did not contain any transactions of a non-routine nature. Fiscal Year 2014 – Our results for the fourth quarter of fiscal year 2014 included a charge of $16.34 million (after tax)in connection with payments, including associated legal and administrative costs, required as a result of our formerCEO’s separation from service, as further discussed in Notes (13), (14) and (15) to these consolidated financialstatements.125 Table of ContentsNOTE 20 – SEGMENT AND GEOGRAPHIC INFORMATION The following table contains segment information for the fiscal years covered by our consolidated financial statements: SEGMENT INFORMATION(in thousands) NutritionalFiscal Year 2016HousewaresHealth & HomeSupplementsBeautyTotalSales revenue, net$310,663$642,735$153,126$439,177$1,545,701Asset impairment charges - - -6,0006,000Operating income56,65938,07811,44624,432130,615Identifiable assets614,489723,337219,406312,4111,869,643Capital and intangible asset expenditures1,5609,1313,9275,98520,603Depreciation and amortization4,18321,3009,4247,84242,749 NutritionalFiscal Year 2015HousewaresHealth & HomeSupplements (1)BeautyTotalSales revenue, net$296,252$613,253$100,395$435,231$1,445,131Asset impairment charges - - -9,0009,000Operating income59,39250,8219,51241,994161,719Identifiable assets397,956683,533218,181354,0851,653,755Capital and intangible asset expenditures2,0192,6026131,2876,521Depreciation and amortization3,61520,5325,38010,12639,653 NutritionalFiscal Year 2014HousewaresHealth & HomeSupplementsBeautyTotalSales revenue, net$274,478$568,075 -$474,600$1,317,153Asset impairment charges - - -12,04912,049Operating income50,82820,764 -45,508117,100Identifiable assets369,698676,131 -487,4731,533,302Capital and intangible asset expenditures85122,934 -16,67840,463Depreciation and amortization3,46119,318 -11,06033,839(1)The Nutritional Supplements segment includes eight months of operating results for fiscal year 2015. The segmentwas acquired on June 30, 2014. Operating income includes acquisition-related expenditures of $3.61 million forfiscal year 2015. For further information regarding the acquisition, see Note (6) to these consolidated financialstatements. We compute segment operating income based on net sales revenue, less cost of goods sold, SG&A and any assetimpairment charges associated with the segment. The SG&A used to compute each segment’s operating income isdirectly associated with the segment, plus shared service and corporate overhead expenses that are allocable to thesegment. In fiscal year 2016, we began making an allocation of shared service and corporate overhead costs to theNutritional Supplements segment. For the fiscal year ended February 29, 2016, those allocations totaled $4.69 million.We do not allocate nonoperating income and expense, including interest or income taxes, to operating segments.126 Table of ContentsOur domestic and international net sales revenue and long-lived assets were as follows: GEOGRAPHIC INFORMATION(in thousands) Fiscal Years Ended the Last Day of February, 2016 2015 2014SALES REVENUE, NET:United States$1,233,464$1,139,959$1,019,525International312,237305,172297,628Total$1,545,701$1,445,131$1,317,153 LONG-LIVED ASSETS:United States$610,038$636,089$444,788International:Barbados315,182319,298324,399Other international171,699133,608148,639Subtotal486,881452,906473,038Total$1,096,919$1,088,995$917,826 The table above classifies assets based upon the country where we hold legal title. Worldwide sales to our largest customer and its affiliates accounted for approximately 16, 18 and 19 percent of our netsales revenue in fiscal years 2016, 2015 and 2014, respectively. Sales to this customer are made within the Beauty andHealth & Home segments. Of these sales, approximately 94, 84 and 92 percent were within the U.S. during fiscal years2016, 2015 and 2014, respectively. Sales to our second largest customer accounted for approximately 8, 9 and 11 percent of our net sales revenue in fiscalyears ending 2016, 2015 and 2014, respectively. Sales to this customer are made across all segments, primarily withinthe United States and Canada. No other customers accounted for 10 percent or more of net sales revenue during thosefiscal years. NOTE 21 – SUBSEQUENT EVENT On March 18, 2016, the Company completed its acquisition of all membership units of Steel Technology, LLC, doingbusiness as Hydro Flask. Hydro Flask is a leading designer, distributor and marketer of high performance insulatedstainless steel food and beverage containers for active lifestyles. Hydro Flask adds a fast growing brand that has builtequity among outdoor and active lifestyle enthusiasts with a product lineup, innovation pipeline and margin profile thatcomplements, and will operate in, our Housewares segment. The acquisition extends the segment’s reach into theoutdoor and athletic specialty, natural foods and e-commerce channels. The aggregate purchase price for the transactionwas