Helen of Troy
Annual Report 2017

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 28, 2017 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number 001-14669HELEN 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 ☐ Smaller reporting company ☐Non-accelerated filer ☐(Do not check if a smaller reporting company) Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐ 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, 2016, based upon the closingprice of the common shares as reported by The NASDAQ Global Select Market on such date, was approximately $2,511,907,494. As of April 21, 2017 there were 27,053,836 common shares, $0.10 par value per share, outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the definitive Proxy Statement for the 2017 Annual General Meeting of Shareholders to be filed within one hundred and twenty days of the fiscalyear ended February 28, 2017 are incorporated by reference into Part III of this report to the extent described herein. Table of ContentsTABLE OF CONTENTS PAGE PART I Item 1.Business2 Item 1A.Risk Factors9 Item 1B.Unresolved Staff Comments19 Item 2.Properties19 Item 3.Legal Proceedings19 Item 4.Mine Safety Disclosures19 PART II Item 5.Market for Registrant's Common Equity, Related Shareholder Matters and IssuerPurchases of Equity Securities20 Item 6.Selected Financial Data23 Item 7.Management's Discussion and Analysis of Financial Condition and Results ofOperations24 Item 7A.Quantitative and Qualitative Disclosures About Market Risk49 Item 8.Financial Statements and Supplementary Data51 Item 9.Changes in and Disagreements with Accountants on Accounting and FinancialDisclosure96 Item 9A.Controls and Procedures96 PART III Item 10.Directors, Executive Officers and Corporate Governance97 Item 11.Executive Compensation97 Item 12.Security Ownership of Certain Beneficial Owners and Management and RelatedShareholder Matters97 Item 13.Certain Relationships and Related Transactions, and Director Independence97 Item 14.Principal Accounting Fees and Services97 PART IV Item 15.Exhibits, Financial Statement Schedules98 Signatures101 1 Table of ContentsEXPLANATORY NOTE In this report and the accompanying consolidated financial statements and notes, unless otherwise indicated or thecontext suggests otherwise, references to “the Company”, “our Company”, “Helen of Troy”, “we”, “us”, or “our”refer to Helen of Troy Limited and its subsidiaries. We refer to the Company’s common shares, par value $0.10 pershare, as “common stock.” References to “EMEA” refer to the combined geographic markets of Europe, the MiddleEast and Africa. We use product and service names in this report for identification purposes only and they may beprotected in the United States and other jurisdictions by trademarks, trade names, service marks, and otherintellectual property rights of the Company and other parties. The absence of a specific attribution in connection withany such mark does not constitute a waiver of any such right. All trademarks, trade names, service marks, and logosreferenced herein belong to their respective owners. References to “fiscal” in connection with a numeric year denotesour fiscal year ending on the last day of February. References to “the FASB” refer to the Financial AccountingStandards Board. References to “GAAP” refer to U.S. generally accepted accounting principles. References to “ASU”refer to the codification of GAAP in the Accounting Standards Updates issued by the FASB. References to “ASC”refer to the codification of GAAP in the Accounting Standards Codification issued by the FASB. PART I Item 1. Business Our CompanyWe incorporated in Texas in 1968 and were reorganized in Bermuda in 1994. We are a leading global consumerproducts company offering creative solutions for our customers through a diversified portfolio of well-recognized andwidely-trusted brands. We have built leading market positions through new product innovation, product quality andcompetitive pricing.Segment and Geographic Information We have four business segments: ·Housewares. Provides a broad range of products to help with food preparation, cooking, cleaning, organization,beverage service, and other tasks to ease everyday living for families. Sales for the segment are primarily toretailers, with some direct-to-consumer product distribution. ·Health and Home. Provides healthcare and home comfort products. Sales for the segment are primarily toretailers, with some direct-to-consumer product distribution. ·Nutritional Supplements. Provides premium branded doctor fomulated nutritional supplements, skincare and painrelief products to help people lead healthier, happier lives. This segment sells primarily direct-to-consumer. ·Beauty. Provides personal care, beauty care and wellness products including hair styling appliances; groomingtools; decorative haircare accessories; and liquid-, solid- and powder-based personal care products. This segmentsells primarily to retailers and beauty supply wholesalers. For more segment and geographic information concerning our net sales revenue, long-lived assets and operatingincome, refer to Note 20 in the accompanying consolidated financial statements.2 Table of ContentsOur Strategic Initiatives In fiscal 2015, we launched a transformational strategy designed to improve the performance of our business segmentsand strengthen our shared service capabilities. This strategy drives our decisions on where we will operate and how wewill achieve our goals in markets around the world. The overall design of our business and organizational plan isintended to create sustainable and profitable growth and improve organizational capability. This strategy encompassesthe following initiatives: Invest in our core businessesWe have developed a portfolio of brands that are market leaders or have a path to grow their market position inattractive categories. We continue to invest behind our most productive brands, which represented approximately 60%of net sales revenue in fiscal 2017. We believe that strategic investment in new products, go-to-market plans andmarketing activities will continue to accelerate the organic growth of these brands. Strategic, disciplined mergers and acquisitionsWe are continually looking for new businesses and opportunities to expand in categories and geographies where webelieve we have critical mass and can develop or sustain a competitive advantage. We will also increase our brandreach through new licensing opportunities when and where it makes sense. We frequently assess our portfolio ofproducts and businesses to ensure each has a role to support our long-term plans. Invest in consumer-centric innovationWe have a long history of developing or acquiring new technologies, new products that improve consumers’ lives andnew designs to differentiate our products from competitors. We continue to focus on innovation, both in our corecategories and product adjacencies. We also focus on initiatives that create commercial value for existing products inorder to increase their appeal and accelerate their organic growth. Consumer shopper preferences and behaviors havetransformed the retail landscape from in-store to omni-channel purchasing experiences. As the retail consumer evolves,we continue to upgrade our digital talent and capabilities and operational capacity to thrive no matter how consumerschoose to buy. Upgrade our organization and people systemsWe believe our employees are our most valuable assets. Attracting, retaining and developing talent is a key focus of ourcompany to ensure we can continue to deliver strong business results. Best in class shared servicesWe have developed a quality, diversified base of suppliers in North America and China. Through our shared servicestructure, we strive to improve our existing supplier base and infrastructure, develop new manufacturing partners,leverage scale, reduce lead times and apply best practices to ensure our products are innovative, on time, on cost andon quality. We also continue to invest in our distribution center capabilities and information technology systems whileapplying discipline and best practices to leverage scale and achieve supply chain excellence. We use a similar approachacross all our shared service functions. Attack wasteWe continue to adopt more efficient and effective approaches to managing people, teams and projects to best respondto today’s complex business environment. We believe that combining the best people and practices with the righttechnology provides a foundation for stable growth. We promote a culture of attacking waste to improve the quality ofour products and services, reduce costs and enhance our capacity to handle increased volume in order to exceed theexpectations of our customers and consumers. Asset efficiency and shareholder friendly policiesAs we manage our businesses for long-term growth and success in the marketplace, we are also looking to manage ouroverall base of assets and capital structure to increase shareholder value. We focus on maximizing cash flow,controlling our costs, return on investment, increasing the efficiency of the capital we deploy, and optimizing workingcapital. We also seek to invest in accretive and strategic acquisitions and, where appropriate, provide a return of capitalto shareholders.3 Table of ContentsOur ProductsThe following table summarizes the types of products we sell by business segment: Segment Product Category Primary ProductsHousewaresFood and Beverage Preparation and StorageFood and beverage preparation tools andgadgets, storage containers and organizationproductsCleaning, Bath and GardenHousehold cleaning products, showerorganization and bathroom accessoriesInfant and ToddlerFeeding and drinking products, child seating,cleaning tools and nursery accessoriesHot and Cold Beverage and Food ContainersInsulated water bottles, jugs, drinkware, travelmugs and food containersHealth & HomeHealthcareThermometers, blood pressure monitors andhumidifiersWater FiltrationFaucet mount water filtration systems andpitcher based water filtration systemsHome EnvironmentAir purifiers, heaters, fans, humidifiers anddehumidifiersNutritional SupplementsVitamins, Minerals and SupplementsHeart, digestive, joint, blood sugar, sleep,brain and vision supportTopical ProductsSkin care, safe beauty and pain relief supportBeautyRetail/Professional Appliances and AccessoriesHair, facial and skin care appliances,grooming brushes, tools and decorative hairaccessoriesGrooming, Skin Care and Hair CareLiquid hair styling, treatment andconditioning products, shampoos, skin careproducts, fragrances, deodorants andantiperspirants Our TrademarksWe sell certain of our products under trademarks licensed from third parties. We also market products under a numberof trademarks that we own. We believe our principal trademarks, both owned and licensed, have high levels of brandname recognition among retailers and consumers throughout the world. Through our favorable association with ourlicensors, we believe we have developed stable, enduring relationships that provide access to unique brands thatcomplement our owned and internally developed 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.4 Table of ContentsThe following table lists some of our key trademarks by segment: Segment Owned LicensedHousewares OXO®, Good Grips®, Hydro Flask®, Soft Works®,OXO tot® Health & Home PUR® Honeywell® , Braun®, Vicks®NutritionalSupplements Omega Q Plus® Resveratrol, ProbioticAdvantage®, OxyRub®, Sleep Answer®, Trilane® Beauty Hot Tools®, Brut®, Pert®, Sure®, Infusium 23® Revlon®, Bed Head® Patents and Other Intellectual PropertyWe maintain utility and design patents in the United States and several foreign countries. We also protect certain detailsabout our processes, products and strategies as trade secrets, keeping confidential the information that we believeprovides us with a competitive advantage. Sales and MarketingWe currently market our products in approximately 75 countries throughout the world. Sales within the United Statescomprised approximately 81%, 80% and 79% of total net sales revenue in fiscal 2017, 2016 and 2015, respectively.Our segments primarily sell their products through mass merchandisers, drugstore chains, warehouse clubs, homeimprovement stores, catalogs, grocery stores, specialty stores, beauty supply retailers, e-commerce retailers,wholesalers, and various types of distributors, as well as directly to consumers. We collaborate extensively with ourretail customers and, in many instances, produce specific versions of our product lines with exclusive designs andpackaging 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 other printedcollateral mailings, online and direct response print, radio and television media. The segment also sells over thetelephone through customer call centers. The segment maintains exclusive development and marketing relationshipswith several medical and wellness professionals, who provide research and advocacy for Company products and arekey components of its marketing and customer outreach programs. The Nutritional Supplements segment does not haveany material formal relationships with any re-distributors, nor does it maintain any field sales force outside of its callcenters. Research and DevelopmentOur research and development activities focus on new, differentiated and innovative products designed to drivesustained organic growth. We continually invest to strengthen our product design and research and developmentcapabilities, including extensive study to gain consumer insight. Information regarding our research and developmentcosts for each of the past three fiscal years is included in Note 1 to consolidated financial statements and is incorporatedby reference herein. 5 Table of ContentsManufacturing and DistributionWe contract with unaffiliated manufacturers, primarily in China and Mexico, to manufacture a significant portion of ourfinished goods for the Beauty appliances and accessories, Housewares, Healthcare, Water Filtration, and HomeEnvironment product categories. The Nutritional Supplements segment and the North American region of thegrooming, skin and hair care category of the Beauty segment source most of their products from U.S. manufacturers.For fiscal years 2017, 2016 and 2015, finished goods manufactured by vendors in the Far East comprisedapproximately 67%, 68% and 67%, respectively, of total finished goods purchased. In total, we occupy approximately 3,480,000 square feet of distribution space in various locations to support ouroperations, 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. CustomersSales to Wal-Mart Stores, Inc. (including its worldwide affiliates) accounted for approximately 15%, 16% and 18% ofour consolidated net sales revenue in fiscal 2017, 2016 and 2015, respectively. No other customers accounted for 10%or more of consolidated net sales revenue during those fiscal years. Sales to our top five customers accounted forapproximately 43%, 40% and 41% percent of our consolidated net sales revenue in fiscal 2017, 2016 and 2015,respectively. Order BacklogWhen placing orders, our individual consumer, retail and wholesale customers usually request that we ship the relatedproducts within a short time frame. As such, there usually is no significant backlog of orders in any of our distributionchannels. SeasonalitySEASONALITY AS A PERCENTAGE OF ANNUAL NET SALES REVENUE Fiscal Years Ended the Last Day of February, Fiscal Quarter Ended 2017 2016 2015 May 22.6% 22.3% 21.6% August 24.0% 23.9% 22.1% November 28.9% 28.8% 30.2% February 24.5% 25.0% 26.1% 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. Competitive ConditionsWe sell our products in markets that are very competitive and mature. Our products compete against similar products ofmany large and small companies, including well-known global competitors. In many of the markets and industrysegments in which we sell our products we compete against other branded products as well as retailers' private-labelbrands. We believe that we have certain key competitive advantages, such as well recognized brands, engineeringexpertise and innovation, sourcing and supply chain know-how, and productive co-development relationships with ourFar East manufacturers. We support our products with advertising, promotions and other marketing activities, as well asan extensive sales force in order to build awareness and to encourage new consumers to try our brands andproducts. We are well positioned in the industry segments and markets in which we operate, often holding a leadershipor significant market share position. We believe these advantages allow us to bring our retailers a value proposition inour products that can significantly out-perform private label products in most categories.6 Table of ContentsWe 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, product claims, ease of ordering, customer service, and cost of delivery. The following table summarizes our primary competitors by business segment: Segment CompetitorHousewares Lifetime Brands, Inc. (KitchenAid), Newell Brands Inc., Simple Human LLC,Newell Brands Inc. (Contigo), Yeti Holdings, Inc. (Yeti), Can’t Live Without It,Inc. (S’well)Health & Home Exergen Corporation, Omron Healthcare, Inc., Crane Engineering, NewellBrands, Lasko Products, LLC., The Clorox Company (Brita), ZeroTechnologies, LLC.NutritionalSupplements Mercola.com, Life Extension, Swanson Health ProductsBeauty Conair, Spectrum Brands Holdings, Inc. (Remington), Newell Brands Inc., TheProcter & Gamble Company, Unilever N.V., Colgate-Palmolive Company Governmental, Regulatory and Environmental MattersOur operations are subject to national, state, local, and provincial jurisdictions’ environmental, health and safety lawsand regulations. 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 the United States. Importing, manufacturing,processing, formulating, packaging, labeling, distributing, selling, and advertising of our Nutritional Supplementssegment products may be subject to regulation by one or more federal or state agencies. The Food and DrugAdministration (the “FDA”) rules impose requirements on the manufacture, packaging, labeling, holding, anddistribution of dietary supplement products. For example, it requires that companies establish extensive writtenprocedures and controls governing various areas and requires identity testing of all incoming ingredients unless acompany successfully petitions for an exemption from this testing requirement in accordance with the regulations. FDAprescribed good manufacturing practices are designed to ensure that dietary supplements and dietary ingredients are notadulterated with contaminants or impurities, and are accurately labeled to reflect the active ingredients and otheringredients in the products. The Federal Trade Commission (the “FTC”) and the FDA share jurisdiction over thepromotion and advertising of dietary supplements. Pursuant to a memorandum of understanding between the twoagencies, the FDA has primary jurisdiction over claims that appear on product labels and labeling and the FTC hasprimary jurisdiction over product advertising. Additionally, an emerging trend with both governments and our retail customers is to prescribe public and private socialaccountability reporting requirements regarding our worldwide business activities. In our product space, somerequirements 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 results ofoperations and consolidated financial condition, nor do we expect it to do so in the foreseeable future. Due to the natureof our7 Table of Contentsoperations and the frequently changing nature of compliance and social reporting standards and technology, we cannotpredict with any certainty that future material capital or operating expenditures will not be required in order to complywith applicable laws, regulations and other reporting mandates. EmployeesAs of February 28, 2017, we employed approximately 1,685 full-time employees worldwide. We also use temporary,part-time and seasonal employees as needed. None of our U.S. employees are covered by a collective bargainingagreement. Certain of our employees in Europe are covered by collective arrangements in accordance with localpractice. We have never experienced a work stoppage, and we believe that we have satisfactory working relations withour employees.Available InformationWe maintain our main Internet site at the following address: 1H1H1H1H1H1H1H1H1H1H1H1H1H1Hhttp://www.hotus.com. The information contained onthis website is not included as a part of, or incorporated by reference into, this report. We make available on or throughour main website’s Investor Relations page under the heading “SEC Filings” certain reports and amendments to thosereports that we file with, or furnish to, the SEC in accordance with the Securities Exchange Act of 1934, as amended(the “Exchange Act”). These include our annual reports on Form 10-K, our quarterly reports on Form 10-Q, our currentreports on Form 8-K, our proxy statements on Schedule 14A, amendments to these reports, and the reports requiredunder Section 16 of the Exchange Act of transactions in our common stock by directors and officers. We make thisinformation available on our website free of charge as soon as reasonably practicable after we electronically file theinformation with, or furnish it to, the SEC. Also, on the Investor Relations page, under the heading “CorporateGovernance,” are the Company’s Code of Ethics, Corporate Governance Guidelines and the Charters of the Committeesof the Board of Directors. 8 Table of Contents Item 1A. Risk FactorsCarefully consider the risks described below and all of the other information included in our Annual Report on Form10-K when deciding whether to invest in our securities or otherwise evaluating our business. If any of the followingrisks or other events or circumstances described elsewhere in this report materialize, our business, operating results orfinancial condition may suffer. In this case, the trading price of our common stock and the value of your investmentmight significantly decline. The risks listed below are not the only risks that we face. Additional risks unknown to us orthat we currently believe are insignificant may also affect our business. 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 during our thirdfiscal quarter, and on the fulfillment of consumer demand throughout the year. We cannot control all of the variousfactors that might affect product delivery to retailers. Vendor production delays, difficulties encountered in shippingfrom overseas, customs clearance delays, and operational issues with any of the third-party logistics providers we use incertain countries are on-going risks of our business. We also rely upon third-party carriers for our product shipmentsfrom our distribution centers to customers. In certain circumstances, we rely on the shipping arrangements our suppliershave made in the case of products shipped directly to retailers from the suppliers. Accordingly, we are subject to risks,including labor disputes, inclement weather, natural disasters, possible acts of terrorism, availability of shippingcontainers, and increased security restrictions associated with the carriers’ ability to provide delivery services to meetour shipping needs. Failure to deliver products to our retailers in a timely and effective manner, often under specialvendor requirements to use specific carriers and delivery schedules, could damage our reputation and brands and resultin loss of customers or reduced orders. Large sophisticated customers may take actions that adversely affect our gross profit and operating results. With the continuing trend towards retail trade consolidation, we are increasingly dependent upon key customers whosebargaining 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 business, operating results and financial condition. In addition, the growth in e-commerce sales, both by large traditional retailers and pure-play online retailers such asAmazon, has increased the size and influence of these types of customers. Certain of these customers source and sellproducts under their own private label brands that compete with our products. As certain large customers and onlineretailers grow even larger and become more sophisticated, they may continue to demand lower pricing, specialpackaging, shorter lead times for the delivery of products, smaller more frequent shipments, or impose otherrequirements on product suppliers. These business demands may relate to inventory practices, logistics or other aspectsof the customer-supplier relationship. If we do not effectively respond to these demands, these customers coulddecrease 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, operating results 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 North Americaand to a lesser extent EMEA, Asia and Latin America. These retail economies are affected primarily by factors such asconsumer demand and the condition of the retail industry, which, in turn, are affected by general economic conditionsand specific events such as natural disasters, terrorist attacks and political unrest. Consumer spending in any geographicregion is generally affected by a number of factors, including local economic conditions, government actions, inflation,interest rates, energy costs, unemployment rates, gasoline prices, and consumer confidence, all of which are beyond ourcontrol. Consumer purchases of discretionary items tend to decline during recessionary periods, when disposableincome is lower, and may impact sales of our products. Any relapse into recession in the United States, the UnitedKingdom, Canada, Mexico or any of the other countries in which we conduct significant business, may continue tocause significant9 Table of Contentsreadjustments in both the volume and mix of our product sales, which could materially and adversely affect ourbusiness, operating results and financial condition. Our operating results are dependent on sales to several large customers and the loss of, or substantial decline in, salesto 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 and operatingresults could suffer if we lost all or a portion of the sales to any one of these customers. In particular, sales to our largestcustomer accounted for approximately 15% of our consolidated net sales revenue in fiscal 2017. While only onecustomer individually accounted for 10% or more of our consolidated net sales revenue in fiscal 2017, sales to our topfive customers accounted for approximately 43% of fiscal 2017 consolidated net sales revenue. We expect that a smallgroup of customers will continue to account for a significant portion of our net sales revenue. Although we have long-standing relationships with our major customers, we generally do not have written agreements that require thesecustomers to buy from us or to purchase a minimum amount of our products. A substantial decrease in sales to any ofour major customers could have a material adverse effect on our financial condition and operating results. We regularlymonitor and evaluate the credit status of our customers and attempt to adjust sales terms as appropriate. Despite theseefforts, a deterioration in the credit worthiness or bankruptcy filing of a key customer could have a material adverseeffect on our business, operating results and financial condition. Expectations regarding recent acquisitions, and any future acquisitions or divestitures, including our ability to realizerelated synergies, along with our ability to effectively integrate acquired businesses or disaggregate divestedbusinesses, may adversely affect the price of our common stock. We continue to look for opportunities to make complementary strategic business and/or brandacquisitions. Additionally, we frequently evaluate our portfolio of business products and may consider divestitures orexits of businesses that we no longer believe to be an appropriate strategic fit. Our financial results could be impactedin the event that changes in the cash flows or other market-based assumptions or conditions cause the value of acquiredassets to fall below book value, or we are not able to deliver the expected benefits or synergies associated withaquisition transactions, which could also have an impact on associated goodwill and intangible assets. Any acquisitionor divestiture, if not favorably received by consumers, shareholders, analysts, and others in the investment community,could have a material adverse effect on the price of our common stock. In addition, any acquisition involves 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 losses or 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. 10 Table of ContentsIf 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-lived intangible assetsrecorded as a result of past acquisitions. We do not amortize goodwill and indefinite-lived intangible assets, but ratherreview them for impairment on an annual basis or more frequently whenever events or changes in circumstancesindicate that their carrying value may not be recoverable. If such circumstances or conditions exist, further steps arerequired in order to determine whether the carrying value of each of the individual assets exceeds its fair market value.If our analysis indicates that an individual asset’s carrying value does exceed its fair market value, the next step is torecord a loss equal to the excess of the individual asset’s carrying value over its fair value. The steps required by GAAPentail significant amounts of judgment and subjectivity. We now complete our analysis of the carrying value of our goodwill and other intangible assets during the fourthquarter of our 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. Due to recent declines in revenue associated with our Nutritional Supplements segment, our annual impairment testingof goodwill and other intangible assets for the segment reflected a fair value that was in excess of the carrying value ofthe segment by a smaller margin than occurred in previous impairment tests. In addition, the fair value of the indefinitelived brand asset was determined to be less than the carrying value and impairments of $9.5 million were recordedduring fiscal 2017. The fair value was determined using primarily a discounted cash flow model and we believe ourassumptions of future revenue, gross margin and operating expenses are reasonable in the circumstances. However, aswe continue to execute our strategy, actual results could differ from our current expectations. To the extent that ourforecasted cash flows were to decline further, it is reasonably likely that we could record impairment expense or incurother charges or losses in the future. We are unable to project what, if any, expense, charges or losses will be in futureperiods. We will continue to closely monitor performance and market conditions relating to this segment and conductour annual test for impairment during the fourth quarter of fiscal 2018. 