approximately $210 million in cash, subject to customary adjustments. The purchase price was funded fromborrowings under our Credit Agreement. Hydro Flask calendar year 2015 revenue was approximately $54 million.Significant assets acquired include inventory, property and equipment, trademarks, customer lists, product technology,and goodwill.127 Table of ContentsHELEN OF TROY LIMITED AND SUBSIDIARIESSchedule II - Valuation and Qualifying Accounts(in thousands) Additions Charged toNet charge Beginningcost and(credit) toEndingDescriptionBalanceexpenses (1)sales revenue (2)Deductions (3)BalanceYear Ended February 29, 2016Allowances for doubtful accounts$1,849$225$ -$341$1,733Allowances for back-to-stock returns4,033 -132 -$4,165Year Ended February 29, 2015Allowances for doubtful accounts$2,127$299$ -$577$1,849Allowances for back-to-stock returns2,552 -1,481 -$4,033 Year Ended February 29, 2014Allowances for doubtful accounts$1,764$400$ -$37$2,127Allowances for back-to-stock returns3,267 -(715) -$2,552(1)Represents periodic charges to the provision for doubtful accounts. (2)Represents net charges (credits) during the period to sales returns and allowances. Net charges to the allowance forback-to-stock returns for fiscal year 2015 include $1.40 million of initial back-to-stock reserves recorded throughpurchase accounting upon the acquisition of Healthy Directions. For more information regarding the acquisition ofHealthy Directions, see Note (6) to the accompanying consolidated financial statements. (3)Represents write-offs of doubtful accounts, net of recoveries of previously reserved amounts. 128 Table of ContentsITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING ANDFINANCIAL DISCLOSURE Not applicable. ITEM 9A. CONTROLS AND PROCEDURES EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES Under the supervision and with the participation of our Company’s management, including the Chief ExecutiveOfficer (CEO) and Chief Financial Officer (CFO), we have evaluated the effectiveness of the design and operation ofour disclosure controls and procedures as defined in Rule 13a-15(e) promulgated under the Exchange Act as ofFebruary 29, 2016. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls andprocedures are effective to ensure that information we are required to disclose in reports that we file or submit under theExchange Act is accumulated and communicated to management, including the CEO and CFO, as appropriate to allowtimely decisions regarding required disclosure and is recorded, processed, summarized, and reported within the timeperiods specified in the SEC’s rules and forms. MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING The management’s report on internal control over financial reporting and the attestation report on internalcontrols over financial reporting of the independent registered public accounting firm required by this item are set forthunder Item 8., “Financial Statements and Supplementary Data” of this report on pages 79 through 80, and areincorporated herein by reference. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING In connection with the evaluation described above, we identified no change in our internal control overfinancial reporting as defined in Rule 13a-15(f) promulgated under the Exchange Act that occurred during our fiscalyear ended February 29, 2016, that has materially affected, or is reasonably likely to materially affect, our internalcontrol over financial reporting. 129 Table of ContentsPART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Information in our Proxy Statement for the 2016 Annual General Meeting of Shareholders (the “ProxyStatement”) is incorporated by reference in response to this Item 10, as noted below: ·Information about our Directors who are standing for re-election is set forth under “Election of Directors”; ·Information about our executive officers is set forth under “Executive Officers”; ·Information about our Audit Committee, including members of the committee, and our designated “auditcommittee financial experts” is set forth under “Corporate Governance” and “Board Committees andMeetings”; and ·Information about Section 16(a) beneficial ownership reporting compliance is set forth under “Section 16(a)Beneficial Ownership Reporting Compliance.” We have adopted a Code of Ethics governing our Chief Executive Officer, Chief Financial Officer, PrincipalAccounting Officer, and finance department members. The full text of our Code of Ethics is published on our website,at www.hotus.com, under the “Investor Relations-Corporate Governance” caption. We intend to disclose futureamendments to, or waivers from, certain provisions of this Code on our website or in a current report on Form 8-K. ITEM 11. EXECUTIVE COMPENSATION Information set forth under the captions “Director Compensation”; “Executive Compensation”; “CompensationDiscussion and Analysis”; “Compensation Committee Interlocks and Insider Participation”; and “Report of theCompensation Committee” in our Proxy Statement is incorporated by reference in response to this Item 11. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT ANDRELATED SHAREHOLDER MATTERS Information set forth under the captions “Security Ownership of Certain Beneficial Owners and Management”and “Executive Compensation” in our Proxy Statement is incorporated by reference in response to this Item 12. ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORINDEPENDENCE Information set forth under the captions “Certain Relationships - Related Person Transactions”; “CorporateGovernance”; and “Board Committees and Meetings” in our Proxy Statement is incorporated by reference in responseto this Item 13. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES Information set forth under the caption “Audit and Other Fees Paid to our Independent Registered PublicAccounting Firm” in our Proxy Statement is incorporated by reference in response to this Item 14. 130 Table of ContentsPART IV ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES (a)1.Financial Statements: See “Index to Consolidated Financial Statements” under Item 8 on page 78 of thisreport 2.Financial Statement Schedule: See “Schedule II” on page 128 of this report 3.ExhibitsThe exhibit numbers succeeded by an asterisk (*) indicate exhibits physically filed with this Form 10-K. The exhibit numberssucceeded by an asterisk (**) indicate exhibits furnished with this Form 10-K that are not deemed filed for purposes of Section18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability. All other exhibit numbers indicate exhibitsfiled by incorporation by reference. Exhibit numbers succeeded by a cross (†) are management contracts or compensatory plansor arrangements.2.1 Agreement and Plan of Merger dated as of December 8, 2010, among Helen of Troy Texas Corporation,KI Acquisition Corp., Kaz, Inc., the Company, and the Kaz, Inc. shareholders party thereto(incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with theSecurities and Exchange Commission on December 9, 2010).3.1 Memorandum of Association (incorporated by reference to Exhibit 3.1 to the Company's RegistrationStatement on Form S-4, File No. 33-73594, filed with the Securities and Exchange Commission onDecember 30, 1993 (the “1993 S-4”)).3.2 Bye-Laws, as amended (incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report onForm 10-Q for the period ending August 31, 2007, filed with the Securities and Exchange Commissionon October 10, 2007).4.1 Registration Rights (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statementon Form S-3, File No. 33-208470, filed with the Securities and Exchange Commission on December 11,2015).10.1† Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 of the Company'sAnnual Report on Form 10-K for the fiscal year ended February 28, 2014, filed with the Securities andExchange Commission on April 29, 2014 (the “2014 10-K”)).10.2† Amended and Restated Helen of Troy Limited 1998 Stock Option and Restricted Stock Plan(incorporated by reference to Appendix A to the Company's Definitive Proxy Statement on Schedule14A, File Number 001-14669, filed with the Securities and Exchange Commission on June 15, 2005).10.3† Form of Helen of Troy Limited Nonstatutory Stock Option Agreement (incorporated by reference toExhibit 10.25 of the Company's Annual Report on Form 10-K for the fiscal year ended February 28,2006, filed with the Securities and Exchange Commission on May 15, 2006 (the “2006 10-K”)).10.4† Form of Helen of Troy Limited Incentive Stock Option Agreement (incorporated by reference toExhibit 10.26 of the 2006 10-K).10.5† Helen of Troy Limited 2008 Employee Stock Purchase Plan (incorporated by reference to Appendix Ato the (incorporated by reference to Appendix A to the Company's Definitive Proxy Statement onSchedule 14A filed with the Securities and Exchange Commission on June 27, 2008 (the “2008 ProxyStatement”)).10.6† Helen of Troy Limited 2008 Non-Employee Directors Stock Incentive Plan (incorporated by referenceto Appendix C to the 2008 Proxy Statement).10.7† Form of Restricted Stock Agreement for the Company’s 2008 Non-Employee Directors Stock IncentivePlan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filedwith the Securities and Exchange Commission on August 26, 2009).10.8 Note Purchase Agreement, dated January 12, 2011, by and among Helen of Troy, L.P., the Company,Helen of Troy Limited, a Barbados company, and the purchasers party thereto (incorporated byreference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities andExchange Commission on January 18, 2011).131 Table of Contents10.9† Helen of Troy Limited Amended and Restated 2008 Stock Incentive Plan (incorporated by reference toExhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and ExchangeCommission on August 25, 2015).10.10† Amended and Restated Helen