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 on ourbusiness, operating results and financial condition, particularly if we are unable to hire and integrate suitablereplacements on a timely basis. Further, as we continue to grow our business, we will need to expand our seniormanagement team. If we are unable to attract or retain these persons, this could hinder our ability to grow our businessand could disrupt our operations or otherwise have a material adverse effect on our business. 11 Table of ContentsOur 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. Dollar willaffect our sales and profitability and can result in exchange losses because we have operations and assets locatedoutside the United States. We transact a certain portion of our international business in currencies other than the U.S.Dollar (“foreign currencies”). Such transactions include sales, certain inventory purchases and operating expenses. As aresult, portions of our cash, trade accounts receivable and trade accounts payable are denominated in foreigncurrencies. Accordingly, foreign operations will continue to expose us to foreign currency fluctuations, both forpurposes of actual conversion and financial reporting purposes. Additionally, we purchase a substantial amount of ourproducts from Chinese manufacturers in U.S Dollars. The Chinese Renminbi has fluctuated against the U.S. Dollar inrecent years, devaluing by approximately 5% against the U.S. Dollar during fiscal 2017. Chinese Reminbi currencyfluctuations add volatility to our product costs over time.Where operating conditions permit, we seek to 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 have alsohistorically hedged against certain foreign currency exchange rate-risk by using a series of forward contracts to protectagainst the foreign currency exchange risk inherent in our forecasted transactions denominated in currencies other thanthe U.S. Dollar. We enter into these types of agreements where we believe we have meaningful exposure to foreigncurrency exchange risk and the contract pricing appears reasonable. It is not practical for us to hedge all our exposures,nor are we able to accurately project the possible effect and interplay of all foreign currency fluctuations on translatedamounts or future net income due to our constantly changing exposure to various currencies, the fact that each foreigncurrency reacts differently to the U.S. Dollar and the significant number of currencies involved. The impact of future foreign currency exchange rate fluctuations on our results of operations cannot be accuratelypredicted. Accordingly, there can be no assurance that foreign currency exchange rates: ·will be stable in the future; ·can be mitigated with currency hedging or other risk management strategies; or ·will not have a material adverse effect on our business, operating results and financial condition. Disruptions in U.S., Euro zone and other international credit markets may adversely affect our business, operatingresults and financial condition. Disruptions in national and international credit markets could result in limitations on credit availability, tighter lendingstandards, 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 us and our customer base. In addition, in the event of disruptions in the financial markets, current orfuture lenders may become unwilling or unable to continue to advance funds under any agreements in place, increasetheir commitments under existing credit arrangements or enter into new financing arrangements. The failure of ourlenders 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,operating results 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 and year to year. Sales in our Health & Home segment are influenced by weather conditions. Sales volumes for thermometry, humidifiersand heating appliances are higher during, and subject to, the severity of the cold weather months, while sales of fans,dehumidifiers and insect control devices are higher during, and subject to, weather conditions in spring and summermonths. 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 temporary unanticipatedreductions in retail traffic and consumer demand, may impact our ability to staff our distribution facilities or couldotherwise impede timely transport and delivery of product from our distribution facilities. Sales in our Health & Homesegment are also12 Table of Contentsimpacted by cough, cold and flu seasonal trends, including the duration and severity of the cold and flu season. Thesefactors could have a material adverse effect on our business, operating results and financial condition. We 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, operating results andfinancial condition. All of our products are manufactured by unaffiliated companies, most of which are in the Far East, principally in China.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, operating results and financial condition. With most of our manufacturers located in the Far East, our production lead times are relatively long. Therefore, wemust 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, operating results and financial condition. The 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 raw materialsfor the manufacture of its products from third-party suppliers. The segment uses multiple agreements for the supply ofmaterials used in the manufacture of its products in order to hedge against shortages or potential spikes in materialcosts. The segment also contracts with third-party manufacturers and suppliers for the production of its products. In theevent of a loss of any significant supplier, the segment could experience difficulties in finding or transitioning toalternative suppliers, which could result in product shortages or product back orders, which could harm its business.There can be no assurance that suppliers will be able to provide the segment with the raw materials in the quantities andat the appropriate level of quality requested or at prices it will be willing to pay. The segment is also subject to thedelays caused by any interruption in the production of these materials including weather, crop conditions, climatechange, transportation interruptions, and natural disasters or other catastrophic events. Occasionally, suppliers have experienced production difficulties with respect to the segment’s products, including thedelivery of materials or products that do not meet rigorous quality control standards. These quality problems have in thepast resulted in, and in the future could result in, stock outages or shortages of our products, and could harm sales orcreate inventory write-offs for unusable product. Increased costs of raw materials and energy may adversely affect our operating results and cash flow. Significant increases in the costs and availability of raw materials and energy may negatively affect our operatingresults. Our suppliers purchase significant amounts of metals and plastics to manufacture our products. In addition, theyalso purchase significant amounts of electricity to supply the energy required in their production processes. Middle Easttensions and related political instabilities may drive up fuel prices resulting in higher transportation prices and productcosts. The cost of these raw materials and energy, in the aggregate, represents a significant portion of our cost of goodssold and certain operating expenses, which we may not be able to pass on to our customers. Our operating results couldbe adversely affected by future increases in these costs. 13 Table of ContentsCertain 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. Most of our U.S. distribution, receiving and storage functions are consolidated into two distribution facilities in northernMississippi. Approximately 66% of our consolidated gross sales volume shipped from facilities in this region in fiscal2017. For this reason, any disruption in our distribution process in either of these facilities, even for a few days, couldadversely affect our business, operating results and financial condition. 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, operating results and financial condition. Our 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 financial 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, related net income and cash flows. Ourprojections are based on management’s best estimate of sales using historical sales data and other relevant informationavailable at the time. These projections are highly subjective since sales to our customers can fluctuate substantiallybased on the demand of their retail customers and related ordering patterns, as well as other risks described in thisreport. Additionally, changes in retailer inventory management strategies could make our inventory management moredifficult. Due to these factors, our future sales and net income could vary materially from our projections. We 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 aredependent upon the continued use of these trademarks. Additionally, we license certain owned trademarks to thirdparties in exchange for royalty income. It is possible that certain actions taken by us, our licensors, licensees, or otherthird parties might diminish greatly the value of any of our licensed trademarks. Some of our licensors and licenseesalso have the ability to terminate their license agreements with us at their option subject to each parties’ right tocontinue 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, operating results 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 and commercialize acontinuing stream of innovative new products that meet changing consumer preferences and take advantage ofopportunities sooner than our competition. We face the risk that our competitors will introduce innovative new productsthat compete with our products. There are numerous uncertainties inherent in successfully developing andcommercializing new products on a continuing basis and new product launches may not deliver expected growth insales or operating income. If we are unable to develop and introduce a continuing stream of competitive new products,it may have an adverse effect on our business, operating results and financial condition. 14 Table of ContentsThe 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, our NutritionalSupplements segment may be subject to product liability claims if the use of our products is alleged to have resulted inillness or injury or if our products include inadequate instructions or warnings. These products generally consist ofvitamins, 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, operating results 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, as well assimilar products distributed by other companies can be significantly influenced by scientific research or findings,national media attention and other publicity about product use. Adverse publicity in the form of published scientificresearch, widely published consumer statements, competitor claims, civil and regulatory actions, and statements byregulatory authorities or other parties, 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, operating results andfinancial condition. Our operating results may be adversely affected by trade barriers, exchange controls, expropriations, and other risksassociated with domestic and foreign operations. The economies of foreign countries important to our operations, including countries in Asia, EMEA and Latin America,could suffer slower economic growth or economic, social and/or political instability or hyperinflation in the future. Ourinternational operations in countries in Asia, EMEA and Latin America, including manufacturing and sourcingoperations (and the international operations of our customers), are subject to inherent risks which could adversely affectus. Additionally, there may be uncertainty resulting from recent political changes in the U.S. and abroad, the Brexitreferendum in the U.K., ongoing terrorist activity, and other global events. These factors are outside of our control, butmay nonetheless cause us to adjust our strategy in order to compete effectively in global markets. The domestic and foreign risks of these changes include, 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 required infrastructure; ·inflation (including hyperinflation) or recession; ·changes in, and the burdens and costs of compliance with, a variety of U.S. and foreign laws and regulations,including tax laws, accounting standards, environmental laws, and occupational health and safety laws; ·social, political or economic instability; ·acts of war and terrorism; 15 Table of Contents·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 investment orforeign trade by our host countries. Should any of these events occur, our ability to sell or export our products or repatriate profits could be impaired, wecould experience a loss of sales and profitability from our domestic or international operations, and/or we couldexperience a substantial impairment or loss of assets, any of which could materially and adversely affect our business,operating results and financial condition. Our liquidity may be materially adversely affected by constraints in the capital markets. We need sufficient sources of liquidity to fund our working capital requirements, service our outstanding indebtednessand finance business opportunities. Without sufficient liquidity, we could be forced to curtail our operations, or we maynot be able to pursue business opportunities. The principal sources of our liquidity are funds generated from operatingactivities, available cash, credit facilities, and other debt arrangements. If our sources of liquidity do not satisfy ourrequirements, we may need to seek additional financing. The future availability of financing will depend on a variety offactors, such as economic and market conditions, the regulatory environment for banks and other financial institutions,the availability of credit and our reputation with potential lenders. These factors could materially adversely affect ourcosts of borrowing and our ability to pursue business opportunities, and threaten our ability to meet our obligations asthey become due. In addition, covenants in our debt agreements could restrict or delay our ability to respond to business opportunities, orin the event of a failure to comply with such covenants, could result in an event of default, which if not cured orwaived, could have a material adverse effect on us. We 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. Our operations are largely dependent on our ERP system. We continuously make adjustments to improve theeffectiveness of the ERP and other peripheral information systems, including the installation of significant newsubsystems. 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. 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 risk ofunauthorized 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, newtools16 Table of Contentsand discoveries, and other events or developments may facilitate or result in a compromise or breach of our computersystems, some of which may go undetected for extended periods. Any such compromise or breach could cause interruptions in our operations, cause damage to our reputation and mightrequire us to spend significant management time and money investigating the event and dealing with local and federallaw enforcement. In addition, we could become the subject of litigation and various claims from our customers,employees, suppliers, service providers, and shareholders. Regardless of the merits and ultimate outcome of thesematters, 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, operating results and financial condition. The 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 Nutritional Supplements segment is required to comply with an extensive body of regulations by national, state andprovincial governmental authorities including regulations issued in the United States by the FDA, the FTC, theConsumer Products Safety Commission, and the U.S. Department of Agriculture. Failure to comply with the regulatoryrequirements of these various governmental agencies and authorities could result in enforcement actions including:cease and desist orders, injunctions, substantial penalties, limits on advertising, consumer redress, divestitures of assets,rescission of contracts, or other relief, which could materially affect our ability to successfully market not only theaffected products, but other products as well. Newly adopted or changes in laws, regulations, interpretations orapplications could, among other things, require reformulation of certain products to meet new standards, result in arecall or discontinuance of certain products not able to be reformulated, impose additional record-keeping requirements,expand documentation of the properties of certain products, expand or alter labeling and/or require additional scientificsubstantiation. In the future, we may be subject to additional laws or regulations administered by the FDA or otherfederal, state, local or regulatory authorities, the repeal or amendment of laws or regulations, which we considerfavorable and/or more stringent interpretations of current laws or regulations. We cannot predict the nature of any futurelaws, regulations, interpretations, orders or applications or any of their effect on our business. Any or all of thesecircumstances could reduce our sales or increase our costs of operating the Nutritional Supplements segment, whichcould have a material adverse effect on our reputation, business, operating results and financial condition. Our business involves the potential for product recalls, product liability and other claims against us, which couldmaterially and adversely affect our business, operating results and financial condition. We are, from time to time, involved in various claims, litigation matters and regulatory proceedings that arise in theordinary course of our business and that could have a material adverse effect on us. These matters may include personalinjury and other tort claims, deceptive trade practices disputes, intellectual property disputes, product recalls, contractdisputes, warranty disputes, employment and tax matters and other proceedings and litigation, including class actions. Itis not possible to predict the outcome of pending or future litigation. As with any litigation, it is possible that some ofthe actions could be decided unfavorably, resulting in significant liability and, regardless of the ultimate outcome, canbe costly to defend. Our results and our business could also be negatively impacted if one of our brands sufferssubstantial damage to its reputation due to a significant product recall or other product-related litigation and if we areunable 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 to haveresulted in property damage, bodily injury or other adverse effects. Although we maintain liability insurance in amountsthat we believe are reasonable, that insurance is, in most cases, subject to large self-insured retentions for which we areresponsible. We cannot provide assurance that we will be able to maintain such insurance on acceptable terms, if at allin the future, or that product liability or other claims will not exceed the amount of insurance coverage, or that all suchmatters would be covered by our insurance. As a result, these types of claims could have a material adverse effect onour business, operating results and financial condition. 17 Table of ContentsOur judgments regarding the accounting for tax positions and the resolution of tax disputes may impact our netearnings and cash flow.Significant judgment is required to determine our effective tax rate and evaluate our tax positions. We provide foruncertain tax positions when such tax positions do not meet the recognition thresholds or measurement criteriaprescribed by applicable accounting standards. Fluctuations in federal, state, local and foreign taxes or a change touncertain tax positions, including related interest and penalties, may impact our effective tax rate and financial results.Additionally, we are subject to audits in the various taxing jurisdictions in which we conduct business. In cases whereaudits are conducted and issues are raised, a number of years may elapse before such issues are finally resolved.Unfavorable resolution of any tax matter could increase the effective tax rate, which could have an adverse effect onour operating results and cash flow. For additional information regarding our taxes, see Note 11 to the accompanyingconsolidated financial statements. Potential changes in laws, including tax laws, and the costs and complexities of compliance with such laws could havea material adverse impact on our business.The impact of future legislation in the U.S. or abroad, including such things as employment and health insurance laws,climate change related legislation, tax legislation, regulations or treaties is always uncertain. Federal and local legislativeagendas from time to time contain numerous proposals dealing with taxes, financial regulation, energy policy,environmental policy, transportation policy and infrastructure policy, among others that, if enacted into law, couldincrease 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. federalincome tax purposes if its largest U.S. shareholders (i.e., those owning 10 percent or more of its shares) together ownmore than 50 percent of the stock outstanding. If the IRS or a court determined that we were a CFC, then each of ourU.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.18 Table of Contents Item 1B. Unresolved Staff CommentsNone. Item 2. PropertiesAs of February 28, 2017, we own, lease or otherwise utilize through third-party management service agreements, a totalof 40 properties worldwide, which include selling, procurement, research and development, administrative, distributionfacilities, and 35 acres of land held for expansion. All properties operated by the Company are adequate for theirintended purpose.Properties we own by location, type and use, segment and approximate size are listed below: Location Type and Use Business Segment Approximate Size(Square Feet)El Paso, Texas, USA Land & Building - U.S. Headquarters All Segments 135,000El Paso, Texas, USA Land & Building - Distribution Facility Housewares, Health & Home and Beauty 408,000Olive Branch, Mississippi, USA Land & Building - Distribution Facility Health & Home and Beauty 1,300,000Southaven, Mississippi, USA Land & Building - Distribution Facility Housewares, Beauty and Nutritional Supplements 1,200,000Sheffield, England Land & Building - Office Space Housewares, Health & Home and Beauty 10,400Mexico City, Mexico Land & Building - Office Space Health & Home and Beauty 3,900 The number of properties we lease or otherwise utilize by type and use and segment are listed below: Segments Served Office Space Distribution Facility TotalAll Segments 5 - 5Multiple Segments - 1 1Housewares 6 2 8Health & Home 6 2 8Nutritional Supplements 1 - 1Beauty 5 6 11Other 23 11 34 Approximate total squarefootage of all propertiesleased or otherwise utilized 229,500 572,000 801,500 Item 3. Legal ProceedingsWe 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, operating results or liquidity. Item 4. Mine Safety DisclosuresNot applicable. 19 Table of Contents PART II Item 5. Market for Registrant's Common Equity, Related Shareholder Matters and Issuer Purchases of EquitySecuritiesPrice Range of Common StockOur common stock is listed on the NASDAQ Global Select Market (“NASDAQ”) [symbol: HELE]. The following tableprovides for the latest two fiscal years, in dollars per share, the high and low sales prices of the common stock reportedon the NASDAQ. Quotations are inter-dealer prices, without retail markup, markdown or commission and may notrepresent actual transactions. High Low FISCAL 2017 First quarter $105.14 $91.38 Second quarter 106.18 89.60 Third quarter 92.75 77.50 Fourth quarter 99.55 79.90 FISCAL 2016 First quarter $92.62 $74.95 Second quarter 100.33 80.88 Third quarter 105.46 81.61 Fourth quarter 106.50 82.28 Approximate Number of Equity Security Holders of Record Our common stock is our only class of equity security outstanding at February 28, 2017. As of April 21, 2017, therewere 157 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 DividendsOur current policy is to retain earnings to provide funds for the operation and expansion of our business, common stockrepurchases and for potential acquisitions. We have not paid any cash dividends on our common stock since inception.Any change in dividend policy will depend upon future conditions, including earnings and financial condition, generalbusiness conditions, any applicable contractual limitations, and other factors deemed relevant by our Board ofDirectors. Generally, our Credit Agreement limits our ability to declare or pay cash dividends to our shareholders if, (1)the Leverage Ratio (as defined in the Credit Agreement) on a pro forma basis is greater than (a) 3.00 to 1.00 if any ofour 3.9% Senior Notes due January 2018 are outstanding and (b) 3.25 to 1.00 if our 3.9% Senior Notes are notoutstanding or the maximum leverage ratio permitted under agreements relating to our 3.9% Senior Notes is increasedto 3.50 to 1.00 and (2) unrestricted cash, cash equivalents and availability for borrowings under the Credit Agreement isless than $25 million. Issuer Purchases of Equity SecuritiesIn 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 28, 2017, we were authorized to purchase $83.4 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,20 Table of Contentsfinancial conditions, any applicable contractual limitations, and other factors, including alternative investmentopportunities. 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 are settled by having the holder tender back to us the number of sharesat fair value equal to any amounts due. We account for net exercises as a purchase and retirement of shares. The following table summarizes our share repurchase activity for the periods covered below: SHARE REPURCHASES Year Ended the Last Day of February(in thousands, except per share data)2017 2016 2015Common stock repurchased on the open market or through tender offer (1): Number of shares 922,731 1,126,796 4,102,143Aggregate value of shares (in thousands)$75,000 $100,000 $273,599Average price per share$81.28 $88.75 $66.70 Common stock received in connection with share-based compensation (2): Number of shares 6,286 117,294 71,950Aggregate value of shares (in thousands)$595 $6,411 $4,826Average price per share$94.61 $54.66 $67.08(1)Includes various open market purchases made in each of the three fiscal years including a modified “Dutch auction” tender offercompleted during fiscal 2015, resulting in the repurchase of 3,693,816 shares of our outstanding common stock at a total cost of$247.8 million, including tender offer transaction-related costs.(2)In fiscal 2016, we issued 276,548 shares of common stock as payment of separation compensation due to our former CEO under hisemployment and separation agreements. In connection with this transaction, the former CEO tendered 116,012 shares back to theCompany as payment for related federal tax obligations. The Company previously accrued and disclosed the separation compensationin fiscal 2014. Fiscal 2015 includes 68,086 shares of common stock with a market value of $67.10 per share, or $4.6 million in theaggregate, which were tendered by our former CEO as payment for related federal tax obligations arising from the vesting andsettlement of performance-based restricted stock units and restricted stock awards. The following schedule sets forth the purchase activity for each month during the three months endedFebruary 28, 2017: ISSUER PURCHASES OF EQUITY SECURITIES FOR THE THREE MONTHS ENDED FEBRUARY 28, 2017 Total Number ofShares Purchased Average PricePaid per Share Total Number ofShares Purchasedas Part of Publicly Announced Plansor Programs Dollar Value ofShares that MayYet be PurchasedUnder the Plansor Programs(in thousands)December 1 through December 31, 2016 51 $95.92 51 $83,423January 1 through January 31, 2017 - - - 83,423February 1 through February 28, 2017 - - - 83,423Total 51 $95.92 51 21 Table of ContentsPerformance GraphThe graph below compares the cumulative total return of our Company to the NASDAQ Market Index and a peerGroup Index, assuming $100 was invested on March 1, 2012. The Peer Group Index is the Dow Jones–U.S. PersonalProducts, Broad Market Cap, Yearly, and Total Return Index. The comparisons in this table are required by the SECand 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 subject to theliabilities of Section 18 under the Exchange Act. In addition, it shall not be deemed incorporated by reference by anystatement 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. 22 Table of Contents Item 6. Selected Financial DataThe selected consolidated statements of income and cash flow data for fiscal 2017, 2016 and 2015, and the selectedconsolidated balance sheet data as of the end fiscal 2017 and 2016, have been derived from our audited consolidatedfinancial statements included in this report. The selected consolidated statements of income and cash flow data forfiscal 2014 and 2013, and the selected consolidated balance sheet data as of the end fiscal 2015, 2014 and 2013, havebeen derived from our audited consolidated financial statements, which are not included in this report. This informationshould be read together with the discussion in “Management’s Discussion and Analysis of Financial Condition andResults of Operations” and our consolidated financial statements and notes to those statements included in this report.All currency amounts are denominated in U.S. Dollars. (in thousands, except per share data) 2017 (1) 2016 (1) 2015 (1) 2014 2013Income Statement Data: Sales revenue, net $1,537,219 $1,545,701 $1,445,131 $1,317,153 $1,288,263Gross profit 675,468 636,005 599,559 516,703 518,211Asset impairment charges 12,400 6,000 9,000 12,049 -Operating income 164,332 130,615 161,719 117,100 148,773Interest expense 14,857 11,096 15,022 10,193 13,345Income tax expense 9,200 18,590 16,050 20,886 19,848Net income 140,689 101,228 131,164 86,248 115,666 Earnings per share - basic $5.11 $3.58 $4.59 $2.69 $3.64Earnings per share - diluted $5.04 $3.52 $4.52 $2.66 $3.62 Weighted average shares outstanding - basic 27,522 28,273 28,579 32,007 31,754Weighted average shares outstanding - diluted 27,891 28,749 29,035 32,386 31,936 Cash Flow Data: Depreciation and amortization $44,341 $42,749 $39,653 $33,839 $34,425Net cash provided by operating activities (2) 228,501 186,545 179,264 154,165 87,558Capital and intangible asset expenditures 20,619 20,603 6,521 40,463 14,688Payments to acquire businesses 209,267 43,150 195,943 - -Net amounts borrowed (repaid) (133,200) 190,700 240,600 (64,393) (92,100) (in thousands) 2017 (1) 2016 (1) 2015 (1) 2014 2013Balance Sheet Data: Working capital (2) $266,711 $487,486 $277,897 $286,122 $236,540Goodwill and other intangible assets 1,118,418 958,756 948,157 775,550 808,869Total assets (2) 1,813,096 1,848,894 1,622,239 1,533,302 1,474,004Long-term debt (2) 461,211 597,270 407,731 95,707 155,000Stockholders' equity (3) 1,020,766 930,043 904,565 1,029,487 926,606Cash dividends - - - - -(1)Includes the material impact of new business acquisitions as follows: ·Fiscal 2017 includes eleven and a half months of operating results from the acquisition of Hydro Flask, acquired during the yearfor a net cash purchase price of $209.3 million. ·Fiscal 2016 includes eleven months of operating results from the Vicks VapoSteam inhalant business acquired for a net cashpurchase price of $42.8 million. Fiscal 2017 and thereafter includes a full year of operating results. ·Fiscal 2015 includes eight months of operating results for the Nutritional Supplements segment, resulting from the HealthyDirections acquisition in fiscal 2015 for a net cash purchase price of $195.9 million. Fiscal 2016 and thereafter includes a fullyear of operating results. (2)Fiscal 2016 and 2015 include certain reclassifications to conform with fiscal 2017 adopted accounting changes as explained in Note4 to the accompanying consolidated financial statements. (3)During fiscal 2017, 2016, 2015, 2014, and 2013, we repurchased and retired 929,017, 1,244,090, 4,174,093, 146,539, and 110,552shares of common stock having total cost of $75.6, $106.4, $278.4, $8.2, and $3.4 million, respectively.23 Table of ContentsInformation Regarding Forward-Looking Statements Certain written and oral statements in this Form 10K may constitute "forward-looking statements" as defined under thePrivate Securities Litigation Reform Act of 1995. This includes statements made in this report, in other filings with theSecurities and Exchange Commission (the "SEC"), in press releases, and in certain other oral and written presentations.Generally, the words "anticipates", "believes", "expects", "plans", "may", "will", "should", "seeks", "estimates","project", "predict", "potential", "continue", "intends", and other similar words identify forward-looking statements. Allstatements that address operating results, events or developments that may occur in the future, including statementsrelated to sales, earnings per share results, and statements expressing general expectations about future operatingresults, are forward-looking statements and are based upon our current expectations and various assumptions. Webelieve there is a reasonable basis for our expectations and assumptions, but there can be no assurance that we willrealize our expectations or that our assumptions will prove correct. Forward-looking statements are subject to risks thatcould cause them to differ materially from actual results. Accordingly, we caution readers not to place undue relianceon forward-looking statements. We believe that these risks include but are not limited to the risks described in thisreport under Item 1A., “Risk Factors” and that are otherwise described from time to time in our SEC reports asfiled. We undertake no obligation to publicly update or revise any forward-looking statements as a result of newinformation, future events or otherwise. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) should beread in conjunction with the other sections of this report, including Part I, Item 1., “Business”; Part II, Item 6.,“Selected Financial Data”; and Part II, Item 8., “Financial Statements and Supplementary Data.” The various sectionsof this MD&A contain a number of forward-looking statements, all of which are based on our current expectations.Actual results may differ materially due to a number of factors, including those discussed in Item 1A.,“Risk Factors,”and in the section entitled “Information Regarding Forward-Looking Statements,” preceding this MD&A, and in Item7A., “Quantitative and Qualitative Disclosures About Market Risk.” Throughout MD&A, we refer to certain measures used by management to evaluate financial performance. We also mayrefer to a number of financial measures that are not defined under GAAP, but have corresponding GAAP-basedmeasures. Where non-GAAP measures appear, we provide tables reconciling these to their corresponding GAAP-basedmeasures and refer to a discussion of their use. We believe these measures provide investors with importantinformation that is useful in understanding our business results and trends. Overview We are a leading global consumer products company offering creative products and solutions for our customersthrough a diversified portfolio of well-recognized and widely-trusted brands. We have built leading market positionsthrough new product innovation, product quality and competitive pricing. We operate in four segments consisting ofHousewares, Health & Home, Nutritional Supplements, and Beauty. In fiscal 2015, we launched a transformationalstrategy to improve the performance of our business segments and strengthen our shared service capabilities. Webelieve we continue to make progress on achieving our strategic objectives. Fiscal 2017 - Significant Developments ·On March 18, 2016, we acquired Steel Technology, LLC, doing business as Hydro Flask (“Hydro Flask”). HydroFlask is a leading designer, distributor and marketer of high performance insulated stainless steel food and beveragecontainers for active lifestyles. The aggregate purchase price for the transaction was $209.3 million, net of cashacquired, and was funded with borrowings under our Credit Agreement. ·In the first and fourth quarters of fiscal 2017, we recorded non-cash asset impairment charges of $7.4 million ($5.1million after tax) and $5.0 million ($3.2 million after tax), respectively. The charges in both quarters relate tocertain trademarks and brand assets in the Beauty and Nutritional Supplements segments. ·In the first quarter of fiscal 2017 we recorded a $1.5 million charge (before and after tax) related to patent litigation.24 Table of Contents·In the third quarter of fiscal 2017, we repurchased 922,731 shares of our common stock in the open market at anaverage price of $81.28 per share for a total cost of $75 million. ·In the fourth quarter of fiscal 2017, we amended our Credit Agreement to increase the revolving commitment from$650 million to $1 billion and extend the term to December 7, 2021. The amendment also increased the leverageratio that is required to be met if we complete acquisitions that meet specified conditions, among other things.Significant Trends Impacting the BusinessNutritional Supplements BusinessDue to recent declines in revenue associated with our Nutritional Supplements segment, our annual impairment testingof goodwill and other intangible assets for the segment reflected a fair value that was in excess of the carrying value ofthe segment by a smaller margin than occurred in previous impairment tests. In addition, the fair value of the indefinitelived brand asset was determined to be less than the carrying value and impairments of $9.5 million were recordedduring fiscal 2017. The fair value was determined using primarily a discounted cash flow model and we believe ourassumptions of future revenue, gross margin and operating expenses are reasonable in the circumstances. However, aswe continue to execute our strategy, actual results could differ from our current expectations. To the extent that ourforecasted cash flows were to decline further, it is reasonably likely that we could record impairment expense or incurother charges or losses in the future. We are unable to project what, if any, expense, charges or losses will be in futureperiods. We will continue to closely monitor performance and market conditions relating to this segment. We are reviewing and evaluating various alternatives with respect to the performance of our Nutritional Supplementssegment. Such initiatives may include a reorganization of the business, investments in online interface and e-commerceplatforms, restructuring or realignment programs, consolidating operations and functions, and divestitures. Certain ofthese activities may have a disproportionate impact on our income relative to the cost savings or generate other chargesor losses. These factors as well as other facts and circumstances attributable to the Nutritional Supplements segmentcould result in other charges or losses relating to the segment. We are unable to project what, if any, expense, chargesor losses will be in future periods. Foreign Currency Exchange Rate Fluctuations Due to the nature of our operations, we have exposure to the the impact of fluctuations in exchange rates fromtransactions that are denominated in a currency other than our reporting currency (the U.S. Dollar). During the secondhalf of fiscal 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. These currencies weakened against the U.S.Dollar by approximately 3%, 10%, 8%, and 7%, respectively, when compared to average levels for the second half offiscal 2014. The trend continued during fiscal 2016, with the same currencies weakening against the U.S. Dollar byapproximately 7%, 15%, 14%, and 21%, respectively, when compared to average levels for fiscal 2015. The trendcontinued during fiscal 2017, with the same currencies weakening against the U.S. Dollar by approximately 13%, 0%,1%, and 16%, respectively, when compared to average levels for fiscal 2016. Consumer Spending and Changes in Shopping PreferencesOur business depends upon discretionary consumer demand for most of our products and primarily operates withinmature and highly developed consumer markets. The principal driver of our operating performance is the strength ofthe U.S. retail economy, as approximately 81%, 80%, and 79% of our consolidated net sales were from U.S. shipmentsin fiscal 2017, 2016, and 2015 respectively. Additionally, the shift in consumer shopping preferences to online ormultichannel shopping experiences has shifted the concentration of our sales. For fiscal 2017, 2016 and 2015, our netsales to customers fulfilling end-consumer online orders and online sales directly to consumers comprisedapproximately 13%, 10%, and 9%, respectively, of our total consolidated net sales revenue for each fiscal year andgrew over 30% in fiscal 2017 . With the continued growth in online sales across the retail landscape, many brick andmortar retailers are aggressively looking for ways to improve their customer delivery capabilities to be able to meetcustomer expectations. As a result, it will become increasingly important for us to leverage our distribution capabilitiesin order to meet the changing demands of our customers, as well as to increase our online capabilities to support ourdirect-to-consumer sales channels and online channel sales by our retail customers. 25 Table of ContentsVariability of the Cough/Cold/Flu Season Sales in several of our Health & Home segment categories are highly correlated to the severity of winter weather andcough/cold/flu incidence. In the U.S., the cough/cold/flu season historically runs from November through March, withpeak activity normally in January to March. For the 2016-2017 season, fall and winter season weather was mild andreports of cough/cold/flu incidence were below the 2015-2016 season, which was a below average season. We expectthat the weakness in the most recent cough/cold/flu season will have an unfavorable impact on initial replenishment ofaffected categories during fiscal 2018, due to high retail inventory levels. 26 Table of ContentsResults of Operations The following table provides selected operating data, in U.S. Dollars, as a percentage of net sales revenue, and as ayear-over-year percentage change. Fiscal Years Ended the Last Day of February, % of Sales Revenue, net (3) % Change (in thousands) 2017 (1) 2016 (2) 2015 (2) 2017 2016 2015 17/16 16/15 Sales revenue by segment, net Housewares $418,128 $310,663 $296,252 27.2% 20.1% 20.5% 34.6% 4.9% Health & Home 632,769 642,735 613,253 41.2% 41.6% 42.4% (1.6)% 4.8% Nutritional Supplements 130,543 153,126 100,395 8.5% 9.9% 6.9% (14.7)% 52.5% Beauty 355,779 439,177 435,231 23.1% 28.4% 30.1% (19.0)% 0.9% Total sales revenue, net 1,537,219 1,545,701 1,445,131 100.0% 100.0% 100.0% (0.5)% 7.0% Cost of goods sold 861,751 909,696 845,572 56.1% 58.9% 58.5% (5.3)% 7.6% Gross profit 675,468 636,005 599,559 43.9% 41.1% 41.5% 6.2% 6.1% Selling, general and administrativeexpense (SG&A) 498,736 499,390 428,840 32.4% 32.3% 29.7% (0.1)% 16.5% Asset impairment charges 12,400 6,000 9,000 0.8% 0.4% 0.6% 106.7% (33.3)% Operating income 164,332 130,615 161,719 10.7% 8.5% 11.2% 25.8% (19.2)% Nonoperating income, net 414 299 517 -% -% -% 38.5% (42.2)% Interest expense (14,857) (11,096) (15,022) (1.0)% (0.7)% (1.0)% 33.9% (26.1)% Total other expense (14,443) (10,797) (14,505) (0.9)% (0.7)% (1.0)% 33.8% (25.6)% Income before income taxes 149,889 119,818 147,214 9.8% 7.8% 10.2% 25.1% (18.6)% Income tax expense 9,200 18,590 16,050 0.6% 1.2% 1.1% (50.5)% 15.8% Net income $140,689 $101,228 $131,164 9.2% 6.5% 9.1% 39.0% (22.8)% (1)Fiscal 2017 includes eleven and a half months of operating results for Hydro Flask, acquired on March 18, 2016. (2)Fiscal 2015 includes eight months of operating results for Healthy Directions, acquired on June 30, 2014. Fiscal 2016 and thereafterincludes a full year of operating results. (3)Sales revenue percentages by segment are computed as a percentage of the related segment’s net sales revenue to total net salesrevenue. All other percentages are computed as a percentage of total net sales revenue. Fiscal 2017 Financial Results ·Consolidated net sales revenue decreased 0.5%, or $8.5 million, to $1,537.2 million in fiscal 2017 compared to$1,545.7 million fiscal 2016.·Consolidated operating income increased 25.8%, or $33.7 million, to $164.3 million for fiscal 2017 compared to$130.6 million in fiscal 2016. Consolidated operating margin increased 2.2 percentage points to 10.7% ofconsolidated net sales revenue in fiscal 2017 compared to 8.5% in fiscal 2016. ·Consolidated adjusted operating income increased 2.4%, or $5.2 million, to $222.0 million for fiscal 2017compared to $216.8 million in fiscal 2016. Consolidated adjusted operating margin increased 0.4 percentage pointsto 14.4% of consolidated net sales revenue in fiscal 2017 compared to 14.0% in fiscal 2016.·Net income increased 39%, or $39.5 million, to $140.7 million in fiscal 2017 compared to $101.2 million in fiscal2016. Diluted EPS increased 43.2% to $5.04 in fiscal 2017 compared to $3.52 in fiscal 2016.·Adjusted income increased 4.6% to $187.9 million in fiscal 2017, compared to $179.7 million in fiscal 2016.Adjusted diluted EPS increased 7.7% to $6.73 in fiscal 2017 compared to $6.25 in fiscal 2016.Adjusted operating income, adjusted operating margin, adjusted income, and adjusted diluted EPS as discussed aboveand on the pages that follow are non-GAAP financial measures as contemplated by SEC Regulation G, Rule 100. Thesemeasures are discussed further, and reconciled to their applicable GAAP-based measures, on pages 32 through 35 and39 through 40.27 Table of ContentsFiscal 2016 Financial Results ·Consolidated net sales revenue increased 7.0%, or $100.6 million, to $1,545.7 million for fiscal 2016 compared to$1,445.1 million in fiscal 2015.·Consolidated operating income decreased 19.2%, or $31.1 million, to $130.6 million for fiscal 2016 compared to$161.7 million in fiscal 2015. Consolidated operating margin decreased 2.7 percentage points to 8.5% ofconsolidated net sales revenue in fiscal 2016 compared to 11.2% in fiscal 2015.·Consolidated adjusted operating income increased 5.5%, or $11.2 million, to $216.8 million for fiscal 2016compared to $205.6 million for fiscal 2015. Consolidated adjusted operating margin decreased 0.2 percentagepoints to 14.0% of consolidated net sales revenue in fiscal 2016 compared to 14.2% in fiscal 2015.·Net income decreased 22.8%, or $29.9 million, to $101.2 million in fiscal 2016 compared to $131.2 million infiscal 2015. Diluted EPS decreased 22.1% to $3.52 in fiscal 2016 compared to $4.52 in fiscal 2015.·Adjusted income increased 5.7% to $179.7 million in fiscal 2016, compared to $169.9 million in fiscal 2015.Adjusted diluted EPS increased 6.8% to $6.25 in fiscal 2016 compared to $5.85 in fiscal 2015.Geographic Net Sales RevenueThe following table provides net sales revenue by geographic region, in U.S. Dollars, as a percentage of net salesrevenue, and the year-over-year percentage change in each region. Fiscal Years Ended the Last Day of February, % of Sales Revenue, net (3) % Change (in thousands) 2017 (1) 2016 (2) 2015 (2) 2017 2016 2015 17/16 16/15 Sales revenue, net by geographic region United States $1,241,653 $1,233,464 $1,139,959 80.8% 79.8% 78.9% 0.7% 8.2%Canada 60,002 57,482 69,996 3.9% 3.7% 4.8% 4.4% (17.9)%EMEA 134,545 139,910 133,902 8.8% 9.1% 9.3% (3.8)% 4.5%Asia Pacific 60,689 51,575 47,245 3.9% 3.3% 3.3% 17.7% 9.2%Latin America 40,330 63,270 54,029 2.6% 4.1% 3.7% (36.3)% 17.1%Total sales revenue, net $1,537,219 $1,545,701 $1,445,131 100.0% 100.0% 100.0% (0.5)% 7.0% (1)Fiscal 2017 includes eleven and a half months of operating results for Hydro Flask, acquired on March 18, 2016. (2)Fiscal 2015 includes eight months of operating results for Healthy Directions, acquired on June 30, 2014. Fiscal year 2016 andthereafter includes a full year of operating results. (3)Sales revenue percentages by segment are computed as a percentage of the related segment’s net sales revenue, to total net salesrevenue. All other percentages are computed as a percentage of total net sales revenue. In fiscal 2017, domestic sales grew 0.7% compared to fiscal 2016, primarily driven by the contribution from the HydroFlask acquisition. International sales declined 5.3% primarily from declines in EMEA and Latin America due to foreigncurrency fluctuations and the re-measurement of our Venezuelan financial statements in fiscal 2017, which werepartially offset by growth in Canada and Asia Pacific. In fiscal 2016, domestic sales grew 8.2% compared to fiscal 2015, which included growth from acquisitions and newproduct introductions. International sales increased 2.3% reflecting growth in Latin America primarily due to hyperinflation in Venezuela, and increases in Asia Pacific and EMEA, partially offset by a decline in Canada. Internationalgrowth was achieved despite an unfavorable impact from foreign currency fluctuations of approximately $29.8 million,or 2.1%, in fiscal 2016.28 Table of ContentsComparison of Fiscal 2017 to Fiscal 2016Consolidated and Segment Net SalesThe following table summarizes the impact that acquisitions, foreign currency and Venezuela re-measurement had onour net sales revenue by segment: Fiscal Year Ended February 28, 2017 (in thousands) Housewares (1) Health & Home (2) NutritionalSupplements Beauty Total Fiscal 2016 sales revenue, net$310,663 $642,735 $153,126 $439,177 $1,545,701 Core business 2,402 (8,257) (22,583) (56,853) (85,291) Impact of foreign currency (1,942) (2,421) - (5,339) (9,702) Venezuela re-measurement - - - (21,206) (21,206) Acquisitions 107,005 712 - - 107,717 Change in sales revenue, net 107,465 (9,966) (22,583) (83,398) (8,482) Fiscal 2017 sales revenue, net$418,128 $632,769 $130,543 $355,779 $1,537,219 Total net sales revenue growth 34.6% (1.6)% (14.7)% (19.0)% (0.5)%Core business 0.8% (1.3)% (14.7)% (12.9)% (5.5)%Impact of foreign currency (0.6)% (0.4)% 0.0% (1.2)% (0.6)%Venezuela re-measurement 0.0% 0.0% 0.0% (4.8)% (1.4)%Acquisitions 34.4% 0.1% 0.0% 0.0% 7.0%(1)Fiscal 2017 includes eleven and a half months of incremental operating results from the Hydro Flask acquisition, acquired on March18, 2016. (2)Fiscal 2017 includes one month of incremental operating results from the Vicks VapoSteam inhalant business acquisition, acquiredon March 31, 2015. In the above table and the table on page 36, core business refers to our net sales revenue associated with product linesor brands after the first twelve months from the date the product line or brand is acquired, excluding the impact thatforeign currency and Venezuelan currency re-measurement had on reported net sales. Net sales revenue from internallydeveloped brands or product lines is considered core business activity. Consolidated Net Sales RevenueConsolidated net sales revenue decreased $8.5 million, or 0.5%, to $1,537.2 million for fiscal 2017, compared to$1,545.7 million for fiscal 2016. The decline was driven by:·a core business decline of $85.3 million, or 5.5%, primarily due to: oa decrease of approximately $39.6 million, or 2.6%, from our rationalization of lower margin, commoditizedand non-strategic business; oa decline in the Nutritional Supplements segment of $22.6 million, or 1.5%; othe unfavorable impact of a weak cough/cold/flu season that was both below average and below that of thesame period last year; othe impact of lower store traffic and soft consumer spending at traditional brick and mortar retail along with theimpact of inventory rationalization by several key retailers; ·the unfavorable impact from foreign currency fluctuations of approximately $9.7 million, or 0.6%; and·an unfavorable impact of $21.2 million, or 1.4%, from the discontinued use of the official exchange rate and theadoption of a market-based exchange rate to re-measure our Venezuelan financial statements in fiscal 2017.These factors were partially offset by growth from acquisitions of $107.7 million, or 7%.29 Table of ContentsSegment Net Sales Revenue HousewaresNet sales revenue in the Housewares segment increased $107.5 million, or 34.6%, to $418.1 million for fiscal 2017,compared to $310.7 million for fiscal 2016. The change was driven by: ·core business growth of $2.4 million, or 0.8%, primarily due to growth in online sales at key customers and newproduct and category introductions, partially offset by lower order replenishment from key customers due to lowerretail store traffic and the unfavorable comparative impact from the launch of the kitchen electrics category in fiscal2016; and·the unfavorable impact of net foreign currency fluctuations of approximately $1.9 million, or 0.6%;·partially offset by growth from acquisitions of $107.0 million, or 34.4%, representing eleven and a half months ofoperating results from Hydro Flask.Health & Home Net sales revenue in the Health & Home segment decreased $10.0 million, or 1.6%, to $632.8 million for fiscal 2017,compared to $642.7 million for fiscal 2016. The change was driven by: ·a core business decline of $8.3 million, or 1.3%, primarily due to a de-emphasis of low margin hot/cold therapybusiness and the impact of another weak cough/cold/flu season on thermometry and humidification replenishmentorders, partially offset by growth in air purification and our seasonal fan and heater categories; and·the unfavorable impact of net foreign currency fluctuations of approximately $2.4 million, or 0.4%;·partially offset by growth from acquisitions of $0.7 million, or 0.1%, representing twelve months of contributionfrom Vicks VapoSteam, compared to eleven months of contribution for fiscal 2016.Nutritional SupplementsNet sales revenue in the Nutritional Supplements segment decreased $22.6 million, or 14.7%, to $130.5 million forfiscal 2017, compared to $153.1 million for fiscal 2016. The change was primarily driven by a decline in the offlineand legacy print newsletter subscription businesses of $17.4 million, or 11.3%. The segment continues to implement amulti-year strategic transition from offline to online channels. This transition includes investments in its online interfaceand e-commerce platforms in an effort to improve order conversion and average order values. BeautyNet sales revenue in the Beauty segment decreased $83.4 million, or 19.0%, to $355.8 million for fiscal 2017,compared to $439.2 million for fiscal 2016. The change was driven by: ·a core business decline of $56.9 million, or 12.9%, primarily due to our rationalization of lower margin,commoditized and non-strategic business and the impact of lower store traffic and soft consumer spending attraditional brick and mortar retail, along with inventory rationalization by several key retailers;·the unfavorable impact of net foreign currency fluctuations of approximately $5.3 million, or 1.2%; and·an unfavorable impact of $21.2 million, or 4.8%, from our discontinued use of the official exchange rate and ouradoption of a market-based exchange rate to re-measure our Venezuelan financial statements in fiscal 2017.Gross Profit MarginConsolidated gross profit margin for fiscal 2017 increased 2.8 percentage points to 43.9%, compared to 41.1% forfiscal 2016. The increase in consolidated gross profit margin is primarily due to: ·favorable shifts in product mix;·product rationalization efforts;30 Table of Contents·the impact of a Venezuela inventory impairment charge of $9.1 million recorded in fiscal 2016, which reduced thecomparative period consolidated gross profit margin by 0.6 percentage points;·accretion from the Hydro Flask acquisition, which increased consolidated gross profit margin by 1.2 percentagepoints; and·reductions in product costs.These factors were partially offset by the unfavorable impact of net foreign currency fluctuations.Selling General and Administrative ExpensesOur consolidated SG&A ratio, defined as consolidated SG&A expense as a percent of consolidated net sales, increased0.1 percentage point to 32.4% for fiscal 2017, compared to 32.3% for fiscal 2016. The increase in consolidated SG&Aratio is primarily due to: ·the impact of higher compensation costs due to hourly wage increases, increases in share-based compensation asnew three-year performance based incentives enter their third year of existence and estimated performance factorsare adjusted and the $1.8 million unfavorable impact of a change in an accounting standard for share-basedcompensation;·higher advertising expense;·patent litigation expense of $1.5 million; and·the impact within our core business that lower overall net sales had on operating leverage.These factors were mostly offset by: ·improved distribution and logistics efficiency and lower outbound freight costs within our core business;·lower year-over-year foreign currency revaluation losses, partially due to cash flow hedges and $10 million of U.S.Dollar to Euro cross-currency debt swaps; and·the comparative favorable impact of the following items recorded in fiscal 2016:oa $17.8 million patent litigation charge;oVenezuela re-measurement related charges of $9.6 million; ando$6.7 million of CEO succession costs recorded as result of the lawsuit settlement with our former CEO.Asset Impairment chargesOur annual impairment testing for goodwill and indefinite lived intangible assets has historically occurred in the firstquarter of our fiscal year. In December 2016, we elected to change our annual impairment testing to the fourth quarterof our fiscal year. Accordingly, for fiscal 2017 we completed impairment tests during the first and fourth fiscal quarters.As a result of our testing of indefinite-lived trademarks in the fourth quarter, we recorded non-cash asset impairmentcharges of $5.0 million ($3.2 million after tax). As a result of our testing of indefinite-lived trademarks in the firstquarter, we recorded non-cash asset impairment charges of $7.4 million ($5.1 million after tax). The charges in bothquarters were related to certain brand assets and trademarks in our Beauty and Nutritional Supplements segments,which were written down to their estimated fair values, determined on the basis of our estimated future discounted cashflows using the relief from royalty valuation method. 31 Table of ContentsOperating Income, Operating Margin, Adjusted Operating Income (non-GAAP), and Adjusted Operating Margin(non-GAAP) by Segment In order to provide a better understanding of the comparative impact of certain items on operating income, the tablesthat follow report the comparative before tax impact of non-cash asset impairment charges, CEO succession costs,acquisition-related expenses, Venezuelan currency re-measurement related charges, patent litigation charges,amortization of intangible assets, and non-cash share-based compensation, as applicable, on operating income andoperating margin for each segment and in total for the periods covered below. Fiscal Year Ended February 28, 2017 (in thousands) Housewares (8) Health & Home NutritionalSupplements Beauty Total Operating income, as reported (GAAP) $89,641 21.4% $52,294 8.3% $(7,933) (6.1)% $30,330 8.5% $164,332 10.7%Asset impairment charges (1) - -% - -% 9,500 7.3% 2,900 0.8% 12,400 0.8%Patent litigation charge (5) - -% 1,468 0.2% - -% - -% 1,468 0.1%Subtotal 89,641 21.4% 53,762 8.5% 1,567 1.2% 33,230 9.3% 178,200 11.6%Amortization of intangible assets (6) 2,643 0.6% 13,663 2.2% 6,284 4.8% 5,718 1.6% 28,308 1.8%Non-cash share-based compensation (7) 3,185 0.8% 5,028 0.8% 2,362 1.8% 4,923 1.4% 15,498 1.0%Adjusted operating income (non-GAAP) $95,469 22.8% $72,453 11.5% $10,213 7.8% $43,871 12.3% $222,006 14.4% Fiscal Year Ended February 29, 2016 (in thousands) Housewares Health & Home NutritionalSupplements (9) Beauty Total Operating income, as reported (GAAP) $56,659 18.2% $38,078 5.9% $11,446 7.5% $24,432 5.6% $130,615 8.5%Asset impairment charges (1) - -% - -% - -% 6,000 1.4% 6,000 0.4%CEO succession costs (2) 1,348 0.4% 2,722 0.4% 704 0.5% 1,933 0.4% 6,707 0.4%Acquisition-related expenses (3) 698 0.2% - -% - -% - -% 698 -%Venezuelan re-measurement related charges (4) - -% - -% - -% 18,733 4.3% 18,733 1.2%Patent litigation charge (5) - -% 17,830 2.8% - -% - -% 17,830 1.2%Subtotal 58,705 18.9% 58,630 9.1% 12,150 7.9% 51,098 11.6% 180,583 11.7%Amortization of intangible assets (6) 1,325 0.4% 14,438 2.2% 6,259 4.1% 5,751 1.3% 27,773 1.8%Non-cash share-based compensation (7) 1,344 0.4% 2,470 0.4% 1,319 0.9% 3,350 0.8% 8,483 0.5%Adjusted operating income (non-GAAP) $61,374 19.8% $75,538 11.8% $19,728 12.9% $60,199 13.7% $216,839 14.0% Fiscal Year Ended February 28, 2015 (in thousands) Housewares Health & Home NutritionalSupplements (9) Beauty Total Operating income, as reported (GAAP) $59,392 20.0% $50,821 8.3% $9,512 9.5% $41,994 9.6% $161,719 11.2%Asset impairment charges (1) - -% - -% - -% 9,000 2.1% 9,000 0.6%Acquisition-related expenses (3) - -% - -% 3,611 3.6% - -% 3,611 0.2%Subtotal 59,392 20.0% 50,821 8.3% 13,123 13.1% 50,994 11.7% 174,330 12.1%Amortization of intangible assets (6) 1,345 0.5% 13,878 2.3% 4,171 4.2% 5,934 1.4% 25,328 1.8%Non-cash share-based compensation (7) 758 0.3% 1,115 0.2% 499 0.5% 3,602 0.8% 5,974 0.4%Adjusted operating income (non-GAAP) $61,495 20.8% $65,814 10.7% $17,793 17.7% $60,530 13.9% $205,632 14.2%In the tables above, footnote references (1) to (7) correspond to the notes beginning on page 34 under the heading entitled “Net Incomeand EPS, Adjusted Income and Adjusted EPS.” Adjusted operating income and adjusted operating margin may be considered non-GAAPfinancial measures as set forth 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 beginning on page 35. (8)Includes eleven and a half months of incremental operating results for Hydro Flask, acquired on March 18, 2016. (9)Fiscal 2015 includes eight months of incremental operating results for Healthy Directions, which was acquired on June 30, 2014.Fiscal 2016 and thereafter includes a full year of operating results. 