of Troy Limited 2011 Annual Incentive Plan (incorporated by referenceto Exhibit 10.11 of the 2015 10-K).10.11 Loan Agreement, dated as of March 1, 2013, by and between Kaz USA, Inc. and Mississippi BusinessFinance Corporation (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K, filed with the Securities and Exchange Commission on March 26, 2013).10.12 Guaranty Agreement, dated as of March 1, 2013, by Helen of Troy Limited and certain of itssubsidiaries in favor of Bank of America, N.A. (incorporated by reference to Exhibit 10.2 to theCompany’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on March26, 2013).10.13 Trust Indenture, dated as of March 1, 2013 between Mississippi Business Finance Corporation andDeutsche Bank National Trust, as trustee (incorporated by reference to Exhibit 10.2 to the Company’sCurrent Report on Form 8-K, filed with the Securities and Exchange Commission on March 26, 2013).10.14† Form of Helen of Troy Limited Stock Option Agreement (incorporated by reference to Exhibit 10.34 tothe Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2013, filed with theSecurities and Exchange Commission on April 29, 2013 (the “2013 10-K”)).10.15† Form of Restricted Stock Agreement for the Company’s 2008 Non-Employee Directors Stock IncentivePlan (incorporated by reference to Exhibit 10.35 of the 2013 10-K).10.16† Employment Agreement among Helen of Troy Nevada Corporation, Helen of Troy Limited and JulienMininberg, dated January 14, 2014 (incorporated by reference to Exhibit 10.1 to the Company’s CurrentReport on Form 8-K, filed with the Securities and Exchange Commission on January 16, 2014).10.17† Separation Agreement among Helen of Troy Nevada Corporation, Helen of Troy Limited, Helen ofTroy Limited (a Barbados company) and Gerald J. Rubin, dated January 14, 2014 (incorporated byreference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Securities andExchange Commission on January 16, 2014).10.18 First Amendment to Guaranty Agreement, dated as of February 7, 2014, made by Helen of Troy, L.P.,Helen of Troy Limited, a Barbados company, HOT Nevada, Inc, Helen of Troy Nevada Corporation,Helen of Troy Texas Corporation, Idelle Labs Ltd., OXO International Ltd., Helen of Troy MacaoCommercial Offshore Limited, Kaz, Inc., Kaz USA, Inc., Kaz Canada, Inc., and Pur Water PurificationProducts, Inc., in favor of Bank of America, N.A. (incorporated by reference to Exhibit 10.2 to theCompany's Current Report on Form 8-K, filed with the Securities and Exchange Commission onFebruary 10, 2014).10.19 Second Amendment to Guaranty Agreement, dated as of June 11, 2014, made by Helen of Troy Limitedand certain of its subsidiaries in favor of Bank of America, N.A. (incorporated by reference to Exhibit10.1 to the Company's Current Report on Form 8-K, filed with the Securities and ExchangeCommission on June 17, 2014).10.20 Amended and Restated Credit Agreement dated January 16, 2015, by and among Helen of Troy, L.P., aTexas limited partnership, Helen of Troy Limited, a Bermuda company, Bank of America, N.A., asadministrative agent, and the other lenders party thereto (incorporated by reference to Exhibit 10.1 tothe Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission onJanuary 20, 2015).10.21 Guaranty, dated January 16, 2015, made by Helen of Troy Limited and certain of its subsidiaries infavor of Bank of America, N.A. and other lenders, pursuant to the Amended and Restated CreditAgreement, dated January 16, 2015 (incorporated by reference to Exhibit 10.2 to the Company'sCurrent Report on Form 8-K, filed with the Securities and Exchange Commission on January 20, 2015).10.22 Third Amendment to Guaranty Agreement, dated as of January 16, 2015, made by Helen of TroyLimited and certain of its subsidiaries in favor of Bank of America, N.A. (incorporated by reference toExhibit 10.3 to the Company's Current Report on Form 8-K, filed with the Securities and ExchangeCommission on January 20, 2015).132 Table of Contents 10.23 First Supplemental Trust Indenture, dated as of March 1, 2014, by and between Mississippi BusinessFinance Corporation and Deutsche Bank National Trust, as trustee (incorporated by reference to Exhibit10.24 of the 2015 10-K).10.24 Second Supplemental Trust Indenture, dated as of February 18, 2015 but effective February 1, 2015, byand between Mississippi Business Finance Corporation and Deutsche Bank National Trust, as trustee(incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with theSecurities and Exchange Commission on February 23, 2015).10.25† Performance Restricted Stock Unit Agreement by and between Helen of Troy Limited and Julien R.Mininberg, granted May 22, 2014 (incorporated by reference to Exhibit 10.1 to the Company’s CurrentReport on Form 8-K, filed with the Securities and Exchange Commission on August 7, 2015).10.26†Performance Restricted Stock Unit Agreement by and between Helen of Troy Limited and Julien