32 Table of ContentsConsolidatedConsolidated operating income increased 25.8% to $164.3 million for fiscal 2017 compared to $130.6 million for fiscal2016. Consolidated adjusted operating income was $222.0 million, or 14.4% of net sales, compared to $216.8 million,or 14.0% of net sales for fiscal 2016. The 0.4 percentage point increase in consolidated adjusted operating marginprimarily reflects accretion from the acquisition of Hydro Flask, the rationalization of low-margin business, and lowerproduct costs, partially offset by the unfavorable impact from foreign currency, the unfavorable impact ofapproximately $8.8 million, or 0.4 percentage points, from the re-measurement of our Venezuelan financial statementsat a new market-based exchange rate, higher compensation expense and higher advertising expense. HousewaresThe Housewares segment’s operating income increased $33.0 million, or 58.2%, to $89.6 million for fiscal 2017compared to fiscal 2016. Segment adjusted operating income increased 55.6% to $95.5 million, or 22.8% of segmentnet sales, compared to $61.4 million, or 19.8% of segment net sales, in fiscal 2016. The 3.0 percentage point increasein segment adjusted operating margin is primarily due to the accretive impact of the Hydro Flask acquisition, whichincreased the segment adjusted operating margin by 3.0 percentage points, as well as core business improvements ininbound freight costs, product cost savings and channel mix. These improvements were offset by higher incentivecompensation costs, increased media advertising expense and the unfavorable impact of foreign currency fluctuations. Health & HomeThe Health & Home segment’s operating income increased $14.2 million, or 37.3%, to $52.3 million for fiscal 2017compared to fiscal 2016. Segment adjusted operating income decreased 4.1% to $72.5 million, or 11.5% of segmentnet sales, compared to $75.5 million, or 11.8% of segment net sales, in fiscal 2016. The 0.3 percentage point decreasein segment adjusted operating margin is primarily due to an increase in media advertising to support new productintroductions and drive category awareness, as well as the unfavorable impact of foreign currency fluctuations. Thesefactors were partially offset by a year-over-year increase in gross profit margin driven by lower product costs andfavorable product/customer mix. Nutritional Supplements The Nutritional Supplements segment’s operating loss was $7.9 million compared to operating income of $11.4 millionin fiscal 2016. Segment adjusted operating income decreased 48.2% to $10.2 million, or 7.8% of segment net sales,compared to $19.7 million, or 12.9% of segment net sales, in fiscal 2016. The 5.1 percentage point decrease in segmentadjusted operating margin is primarily due the net sales decline and its unfavorable impact on operating leverage,partially offset by lower promotion, advertising, and customer acquisition costs and lower incentive compensationcosts. BeautyThe Beauty segment’s operating income increased $5.9 million, or 24.1%, to $30.3 million for fiscal 2017 compared tofiscal 2016. Segment adjusted operating income decreased 27.1% to $43.9 million, or 12.3% of segment net sales,compared to $60.2 million, or 13.7% of segment net sales, in fiscal 2016. The 1.4 percentage point decrease in adjustedoperating margin is primarily due to the impact of a change in the rate used to re-measure our Venezuelan financialstatements, which had a comparative unfavorable impact on operating income of approximately $8.4 million andadjusted operating margin of approximately 2.4 percentage points, foreign currency fluctuations, and other net salesdeclines and their unfavorable impact on operating leverage. These factors were partially offset by reduced productcosts, a higher margin sales mix, and lower incentive compensation expense. Interest ExpenseInterest expense was $14.9 million in fiscal 2017 compared to $11.1 million in fiscal 2016. The increase in interestexpense is due to: ·higher levels of debt as a result of borrowings used to fund the repurchase of $75.0 million of the Company’soutstanding common stock and the $210.0 million acquisition of Hydro Flask in fiscal 2017; and ·higher average interest rates in fiscal 2017 compared to fiscal 2016. 33 Table of ContentsIncome Tax Expense Our fiscal 2017 income tax expense was $9.2 million and our effective tax rate was 6.1%, compared to $18.6 millionand 15.5% respectively in fiscal 2016. The year-over-year comparison of our effective tax rates was impacted by themix of taxable income in our various tax jurisdictions. Due to the Company’s organization in Bermuda and theownership structure of its foreign subsidiaries, many of which are not owned directly or indirectly by a U.S. parentcompany, an immaterial amount of the Company’s foreign income is subject to U.S. taxation on a permanent basisunder current law. Additionally, the Company’s intellectual property is largely owned by foreign subsidiaries of theCompany, resulting in proportionally higher earnings in jurisdictions with lower statutory tax rates, which decreases theCompany’s overall effective tax rate. The fiscal 2017 effective tax rate was also favorably impacted by: ·a $4.1 million tax benefit resulting from non-cash impairment charges of $12.4 million; ·$1.8 million in tax benefits resulting from the recognition of excess tax benefits from share-based compensation inincome tax expense rather than paid in capital due to our adoption of ASU 2016-09; ·$1.6 million in tax benefits related to the resolution of uncertain tax positions; and ·tax benefits of $1.5 million in due to the finalization of certain tax returns. These items had the combined effect of lowering our effective tax rate by 5.1 percentage points. Net Income, EPS, Adjusted Income (non-GAAP), and Adjusted EPS (non-GAAP)In order to provide a better understanding of the impact of certain items on our net income and EPS, the analysis thatfollows reports the comparative after tax impact of non-cash asset impairment charges, CEO succession costs,acquisition-related expenses, Venezuelan currency re-measurement related charges, patent litigation charges,amortization of intangible assets, and non-cash share-based compensation, as applicable, on our net income, and basicand diluted EPS for the periods covered below. Fiscal Years Ended theLast Day of February, Basic EPS Diluted EPS(dollars in thousands, except pershare data) 2017 2016 2015 2017 2016 2015 2017 2016 2015Net income as reported (GAAP) $140,689 $101,228 $131,164 $5.11 $3.58 $4.59 $5.04 $3.52 $4.52Asset impairment charges, net oftax (1) 8,295 5,312 8,155 0.30 0.19 0.29 0.30 0.18 0.28CEO succession costs, net of tax (2) - 4,645 - - 0.16 - - 0.16 -Acquisition-related expenses, net oftax (3) - 696 2,306 - 0.03 0.08 - 0.02 0.08Venezuelan re-measurement relatedcharges, net of tax (4) - 18,733 - - 0.66 - - 0.65 -Patent litigation charge, net of tax(5) 1,464 17,785 - 0.05 0.63 - 0.05 0.62 -Subtotal 150,448 148,399 141,625 5.46 5.25 4.96 5.39 5.16 4.88Amortization of intangible assets,net of tax (6) 24,338 24,063 22,985 0.88 0.85 0.80 0.87 0.84 0.79Non-cash share-basedcompensation, net of tax (7) 13,102 7,199 5,312 0.48 0.25 0.19 0.47 0.25 0.18Adjusted income (non-GAAP) $187,888 $179,661 $169,922 $6.82 $6.35 $5.95 $6.73 $6.25 $5.85 Weighted average shares of commonstock used in computing basic anddiluted EPS 27,522 28,273 28,579 27,891 28,749 29,035(1)Includes non-cash intangible asset impairment charges in fiscal 2017, 2016 and 2015 of $12.4, $6.0 and $9.0 million, respectively,net of taxes of $4.1, $0.7 and $0.8 million, respectively. (2)Includes CEO succession costs in connection with the settlement of a lawsuit with our former CEO recorded in fiscal 2016 of $6.7million, net of taxes of $2.1 million. (3)Includes acquisition expenses incurred for Hydro Flask and Healthy Directions recorded in fiscal 2016 and 2015, of $0.7 and $3.6million, respectively, net of taxes of $0 and $1.3 million, respectively. (4)Includes Venezuelan currency re-measurement related charges recorded in fiscal 2016 of $18.7 million (before and after tax). (5)Includes patent litigation charges recorded in fiscal 2017 and 2016, of $1.5 and $17.8 million (before and after tax), respectively.34 Table of Contents(6)Includes amortization of intangible assets in fiscal 2017, 2016 and 2015, of $28.3, $27.8 and $25.3 million, respectively, net of taxesof $4.0, $3.7 and $2.3 million, respectively. (7)Includes non-cash share-based compensation expense in fiscal 2017, 2016 and 2015, of $15.5, $8.5 and $6.0 million, respectively, netof taxes of $2.4, $1.3 and $0.7 million, respectively. Our net income was $140.7 million for fiscal 2017 compared to $101.2 million for fiscal 2016, an increase of 39.0%.Our diluted earnings per share increased $1.52, or 43.2%, to $5.04 for fiscal 2017 compared to $3.52 for fiscal 2016. Adjusted income increased $8.2 million, or 4.6%, for fiscal 2017 compared to fiscal 2016. Adjusted diluted EPS was$6.73 for fiscal 2017 compared to $6.25 for fiscal 2016. The increase in adjusted income was primarily due to anincrease in adjusted operating income and lower tax expense, partially offset by higher interest expense. The increase inadjusted diluted EPS was due to increased adjusted income and the repurchase of 922,731 shares during fiscal 2017. The tables referred to beginning on pages 32 and 34 under the headings “Operating Income, Operating Margin,Adjusted Operating Income (non-GAAP) and Adjusted Operating Margin (non-GAAP) by Segment” and “Net Income,EPS, Adjusted Income (non-GAAP), and Adjusted EPS (non-GAAP),” respectively report operating income, operatingmargin, net income and EPS without the impact of non-cash asset impairment charges, CEO succession costs,acquisition-related expenses, Venezuelan currency re-measurement related charges, patent litigation charges,amortization of intangible assets, and non-cash share-based compensation for the periods presented, asapplicable. These measures may be considered non-GAAP financial information as set forth in SEC Regulation G, Rule100. The preceding table reconciles these measures to their corresponding GAAP-based measures presented in ourconsolidated statements of income. We believe that adjusted operating income, adjusted operating margin, adjustedincome and adjusted EPS provide useful information to management and investors regarding financial and businesstrends relating to the Company’s financial condition and results of operations. We believe that these non-GAAPfinancial measures, in combination with the Company’s financial results calculated in accordance with GAAP, provideinvestors with additional perspective regarding the impact of such charges on net income and earnings per share. Wealso believe that these non-GAAP measures facilitate a more direct comparison of the Company’s performance with itscompetitors. We further believe that including the excluded charges would not accurately reflect the underlyingperformance of the Company’s continuing operations for the period in which the charges are incurred, even thoughsuch charges may be incurred and reflected in the Company’s GAAP financial results in the near future. The materiallimitation associated with the use of the non-GAAP financial measures is that the non-GAAP measures do not reflect thefull economic impact of the Company's activities. The Company’s adjusted operating income, adjusted operatingmargin, adjusted income and adjusted EPS are not prepared in accordance with GAAP, are not an alternative to GAAPfinancial information and may be calculated differently than non-GAAP financial information disclosed by othercompanies. Accordingly, undue reliance should not be placed on non-GAAP information. 35 Table of ContentsComparison of Fiscal 2016 to Fiscal 2015 Consolidated and Segment Net SalesThe following table summarizes the impact that acquisitions and foreign currency had on our net sales revenue bysegment: Fiscal Year Ended February 29, 2016 (in thousands) Housewares Health & Home (1) NutritionalSupplements (2) Beauty Total Fiscal 2015 sales revenue, net$296,252 $613,253 $100,395 $435,231 $1,445,131 Core business 15,662 39,697 (154) 14,287 69,492 Impact of foreign currency (1,251) (18,202) - (10,341) (29,794) Acquisitions - 7,987 52,885 - 60,872 Change in sales revenue, net 14,411 29,482 52,731 3,946 100,570 Fiscal 2016 sales revenue, net$310,663 $642,735 $153,126 $439,177 $1,545,701 Total net sales revenue growth 4.9% 4.8% 52.5% 0.9% 7.0%Core business 5.3% 6.5% (0.2)% 3.3% 4.8%Impact of foreign currency (0.4)% (3.0)% 0.0% (2.4)% (2.1)%Acquisitions 0.0% 1.3% 52.7% 0.0% 4.2%(1)Fiscal 2016 includes eleven months of incremental operating results from the Vicks VapoSteam inhalant business acquisition,acquired on March 31, 2015. (2)Fiscal 2016 includes four months of incremental operating results from the Healthy Directions acquisition, acquired on June 30, 2014. Consolidated Net Sales RevenueConsolidated net sales revenue increased $100.6 million, or 7.0%, to $1,545.7 million for fiscal 2016 compared to$1,445.1 million for fiscal 2015. The change was driven by: ·a core business increase of $69.5 million, or 4.8%;·growth from acquisitions of $60.9 million, or 4.2%; and ·the unfavorable impact of net foreign currency fluctuations of approximately $29.8 million, or 2.1%.Segment Net Sales Revenue HousewaresNet sales revenue in the Housewares segment increased $14.4 million, or 4.9%, to $310.7 million for fiscal 2016,compared to $296.3 million for fiscal 2015. The change was driven by:·core business growth of $15.7 million, or 5.3%, primarily due to innovative category extensions and expandedshelf space in traditional and online sales channels, partially offset by higher year-over-year promotional discountsin support of new product introductions; and·the unfavorable impact of net foreign currency fluctuations of approximately $1.3 million, or 0.4%.36 Table of ContentsHealth & Home Net sales revenue in the Health & Home segment increased $29.5 million, or 4.8%, to $642.7 million for fiscal 2016compared to $613.3 million for fiscal 2015. The change was driven by: ·core business growth of $39.7 million, or 6.5%, primarily due to new product introductions in thermometry andhumidification and expanded distribution in Europe, growth in water filtration driven by greater consumerawareness of water quality issues and high sell-through of fan shipments in the U.S., Canada and Europe due tosustained high summer temperatures, partially offset by the impact of a weak cough/cold/flu season;·growth from acquisitions of $8.0 million, or 1.3%, representing eleven months of operating results from theacquisition of Vicks VapoSteam; and·the unfavorable impact of net foreign currency fluctuations of approximately $18.2 million, or 3.0%. Nutritional SupplementsThe Nutritional Supplements segment includes the operating results from Healthy Directions, which we acquired onJune 30, 2014. The Nutritional Supplements segment contributed net sales revenue of $153.1 million in fiscal 2016.Core business net sales in the Nutritional Supplements segment for the eight months of comparable operating resultssince acquisition declined by $0.2 million as growth in direct-to-consumer product sales were offset by declines in thelegacy print newsletter subscription business, which was de-emphasized as part of the segment’s growth strategy. BeautyNet sales revenue in the Beauty segment increased $4.0 million, or 0.9%, to $439.2 million for fiscal 2016 comparedwith $435.2 million for fiscal 2015. The change was driven by:·a core business increase of $14.3 million, or 3.3%, due to the impacts of hyperinflation in Venezuela, lowerpromotional discounts, and new products in the appliances and accessories categories; partially offset by declinesin personal care due to continued competitive pressures; and·the unfavorable impact of net foreign currency fluctuations of approximately $10.3 million, or 2.4%.Beauty segment net sales revenue includes sales from our operations in Venezuela of $22.0 and $10.3 million in fiscal2016 and 2015, respectively. As further discussed in Note 3 to the accompanying consolidated financial statements andunder “Overview” above, we changed the rate used to re-measure our Venezuelan financial statements as of February29, 2016. At the new exchange rate, we expect that U.S. reported net sales will no longer be meaningful to ourconsolidated and Beauty segment net sales. Gross Profit Margin:Consolidated gross profit margin for fiscal 2016 decreased 0.4 percentage points to 41.1%, compared to 41.5% forfiscal 2015. The decrease in consolidated gross profit margin is primarily due to: ·a re-measurement related charge of $9.1 million with respect to Venezuelan inventory at February 29, 2016, whichreduced consolidated gross profit margin by 0.6 percentage points; and ·the unfavorable impact of net foreign currency fluctuations. These factors were partially offset by an incremental four months of operating results from the Nutritional Supplementssegment, which increased consolidated gross profit margin by 1.1 percentage points. 37 Table of ContentsSelling, General and Administrative Expense:Our consolidated SG&A ratio increased 2.6 percentage points to 32.4% for fiscal 2016, compared to 29.7% for fiscal2015. The increase in the consolidated SG&A ratio is primarily due to: ·Venezuelan re-measurement related charges of $9.6 million, which increased the SG&A ratio by 0.6 percentagepoints; ·the impact of a $17.8 million patent litigation charge recorded in the fourth quarter of fiscal 2016, which increasedthe SG&A ratio by 1.2 percentage points; ·the impact of $6.7 million of CEO succession costs recorded as result of a settlement with our former CEO, whichincreased the SG&A ratio by 0.4 percentage points; ·the unfavorable comparison resulting from a $7.0 million gain from the amendment of a trademark licenseagreement in fiscal 2015, which decreased the comparative period SG&A ratio by 0.5 percentage points; 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 cash flow hedges and a cross-currencydebt swap; ·lower outbound freight costs; and ·the impact that higher overall net sales had on operating leverage. Asset Impairment Charges Fiscal 2016We performed interim impairment testing in the fourth quarter of fiscal 2016 for certain of our brands as a result ofrevised growth outlooks. As a result of our testing, we recorded a non-cash asset impairment charge of $3.0 million($2.7 million after tax). We performed our annual evaluation of goodwill and indefinite-lived intangible assets forimpairment during the first quarter of fiscal 2016. As a result of our testing of indefinite-lived trademarks, we recordeda non-cash asset impairment charge of $3.0 million ($2.7 million after tax). The charges in both quarters were related tocertain trademarks in our Beauty segment, which were written down to fair value, determined on the basis of futurediscounted cash flows using the relief from royalty valuation method. Fiscal 2015We performed our annual evaluation of goodwill and indefinite-lived intangible assets for impairment during the firstquarter of fiscal 2015. As a result of our testing of indefinite-lived trademarks and licenses, we recorded a non-cashasset impairment charge of $9.0 million ($8.2 million after tax). The charge was related to certain trademarks in ourBeauty segment, which were written down to their estimated fair value, determined on the basis of future discountedcash flows using the relief from royalty valuation method. 38 Table of ContentsOperating Income, Operating Margin, Adjusted Operating Income (non-GAAP), and Adjusted Operating Margin(non-GAAP) by SegmentAdjusted operating income and adjusted operating margin 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-GAAP financialinformation is useful and the nature and limitations of the non-GAAP financial measures is furnished beginning onpage 35. ConsolidatedConsolidated operating income decreased 19.2% to $130.6 million for fiscal 2016 compared to $161.7 million for fiscal2015. Consolidated adjusted operating income increased 5.4% to $216.8 million, or 14.0% of consolidated net sales,compared to $205.6 million, or 14.2% of net sales for fiscal 2015. The 0.2 percentage point decrease in consolidatedadjusted operating margin primarily reflects the unfavorable impact of foreign currency fluctuations and thecomparative impact of a $7.0 million gain from the amendment of a license agreement recorded in fiscal year 2015,partially offset by sales growth, improved operating leverage and the impact of hyperinflation in Venezuela. HousewaresThe Housewares segment’s operating income decreased $2.7 million, or 4.6%, to $56.7 million for fiscal 2016compared to fiscal 2015. Segment adjusted operating income decreased 0.2% to $61.4 million or 19.8% of segment netsales, compared to $61.5 million or 20.8% of net sales in fiscal 2015. The 1.0 percentage point decrease in segmentadjusted operating margin is primarily due to higher promotional spending, increased media advertising in support ofnew products and categories, higher compensation expense incurred to support category expansion and increasedoperating capacity, and lower margin kitchen electric sales. Health & HomeThe Health & Home segment’s operating income decreased $12.7 million, or 25.1%, to $38.1 million for fiscal 2016compared to fiscal 2015. Segment adjusted operating income increased 14.8% to $75.5 million or 11.8% of segmentnet sales, compared to $65.8 million or 10.7% of net sales in fiscal 2015. The 1.1 percentage point increase in segmentadjusted operating margin is primarily due to favorable operating leverage from net sales revenue growth and marginaccretion from the VapoSteam acquisition, partially offset by the unfavorable impact of foreign currency fluctuations onU.S. Dollar reported net sales, and the unfavorable comparative impact of a $7.0 million gain from the amendment of atrademark license agreement recorded in fiscal 2015. Nutritional SupplementsThe Nutritional Supplements segment’s operating income includes the operating results from Healthy Directions, whichwe acquired on June 30, 2014. The Nutritional Supplements segment contributed operating income of $11.5 million infiscal 2016. Segment adjusted operating margin for fiscal 2016 was 12.9% of segment net sales compared to 17.7% ofsegment net sales for the eight months of operating results included in fiscal 2015. The decrease in segment adjustedoperating margin is primarily due to: ·a decline of 3.1 percentage points from an allocation of $4.7 million of shared service and corporate overheadexpenses that were not made in fiscal 2015, the year of acquisition; and ·increased investments in promotions, advertising, customer acquisition, and online sales channel development. BeautyThe Beauty segment’s operating income decreased $17.6 million, or 41.8%, to $24.4 million for fiscal 2016 comparedto fiscal 2015. Segment adjusted operating income decreased 0.5% to $60.2 million or 13.7% of segment net sales,compared to $60.5 million or 13.9% in fiscal 2015. The 0.2 percentage point decrease in segment adjusted operatingmargin is primarily due the unfavorable impact of foreign currency fluctuations on U.S. Dollar reported net salesrevenue. Interest ExpenseInterest expense decreased to $11.1 million in fiscal 2016 compared to $15.0 million in fiscal 2015. The decrease ininterest expense is due to lower interest rates incurred on borrowings under our credit facility and lower term debtoutstanding in fiscal 2016, which accrued interest at comparatively higher rates than under our credit facility.39 Table of ContentsIncome Tax ExpenseOur fiscal year 2016 income tax expense was $18.6 million and our effective tax rate was 15.5% compared to $16.1million and 10.9% in fiscal 2015. The year-over-year comparison of our effective tax rates was primarily impacted bythe mix of taxable income in our various tax jurisdictions. The fiscal 2016 effective tax rate was also impacted by: ·the unfavorable effect of Venezuelan currency re-measurement and non-cash impairment charges of $18.7 million,with no related tax benefit; ·the unfavorable effect of a patent litigation charge of $17.8 million with minimal related tax benefit; ·the impact of unfavorable foreign currency exchange fluctuations on income before tax, with no related tax benefit;and ·tax benefits of $2.1 million due to the finalization of certain tax returns and changes in uncertain tax positions. These items had the combined effect of increasing our effective tax rate by 2.3 percentage points. Net Income, EPS, Adjusted Income (non-GAAP), and Adjusted EPS (non-GAAP)Adjusted income and adjusted EPS may be considered non-GAAP financial measures as set forth in SEC Regulation G,Rule 100. An explanation of the reasons why the Company believes the non-GAAP financial information is useful andthe nature and limitations of the non-GAAP financial measures is furnished beginning on page 35. Our net income was $101.2 million for fiscal 2016 compared to $131.1 million for fiscal 2015, a decrease of 22.8%.Our diluted EPS decreased $1.00, or 22.1%, to $3.52 for fiscal 2016 compared to $4.52 for fiscal 2015. Adjusted income increased $9.7 million, or 5.7%, for fiscal 2016 compared to fiscal 2015. Adjusted diluted EPS was$6.25 for fiscal 2016 compared to $5.85 for fiscal 2015. The increase in adjusted income was primarily due to overallsales growth, lower interest expense, and a slight decline in adjusted operating margin of 0.2 percentage points, despitethe unfavorable impact of foreign exchange fluctuations in fiscal 2016 and the comparative impact of a $7.0 millionafter tax gain from the amendment of a trademark license agreement recorded in fiscal 2015. The increase in adjusteddiluted EPS was due to increased adjusted income and lower diluted shares outstanding compared to fiscal 2015. 40 Table of ContentsFinancial Condition, Liquidity and Capital Resources Selected measures of our liquidity and capital utilization for fiscal 2017 and 2016 are shown below: SELECTED MEASURES OF OUR LIQUIDITY AND CAPITAL UTILIZATION (1) Year Ended February 28, 2017 2016 Accounts Receivable Turnover (Days) 55.3 52.4 Inventory Turnover (Times) (2) 2.8 2.9 Working Capital (in thousands) (3) $266,711 $487,486 Current Ratio (3) 1.9:1 2.8:1 Ending Debt to Ending Equity Ratio (3) 47.6% 66.7% Return on Average Equity (4) 14.4% 10.9% (1)Accounts receivable turnover, inventory turnover and return on average equity computations use 12 month trailing net sales revenue,cost of goods sold or net income components as required by the particular measure. The current and four prior quarters' endingbalances of accounts receivable, inventory and equity are used for the purposes of computing the average balance component asrequired by the particular measure.(2)For fiscal 2016, inventory turnover without the impact of a $9.1 million non-cash inventory impairment charge due to Venezulancurrency re-measurement was 2.8 times.(3)As a result of the adoption of new accounting pronouncements in fiscal 2017, we reclassified certain elements of working capital fromcurrent to long-term. Corresponding prior year amounts were reclassified to conform to the current year’s presentation. Refer to Note 4in the accompanying consolidated financial statements for further information. (4)Net income and average equity for fiscal years 2017 and 2016 include after tax non-cash asset impairment charges of $8.3 and $5.3million, respectively, and after-tax patent litigation charges of $1.5 and $17.8, respectively. In addition, net income and averageequity for fiscal year 2016 include after tax acquisition-related expenses $0.7 million, after tax CEO succession costs of $4.7 millionand after tax Venezuelan currency re-measurement related charges of $18.7 million. For fiscal years 2017 and 2016, these items had anunfavorable impact of 0.9 and 4.9 percentage points, respectively, on the return on average equity. Operating Activities Comparison of Fiscal 2017 to Fiscal 2016Operating activities provided $228.5 million of cash during fiscal 2017 compared to $186.5 million of cash providedduring fiscal 2016. The increase in operating cash flow was primarily due to the increase in net income and netfavorable fluctuations in working capital components. Accounts receivable increased $12.4 million to $229.9 million at the end of fiscal 2017, compared to $217.5 million atthe end of fiscal 2016. Accounts receivable turnover increased to 55.3 days from 52.4 days in fiscal 2016. Inventory decreased $12.5 million to $289.1 million at the end of fiscal 2017, compared to $301.6 million at the end offiscal 2016. Inventory as of February 28, 2017 includes $25.0 million from the Hydro Flask acquisition. Inventoryturnover was 2.8 times for fiscal 2017 compared to 2.9 times for fiscal 2016. Working capital was $266.7 million at the end of fiscal 2017, compared to $487.5 million at the end of fiscal 2016. Thedecrease in working capital was primarily due to the use of $210 million in cash held at the end of fiscal 2016 to fundthe Hydro Flask acquisition in March 2016. 41 Table of ContentsComparison of Fiscal 2016 to Fiscal 2015Operating activities provided $185.3 million of cash during fiscal 2016 compared to $178.6 million of cash providedduring fiscal 2015. The increase in operating cash flow was primarily due to fluctuations in working capitalcomponents. Accounts receivable decreased $5.0 million to $217.5 million at the end of fiscal 2016, compared to $222.5 million atthe end of fiscal 2015. Accounts receivable turnover improved to 52.4 days from 58.6 days in fiscal year 2015. Thechange in accounts receivable turnover is primarily due to the impact of an additional four months of NutritionalSupplements net sales without a corresponding increase in accounts receivable, as the segment collects most of itsrevenue upon shipment of product. Inventory increased $8.5 million to $301.6 million at the end of fiscal 2016, compared to $293.1 million at the end offiscal 2015. Inventory turnover increased to 2.9 times per year from 2.7 times per year in fiscal 2015. We believe theimprovement in inventory turnover is due primarily to improvements in our supply chain operations and SKUrationalization efforts, as well as the impact of the Nutritional Supplements segment, which turns inventory at a higherrate than the rest of our segments. Working capital was $487.5 million at the end of fiscal 2016, compared to $277.9 million at the end of fiscal 2015. Theincrease in working capital was primarily the result of a $210 million draw on our revolving credit facility shortlybefore the end of fiscal 2016 to facilitate the closing of the Hydro Flask acquisition in March 2016. Investing Activities Investing activities used cash of $229.9, $63.7 and $202.5 million in fiscal 2017, 2016 and 2015, respectively. Highlights from Fiscal 2017·we spent $0.6 million on building and improvements, $13.5 million on computers, software implementations andenhancements, furniture and other equipment, $5.5 million on tools, molds and other capital asset additions, and$1.0 million on the development of new patents; and ·we paid $209.3 million to acquire Hydro Flask. Highlights from Fiscal 2016·we spent $6.4 million on building and improvements, $10.6 million on computers, software implementations andenhancements, $2.5 million on tools, molds and other capital asset additions and $1.1 million on the developmentof new patents; and ·we paid $42.8 million to acquire the Vicks VapoSteam inhalant business in the Health & Home segment. Highlights from Fiscal 2015·we spent $3.0 million on information technology infrastructure, building and improvements and furniture and otherequipment, $2.4 million on tools, molds and other capital asset additions and $1.2 million on the development ofnew patents; and ·we paid $195.9 million to acquire Healthy Directions. Financing Activities: Financing activities provided (used) cash of ($201.4), $90.7 and ($34.5) million in fiscal 2017, 2016 and 2015,respectively. Highlights from Fiscal 2017·we had draws of $470.9 million against our credit agreement; ·we repaid $580.3 million drawn against our credit agreement; ·we repaid $23.8 million of long-term debt; and 42 Table of Contents·we repurchased and retired 929,017 shares of common stock at an average price of $81.37 per share for a totalpurchase price of $75.6 million through a combination of the settlement of certain stock awards and open marketpurchases. Highlights from Fiscal 2016·we had draws of $802.6 million against our credit agreement, including $210 million drawn shortly before fiscalyear end to facilitate the closing of the Hydro Flask acquisition in March 2016; ·we repaid $590.0 million drawn against our credit agreement; ·we repaid $21.9 million of long-term debt; ·we issued 276,548 shares of common stock as payment for $15 million in separation compensation due to ourformer CEO, and he tendered back 116,012 shares as payment for $12 million in related federal income taxwitholding obligations; and ·we repurchased and retired 1,244,090 shares of common stock at an average price of $85.53 per share for a totalpurchase price of $106.4 million through a combination of the settlement of certain stock awards and open marketpurchases. Highlights from Fiscal 2015·we had draws of $769.0 million against our credit agreement; ·we repaid $431.5 million drawn against our credit agreement; ·we repaid $96.9 million of long-term debt; and ·we repurchased and retired 4,174,093 shares of common stock at an average price of $66.70 per share for a totalpurchase price of $278.4 million through a combination of a modified “Dutch auction” tender offer, the settlementof certain stock awards and open market purchases.Credit Agreement and Other Debt Agreements Credit AgreementWe 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 $1 billion as of February 28, 2017. Thecommitment under the Credit Agreement terminates on December 7, 2021. Borrowings accrue interest under one of twoalternative methods as described in the Credit Agreement. With each borrowing against our credit line, we can elect theinterest rate method based on our funding needs at the time. We also incur loan commitment and letter of credit feesunder the Credit Agreement. Outstanding letters of credit reduce the borrowing availability under the Credit Agreementon a dollar-for-dollar basis. In connection with an amendment to our Credit Agreement in fiscal 2017, we incurred atotal of $2.3 million in new debt acquisition costs that are being amortized over the term of the Credit Agreement. As ofFebruary 28, 2017, the outstanding revolving loan principal balance was $440.7 million and the balance of outstandingletters of credit was $1.5 million. As of February 28, 2017, the amount available for borrowings under the CreditAgreement was $557.8 million. Covenants in our debt agreements limit the amount of total indebtedness we can incur.As of February 28, 2017 these covenants effectively limited our ability to incur more than $280.6 million of additionaldebt from all sources, including our Credit Agreement. Other Debt AgreementsIn addition to the Credit Agreement, at February 28, 2017, we had an aggregate principal balance of $20 million of3.9% Senior Notes due January 2018 with one remaining installment due in January 2018. We also have an aggregate principal balance of approximately $30 million under a loan agreement with the MississippiBusiness Finance Corporation (the “MBFC Loan”). The borrowings were used to fund construction of our OliveBranch, Mississippi distribution facility. $3.8 and $1.9 million in principal payments were made on March 1, 2016 and2015, respectively. The remaining loan balance is payable as follows: $5.7 million on March 1, 2017; $1.9 million onMarch 1,43 Table of Contents2018 through 2022; and $14.8 million on March 1, 2023. Any remaining outstanding principal and interest is due uponmaturity on March 1, 2023. Our debt agreements require the maintenance of certain key financial covenants, defined in the table below. Our debtagreements also contain other customary covenants, including, among other things, covenants restricting or limiting us,except under certain conditions set forth therein, from (1) incurring debt, (2) incurring liens on its properties, (3)making certain types of investments, (4) selling certain assets or making other fundamental changes relating to mergersand consolidations, and (5) repurchasing shares of our common stock and paying dividends. Our debt agreements alsocontain customary events of default, including failure to pay principal or interest when due, among others. Our debtagreements are cross-defaulted to each other. Upon an event of default under our debt agreements, the holders orlenders may,among other things, accelerate the maturity of any amounts outstanding under our debt agreements. The commitmentsof the lenders to make loans to us under the Credit Agreement are several and not joint. Accordingly, if any lender failsto make loans to us, our available liquidity could be reduced by an amount up to the aggregate amount of such lender’scommitments under the credit facility. The table below provides the formulas currently in effect under various provisions contained in certain key financialcovenants under our debt agreements: Applicable Financial CovenantCredit Agreement and MBFC Loan3.9% Senior Notes $500 MillionMinimum Consolidated Net WorthNone+ 25% of Fiscal Quarter Net Earnings After August 31, 2010 (1) EBIT (2)EBIT (2) ÷÷Interest Coverage RatioInterest 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 Acquisitions][EBITDA (2) + Pro Forma Effect of 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 so thatthe EBITDA of the acquired business included in the computation equals its twelve monthtrailing 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.44 Table of ContentsContractual ObligationsOur contractual obligations and commercial commitments in effect as of the end of fiscal 2017 were: PAYMENTS DUE BY PERIOD - TWELVE MONTHS ENDED THE LAST DAY OF FEBRUARY: 2018 2019 2020 2021 2022 After(in thousands) Total 1 year 2 years 3 years 4 years 5 years 5 yearsFixed rate debt $20,000 $20,000 $ - $ - $ - $ - $ -Floating rate debt 470,707 5,700 1,900 1,900 1,900 442,600 16,707Long-term incentive plan payouts 12,840 6,630 3,716 2,494 - - -Interest on fixed rate debt 676 676 - - - - -Interest on floating rate debt (1) 47,995 10,050 10,006 9,963 9,920 7,717 339Open purchase orders 193,434 193,434 - - - - -Long-term purchase commitments 804 501 303 - - - -Minimum royalty payments 62,820 13,089 12,841 12,947 9,856 8,895 5,192Advertising and promotional 56,006 19,879 7,145 7,253 7,337 7,413 6,979Operating leases 37,143 6,511 5,936 4,440 4,118 3,878 12,260Capital spending commitments 683 683 - - - - -Total contractual obligations (2) $903,108 $277,153 $41,847 $38,997 $33,131 $470,503 $41,477(1)We estimate our future obligations for interest on our floating rate debt by assuming the weighted average interest rates in effect oneach floating rate debt obligation at February 28, 2017 remain constant into the future. This is an estimate, as actual rates will varyover time. In addition, for the Credit Agreement, we assume that the balance outstanding as of February 28, 2017 remains the same forthe remaining term of the agreement. The actual balance outstanding under our Credit Agreement may fluctuate significantly in futureperiods, depending on the availability of cash flow from operations and future investing and financing considerations. (2)In addition to the contractual obligations and commercial commitments in the table above, as of February 28, 2017, we have recordeda provision for uncertain tax positions of $6.6 million. We are unable to reliably estimate the timing of most of the future payments, ifany, related to uncertain tax positions; therefore, we have excluded these tax liabilities from the table above. Off-Balance Sheet ArrangementsWe have no existing activities involving special purpose entities or off-balance sheet financing. Current and Future Capital NeedsBased 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. We may also elect to repurchaseadditional shares of common stock up to the balance of our current authorization over the next fiscal year, subject tolimitations contained in our debt agreements and based upon our assessment of a number of factors, including shareprice, trading volume and general market conditions, working capital requirements, general business conditions,financial conditions, any applicable contractual limitations, and other factors, including alternative investmentopportunities. For additional information, see Part II, Item 5., “Unregistered Sales of Equity Securities and Use ofProceeds” in this report. As of February 28, 2017, the amount of cash and cash equivalents held by our foreignsubsidiaries was $18.9 million, of which, an immaterial amount was held in foreign countries where the funds may notbe readily convertible into other currencies. 45 Table of ContentsCritical Accounting Policies and Estimates The SEC defines critical accounting policies as those that are both most important to the portrayal of a company'sfinancial condition and results, and require management’s most difficult, subjective or complex judgments, often as aresult of the need to make estimates about the effect of matters that are inherently uncertain. We consider the followingpolicies to meet this definition. Income TaxesWe must make certain estimates and judgments in determining income tax expense for financial statement purposes.These estimates and judgments must be used in the calculation of certain tax assets and liabilities because of differencesin the timing of recognition of revenue and expense for tax and financial statement purposes. We must assess thelikelihood that we will be able to recover our deferred tax assets. If recovery is not likely, we must increase ourprovision for taxes by recording a valuation allowance against the deferred tax assets that we estimate will notultimately be recoverable. As changes occur in our assessments regarding our ability to recover our deferred tax assets,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 of complex taxregulations. We recognize liabilities for uncertain tax positions based on the two-step process prescribed within GAAP.The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicatesthat it is more likely than not that the position will be sustained on audit based upon its technical merits, includingresolution of related appeals or litigation processes, if any. The second step requires us to estimate and measure the taxbenefit as the largest amount that has greater than a 50 percent likelihood of being realized upon ultimate settlement. Itis inherently difficult and subjective to estimate such amounts, as this requires us to determine the probability of variouspossible outcomes. We reevaluate these uncertain tax positions on a quarterly basis. This evaluation is based on factorsincluding, but not limited to, changes in facts or circumstances, changes in tax law, effectively settled issues underaudit, historical experience with similar tax matters, guidance from our tax advisors, and new audit activity. A change inrecognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provisionin the period in which the change occurs. Estimates of Credits to be Issued to CustomersWe regularly receive requests for credits from retailers for returned products or in connection with sales incentives, suchas cooperative advertising and volume rebate agreements. We reduce sales or increase SG&A, depending on the natureof the credits, for estimated future credits to customers. Our estimates of these amounts are based on either historicalinformation about credits issued, relative to total sales, or on specific knowledge of incentives offered to retailers. Thisprocess entails a significant amount of subjectivity and uncertainty. Valuation of InventoryWe currently record inventory on our balance sheet at average cost, or net realizable value, if it is below our recordedcost. Determination of net realizable value requires us to estimate the point in time at which an item's net realizablevalue drops below its recorded cost. We regularly review our inventory for slow-moving items and for items that we areunable to sell at prices above their original cost. When we identify such an item, we reduce its book value to the netamount that we expect to realize upon its sale. This process entails a significant amount of inherent subjectivity anduncertainty. Goodwill and Indefinite-Lived IntangiblesAs a result of acquisitions, we have significant intangible assets on our balance sheet that include goodwill andindefinite-lived intangibles (primarily trademarks and licenses). Accounting for business combinations requires the useof estimates and assumptions in determining the fair value of assets acquired and liabilities assumed in order to properlyallocate the purchase price. The estimates of the fair value of the assets acquired and liabilities assumed are based uponassumptions believed to be reasonable using established valuation techniques that consider a number of factors, andwhen appropriate, valuations performed by independent third-party appraisers. We consider whether circumstances or conditions exist which suggest that the carrying value of our goodwill and otherlong-lived assets might be impaired. If such circumstances or conditions exist, further steps are required in order todetermine whether the carrying value of each of the individual assets exceeds its fair market value. If analysis indicates46 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. Our annual impairment testing for goodwill and indefinite lived intangible assets has historically occurred in the firstquarter of our fiscal year. In December 2016, we elected to change our annual impairment testing to the fourth quarterof our fiscal year. Accordingly, for fiscal 2017 we completed impairment tests during both the first and fourth fiscalquarters. Going forward, we expect to complete the annual analysis of the carrying value of our goodwill and otherintangible assets during the fourth quarter of each fiscal year, or more frequently whenever events or changes incircumstances indicate that their carrying value may not be recoverable. Due to recent declines in revenue associated with our Nutritional Supplements segment, our annual impairment testingof goodwill and other intangible assets for the segment reflected a fair value that was in excess of the carrying value ofthe segment by a smaller margin than occurred in previous impairment tests. In addition, the fair value of the indefinitelived brand asset was determined to be less than the carrying value and impairments of $9.5 million were recordedduring fiscal 2017. The fair value was determined using primarily a discounted cash flow model and we believe ourassumptions of future revenue, gross margin and operating expenses are reasonable in the circumstances. However, aswe continue to execute our strategy, actual results could differ from our current expectations. To the extent that ourforecasted cash flows were to decline further, it is reasonably likely that we could record impairment expense or incurother charges or losses in the future. We are unable to project what, if any, expense, charges or losses will be in futureperiods. 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. The Company continues to monitor its reporting units for any triggering events or other signs of impairment. For boththe goodwill and indefinite-lived intangible assets in its reporting units, the recoverability of these amounts is dependentupon achievement of the Company’s projections and the continued execution of key initiatives related to revenuegrowth and improved profitability. The rates used in our projections are management’s estimate of the most likelyresults over time, given a wide range of potential outcomes. The assumptions and estimates used in our impairmenttesting involve significant elements of subjective judgment and analysis by the Company’s management. While webelieve 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 AssetsWe consider whether circumstances or conditions exist that suggest that the carrying value of a long-lived asset mightbe impaired. If such circumstances or conditions exist, further steps are required in order to determine whether thecarrying value of the asset exceeds its fair market value. If analysis indicates that the asset’s carrying value does exceedits fair market value, the next step is to record a loss equal to the excess of the asset’s carrying value over its fair value.The steps entail significant amounts of judgment and subjectivity. Economic Useful Life of Intangible AssetsWe amortize intangible assets, such as licenses, trademarks, customer lists and distribution rights over their economicuseful lives, unless those assets' economic useful lives are indefinite. If an intangible asset’s economic useful life isdeemed indefinite, that asset is not amortized. When we acquire an intangible asset, we consider factors such as theasset's history, our plans for that asset and the market for products associated with the asset. We consider these samefactors when reviewing the economic useful lives of our previously acquired intangible assets as well. We review theeconomic useful lives of our intangible assets at least annually. The determination of the economic useful life of anintangible asset requires a significant amount of judgment and entails significant subjectivity and uncertainty. Wecomplete our analysis of the remaining useful economic lives of our intangible assets during the fourth quarter of eachfiscal year. 47 Table of ContentsShare-Based CompensationWe 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 to employees,including grants of stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”) and performancerestricted stock units (“PSUs”), to be measured based on the grant date fair value of the awards. The resulting expenseis recognized over the periods during which the employee is required to perform service in exchange for the award. Theestimated number of PSU’s that will ultimately vest requires judgment, and to the extent actual results or updatedestimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the periodestimates are revised. Stock options are recognized in the financial statements based on their fair values using an option pricing model at thedate of grant. We use a Black-Scholes option-pricing model to calculate the fair value of options. This model requiresvarious judgmental assumptions including volatility, forfeiture rates and expected option life. 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 4 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. 48 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 RiskOur functional currency is the U.S. Dollar. By operating internationally, we are subject to foreign currency risk fromtransactions 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 fiscal 2017, 2016 and 2015,approximately 12%, 14% and 14%, respectively, of our net sales revenue was in foreign currencies. These sales wereprimarily denominated in British Pounds, Euros, Mexican Pesos, Canadian Dollars, and Venezuelan Bolivars. We makemost of our inventory purchases from the Far East and use the U.S. Dollar for such purchases. In our consolidatedstatements of income, exchange gains and losses resulting from the remeasurement of foreign taxes receivable, taxespayable, deferred tax assets, and deferred tax liabilities are recognized in their respective income tax lines, and all otherforeign exchange gains and losses are recognized in SG&A. We identify foreign currency risk by regularly monitoring our foreign currency-denominated transactions and balances.Where operating conditions permit, we reduce foreign currency risk by purchasing most of our inventory with U.S.Dollars and by converting cash balances denominated in foreign currencies to U.S. Dollars. We 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. Our primary objective in holdingderivatives is to reduce the volatility of net earnings and cash flows, and the net asset value associated with changes inforeign currency exchange rates. Our foreign currency risk management strategy includes both hedging instrumentsand derivatives that are not designated as hedging instruments, which generally have terms of up to 12 months. We donot enter into any forward exchange contracts or similar instruments for trading or other speculative purposes. Weexpect that as currency market conditions warrant, and our foreign denominated transaction exposure grows, we willcontinue to execute additional contracts in order to hedge against certain potential foreign exchange losses. Refer toNote 13 in the accompanying consolidated financial statements for further information regarding these instruments. Chinese Renminbi Currency Exchange UncertaintiesA significant portion of the products we sell are purchased from third-party manufacturers in China. The ChineseRenminbi has fluctuated against the U.S. Dollar in recent years, devaluing by approximately 5 percent against the U.S.Dollar during fiscal 2017. If China’s currency continues to fluctuate against the U.S. Dollar in the short-to-intermediateterm, we cannot accurately predict the impact of those fluctuations on our results of operations. Accordingly, 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 business, results of operations and financial condition. Interest Rate RiskInterest on our outstanding debt as of February 28, 2017 is both floating and fixed, as such, we are exposed to changesin short-term market interest rates and these changes in rates will impact our net interest expense. Additionally, our cashand short-term investments generate interest income that will vary based on changes in short-term interest. Refer toNotes 10 and 13 in the accompanying consolidated financial statements for further information regarding our interestrate sensitive assets and liabilities. 49 Table of ContentsRate Sensitive Financial InstrumentsThe following table shows the approximate potential fair value change in U.S. Dollars that would arise from ahypothetical adverse 10% change in certain market-based rates underlying our rate sensitive financial instruments as ofFebruary 28, 2017 and February 29, 2016. February 28, 2017 Face or Estimated Notional Carrying Fair Change in(in thousands) Amount Value Value Fair ValueFixed rate long-term debt (1) $20,000 $(19,763) $(19,858) $247Foreign currency contracts - cross-currency debt swap $10,000 $ - $ - $(224)Foreign currency contracts - Euros (2) €27,500 $727 $727 $(2,944)Foreign currency contracts - Canadian Dollars (2) $24,000 $187 $187 $(2,178)Foreign currency contracts - Pounds (2) £13,500 $548 $548 $(1,686)Foreign currency contracts - Mexican Peso (2) $59,600 $(47) $(47) $(318) February 29, 2016 Face or Estimated Notional Carrying Fair Change in(in thousands) Amount Value Value Fair ValueFixed rate long-term debt (1) $40,000 $(39,496) $(40,410) $(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)(1)The underlying interest rates used as a basis for these estimates are rates quoted by our lenders on fixed rate notes of similar term andcredit 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 foreign currency contracts. The table above is for risk analysis purposes and does not purport to represent actual losses or gains in fair value thatwe could incur. It is important to note that the change in value represents the estimated change in the fair value of thecontracts. Actual results in the future may differ materially from these estimated results due to actual developments inthe global financial markets. Because the contracts hedge an underlying exposure, we would expect a similar andopposite change in foreign exchange gains or losses and floating interest rates over the same periods as the contracts.50 Table of Contents Item 8. Financial Statements and Supplementary Data INDEX TO CONSOLIDATED FINANCIAL STATEMENTSAND FINANCIAL STATEMENT SCHEDULE PAGE Management’s Report on Internal Control Over Financial Reporting 52 Reports of Independent Registered Public Accounting Firm 53 Consolidated Financial Statements: Consolidated Balance Sheets as of February 28, 2017 and February 29, 2016 55 Consolidated Statements of Income for each of the years in the three-year period ended February 28,2017 56 Consolidated Statements of Comprehensive Income for each of the years in the three-year periodended February 28, 2017 57 Consolidated Statements of Stockholders' Equity for each of the years in the three-year period endedFebruary 28, 2017 58 Consolidated Statements of Cash Flows for each of the years in the three-year period ended February28, 2017 59 Notes to Consolidated Financial Statements 60 Financial Statement Schedule: Schedule II - Valuation and Qualifying Accounts for each of the years in the three-year period endedFebruary 28, 2017 95 All other schedules are omitted as the required information is included in the consolidated financial statements or is notapplicable. 51 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 over financialreporting 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 financial reportingand the preparation of financial statements for external purposes in accordance with U.S. generally accepted accountingprinciples 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 expenditures arebeing 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 the possibilitythat misstatements may not be prevented or detected. Furthermore, the effectiveness of internal controls may becomeinadequate because of future changes in conditions, or variations in the degree of compliance with our policies orprocedures. Our management assesses the effectiveness of our internal control over financial reporting using the criteria set forth bythe Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) in the 2013 Internal Control-Integrated Framework. Based on our assessment, we concluded that our internal control over financial reporting waseffective as of February 28, 2017. Our independent registered public accounting firm, Grant Thornton LLP, has issued an audit report on the effectivenessof the Company's internal control over financial reporting. This report appears on page 53. 52 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 28, 2017, 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 (UnitedStates). Those standards require that we plan and perform the audit to obtain reasonable assurance about whethereffective internal control over financial reporting was maintained in all material respects. Our audit included obtainingan understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testingand evaluating the design and operating effectiveness of internal control based on the assessed risk, and performingsuch other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonablebasis for our opinion. A company’s internal control over financial reporting is a process designed to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company’s internal control over financial reporting includes those policiesand procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions arerecorded as necessary to permit preparation of financial statements in accordance with generally accepted accountingprinciples, and that receipts and expenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect onthe financial statements. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.Also, projections of any evaluation of effectiveness to future periods are subject to the risk that the controls maybecome inadequate because of changes in conditions, or that the degree of compliance with the policies or proceduresmay deteriorate. In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as ofFebruary 28, 2017, based on the criteria established in the 2013 Internal Control—Integrated Framework issued byCOSO. We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (UnitedStates), the consolidated financial statements of the Company as of and for the year ended February 28, 2017, and ourreport dated May 1, 2017 expressed an unqualified opinion on those financial statements. /s/ GRANT THORNTON LLP Dallas, TexasMay 1, 201753 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 28, 2017 and February 29, 2016, and the related consolidated statements of income,comprehensive income, stockholders’ equity, and cash flows for each of the three years in the period endedFebruary 28, 2017. 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 (UnitedStates). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supportingthe amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles usedand significant estimates made by management, as well as evaluating the overall financial statement presentation. Webelieve 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 28, 2017 and February 29, 2016, and theresults of their operations and their cash flows for each of the three years in the period ended February 28, 2017, 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 (UnitedStates), the Company’s internal control over financial reporting as of February 28, 2017, based on criteria established inthe 2013 Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of theTreadway Commission (“COSO”) and our report dated May 1, 2017 expressed an unqualified opinion. /s/ GRANT THORNTON LLP Dallas, TexasMay 1, 2017 54 Table of ContentsHELEN OF TROY LIMITED AND SUBSIDIARIESConsolidated Balance Sheets February 28, February 29,(in thousands, except shares and par value) 2017 2016Assets Assets, current: Cash and cash equivalents $23,087 $225,800Receivables - principally trade, less allowances of $5,656 and $5,898 229,928 217,543Inventory 289,122 301,609Prepaid expenses and other current assets 11,699 9,780Income taxes receivable 2,242 356Total assets, current 556,078 755,088 Property and equipment, net of accumulated depreciation of $106,561 and $93,926 134,935 130,465Goodwill 698,929 583,005Other intangible assets, net of accumulated amortization of $165,388 and $137,174 419,489 375,751Deferred tax assets, net 1,955 2,484Other assets, net of accumulated amortization of $1,930 and $1,828 1,710 2,101Total assets $1,813,096 $1,848,894 Liabilities and Stockholders' Equity Liabilities, current: Accounts payable, principally trade $111,763 $103,713Accrued expenses and other current liabilities 153,200 141,245Long-term debt, current maturities 24,404 22,644Total liabilities, current 289,367 267,602 Long-term debt, excluding current maturities 461,211 597,270Deferred tax liabilities, net 20,091 27,364Other liabilities, noncurrent 21,661 26,615Total liabilities 792,330 918,851 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; 27,028,665 and 27,735,034 shares issued and outstanding 2,703 2,774Additional paid in capital 218,760 198,077Accumulated other comprehensive income 1,173 665Retained earnings 798,130 728,527Total stockholders' equity 1,020,766 930,043Total liabilities and stockholders' equity $1,813,096 $1,848,894 See accompanying notes to consolidated financial statements.55 Table of ContentsHELEN OF TROY LIMITED AND SUBSIDIARIESConsolidated Statements of Income Fiscal Years Ended the Last Day of February,(in thousands, except per share data) 2017 2016 2015Sales revenue, net $1,537,219 $1,545,701 $1,445,131Cost of goods sold 861,751 909,696 845,572Gross profit 675,468 636,005 599,559 Selling, general and administrative expense ("SG&A") 498,736 499,390 428,840Asset impairment charges 12,400 6,000 9,000Operating income 164,332 130,615 161,719 Nonoperating income, net 414 299 517Interest expense (14,857) (11,096) (15,022)Income before income taxes 149,889 119,818 147,214 Income tax expense 9,200 18,590 16,050Net income $140,689 $101,228 $131,164 Earnings per share: Basic $5.11 $3.58 $4.59Diluted $5.04 $3.52 $4.52 Weighted average shares of common stock used in computing net earnings per share: Basic 27,522 28,273 28,579Diluted 27,891 28,749 29,035 See accompanying notes to consolidated financial statements. 56 Table of ContentsHELEN OF TROY LIMITED AND SUBSIDIARIESConsolidated Statements of Comprehensive Income Fiscal Years Ended the Last Day of February, 2017 2016 2015 Before Net of Before Net of Before Net of(in thousands) Tax Tax Tax Tax Tax Tax Tax Tax TaxIncome $149,889 $(9,200) $140,689 $119,818 $(18,590) $101,228 $147,214 $(16,050) $131,164Other comprehensive income("OCI") Cash flow hedge activity -interest rate swaps Changes in fair market value - - - - - - 28 (10) 18Settlements reclassified toincome - - - - - - 1,199 (420) 779Subtotal - - - - - - 1,227 (430) 797 Cash flow hedge activity -foreign currency contracts Changes in fair market value 2,205 (380) 1,825 1,978 (314) 1,664 434 (62) 372Settlements reclassified toincome (1,454) 137 (1,317) (1,203) 280 (923) (176) 22 (154)Subtotal 751 (243) 508 775 (34) 741 258 (40) 218Total OCI 751 (243) 508 775 (34) 741 1,485 (470) 1,015Comprehensive income $150,640 $(9,443) $141,197 $120,593 $(18,624) $101,969 $148,699 $(16,520) $132,179 See accompanying notes to consolidated financial statements. 57 Table of ContentsHELEN OF TROY LIMITED AND SUBSIDIARIESConsolidated Statements of Stockholders' Equity Fiscal Years Ended the Last Day of February,(in thousands) 2017 2016 2015Common stock shares Balances, beginning of period 27,735 28,488 32,273Exercise of stock options 170 178 187Restricted share-based compensation 21 285 71Vesting of performance awards - - 100Issuance of common stock in connection with employee stock purchase plan 32 28 31Common stock repurchased and retired (929) (1,244) (4,174)Balances, end of period 27,029 27,735 28,488 Common stock Balances, beginning of period $2,774 $2,849 $3,227Exercise of stock options 17 18 19Restricted share-based compensation 2 28 7Vesting of performance awards - - 10Issuance of common stock in connection with employee stock purchase plan 3 3 3Common stock repurchased and retired (93) (124) (417)Balances, end of period $2,703 $2,774 $2,849 Paid in capital Balances, beginning of period $198,077 $179,934 $180,861Cumulative effect of accounting change 588 - -Stock option share-based compensation 3,194 3,513 3,670Exercise of stock options, including tax benefits of $0, $1,581 and $773 7,288 8,304 6,318Restricted share-based compensation, including tax benefits of $0, $1,894 and $0 12,304 21,836 9,759Issuance of common stock in connection with employee stock purchase plan 2,487 1,924 1,538Common stock repurchased and retired (5,178) (17,434) (22,212)Balances, end of period $218,760 $198,077 $179,934 Accumulated other comprehensive income (loss) Balances, beginning of period $665 $(76) $(1,091)Cash flow hedge activity - interest rate swaps, net of tax - - 797Cash flow hedge activity - foreign currency, net of tax 508 741 218Balances, end of period $1,173 $665 $(76) Retained earnings Balances, beginning of period $728,527 $721,858 $846,490Cumulative effect of accounting change (856) - -Net income 140,689 101,228 131,164Common stock repurchased and retired (70,230) (94,559) (255,796)Balances, end of period $798,130 $728,527 $721,858 Total stockholders' equity $1,020,766 $930,043 $904,565 See accompanying notes to consolidated financial statements. 58 Table of ContentsHELEN OF TROY LIMITED AND SUBSIDIARIESConsolidated Statements of Cash Flows Fiscal Years Ended the Last Day of February,(in thousands) 2017 2016 2015Cash provided (used) by operating activities: Net income $140,689 $101,228 $131,164Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 44,341 42,749 39,653Amortization of financing costs 1,200 1,158 1,846Provision for doubtful receivables 2,326 225 299Non-cash share-based compensation 15,498 8,483 5,974Non-cash intangible asset impairment charges 12,400 6,000 9,000Non-cash Venezuelan re-measurement related charges - 17,441 -Loss on the sale or disposal of property and equipment 198 84 49Deferred income taxes and tax credits (7,254) (464) (1,830)Changes in operating capital, net of effects of acquisition of businesses: Receivables (6,827) (3,604) (9,487)Inventories 18,967 (17,606) 2,274Prepaid expenses and other current assets (1,614) (2,412) 2,317Other assets and liabilities, net (2,941) 10,668 2,448Accounts payable 5,797 7,044 16,502Accrued expenses and other current liabilities 9,197 15,764 (21,135)Accrued income taxes (3,476) (213) 190Net cash provided by operating activities 228,501 186,545 179,264 Cash provided (used) by investing activities: Capital and intangible asset expenditures (20,619) (20,603) (6,521)Proceeds from the sale of property and equipment 32 7 -Payments to acquire businesses, net of cash acquired (209,267) (43,150) (195,943)Net cash used by investing activities (229,854) (63,746) (202,464) Cash provided (used) by financing activities: Proceeds from line of credit 470,900 802,600 769,000Repayment of line of credit (580,300) (590,000) (431,500)Repayment of long-term debt (23,800) (21,900) (96,900)Payment of financing costs (2,299) (19) (4,585)Proceeds from share issuances under share-based compensation plans 9,734 12,025 7,621Payment of tax obligations resulting from cashless share award settlements (595) - (4,569)Payment of tax obligations resulting from cashless share settlement of severance obligation - (12,000) -Payments for repurchases of common stock (75,000) (100,000) (273,599)Net cash provided (used) by financing activities (201,360) 90,706 (34,532) Net increase (decrease) in cash and cash equivalents (202,713) 213,505 (57,732)Cash and cash equivalents, beginning balance 225,800 12,295 70,027Cash and cash equivalents, ending balance $23,087 $225,800 $12,295 Supplemental cash flow information: Interest paid $13,231 $9,978 $13,990Income taxes paid, net of refunds $20,736 $15,950 $16,591Value of common stock received as exercise price of options $36 $118 $257 See accompanying notes to consolidated financial statements.59 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 and Related InformationGeneralWhen used in these notes, unless otherwise indicated or the context suggests otherwise, references to “the Company”,“our Company”, “Helen of Troy”, “we”, “us”, or “our” refer to Helen of Troy Limited and its subsidiaries. We refer tothe Company’s common shares, par value $0.10 per share, as “common stock.” References to “the FASB” refer to theFinancial Accounting Standards Board. References to “GAAP” refer to U.S. generally accepted accounting principles.References to “ASU” refer to the codification of GAAP in the Accounting Standards Updates issued by the FASB.References to “ASC” refer to the codification of GAAP in the Accounting Standards Codification issued by the FASB. We incorporated as Helen of Troy Corporation in Texas in 1968 and were reorganized as Helen of Troy Limited inBermuda in 1994. We are a global designer, developer, importer, marketer, and distributor of an expanding portfolio ofbrand-name consumer products. We have four segments: Housewares, Health & Home, Nutritional Supplements, andBeauty. Our Housewares segment provides a broad range of innovative consumer products for the home. Productofferings include food preparation tools and storage containers; cleaning, bath and garden tools and accessories; infantand toddler care products; and insulated beverage and food containers. The Health & Home segment focuses onhealthcare devices such as thermometers, humidifiers, blood pressure monitors, and heating pads; water filtrationsystems; 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, topicalskin products and 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, ourhighest sales volume and operating income occur in our third fiscal quarter ending November 30. We purchase ourproducts from unaffiliated manufacturers, most of which are located in China, Mexico and the United States. The preparation of financial statements in accordance with U.S. GAAP requires management to make estimates andassumptions that affect the amounts reported in our consolidated financial statements and accompanying notes. Actualresults may differ materially from those estimates. Our consolidated financial statements include the accounts of Helen of Troy Limited and its wholly owned subsidiaries.All intercompany accounts and transactions are eliminated in consolidation. We have reclassified, combined or separately disclosed certain amounts in the prior years’ consolidated financialstatements and accompanying footnotes to conform to the current year’s presentation. The effects of thesereclassifications are shown in tables provided in Note 4, below. Cash and cash equivalentsCash equivalents include all highly liquid investments with an original maturity of three months or less. We maintaincash and cash equivalents at several financial institutions, which at times may not be federally insured or may exceedfederally insured limits. We have not experienced any losses in such accounts and believe we are not exposed to anysignificant credit risks on such accounts. We consider money market accounts, which at February 28, 2017 primarilyheld short-term U.S. treasury obligations, to be cash equivalents.60 thTable of ContentsReceivablesOur receivables are comprised of trade credit granted to customers, primarily in the retail industry, offset by twovaluation reserves: an allowance for doubtful receivables and an allowance for back-to-stock returns. Ourallowance for doubtful receivables reflects our best estimate of probable losses, determined principally based onhistorical experience and specific allowances for known at-risk accounts. Our policy is to write off receivableswhen we have determined they will no longer be collectible. Write-offs are applied as a reduction to the allowancefor doubtful accounts and any recoveries of previous write-offs are netted against bad debt expense in the periodrecovered. Our allowance for back-to-stock returns reflects our best estimate of future customer returns,determined principally based on historical experience and specific allowances for known pending returns.We have a significant concentration of credit risk with one major customer at February 28, 2017 representingapproximately 17% of gross trade receivables. In addition, as of February 28, 2017 and February 29, 2016,approximately 44% of our gross trade receivables in each year were due from our five top customers. Foreign currency transactions and related derivative financial instrumentsThe U.S. Dollar is the functional currency for the Company and all its subsidiaries; therefore, we do not have atranslation adjustment recorded through accumulated other comprehensive income. All our non-U.S. subsidiaries'transactions involving other currencies have been re-measured in U.S. Dollars using exchange rates in effect on the dateeach transaction occurred. 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 are recognizedin their respective income tax lines and all other foreign exchange gains and losses are recognized in SG&A. In order tomanage our exposure to changes in foreign currency exchange rates, we use forward currency contracts to exchangeforeign currencies 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 fair value of theforward exchange contracts are recorded each period in our consolidated statements of income or comprehensiveincome, depending on the type of hedging instrument and the effectiveness of the hedges. We evaluate all hedgingtransactions each quarter to determine that they remain effective. Any material ineffectiveness is recorded as part ofSG&A in our consolidated statements of income. Inventory and cost of goods soldOur inventory consists almost entirely of finished goods. We currently record inventory on our balance sheet at averagecost, or net realizable value, if it is below our recorded cost. Our average costs include the amounts we paymanufacturers for product, tariffs and duties associated with transporting product across national borders, freight costsassociated with transporting the product from our manufacturers to our distribution centers, and general andadministrative expenses directly attributable to acquiring inventory, as applicable.General and administrative expenses in inventory include all the expenses of operating the Company's sourcingactivities and expenses incurred for production monitoring, product design, engineering, and packaging. We charged$41.7, $39.2 and $36.4 million of such general and administrative expenses to inventory during fiscal 2017, 2016 and2015, respectively. We estimate that $12.8 and $13.1 million of general and administrative expenses directlyattributable to the procurement of inventory were included in our inventory balances on hand at February 28, 2017and February 29, 2016, respectively.The “Cost of goods sold” line item in 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 realizable valueas the basis for recording inventory, we base our estimates on expected future selling prices less expected disposalcosts.For fiscal 2017, 2016 and 2015, finished goods purchased from vendors in the Far East comprised approximately 67%,68% and 67%, respectively, of finished goods purchased. During fiscal 2017, we had one vendor who fulfilledapproximately 11% of our product requirements. Our top two manufacturers combined fulfilled approximately 18% ofour product requirements. Over the same period, our top five suppliers fulfilled approximately 31% of our productrequirements.61 Table of ContentsProperty and equipmentThese assets are stated at cost. Depreciation is recorded on a straight-line basis over the estimated useful lives of theassets. Expenditures for repair and maintenance of property and equipment are expensed as incurred. For taxpurposes, accelerated depreciation methods are used where allowed by tax laws.License agreements, trademarks, patents, and other intangible assetsA significant portion of our consolidated sales are made subject to trademark license agreements with various licensors.Our license agreements are reported on our consolidated balance sheets at cost, less accumulated amortization. The costof our license agreements represent amounts paid to licensors to acquire the license or to alter the terms of the license ina manner that we believe to be in our best interest. Certain licenses have extension terms that may require additionalpayments to the licensor as part of the terms of renewal. The Company capitalizes costs incurred to renew or extend theterm of a license agreement and amortizes such costs on a straight-line basis over the remaining term or economic lifeof the agreement, whichever is shorter. Royalty payments are not included in the cost of license agreements. Royaltyexpense under our license agreements is recognized as incurred and is included in our consolidated statements ofincome in SG&A. Net sales revenue subject to trademark license agreements requiring royalty payments comprisedapproximately 40%, 41% and 42% of consolidated net sales revenue for fiscal 2017, 2016 and 2015, respectively.During fiscal 2017, two license agreements accounted for net sales revenue subject to royalty payments ofapproximately 13% and 11% of consolidated net sales, respectively. No other license agreements had associated netsales revenue subject to royalty payments that accounted for 10% or more of consolidated net sales revenue.We also sell products under trademarks and brand assets that we own. Trademarks and brand assets that we acquirefrom other entities are generally recorded on our consolidated balance sheets based upon the appraised fair value of theacquired asset, net of any accumulated amortization and impairment charges. Costs associated with developingtrademarks internally are recorded as expenses in the period incurred. In certain instances where trademarks or brandassets have readily determinable useful lives, we amortize their costs on a straight-line basis over such lives. In mostinstances, we have determined that such acquired assets have an indefinite useful life. In these cases, no amortization isrecorded. Patents acquired through purchase from other entities, if material, are recorded on our consolidated balancesheets based upon the appraised value of the acquired patents and amortized over the remaining life of the patent.Additionally, we incur certain costs, primarily legal fees in connection with the design and development of products tobe covered by patents, which are capitalized as incurred and amortized on a straight-line basis over the life of the patentin the jurisdiction filed, typically 14 years.Other intangible assets include customer lists, distribution rights, patent rights, and non-compete agreements that weacquired from other entities. These are recorded on our consolidated balance sheets based upon the fair value of theacquired asset and amortized on a straight-line basis over the remaining life of the asset as determined either throughoutside appraisal or by the term of any controlling agreements. Goodwill, intangible and other long-lived assets and related impairment testingOur annual impairment testing for goodwill and indefinite lived intangible assets has historically occurred in the firstquarter of our fiscal year. In December 2016, we elected to change our annual impairment testing to the fourthquarter of our fiscal year. Accordingly, for fiscal 2017 we completed impairment tests during both the first and fourthfiscal quarters. Going forward, we will complete the annual analysis of the carrying value of our goodwill and otherintangible assets during the fourth quarter of each fiscal year, or more frequently whenever events or changes incircumstances indicate that their carrying value may not be recoverable.Goodwill is recorded as the difference, if any, between the aggregate consideration paid and the fair value of the nettangible and intangible assets received in the acquisition of a business. We evaluate goodwill at the reporting unit level(operating segment or one level below an operating segment). We measure the amount of any goodwill impairmentbased upon the estimated fair value of the underlying assets and liabilities of the reporting unit, including anyunrecognized intangible assets and estimates of the implied fair value of goodwill. An impairment charge isrecognized to the extent the recorded goodwill exceeds the implied fair value of goodwill.62 Table of ContentsWe consider whether circumstances or conditions exist that suggest that the carrying value of our goodwill and otherlong-lived assets might be impaired. If such circumstances or conditions exist, further steps are required in order todetermine whether the carrying value of each of the individual assets exceeds its fair market value. If the analysisindicates that an individual asset’s carrying value does exceed its fair market value, the next step is to record a lossequal to the excess of the individual asset’s carrying value over its fair value. These steps entail significant amounts ofjudgment and subjectivity. When events and changes in circumstances indicate there may be an impairment, weperform interim testing. Economic useful lives and amortization of intangible assetsWe amortize intangible assets, such as licenses and trademarks, over their economic useful lives, unless those assets'economic useful lives are indefinite. If an intangible asset's economic useful life is deemed indefinite, that asset is notamortized. We review the economic useful lives of our intangible assets at least annually.Intangible assets consist primarily of goodwill, license agreements, trademarks, brand assets, customer lists, distributionrights, patents, and patent licenses. For certain intangible assets subject to amortization, we use the straight-line methodover appropriate periods ranging from 4 to 30 years. WarrantiesOur products are under warranty against defects in material and workmanship for periods ranging from two to fiveyears. We estimate our warranty accrual using our historical experience and believe that this is the most reliablemethod by which we can estimate our warranty liability. The following table summarizes the activity in our accrualfor the past two fiscal years: ACCRUAL FOR WARRANTY RETURNS Fiscal Years Ended the Last Day of February,(in thousands) 2017 2016Beginning balance $20,622 $23,553Additions to the accrual 57,686 57,847Reductions of the accrual - payments and credits issued (56,542) (60,778)Ending balance $21,766 $20,622 Financial instrumentsThe carrying amounts of cash and cash equivalents, receivables, accounts payable, accrued expenses, and income taxespayable approximate fair value because of the short maturity of these items. See Note 10 to these consolidated financialstatements for our assessment of the fair value of our long-term debt. Income taxes and uncertain tax positionsThe provision for income tax expense is calculated on reported income before income taxes based on current tax lawand includes, in the current period, the cumulative effect of any changes in tax rates from those used previously indetermining deferred tax assets and liabilities. Tax laws may require items to be included in the determination of taxableincome at different times from when the items are reflected in the financial statements. Deferred tax balances reflect theeffects of temporary differences between the financial statement carrying amounts of assets and liabilities and their taxbases, as well as from net operating losses and tax credit carryforwards, and are stated at enacted tax rates in effect forthe year taxes are expected to be paid or recovered. Deferred tax assets represent tax benefits for tax deductions or credits available in future years and require certainestimates and assumptions to determine whether it is more likely than not that all or a portion of the benefit will not berealized. The recoverability of these future tax deductions and credits is determined by assessing the adequacy of futureexpected taxable income from all sources, including the future reversal of existing taxable temporary differences,taxable income in carryback years, estimated future taxable income and available tax planning strategies. Should achange in facts63 Table of Contentsor circumstances lead to a change in judgment about the ultimate recoverability of a deferred tax asset, we record oradjust the related valuation allowance in the period that the change in facts and circumstances occurs, along with acorresponding increase or decrease in income tax expense. We record tax benefits for uncertain tax positions based upon management’s evaluation of the information available atthe reporting date. To be recognized in the financial statements, the tax position must meet the more-likely-than-notthreshold that the position will be sustained upon examination by the tax authority based on technical merits assumingthe tax authority has full knowledge of all relevant information. For positions meeting this recognition threshold, thebenefit is measured as the largest amount of benefit that meets the more-likely-than-not threshold to be sustained. Weperiodically evaluate these tax positions based on the latest available information. For tax positions that do not meet thethreshold requirement, we record liabilities for unrecognized tax benefits as a tax expense or benefit in the periodrecognized or reversed, and disclose as a separate liability in our financial statements, including related accrued interestand penalties. Revenue recognitionSales are recognized when revenue is realized or realizable and has been earned. Sales and shipping terms vary amongour customers, and as such, revenue is recognized when risk and title to the product transfer to the customer. Net salesrevenue is comprised of gross revenues less estimates of expected returns, trade discounts and customer allowances,which include incentives such as advertising discounts, volume rebates and off-invoice markdowns. Such deductionsare recorded during the period the related revenue is recognized. Sales and value added taxes collected from customersand remitted to governmental authorities are excluded from net sales revenue reported in the consolidated financialstatements. Consideration granted to customersWe offer our customers certain incentives in the form of cooperative advertising arrangements, volume rebates, productmarkdown allowances, trade discounts, cash discounts, slotting fees, and similar other arrangements. In instances wherethe customer provides us with proof of advertising performance, reductions in amounts received from customers undercooperative advertising programs are expensed in our consolidated statements of income in SG&A. Customercooperative advertising incentives included in SG&A were $18.4, $19.4 and $17.3 million for fiscal 2017, 2016 and2015, respectively. Reductions in amounts received from customers for advertising without proof of performance, markdown allowances,slotting fees, trade discounts, cash discounts, and volume rebates are all recorded as reductions of net sales revenue. AdvertisingAdvertising costs include cooperative advertising discussed above, traditional and internet media advertising andproduction expenses, and expenses associated with other promotional product messaging and consumer awarenessprograms. Advertising costs are expensed in the period in which they are incurred and included in our consolidatedstatements of income in SG&A. We incurred total advertising costs, including amounts paid to customers forcooperative media and print advertising, of $111.6, $107.5 and $88.4 million during fiscal 2017, 2016 and 2015,respectively. Research and development expensesExpenditures for research activities relating to product design, development and improvement are charged to expenseas incurred and included in our consolidated statements of income in SG&A. We incurred total research anddevelopment expenses of $9.7, $10.0 and $7.4 million during fiscal 2017, 2016 and 2015, respectively. Shipping and handling revenues and expensesShipping and handling expenses are included in our consolidated statements of income in SG&A. These expensesinclude distribution center costs, third-party logistics costs and outbound transportation costs we incur. Our expensesfor shipping and handling were $86.3, $88.9 and $87.9 million during fiscal 2017, 2016 and 2015, respectively. 