R.Mininberg, granted March 1, 2015 (incorporated by reference to Exhibit 10.2 to the Company’s CurrentReport on Form 8-K, filed with the Securities and Exchange Commission on August 7, 2015).10.27† Amended and restated Employment Agreement among Helen of Troy Nevada Corporation, Helen ofTroy Limited and Julien Mininberg, dated January 7, 2016 (incorporated by reference to Exhibit 10.1 tothe Company's Quarterly Report on Form 10-Q for the period ending November 30, 2015, filed with theSecurities and Exchange Commission on January 11, 2016).21* Subsidiaries of the Registrant.23.1* Consent of Independent Registered Public Accounting Firm, Grant Thornton LLP.31.1* Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) pursuant toSection 302 of the Sarbanes-Oxley Act of 2002.31.2* Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) pursuant toSection 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 Document101.SCH* XBRL Taxonomy Extension Schema101.CAL* XBRL Taxonomy Extension Calculation Linkbase101.DEF* XBRL Taxonomy Extension Definition Linkbase101.LAB* XBRL Taxonomy Extension Label Linkbase101.PRE* XBRL Taxonomy Extension Presentation Linkbase 133 Table of ContentsSIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused thisreport to be signed on its behalf by the undersigned, thereunto duly authorized. HELEN OF TROY LIMITED By: /s/ Julien R. Mininberg Julien R. Mininberg Chief Executive Officer and Director April 29, 2016 Pursuant to the requirements of the Exchange Act, this report has been signed below by the following personson behalf of the registrant and in the capacities and on the dates indicated. /s/ Julien R. Mininberg/s/ Brian L. GrassJulien R. MininbergBrian L. GrassChief Executive Officer, Director and Principal ExecutiveOfficerApril 29, 2016 Chief Financial Officerand Principal Financial OfficerApril 29, 2016 /s/ Richard J. Oppenheim/s/ Timothy F. MeekerRichard J. OppenheimTimothy F. MeekerFinancial Controller and Principal Accounting OfficerDirector, Chairman of the BoardApril 29, 2016April 29, 2016 /s/ Gary B. Abromovitz/s/ John B. ButterworthGary B. AbromovitzJohn B. ButterworthDirector, Deputy Chairman of the BoardDirectorApril 29, 2016April 29, 2016 /s/ Alexander M. Davern/s/ Beryl B. RaffAlexander M. DavernBeryl B. RaffDirectorDirectorApril 29, 2016April 29, 2016 /s/ William F. Susetka/s/ Darren G. WoodyWilliam F. SusetkaDarren G. WoodyDirectorDirectorApril 29, 2016April 29, 2016 134 Table of ContentsINDEX TO EXHIBITS The exhibit numbers succeeded by an asterisk (*) indicate exhibits physically filed with this Form 10-K. The exhibitnumbers succeeded by an asterisk (**) indicate exhibits furnished with this Form 10-K that are not deemed filed forpurposes of Section 18 of the Securities Exchange Act of 1934 and otherwise are not subject to liability. All otherexhibit numbers indicate exhibits filed by incorporation by reference. Exhibit numbers succeeded by a cross (†) aremanagement contracts or compensatory plans or arrangements. 2.1 Agreement and Plan of Merger dated as of December 8, 2010, among Helen of Troy Texas Corporation,KI Acquisition Corp., Kaz, Inc., the Company, and the Kaz, Inc. shareholders party thereto(incorporated by reference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with theSecurities and Exchange Commission on December 9, 2010).3.1 Memorandum of Association (incorporated by reference to Exhibit 3.1 to the Company's RegistrationStatement on Form S-4, File No. 33-73594, filed with the Securities and Exchange Commission onDecember 30, 1993 (the “1993 S-4”)).3.2 Bye-Laws, as amended (incorporated by reference to Exhibit 3.2 to the Company's Quarterly Report onForm 10-Q for the period ending August 31, 2007, filed with the Securities and Exchange Commissionon October 10, 2007).4.1 Registration Rights (incorporated by reference to Exhibit 4.3 to the Company’s Registration Statementon Form S-3, File No. 33-208470, filed with the Securities and Exchange Commission on December 11,2015).10.1† Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 of the Company'sAnnual Report on Form 10-K for the fiscal year ended February 28, 2014, filed with the Securities andExchange Commission on April 29, 2014 (the “2014 10-K”)).10.2† Amended and Restated Helen of Troy Limited 1998 Stock Option and Restricted Stock Plan(incorporated by reference to Appendix A to the Company's Definitive Proxy Statement on Schedule14A, File Number 001-14669, filed with the Securities and Exchange Commission on June 15, 2005).10.3† Form of Helen of Troy Limited Nonstatutory Stock Option Agreement (incorporated by reference toExhibit 10.25 of the Company's Annual Report on Form 10-K for the fiscal year ended February 28,2006, filed with the Securities and Exchange Commission on May 15, 2006 (the “2006 10-K”)).10.4† Form of Helen of Troy Limited Incentive Stock Option Agreement (incorporated by reference toExhibit 10.26 of the 