64 Table of ContentsShare-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 to employees,including grants of stock options, restricted stock awards (“RSAs”), restricted stock units (“RSUs”), and performancestock units (“PSUs”), to be measured based on the grant date fair value of the awards. The resulting expense isrecognized over the periods during which the employee is required to perform service in exchange for the award. Theestimated number of PSU’s that will ultimately vest requires judgment, and to the extent actual results or updatedestimates differ from our current estimates, such amounts will be recorded as a cumulative adjustment in the periodestimates are revised. All share-based compensation expense is recorded net of forfeitures in our consolidatedstatements of income. Stock options are recognized in the financial statements based on their fair values using an option-pricing model at thedate of grant. We use a Black-Scholes option-pricing model to calculate the fair value of options. This model requiresvarious judgmental assumptions including volatility, forfeiture rates and expected option life. See Note 16 to these consolidated financial statements for more information on our share-based compensation plans. Note 2 – Earnings Per ShareWe compute basic earnings per share using the weighted average number of shares of common stock outstandingduring the period. We compute diluted earnings per share using the weighted average number of shares of commonstock outstanding plus the effect of dilutive securities. Dilutive securities at any given point in time may consist ofoutstanding options to purchase common stock and issued and contingently issuable unvested RSUs and PSUs. SeeNote 16 to these consolidated financial statements for more information regarding RSUs, PSUs and other performancebased stock awards. Options for common stock are excluded from the computation of diluted earnings per share if theireffect is antidilutive.For fiscal 2017, 2016 and 2015, the components of basic and diluted shares were as follows:WEIGHTED AVERAGE DILUTED SECURITIES Fiscal Years Ended the Last Day of February,(in thousands) 2017 2016 2015Weighted average shares outstanding, basic 27,522 28,273 28,579Incremental shares from share-based payment arrangements 369 476 456Weighted average shares outstanding, diluted 27,891 28,749 29,035 Dilutive securities, stock options 365 317 647Dilutive securities, unvested or unsettled stock awards 186 227 273Antidilutive securities, stock options 137 159 239 Note 3 – Significant Accounting MattersFiscal 2016 Venezuelan re-measurement change – In fiscal 2016, as a result of a devaluation of the Venezuelanofficial rate, continued economic instability from declines in oil prices and the declaration of an economic emergency,among other factors, we discontinued the use of the official exchange rate and adopted a market-based exchangerate. As a result, we recorded a charge of $9.57 million (before and after tax) from the re-measurement of ourVenezuelan monetary assets and liabilities at February 29, 2016 at the new rate. In addition to re-measuring ourmonetary holdings in Venezuela, we recorded $9.16 million of non-cash impairment charges (before and after tax) withrespect to inventory and property and equipment in order to reflect their respective estimated net realizable and fairvalues as of February 29, 2016.At the current exchange rate, sales in Venezuela represent less than 0.1% of our consolidated net sales and we expectthat future reported net sales and operating income from Venezuela will no longer be meaningful to our consolidatedand Beauty segment operating results. 65 Table of ContentsThe following table summarizes the financial impact of the adjustments described above.IMPACT OF VENEZUELAN RE-MEASURMENT RELATED CHARGES Balance at February 29, 2016(in thousands) 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 Fiscal 2015 change in accounting estimate – In the third quarter of fiscal 2015, we revised our product liabilityestimates to reflect more relevant historical claims experience. The effect of the change in estimate was recorded inSG&A. The change increased operating income, net income and diluted earnings per share by $2.2 million, $1.4million and $0.05 per share, respectively, for fiscal 2015.Note 4 – New Accounting PronouncementsNot Yet AdoptedIn January 2017, the FASB, issued ASU 2017-04, “Intangibles-Goodwill and Other (Topic 350): Simplifying the Testfor Goodwill Impairment.” This guidance provides for a single-step quantitative test to identify and measureimpairment, requiring an entity to recognize an impairment charge for the amount by which the goodwill carryingamount exceeds the reporting unit’s fair value. This guidance will be effective for us in fiscal 2021, with early adoptionpermitted. This guidance must be applied on a prospective basis. We do not expect the adoption of this guidance tohave a material impact on our financial position, results of operations or cash flows. In October 2016, the FASB issued ASU 2016-16, “Accounting for Income Taxes: Intra-Entity Asset Transfers of AssetsOther Than Inventory.” ASU 2016-16 amends accounting guidance for intra-entity transfers of assets other thaninventory to require the recognition of taxes when the transfer occurs. The amendment will be effective for us in fiscal2019 with early adoption permitted as of the beginning of an annual reporting period for which financial statementshave not been issued or made available for issuance. A modified retrospective approach will be required for transitionto the new guidance, with a cumulative-effect adjustment consisting of the net impact from (1) the write-off of anyunamortized expense previously deferred and (2) recognition of any previously unrecognized deferred tax assets, net ofany valuation allowance. The new guidance does not include any specific new disclosure requirements. The newguidance may impact our effective tax rate, after adoption. We are currently evaluating the impact this guidance mayhave on our consolidated financial position, results of operations and cash flows. 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. The new lease guidance will essentially eliminate off-balance sheet financing. Theguidance is effective for us in fiscal 2021. The new standard must be adopted using a modified retrospective transitionand requires the new guidance to be applied at the beginning of the earliest comparative period presented. We arecurrently evaluating the effect this new accounting guidance may have on our consolidated financial position, results ofoperations and 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 andhow66 Table of Contentsrevenue is recognized. The core principle of the guidance is that a company should recognize revenue to depict thetransfer 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. We will be required to adopt the new standard in fiscal2019 and can adopt either retrospectively or as a cumulative effect adjustment as of the date of adoption. We arecurrently evaluating the effect of this new accounting guidance. Therefore, we have not yet selected a transition methodnor have we determined the impact that the new standard may have on our consolidated financial position, results ofoperations and cash flows. Adopted In March 2016, the FASB issued ASU 2016-09, “Improvements to Employee Share-Based Payment Accounting,”which changes the accounting for certain aspects of share-based payments to employees. The provisions of the newguidance affecting us require excess tax benefits and tax deficiencies to be recorded in the income statement when theawards vest or are settled; remove the requirement to include hypothetical excess tax benefits in the application of thetreasury stock method when computing earnings per share; and provided for a new policy election to either: (1)continue applying forfeiture rate estimates in the determination of compensation cost, or (2) account for forfeitures as areduction of share-based compensation cost as they occur. The new guidance also requires cash flows related to excesstax benefits to be classified as an operating activity in the cash flow statement and requires shares withheld for taxwithholding purposes to be classified as a financing activity. We elected to early adopt the new guidance in the firstquarter of fiscal 2017. This required us to reflect adjustments as of March 1, 2016. The primary impact of adoption wasthe recognition of excess tax benefits in our provision for income taxes rather than additional paid-in capital for allperiods after fiscal 2016. We elected to change our accounting policy regarding forfeitures. Previously, we estimatedforfeitures expected to occur in the determination of compensation costs. Going forward we will now recognizeforfeitures in the period they occur. The cumulative effect adjustments made upon adoption were not material. For fiscal2017 we recognized additional share-based compensation expense of $1.8 million from the change in accounting forforfeitures of share-based awards, and we recognized $1.8 million of excess tax benefits in income tax expense ratherthan additional paid-in capital. The excess tax benefits were reported as an increase to cash provided by operations inthe statement of cash flows. In November 2015, the FASB issued ASU 2015-17, “Balance Sheet Classification of Deferred Taxes”, which eliminatesthe requirement for companies to present deferred tax liabilities and assets as current and non-current in a classifiedbalance sheet. Instead, upon adoption, companies are required to classify all deferred tax assets and liabilities as non-current. We elected to early adopt the new guidance in the first quarter of fiscal 2017 and have made the necessaryconforming reclassifications to the accompanying February 29, 2016 consolidated balance sheet. The application of theprovisions of ASU 2015-17 did not have a material effect on our consolidated financial position, results of operations orcash 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. We adopted the new guidance in the first quarter of fiscal 2017 and have madethe necessary conforming reclassifications to the accompanying February 29, 2016 consolidated balance sheet andrelated footnote disclosures. The application of the provisions of ASU 2015-03 did not have a material effect on ourconsolidated financial position, results of operations or cash flows. 67 Table of ContentsWe have provided the table below, which summarizes the impact of each of the adopted accounting changes to theaccompanying consolidated financial statements. IMPACT OF ACCOUNTING CHANGES Increase (Decrease)(in thousands) Standard Transition Method February 28, 2017 February 29, 2016Consolidated Balance Sheets Current deferred tax assets, net ASU 2015-17 Retrospective $(23,131) $(17,636)Long-term deferred tax assets, net ASU 2015-17 Retrospective $1,038 $879Long-term deferred tax assets, net ASU-2016-09 Modified retrospective $(232) $ -Other assets - debt issuance costs ASU 2015-03 Retrospective $(14,917) $(12,618)Other assets - accumulated amortization ASU 2015-03 Retrospective $(9,824) $(8,625) Long-term debt, current maturities ASU 2015-03 Retrospective $(1,296) $(1,156)Current deferred tax liabilities, net ASU 2015-17 Retrospective $168 $ -Long-term deferred tax liabilities, net ASU 2015-17 Retrospective $(21,925) $(16,757)Long-term debt, excluding current maturities ASU 2015-03 Retrospective $(3,796) $(2,837) Additional paid-in capital ASU-2016-09 Modified retrospective $588 $ -Retained earnings ASU-2016-09 Modified retrospective $(856) $ - IMPACT OF ACCOUNTING CHANGES Increase (Decrease) Fiscal Year Ended(in thousands) Standard Transition Method February 28, 2017 February 29, 2016Consolidated Statements of Income Share-based compensation expense ASU-2016-09 Modified retrospective $1,754 $ -Current income tax expense ASU-2016-09 Modified retrospective $(1,844) $ - Consolidated Statements of Cash Flows Cash provided by operating activities: Accrued income taxes ASU-2016-09 Retrospective $1,844 $989 Cash provided by financing activities: Share-based compensation tax benefit ASU-2016-09 Retrospective $(1,844) $(989) Unless otherwise disclosed above, we believe that the impact of other recently issued standards that are not yet effectivewill not have a material impact on its consolidated financial position, results of operations and cash flows uponadoption. Note 5 – Property and EquipmentA summary of property and equipment is as follows:PROPERTY AND EQUIPMENT Estimated Useful Lives February 28, February 29,(in thousands) (Years) 2017 2016Land - $12,800 $12,800Building and improvements 3 -40 109,026 108,509Computer, furniture and other equipment 3 -15 81,122 70,778Tools, molds and other production equipment 1 -10 31,157 28,254Construction in progress - 7,391 4,050Property and equipment, gross 241,496 224,391Less accumulated depreciation (106,561) (93,926)Property and equipment, net $134,935 $130,465 We recorded $16.0, $15.0 and $14.3 million of depreciation expense including $4.6, $4.3 and $3.8 million in cost ofgoods sold and $11.4, $10.7 and $10.5 million in SG&A in the consolidated statements of income for fiscal 2017, 2016and 2015, respectively.68 Table of ContentsWe lease certain facilities, equipment and vehicles under operating leases, which expire at various dates through fiscal2027. Certain of the leases contain escalation clauses and renewal or purchase options. Rent expense related to ouroperating leases was $6.1, $5.9 and $5.0 million for fiscal 2017, 2016 and 2015, respectively.As of February 29, 2016, we recorded non-cash impairment charges totaling $0.1 million, before and after tax, toreflect Venezuelan property and equipment at its estimated fair value. See Note 3 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 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 2016 included $1.7 million in connection with this project. Note 6 – Goodwill and Intangible AssetsWe 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. Some of our goodwill is held injurisdictions that allow deductions for tax purposes, however, in some of those jurisdictions we have no tax basis for theassociated goodwill recorded for book purposes. Accordingly, the majority of our goodwill is not deductible for taxpurposes. We perform annual impairment testing each fiscal year and interim impairment testing, if necessary. We writedown any asset deemed to be impaired to its fair value. Our traditional impairment test methodology uses primarily estimated future discounted cash flow models (“DCFModels”). 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, we consider the existing rates on Treasury Bills, yieldspreads on assets with comparable expected lives, historical volatility of our common stock and that of comparablecompanies, and general economic and industry trends, among other considerations. When stock market or otherconditions warrant, we expand our traditional impairment test methodology to give weight to other methods thatprovide additional observable market information in order to better reflect the current risk level being incorporated intomarket prices and in order to corroborate the fair values of each of our reporting units. Management will placeincreased reliance on these additional methods in conjunction with its DCF Models in the event that the total marketcapitalization of its stock drops below its consolidated stockholders’ equity balance for a sustained 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.Impairment Testing in Fiscal 2017 – Our annual impairment testing for goodwill and indefinite lived intangible assetshas historically occurred in the first quarter of our fiscal year. In December 2016, we elected to change our annualimpairment testing to the fourth quarter of our fiscal year. Accordingly, for fiscal 2017 we completed impairment testsduring the first and fourth fiscal quarters. As a result of our testing of indefinite-lived trademarks in the fourth quarter,we recorded non-cash asset impairment charges of $5.0 million ($3.2 million after tax). As a result of our testing ofindefinite-lived trademarks in the first quarter, we recorded non-cash asset impairment charges of $7.4 million ($5.1million after tax). The charges in both quarters were related to certain brand assets and trademarks in our Beauty andNutritional Supplements segments, which were written down to their estimated fair values, determined on the basis ofour estimated future discounted cash flows using the relief from royalty valuation method.Due to recent declines in revenue associated with our Nutritional Supplements segment, our annual impairment testingof goodwill and other intangible assets for the segment reflected a fair value that was in excess of the carrying value bya smaller margin than occurred in previous impairment tests. In addition, the fair value of the indefinite lived brandasset was determined to be less than the carrying value and impairments of $9.5 million were recorded during fiscal2017. The fair values were determined using primarily a discounted cash flow model and we believe our assumptionsof future69 Table of Contentsrevenue, gross margin and operating expenses are reasonable in the circumstances. However, as we continue to executeour strategy, actual results could differ from our current expectations. To the extent that our forecasted cash flows wereto decline further, it is reasonably likely that we could record additional impairment expense or other charges or lossesin the future. We are unable to project what, if any, expense, charges, or losses will be in future periods. We willcontinue to closely monitor performance and market conditions related to this segment. Impairment Testing in Fiscal 2016 – We performed interim impairment testing in the fourth quarter of fiscal 2016 forcertain of our brands as a result of revised growth outlooks. As a result of our testing, we recorded a non-cashimpairment charge of $3.0 million ($2.7 million after tax). We performed our annual evaluation of goodwill andindefinite-lived intangible assets for impairment during the first quarter of fiscal 2016. As a result of our testing ofindefinite-lived trademarks, we recorded a non-cash asset impairment charge of $3.0 million ($2.7 million after tax).The charges in both quarters were related to certain trademarks in our Beauty segment, which were written down to fairvalue, determined on the basis of future discounted cash flows using the relief from royalty valuation method.Impairment Testing in Fiscal 2015 – We performed our annual evaluation of goodwill and indefinite-lived intangibleassets for impairment during the first quarter of fiscal 2015. As a result of our testing of indefinite-lived trademarks andlicenses, we recorded a non-cash asset impairment charge of $9.0 million ($8.2 million after tax). The charge wasrelated to certain trademarks in our Beauty segment, which were written down to their estimated fair value, determinedon the basis of future discounted cash flows using the relief from royalty valuation method.70 Table of ContentsThe following tables summarize the changes in our goodwill and intangible assets by segment for fiscal 2017 and 2016: GOODWILL AND INTANGIBLE ASSETS Balances at Balances at Weighted February 29, 2016 Year Ended February 28, 2017 February 28, 2017 Average Gross Cumulative Acquisition Gross Cumulative Life Carrying Goodwill and Retirement Carrying Goodwill Accumulated Net Book(in thousands) (Years) Amount Impairments Additions Impairments Adjustments Amount Impairments Amortization Value Housewares: Goodwill $166,132 $ - $116,053 $ - $(129) $282,056 $ - $ - $282,056Trademarks - indefinite 75,200 - 59,000 - - 134,200 - - 134,200Other intangibles - finite 11.6 15,448 - 25,040 - (95) 40,393 - (15,476) 24,917Subtotal 256,780 - 200,093 - (224) 456,649 - (15,476) 441,173 Health & Home: Goodwill 284,913 - - - - 284,913 - - 284,913Trademarks - indefinite 54,000 - - - - 54,000 - - 54,000Licenses - finite 15,300 - - - - 15,300 - (15,300) -Licenses - indefinite 7,400 - - - - 7,400 - - 7,400Other Intangibles - finite 5.0 116,575 - 472 - (65) 116,982 - (66,027) 50,955Subtotal 478,188 - 472 - (65) 478,595 - (81,327) 397,268 Nutritional Supplements: Goodwill 96,609 - - - - 96,609 - - 96,609Brand assets - indefinite 65,520 - - (9,500) - 56,020 - - 56,020Other intangibles - finite 4.3 44,180 - - - - 44,180 - (16,715) 27,465Subtotal 206,309 - - (9,500) - 196,809 - (16,715) 180,094 Beauty: Goodwill 81,841 (46,490) - - - 81,841 (46,490) - 35,351Trademarks - indefinite 48,754 - - (2,900) - 45,854 - - 45,854Trademarks - finite 11.6 150 - - - - 150 - (92) 58Licenses - indefinite 10,300 - - - - 10,300 - - 10,300Licenses - finite 5.8 13,696 - - - - 13,696 - (11,849) 1,847Other intangibles - finite 1.2 46,402 - - - - 46,402 - (39,929) 6,473Subtotal 201,143 (46,490) - (2,900) - 198,243 (46,490) (51,870) 99,883 Total $1,142,420 $(46,490) $200,565 $(12,400) $(289) $1,330,296 $(46,490) $(165,388) $1,118,418 71 Table of ContentsGOODWILL AND INTANGIBLE ASSETS Balances at Balances at Weighted February 28, 2015 Year Ended February 29, 2016 February 29, 2016 Average Gross Cumulative Acquisition Gross Cumulative Life Carrying Goodwill and Retirement Carrying Goodwill Accumulated Net Book(in thousands) (Years) Amount Impairments Additions Impairments Adjustments Amount Impairments Amortization Value Housewares: Goodwill $166,132 $ - $ - $ - $ - $166,132 $ - $ - $166,132Trademarks - indefinite 75,200 - - - - 75,200 - - 75,200Other intangibles - finite 4.0 15,754 - 446 - (752) 15,448 - (12,916) 2,532Subtotal 257,086 - 446 - (752) 256,780 - (12,916) 243,864 Health & Home: Goodwill 251,758 - 32,958 - 197 284,913 - - 284,913Trademarks - indefinite 54,000 - - - - 54,000 - - 54,000Licenses - finite 1.0 15,300 - - - - 15,300 - (12,750) 2,550Licenses - indefinite - - 7,400 - - 7,400 - - 7,400Other Intangibles - finite 6.0 113,727 - 2,848 - - 116,575 - (54,913) 61,662Subtotal 434,785 - 43,206 - 197 478,188 - (67,663) 410,525 Nutritional Supplements: Goodwill 96,486 - - - 123 96,609 - - 96,609Brand assets - indefinite 65,500 - 20 - - 65,520 - - 65,520Other intangibles - finite 5.3 43,800 - 380 - - 44,180 - (10,431) 33,749Subtotal 205,786 - 400 - 123 206,309 - (10,431) 195,878 Beauty: Goodwill 81,841 (46,490) - - - 81,841 (46,490) - 35,351Trademarks - indefinite 54,754 - - (6,000) - 48,754 - - 48,754Trademarks - finite 12.6 150 - - - - 150 - (87) 63Licenses - indefinite 10,300 - - - - 10,300 - - 10,300Licenses - finite 6.8 13,696 - - - - 13,696 - (11,532) 2,164Other intangibles - finite 2.2 47,876 - - - (1,474) 46,402 - (34,545) 11,857Subtotal 208,617 (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 In fiscal 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 (before and after tax), recorded as a gain in SG&A. For fiscal 2015, sales into the relinquished countriesaccounted for approximately 0.3% of the Health & Home segment’s total net sales. For categories such as portable fans,portable heaters and portable humidifiers, we remain the Honeywell global licensee under the same material terms asour previous agreement. 72 Table of ContentsThe following table summarizes the amortization expense attributable to intangible assets recorded in SG&A in theconsolidated statements of income for fiscal 2017, 2016 and 2015, as well as estimated amortization expense for fiscal2018 through 2022:AMORTIZATION OF INTANGIBLE ASSETSAggregate Amortization Expense (in thousands) Fiscal 2017 $28,308Fiscal 2016 $27,773Fiscal 2015 $25,328 Estimated Amortization Expense (in thousands) Fiscal 2018 $25,172Fiscal 2019 $20,206Fiscal 2020 $19,102Fiscal 2021 $16,532Fiscal 2022 $6,037 Note 7 – AcquisitionsHydro Flask Acquisition – On March 18, 2016, we completed the acquisition of all membership units of SteelTechnology, LLC, doing business as Hydro Flask. Hydro Flask is a leading designer, distributor and marketer of highperformance insulated stainless steel food and beverage containers for active lifestyles. The aggregate purchase pricefor the transaction was approximately $209.3 million, net of cash acquired. Significant assets acquired includereceivables, inventory, prepaid expenses, property and equipment, trade names, technology assets, customerrelationships, and goodwill. Acquisition-related expenses, incurred during fiscal 2016, were approximately $0.7 million(before and after tax).We accounted for the acquisition as the purchase of a business and recorded the excess purchase price as goodwill,which is not expected to be deductible for income tax purposes. We have completed our analysis of the economic livesof the assets acquired and determined the appropriate fair values of the acquired assets. We assigned $59.0 million totrade names with indefinite economic lives. We assigned $10.3 million to technology assets and $14.2 million tocustomer relationships and are amortizing these assets over expected lives of 10 and 24 years, respectively. Fortechnology assets, we considered the average life cycle of the underlying products, which range from 7 - 15 years, andthe overall average life of the associated patent portfolio. For the customer relationships, we used historical attritionrates to assign an expected life. The following schedule presents the net assets of Hydro Flask recorded at acquisition, excluding cash acquired: HYDRO FLASK - NET ASSETS RECORDED UPON ACQUISITION AT MARCH 18, 2016(in thousands)Assets: Receivables $7,955Inventory 6,243Prepaid expenses and other current assets 336Property and equipment 1,108Goodwill 116,053Trade names - indefinite 59,000Technology assets - definite 10,300Customer relationships - definite 14,200Subtotal - assets 215,195 Liabilities: Accounts payable 2,275Accrued expenses 3,662Subtotal - liabilities 5,937Net assets recorded $209,25873 Table of ContentsThe fair values of the above assets acquired and liabilities assumed were estimated by applying income and marketapproaches. Key assumptions include various discount rates based upon a 12.3% weighted average cost of capital;royalty rates used in the determination of trade names and technology asset values of 6% and 2%, respectively; and acustomer attrition rate used in the determination of customer relationship values of approximately 4% per year. The impact of the Hydro Flask acquisition on our consolidated statements of income for fiscal 2017 is as follows: HYDRO FLASK - IMPACT ON CONSOLIDATED STATEMENT OF INCOME Fiscal YearMarch 18, 2016 (acquisition date) through February 28, 2017 Ended(in thousands, except earnings per share data) February 28, 2017Sales revenue, net $107,005Net income 27,902 Earnings per share: Basic $1.01Diluted $1.00 The following supplemental unaudited pro forma information presents our financial results as if the Hydro Flaskacquisition had occurred as of the beginning of the fiscal periods presented. This supplemental pro forma informationhas been prepared for comparative purposes and would not necessarily indicate what may have occurred if theacquisition had been completed on March 1, 2015, and this information is not intended to be indicative of future results. HYDRO FLASK - PRO FORMA IMPACT ON CONSOLIDATED STATEMENTS OF INCOME(unaudited)As if the acquisition had been completed at the beginning of March 1, 2015 Fiscal Years Ended the Last Day of February,(in thousands, except earnings per share data) 2017 2016Sales revenue, net $1,540,714 $1,603,656Net income 141,325 113,906 Earnings per share: Basic $5.13 $4.03Diluted $5.07 $3.96Vicks 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, we acquired a fully paid-up U.S. license of P&G’s VicksVapoPad scent pads. The vast majority of Vicks VapoSteam and VapoPads are used in our Vicks humidifiers,vaporizers and other health care devices. The aggregate purchase price for the two transactions was approximately$42.8 million financed primarily with borrowings under our Credit Agreement. 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 $7.4 million to trademark licenses with indefinite economic lives. We assigned $1.0million to customer relationships and $1.2 million to product formulations and will amortize these assets over expectedlives of 19.5 and 20.0 years, respectively. For the customer relationships, we used historical attrition rates to assign anexpected life. For product formulations, we used our best estimate of the remaining product life. The trademarks areconsidered to have indefinite lives that are not subject to amortization. We assigned $33.0 million to goodwill, which isexpected to be deductible for income tax purposes. Healthy Directions Acquisition – On June 30, 2014, we completed the acquisition of Healthy Directions, a leader inthe premium branded vitamin, mineral and supplement market for a total cash purchase price of $195.9 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.74 Table of ContentsBrand assets include trademarks, tradenames, product formulations, proprietary research, doctor endorsements and allother associated elements of brand equity. Acquisition-related expenses incurred in fiscal 2015 were approximately$3.6 million ($2.3 million after tax). Healthy Directions reports its operations as the Nutritional Supplements segment. We accounted for the acquisition as the purchase of a business and recorded the excess purchase price as goodwill. 