2006 10-K).10.5† Helen of Troy Limited 2008 Employee Stock Purchase Plan (incorporated by reference to Appendix Ato the (incorporated by reference to Appendix A to the Company's Definitive Proxy Statement onSchedule 14A filed with the Securities and Exchange Commission on June 27, 2008 (the “2008 ProxyStatement”)).10.6† Helen of Troy Limited 2008 Non-Employee Directors Stock Incentive Plan (incorporated by referenceto Appendix C to the 2008 Proxy Statement).10.7† Form of Restricted Stock Agreement for the Company’s 2008 Non-Employee Directors Stock IncentivePlan (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filedwith the Securities and Exchange Commission on August 26, 2009).10.8 Note Purchase Agreement, dated January 12, 2011, by and among Helen of Troy, L.P., the Company,Helen of Troy Limited, a Barbados company, and the purchasers party thereto (incorporated byreference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities andExchange Commission on January 18, 2011).10.9† Helen of Troy Limited Amended and Restated 2008 Stock Incentive Plan (incorporated by reference toExhibit 10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and ExchangeCommission on August 25, 2015).10.10† Amended and Restated Helen of Troy Limited 2011 Annual Incentive Plan (incorporated by reference toExhibit 10.11 of the 2015 10-K).10.11 Loan Agreement, dated as of March 1, 2013, by and between Kaz USA, Inc. and Mississippi BusinessFinance Corporation (incorporated by reference to Exhibit 10.1 to the Company’s Current Report onForm 8-K, filed with the Securities and Exchange Commission on March 26, 2013).135 Table of Contents10.12 Guaranty Agreement, dated as of March 1, 2013, by Helen of Troy Limited and certain of itssubsidiaries in favor of Bank of America, N.A. (incorporated by reference to Exhibit 10.2 to theCompany’s Current Report on Form 8-K, filed with the Securities and Exchange Commission on March26, 2013).10.13 Trust Indenture, dated as of March 1, 2013 between Mississippi Business Finance Corporation andDeutsche Bank National Trust, as trustee (incorporated by reference to Exhibit 10.2 to the Company’sCurrent Report on Form 8-K, filed with the Securities and Exchange Commission on March 26, 2013).10.14† Form of Helen of Troy Limited Stock Option Agreement (incorporated by reference to Exhibit 10.34 tothe Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2013, filed with theSecurities and Exchange Commission on April 29, 2013 (the “2013 10-K”)).10.15† Form of Restricted Stock Agreement for the Company’s 2008 Non-Employee Directors Stock IncentivePlan (incorporated by reference to Exhibit 10.35 of the 2013 10-K).10.16† Employment Agreement among Helen of Troy Nevada Corporation, Helen of Troy Limited and JulienMininberg, dated January 14, 2014 (incorporated by reference to Exhibit 10.1 to the Company’s CurrentReport on Form 8-K, filed with the Securities and Exchange Commission on January 16, 2014).10.17† Separation Agreement among Helen of Troy Nevada Corporation, Helen of Troy Limited, Helen ofTroy Limited (a Barbados company) and Gerald J. Rubin, dated January 14, 2014 (incorporated byreference to Exhibit 10.2 to the Company’s Current Report on Form 8-K, filed with the Securities andExchange Commission on January 16, 2014).10.18 First Amendment to Guaranty Agreement, dated as of February 7, 2014, made by Helen of Troy, L.P.,Helen of Troy Limited, a Barbados company, HOT Nevada, Inc, Helen of Troy Nevada Corporation,Helen of Troy Texas Corporation, Idelle Labs Ltd., OXO International Ltd., Helen of Troy MacaoCommercial Offshore Limited, Kaz, Inc., Kaz USA, Inc., Kaz Canada, Inc., and Pur Water PurificationProducts, Inc., in favor of Bank of America, N.A. (incorporated by reference to Exhibit 10.2 to theCompany's Current Report on Form 8-K, filed with the Securities and Exchange Commission onFebruary 10, 2014).10.19 Second Amendment to Guaranty Agreement, dated as of June 11, 2014, made by Helen of Troy Limitedand certain of its subsidiaries in favor of Bank of America, N.A. (incorporated by reference to Exhibit10.1 to the Company's Current Report on Form 8-K, filed with the Securities and ExchangeCommission on June 17, 2014).10.20 Amended and Restated Credit Agreement dated January 16, 2015, by and among Helen of Troy, L.P., aTexas limited partnership, Helen of Troy Limited, a Bermuda company, Bank of America, N.A., asadministrative agent, and the other lenders party thereto (incorporated by reference to Exhibit 10.1 tothe Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission onJanuary 20, 2015).10.21 Guaranty, dated January 16, 2015, made by Helen of Troy Limited and certain of its subsidiaries infavor of Bank of America, N.A. and other lenders, pursuant to the Amended and Restated CreditAgreement, dated January 16, 2015 (incorporated by reference to Exhibit 10.2 to the Company's CurrentReport on Form 8-K, filed with the Securities and Exchange Commission on January 20, 2015).10.22 Third Amendment to Guaranty Agreement, dated as of January 16, 2015, made by Helen of TroyLimited and certain of its subsidiaries in favor of Bank of America, N.A. (incorporated by reference toExhibit 10.3 to the Company's Current Report on Form 8-K, filed with the Securities and ExchangeCommission on January 20, 2015).10.23 First Supplemental Trust Indenture, dated as of March 1, 2014, by and between Mississippi BusinessFinance Corporation and Deutsche Bank National Trust, as trustee (incorporated by reference to Exhibit10.24 of the 2015 10-K).10.24 Second Supplemental Trust Indenture, dated as of February 18, 2015 but effective February 1, 2015, byand between Mississippi Business Finance Corporation and Deutsche Bank National Trust, as trustee(incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with theSecurities and Exchange Commission on February 23, 2015).136 Table of Contents10.25† Performance Restricted Stock Unit Agreement by and between Helen of Troy Limited and Julien R.Mininberg, granted May 22, 2014 (incorporated by reference to Exhibit 10.1 to the Company’s CurrentReport on Form 8-K, filed with the Securities and Exchange Commission on August 7, 2015). 10.26† Performance Restricted Stock Unit Agreement by and between Helen of Troy Limited and Julien R.Mininberg, granted March 1, 2015 (incorporated by reference to Exhibit 10.2 to the Company’s CurrentReport on Form 8-K, filed with the Securities and Exchange Commission on August 7, 2015).10.27† Amended and restated Employment Agreement among Helen of Troy Nevada Corporation, Helen ofTroy Limited and Julien Mininberg, dated January 7, 2016 (incorporated by reference to Exhibit 10.1 tothe Company's Quarterly Report on Form 10-Q for the period ending November 30, 2015, filed with theSecurities and Exchange Commission on January 11, 2016).21* Subsidiaries of the Registrant.23.1* Consent of Independent Registered Public Accounting Firm, Grant Thornton LLP.31.1* Certification of Chief Executive Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) pursuant toSection 302 of the Sarbanes-Oxley Act of 2002.31.2* Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) pursuant toSection 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 Document101.SCH* XBRL Taxonomy Extension Schema101.CAL* XBRL Taxonomy Extension Calculation Linkbase101.DEF* XBRL Taxonomy Extension Definition Linkbase101.LAB* XBRL Taxonomy Extension Label Linkbase101.PRE* XBRL Taxonomy Extension Presentation Linkbase 137 EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT The following is a list of subsidiaries of the company as of February 29, 2016, omitting subsidiaries which, consideredin the aggregate, would not constitute a significant subsidiary. Name Incorporation Doing Business as Helen of Troy LimitedBarbadosSame Name Helen of Troy Comercial Offshore de MacauLimitadaMacauSame Name Helen of Troy L.P.Texas Limited PartnershipSame Name, Helen of Troy, Belson Products, and Fusion Tools Idelle Labs, Ltd.Texas Limited PartnershipSame Name OXO International Ltd.Texas Limited PartnershipSame Name Fontelux Trading, S.A.UruguaySame Name Healthy Directions, LLCDelawareSame Name Helen of Troy de Mexico S.de R.L. de C.V.MexicoSame Name Kaz, Inc.New YorkSame Name Kaz USA, Inc.MassachusettsSame Name Pur Water Purification Products, Inc.NevadaSame Name Kaz Europe SàrlSwitzerlandSame Name Kaz (Far East) LimitedHong KongSame Name 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of DirectorsHelen of Troy LimitedWe have issued our reports dated April 29, 2016 with respect to the consolidated financial statements, scheduleand internal control over financial reporting included in the Annual Report of Helen of Troy Limited and Subsidiarieson Form 10-K for the year ended February 29, 2016. We hereby consent to the incorporation by reference of saidreports in the Registration Statements of Helen of Troy Limited and Subsidiaries on Forms S-8 (File No. 333-154525,effective October 21, 2008; File No. 333-154526, effective October 21, 2008; File No. 333-153658, effectiveSeptember 24, 2008; File No. 333-67349, effective November 16, 1998; File No. 333-90776, effective June 19, 2002;File No. 333-128832, effective October 5, 2005; and File No. 333-178217, effective November 29, 2011); and Form S-3 (File No. 333-208470, effective December 11, 2015)./s/ GRANT THORNTON LLPDallas, TexasApril 29, 2016  EXHIBIT 31.1CERTIFICATION I, Julien R. Mininberg, certify that: 1.I have reviewed this annual report on Form 10-K of Helen of Troy Limited; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairlypresent in all material respects, the financial condition, results of operations and cash flows of the registrant as of,and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controlsand procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financialreporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to bedesigned under our supervision, to ensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities, particularly during the period inwhich this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reportingto be designed under our supervision, to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles; c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periodcovered by this report based on such evaluation; d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurredduring the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annualreport) that has materially affected, or is reasonably likely to materially affect, the registrant's internal controlover financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal controlover financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (orpersons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarizeand report financial information; and b)Any fraud, whether or not material, that involves management or other employees who have a significant rolein the registrant’s internal control over financial reporting. Date: April 29, 2016 /s/ Julien R. MininbergJulien R. MininbergChief Executive Officer,Director and Principal Executive Officer  EXHIBIT 31.2 CERTIFICATION I, Brian L. Grass, certify that:1.I have reviewed this annual report on Form 10-K of Helen of Troy Limited; 2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of the circumstances under which such statementswere made, not misleading with respect to the period covered by this report; 3.Based on my knowledge, the financial statements, and other financial information included in this report, fairlypresent in all material respects, the financial condition, results of operations and cash flows of the registrant as of,and for, the periods presented in this report; 4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controlsand procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financialreporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to bedesigned under our supervision, to ensure that material information relating to the registrant, including itsconsolidated subsidiaries, is made known to us by others within those entities, particularly during the period inwhich this report is being prepared; b)Designed such internal control over financial reporting, or caused such internal control over financial reportingto be designed under our supervision, to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordance with generallyaccepted accounting principles; c)Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the periodcovered by this report based on such evaluation; d)Disclosed in this report any change in the registrant's internal control over financial reporting that occurredduring the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annualreport) that has materially affected, or is reasonably likely to materially affect, the registrant's internal controlover financial reporting; and 5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal controlover financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (orpersons performing the equivalent functions): a)All significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarizeand report financial information; and b)Any fraud, whether or not material, that involves management or other employees who have a significant rolein the registrant’s internal control over financial reporting. Date: April 29, 2016 /s/ Brian L. GrassBrian L. GrassChief Financial Officerand Principal Financial Officer  EXHIBIT 32CERTIFICATION In connection with the Annual Report of Helen of Troy Limited (the “Company”) on Form 10-K for the fiscal yearended February 29, 2016, as filed with the Securities and Exchange Commission (the “Report”), and pursuant to 18U.S.C., chapter 63, Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, each of theundersigned, the Chief Executive Officer and Director and the Senior Vice President and Chief Financial Officer of theCompany, hereby certifies that to the best of their knowledge: 1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934;and2.The information contained in the Report fairly presents, in all material respects, the financial condition and resultsof operations of the Company. Dated: April 29, 2016 /s/ Julien R. MininbergJulien R. MininbergChief Executive Officer,Director and Principal Executive Officer /s/ Brian L. GrassBrian L. GrassChief Financial Officerand Principal Financial Officer This certification is not deemed to be “filed” for purposes of section 18 of the Securities Exchange Act, or otherwisesubject to the liability of that section. This certification is not deemed to be incorporated by reference into any filingunder the Securities Act of 1933 or Securities Exchange Act of 1934, except to the extent that the Company specificallyincorporates it by reference. 

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