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 $257Inventory 6,226Prepaid expenses and other current assets 1,875Property and equipment 5,962Goodwill 95,308Brand assets - indefinite 65,500Customer relationships - definite 43,800Subtotal - assets 218,928 Liabilities: Accounts payable 6,479Accrued expenses 13,964Other long-term liabilities 2,542Subtotal - liabilities 22,985Net assets recorded $195,943 The fair values of the above assets acquired were estimated by applying income and market approaches. Keyassumptions included various discount rates based upon a 14.6% weighted average cost of capital, a royalty rate of 5%used in the determination of the brand assets fair value, and a customer attrition rate averaging 14% per year used in thedetermination of customer relationship values.Note 8 – Accrued Expenses and Other Current LiabilitiesA summary of accrued expenses and other current liabilities is as follows:ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES February 28, February 29,(in thousands) 2017 2016Accrued compensation, benefits and payroll taxes $34,917 $28,912Accrued sales returns, discounts and allowances 27,377 27,530Accrued warranty returns 21,766 20,622Accrued advertising 23,747 22,087Accrued legal fees and settlements 16,908 16,699Accrued royalties 9,553 7,961Accrued property, sales and other taxes 6,564 6,938Accrued freight and duty 3,454 2,043Accrued product liability 2,141 2,098Derivative liabilities, current 47 495Liability for uncertain tax positions - 536Other 6,726 5,324Total accrued expenses and other current liabilities $153,200 $141,24575 Table of ContentsNote 9 – Other Liabilities, NoncurrentA summary of other noncurrent liabilities is as follows:OTHER LIABILITIES, NONCURRENT February 28, February 29,(in thousands) 2017 2016Deferred compensation liability $6,560 $8,298Liability for uncertain tax positions 6,611 8,201Other liabilities 8,490 10,116Total other liabilities, noncurrent $21,661 $26,615Note 10 – Long-Term DebtWe 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 $1 billion as of February 28, 2017. Thecommitment under the Credit Agreement terminates on December 7, 2021. Borrowings accrue interest under one of twoalternative methods as described in the Credit Agreement. With each borrowing against our credit line, we can elect theinterest rate method based on our funding needs at the time. We also incur loan commitment and letter of credit feesunder the Credit Agreement. Outstanding letters of credit reduce the borrowing availability under the Credit Agreementon a dollar-for-dollar basis. In connection with an amendment to our Credit Agreement in fiscal 2017, we incurred atotal of $2.3 million in new debt acquisition costs that are being amortized over the term of the Credit Agreement. As ofFebruary 28, 2017, the outstanding revolving loan principal balance was $440.7 million and the balance of outstandingletters of credit was $1.5 million. As of February 28, 2017, the amount available for borrowings under the CreditAgreement was $557.8 million. Covenants in our debt agreements limit the amount of total indebtedness we can incur.As of February 28, 2017 these covenants effectively limited our ability to incur more than $280.6 million of additionaldebt from all sources, including our Credit Agreement. A summary of our long-term debt follows: LONG-TERM DEBT Original Date Interest Last Day of February(dollars in thousands) Borrowed Rates Matures 2017 2016$37.6 million unsecured loan with the Mississippi Business Finance Corporation (the"MBFC Loan"), interest is set and payable quarterly at a Base Rate, plus a margin of up to1.0%, or applicable LIBOR plus a margin of up to 2.0%, as determined by the interest rateelected and the Leverage Ratio. Loan subject to holder's call on or after March 1, 2018.Loan can be prepaid without penalty. (1) 03/13 Floating 03/23 $29,903 $33,706$100 million unsecured Senior Notes payable at a fixed interest rate of 3.9%. Interestpayable semi-annually. Annual principal payments of $20 million began in January 2014.Prepayment of notes are subject to a "make whole" premium. 01/11 3.9% 01/18 19,763 39,496Credit Agreement 01/15 Floating 12/21 435,949 546,712Total long-term debt 485,615 619,914Less current maturities of long-term debt (24,404) (22,644)Long-term debt, excluding current maturities $461,211 $597,270(1)$3.8 and $1.9 million in principal payments were made on March 1, 2016 and 2015, respectively. The remaining loan balance ispayable as follows: $5.7 million on March 1, 2017; $1.9 million annually on March 1, 2018 through 2022; and $14.8 million onMarch 1, 2023. Any remaining outstanding principal and interest is due upon maturity on March 1, 2023. The fair market value of the fixed rate debt at February 28, 2017 computed using a discounted cash flow analysis andcomparable market rates was $20.1 million compared to the $19.8 million book value. Our other long-term debt hasfloating interest rates, and its book value approximates its fair value at February 28, 2017.76 Table of ContentsAll 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. We were in compliance withthe terms of these agreements as of February 28, 2017. 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 Fiscal Years Ended the Last Day of February, (in thousands) 2017 2016 2015 Average borrowings outstanding (1) $498,420 $399,800 $300,280 Average interest rate during each year (2) 2.2% 1.6% 2.5% Interest rate range during each year 1.9 - 4.3% 1.4 - 4.0% 1.9 - 4.4% Weighted average interest rates on borrowings outstanding at year end 2.3% 2.8% 1.9% (1)Average borrowings outstanding is computed as the average of the current and four prior quarters ending balances of our creditfacility.(2) The average interest rate during each year is computed by dividing the total interest expense associated with our credit facility for afiscal 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 Fiscal Years Ended the Last Day of February,(in thousands) 2017 2016 2015Interest and commitment fees $13,747 $9,949 $11,958Deferred finance costs 1,200 1,158 1,846Interest rate swap settlements, net - - 1,218Cross-currency debt swap (90) (11) -Total interest expense $14,857 $11,096 $15,022Note 11 - Income TaxesWe reorganized the Company in Bermuda in 1994 and many of our foreign subsidiaries are not directly or indirectlyowned by a U.S. parent. As such, a large portion of our foreign income is not subject to U.S. taxation on a permanentbasis under current law. Additionally, our intellectual property is largely owned by foreign subsidiaries, resulting inproportionally higher earnings in jurisdictions with lower statutory tax rates, which decreases our overall effective taxrate. The taxable income earned in each jurisdiction, whether U.S. or foreign, is determined by the subsidiary'soperating results, and transfer pricing and tax regulations in the related jurisdictions. We have indefinitely reinvested$62.1 million of undistributed earnings of our foreign operations outside of our U.S. tax jurisdiction as ofFebruary 28, 2017. No deferred tax liability has been recognized for the remittance of such earnings to the U.S. since itis 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 Fiscal Years Ended the Last Day of February,(in thousands) 2017 2016 2015U.S. $15,051 $30,874 $34,876Non-U.S. 134,838 88,944 112,338Total $149,889 $119,818 $147,21477 Table of ContentsOur components of income tax expense (benefit) are as follows: COMPONENTS OF INCOME TAX EXPENSE (BENEFIT) Fiscal Years Ended the Last Day of February,(in thousands) 2017 2016 2015U.S. Current $16,744 $12,824 $18,525Deferred (10,230) (1,239) (3,014) 6,514 11,585 15,511 Non-U.S. Current (290) 4,919 (645)Deferred 2,976 2,086 1,184 2,686 7,005 539Total $9,200 $18,590 $16,050 Our 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, 2017 2016 2015 Effective income tax rate at the U.S. statutory rate 35.0% 35.0% 35.0% Impact of U.S. state income taxes 0.3% 0.5% 0.6% Effect of zero tax rate in Macau (20.9)% (19.3)% (12.4)% Effect of statutory tax rate in Barbados (7.6)% (6.8)% (11.7)% Effect of statutory tax rate in Switzerland (3.8)% (5.7)% (2.9)% Effect of income from other non-U.S. operations subject to varying rates 2.2% 4.1% 0.9% Effect of foreign exchange fluctuations 0.5% 3.3% 0.4% Effect of asset impairment charges 0.4% 1.1% 1.6% Other Items 0.0% 3.3% (0.6)% Effective income tax rate 6.1% 15.5% 10.9% Our Macau subsidiary generates income from the sale of the goods that it has sourced and procured. This subsidiary isresponsible for the sourcing and procurement of a large portion of the products that we sell. We have an indefinite taxholiday in Macau conditioned on the subsidiary meeting certain employment and investment thresholds. We have notexperienced any issues in meeting the required thresholds, and are unaware of any regulatory changes or impendingcircumstances that would restrict our right to continue to benefit from the tax holiday. Because our Macau subsidiary isnot directly or indirectly owned by a U.S. parent, there is no U.S. tax liability associated with the income generated inMacau. 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. 78 Table of ContentsThe tax effects of temporary differences that give rise to significant portions of the deferred tax assets and liabilities asof the last day of February 2017 and 2016 are as follows: COMPONENTS OF DEFERRED TAX ASSETS AND LIABILITIES Last Day of February,(in thousands) 2017 2016Deferred tax assets, gross: Operating loss carryforwards $16,799 $15,419Accounts receivable 7,375 6,332Inventories 11,057 10,372Accrued expenses and other 12,007 10,783Total gross deferred tax assets 47,238 42,906 Valuation allowance (17,600) (16,223)Deferred tax liabilities: Depreciation and amortization (47,774) (51,562)Total deferred tax liabilities, net $(18,136) $(24,879) 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 2017, the $1.4 million net increase in our valuation allowance wasprincipally due to changes in estimates regarding the value of operating loss carryforwards to be used in the future. As of February 28, 2017 and February 29, 2016, we had remaining tax-deductible goodwill of $113.0 million and$133.1 million, respectively, resulting from acquisitions. The amortization of this goodwill is deductible over variousperiods ranging up to 12 years. The tax deduction for goodwill in fiscal 2018 is expected to be approximately $20.2million.The composition of our operating loss carryforwards at the end of fiscal 2017 is as follows: SUMMARY OF OPERATING LOSS CARRYFORWARDS Balances at February 28, 2017 Tax Year Deferred Operating Expiration Tax Loss(in thousands) Date Range Assets CarryforwardU.S. state operating loss carryforward 2017 - 2036 $458 $11,121Non-U.S. operating loss carryforwards with definite carryover periods 2017 - 2027 1,418 8,349Non-U.S. operating loss carryforwards with indefinite carryover periods Indefinite 14,923 50,514Subtotals 16,799 $69,984Less portion of valuation allowance established for operating loss carryforwards (15,954) Total $845 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. 79 Table of ContentsDuring fiscal 2017 and 2016, changes in the total amount of unrecognized tax benefits were as follows: UNRECOGNIZED TAX BENEFITS Fiscal Years Ended the Last Day of February,(in thousands) 2017 2016Total unrecognized tax benefits, beginning balance $8,737 $10,295Tax positions taken during the current period - -Resolution of tax dispute (1,381) -Changes in tax positions taken during a prior period 121 278Lapse in statute of limitations (218) (1,375)Impact of foreign currency re-measurement (133) (421)Settlements (515) (40)Total unrecognized tax benefits, ending balance 6,611 8,737Less current unrecognized tax benefits - (536)Noncurrent unrecognized tax benefits $6,611 $8,201 Included in the balance of unrecognized tax benefits at the end of fiscal 2017 were $6.6 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 interest and penalties on uncertain tax positions as income tax expense. At the end of February 2017 and2016, the liability for tax-related interest and penalties included in unrecognized tax benefits was $1.7 million and $2.3million, respectively. Additionally, during fiscal 2017, 2016 and 2015 we recognized expense (benefit) of ($0.6), $0.5and $0.2 million, respectively, in the consolidated statements of income. 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 consolidatedfinancial statements. As of February 28, 2017, tax years under examination or still subject to examination by material tax jurisdictions are asfollows: Jurisdiction Tax Years Under Examination Open Tax YearsUnited Kingdom - None - 2016-2017United States * 2003, 2007, 2008 2003, 2007, 2008, 2014 - 2017Switzerland - None - 2013-2017Hong Kong 2014 2009-2017* Kaz, Inc. and its U.S. subsidiaries are under examination for the 2003, 2007 and 2008 tax years. In February 2016, the examination ofHelen of Troy Texas Corporation and its subsidiaries for the 2011 and 2012 tax years was completed with no impact to tax expense.During fiscal 2017 we received an initial notice from a state tax authority which questioned our determination oftaxable income applicable to the particular state resulting from interpretations of certain state income tax provisionsapplicable to our legal structure. We believe we have accurately reported our taxable income and will be pursuing thematter through routine administrative processes with the state. We believe it is unlikely that the outcome of thesematters will have a material adverse effect on our consolidated financial position, results of operations, or liquidity.80 Table of ContentsNote 12 – Fair Value We classify our various assets and liabilities recorded or reported at fair value under a hierarchy prescribed by GAAPthat 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 the transfer ofan asset or liability to a different level, our policy is to recognize the transfer at the beginning of the reporting period inwhich the event resulting in the transfer occurred. The following tables present the fair value of our financial assets and liabilities measured on a recurring basis as of thelast day of February 2017 and 2016: FAIR VALUES OF FINANCIAL ASSETS AND LIABILITIES Fair Values at February 28, 2017(in thousands) (Level 2) (1)Assets: Money market accounts $2,711Foreign currency contracts 2,167Total assets $4,878 Liabilities: Fixed rate debt (2) $20,105Floating rate debt 465,852Foreign currency contracts 47Total liabilities $486,004 Fair Values at February 29, 2016(in thousands) (Level 2) (1)Assets: Money market accounts $211,964Foreign currency contracts 1,372Total assets $213,336 Liabilities: Fixed rate debt (2) $40,281Floating rate debt 580,418Foreign currency contracts 502Total liabilities $621,201 (1)Our financial assets and liabilities are classified as Level 2 assets because their valuation is dependent on observable inputs and otherquoted prices for similar assets or liabilities, or model-derived valuations whose significant value drivers are observable. (2)Debt values are reported at estimated fair value in these tables, but are recorded in the accompanying consolidated balance sheets atthe undiscounted value of remaining principal payments due. The 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.treasury81 Table of Contentsobligations and are included in cash and cash equivalents in the accompanying consolidated balance sheets. Moneymarket accounts temporarily held $210 million drawn shortly before the end of fiscal 2016 in order to facilitate theclosing 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, 13 and 18 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 28, 2017 and February 29, 2016 of 1.8% and 2.4%, respectively. All other long-term debt has floating interestrates, and its book value approximates its fair value as of the reporting date. Our other non-financial assets include goodwill and other intangible assets, which we classify as Level 3 items. Theseassets are measured at fair value on a non-recurring basis as part of our impairment testing. Note 6 to these consolidatedfinancial statements contains additional information regarding impairment testing and related intangible assetimpairments. The table below presents other non-financial assets measured on a non-recurring basis using significantunobservable inputs (Level 3) for fiscal 2017 and 2016: OTHER NON-FINANCIAL ASSETSFAIR VALUE MEASUREMENTS USING SIGNIFICANT UNOBSERVABLE INPUTS (Level 3) Fiscal Years Ended the Last Day of February,(in thousands) 2017 2016Beginning balances $958,756 $948,157 Total income (expense): Included in net income - realized (40,614) (31,547) Acquired during the period 200,565 44,052 Acquisition adjustments and retirements during the period (289) (1,906)Ending balances $1,118,418 $958,756Note 13 – 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. Forfiscal 2017, 2016 and 2015, approximately 12%, 14% and 14%, respectively, of our net sales revenue was in foreigncurrencies. These sales were primarily denominated in British Pounds, Euros, Mexican Pesos, Canadian Dollars, andVenezuelan Bolivars. We make most of our inventory purchases from the Far East and use the U.S. Dollar for suchpurchases. In our consolidated statements of income, exchange gains and losses resulting from the remeasurement offoreign taxes receivable, taxes payable, deferred tax assets, and deferred tax liabilities are recognized in their respectiveincome tax lines, and all other foreign exchange gains and losses are recognized in SG&A. We recorded net exchangegains (losses) from foreign currency fluctuations, including the impact of currency hedges and the cross-currency debtswap, of $0.5, ($3.1) and ($5.7) million in SG&A during fiscal 2017, 2016 and 2015, respectively. 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. The effective portion of the changesin fair value of these instruments is reported in OCI and reclassified into SG&A in the same period they are settled. Theineffective portion, which is not material for any year presented, is immediately recognized in SG&A.82 Table of ContentsInterest Rate Risk – Interest on our outstanding debt as of February 28, 2017 is both floating and fixed. Fixed ratesare in place on $20 million of Senior Notes at 3.9% and floating rates are in place on the balance of all other debtoutstanding, which totaled $470.7 million as of February 28, 2017. If short-term interest rates increase, we will incurhigher interest rates on any future outstanding balances of floating rate debt. The following table summarizes the fair values of our various derivative instruments at the end of fiscal 2017 and 2016: FAIR VALUES OF DERIVATIVE INSTRUMENTS February 28, 2017 Prepaid Accrued Expenses Expenses Final and Other and Other Other(in thousands) Settlement Notional Current Other Current Liabilities,Derivatives designated as hedging instruments Hedge Type Date Amount Assets Assets Liabilities Non-currentForeign currency contracts - sell Euro Cash flow 2/2018 €27,500 $727 $ - $ - $- Foreign currency contracts - sell Canadian Dollars Cash flow 6/2018 $26,000 155 32 - - Foreign currency contracts - sell Pounds Cash flow 2/2018 £13,500 548 - - - Foreign currency contracts - sell Mexican Pesos Cash flow 2/2018 $59,600 - - 47 - Subtotal 1,430 32 47 - Derivatives not designated under hedge accounting Foreign currency contracts - cross-currency debtswaps (1) 1/2018 $10,000 705 - - -Total fair value $2,135 $32 $47 $ -(1)We have entered into foreign currency contracts referred to as “cross-currency deb swaps”, which in effect adjusts the currencydenomination of our 3.9% Senior Notes due January 2018 to the Euro for the notional amounts reported, creating an economic hedgeagainst currency movements. On these contracts, we have not elected hedge accounting. February 29, 2016 Prepaid Accrued Expenses Expenses Final and Other and Other Other(in thousands) Settlement Notional Current Other Current Liabilities,Derivatives designated as hedging instruments Hedge Type Date Amount Assets Assets Liabilities Non-currentForeign currency contracts - sell Euro Cash flow 2/2017 €27,000 $1,066 $ - $ - $ -Foreign currency contracts - sell Canadian Dollars Cash flow 6/2017 $28,000 - - 495 7Foreign currency contracts - sell Pounds Cash flow 2/2017 £3,450 94 - - -Foreign currency contracts - sell Australian Dollars Cash flow 8/2016 $1,650 6 - - -Subtotal 1,166 - 495 7 Derivatives not designated under hedge accounting Foreign currency contracts - cross-currency debt swap (1) 1/2018 $5,000 - 206 - -Total fair value $1,166 $206 $495 $ 7 The pre-tax effect of derivative instruments for fiscal 2017 and 2016 is as follows: PRE-TAX EFFECT OF DERIVATIVE INSTRUMENTS Fiscal Years Ended the Last Day of February, Gain / (Loss) Gain / (Loss) Reclassified from Recognized in OCI Accumulated Other Comprehensive Gain / (Loss) Recognized (effective portion) Income (Loss) into Income As Income(in thousands) 2017 2016 Location 2017 2016 Location 2017 2016Currency contracts - cash flow hedges $2,205 $1,978 SG&A $1,454 $1,203 $ - $ -Interest rate swaps - cash flow hedges - - Interest expense - - - -Cross-currency debt swaps - principal - - - - SG&A 499 206Cross-currency debt swaps - interest - - - - Interest Expense 90 11Total $2,205 $1,978 $1,454 $1,203 $589 $217 83 Table of ContentsWe expect net gains of $1.4 million associated with foreign currency contracts currently reported in accumulated othercomprehensive income, to be reclassified into income over the next twelve months. The amount ultimately realized,however, will differ as exchange rates change and the underlying contracts settle. See Notes 1, 12 and 18 to theseconsolidated financial statements for more information on our hedging activities. Counterparty Credit Risk – Financial instruments, including foreign currency contracts, cross-currency debt swapsand interest rate swaps, expose us to counterparty credit risk for nonperformance. We manage our exposure tocounterparty credit risk by dealing with counterparties who are substantial international financial institutions withsignificant experience using such derivative instruments. Although our theoretical credit risk is the replacement cost atthe 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 2017 and 2016: CASH AND CASH EQUIVALENTS February 28, 2017 February 29, 2016 Carrying Range of Carrying Range of(in thousands) Amount Interest Rates Amount Interest RatesCash, interest and non-interest-bearing accounts $20,376 0.00 to 0.35% $13,836 0.00 to 0.50%Money market funds 2,711 0.18 to 0.19% 211,964 0.11 to 0.19%Total cash and cash equivalents $23,087 $225,800 Our money market balance at the end of fiscal 2016 includes $210 million drawn shortly before the end of the fiscalyear, in order to facilitate the closing of the Hydro Flask acquisition in March 2016. Note 14 – 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 – We have entered into employment contracts with certain officers,including an employment agreement with Mr. Julien Mininberg, the Company’s CEO, that was amended and restatedon January 7, 2016. The amended and restated agreement, among other things, extended the term of Mr. Mininberg’semployment agreement from March 1, 2016 through February 28, 2019. These agreements provide for minimum salarylevels, potential incentive bonuses, and in some cases, performance based awards. These agreements also specifyvarying levels of salary continuation and/or severance compensation dependent on certain circumstances such asinvoluntary termination for other than cause or involuntary termination due to a change of control. In some cases, the expiration dates for these agreements are indefinite, unless terminated by either party. At February28, 2017, the estimated aggregate commitment for potential future compensation and/or severance pursuant to allcontinuing employment contracts, was approximately $12.0 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, and84 Table of Contentsfluctuations in the Chinese Renminbi against the U.S. Dollar have resulted in variability in our cost of goods sold. In thepast, certain Chinese suppliers have closed operations due to economic conditions that pressured their profitability.Although we have multiple sourcing partners for certain products, occasionally we are unable to source certain items ona timely basis due to changes occurring with our suppliers. We believe that we could source similar products outsideChina, if necessary, and we continuously explore expanding sourcing alternatives in other countries. However, therelocation of any production capacity could require substantial time and increased costs. Customer 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 – In January 2016, a jury ruled against the Company in a case that involved claims byExergen Corporation. The case involved the alleged patent infringement related to two forehead thermometer modelssold by our subsidiary, Kaz USA, Inc., in the United States. As a result of the jury verdict, we recorded a charge infiscal 2016 including legal fees and other related expenses, of $17.8 million (before and after tax). In June 2016, certainpost-trial motions were concluded with Exergen Corporation being awarded an additional $1.5 million of pre-judgmentcompensation. We accrued this additional amount in May 2016. In July 2016, we appealed the judgment to the UnitedStates Court of Appeals for the Federal Circuit. The Company continues to vigorously pursue its appellate rights anddefend against the underlying judgment. 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 commercialcommitments at the end of fiscal 2017 were: PAYMENTS DUE BY PERIOD - TWELVE MONTHS ENDED THE LAST DAY OF FEBRUARY: 2018 2019 2020 2021 2022 After(in thousands) Total 1 year 2 years 3 years 4 years 5 years 5 yearsFixed rate debt $20,000 $20,000 $ - $ - $ - $ - $ -Floating rate debt 470,707 5,700 1,900 1,900 1,900 442,600 16,707Long-term incentive plan payouts 12,840 6,630 3,716 2,494 - - -Interest on fixed rate debt 676 676 - - - - -Interest on floating rate debt (1) 47,995 10,050 10,006 9,963 9,920 7,717 339Open purchase orders 193,434 193,434 - - - - -Long-term purchase commitments 804 501 303 - - - -Minimum royalty payments 62,820 13,089 12,841 12,947 9,856 8,895 5,192Advertising and promotional 56,006 19,879 7,145 7,253 7,337 7,413 6,979Operating leases 37,143 6,511 5,936 4,440 4,118 3,878 12,260Capital spending commitments 683 683 - - - - -Total contractual obligations (2) $903,108 $277,153 $41,847 $38,997 $33,131 $470,503 $41,477(1)We estimate our future obligations for interest on our floating rate debt by assuming the weighted average interest rates in effect oneach floating rate debt obligation at February 28, 2017 remain constant into the future. This is an estimate, as actual rates will varyover time. In addition, for the Credit Agreement, we assume that the balance outstanding as of February 28, 2017 remains the same forthe remaining term of the agreement. The actual balance outstanding under our Credit Agreement may fluctuate significantly in futureperiods, depending on the availability of cash flow from operations and future investing and financing considerations.(2)In addition to the contractual obligations and commercial commitments in the table above, as of February 28, 2017, we have recordeda provision for uncertain tax positions of $6.6 million. We are unable to reliably estimate the timing of most of the future payments, ifany, related to uncertain tax positions; therefore, we have excluded these tax liabilities from the table above.85 Table of ContentsNote 15 – 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 28, 2017, we were authorized to purchase $83.4 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 Year Ended the Last Day of February(in thousands, except per share data)2017 2016 2015Common stock repurchased on the open market or through tender offer (1): Number of shares 922,731 1,126,796 4,102,143Aggregate value of shares (in thousands)$75,000 $100,000 $273,599Average price per share$81.28 $88.75 $66.70 Common stock received in connection with share-based compensation (2): Number of shares 6,286 117,294 71,950Aggregate value of shares (in thousands)$595 $6,411 $4,826Average price per share$94.61 $54.66 $67.08(1)Includes various open market purchases made in each of the three fiscal years including a modified “Dutch auction” tender offercompleted during fiscal 2015, resulting in the repurchase of 3,693,816 shares of our outstanding common stock at a total cost of$247.8 million, including tender offer transaction-related costs.(2)In fiscal 2016, we issued 276,548 shares of common stock as payment of separation compensation due to our former CEO under hisemployment and separation agreements. In connection with this transaction, the former CEO tendered 116,012 shares back to theCompany as payment for related federal tax obligations. The Company previously accrued and disclosed the separation compensationin fiscal 2014. Fiscal 2015 includes 68,086 shares of common stock having a market value of $67.10 per share, or $4.6 million in theaggregate, which were tendered by our former CEO as payment for related federal tax obligations arising from the vesting andsettlement of performance-based restricted stock units and restricted stock awards. 86 Table of ContentsNote 16 – 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 applicable listing standards for companies traded on the NASDAQ Stock Market LLC. 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 28, 2017, there were 1,200 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 vesting periods and will expire on dates ranging from seven to ten years from the date of grant. Thesestock options are expensed ratably over their vesting terms. As of February 28, 2017, there were 447,137 shares ofcommon stock subject to options outstanding under the plan. ·Restricted Stock Awards (“RSAs”): RSAs were awarded to our former CEO that vested as a result of theachievement of certain performance targets specified in his employment agreement. RSAs for 62,304 shares ofcommon stock for fiscal 2014 with a fair value at the date of the award of $67.10 per share, vested during fiscal2015. In addition, during fiscal 2016, we issued an RSA that immediately vested for 2,000 shares of common stockto our current CEO at a fair value of $89.12 per share. ·Restricted Stock Units (“RSUs”): RSUs are awards of time-vested restricted stock units that are independent ofstock option grants and are generally subject to forfeiture if employment terminates prior to vesting. During fiscal2017, 2016 and 2015, we granted RSUs that may be settled for up to 92,329, 29,932, and 28,937 shares ofcommon stock, with weighted average grant date fair values of $96.74, $76.62 and $58.36, respectively, to theCEO and certain members of the management team. The awards vest over varying terms up to 4 years. TheCompany expenses the cost of restricted stock units ratably over their vesting periods. ·Performance Restricted Stock Units (“PSUs”): PSUs are performance-based restricted stock unit awards thatrepresent the right to receive unrestricted shares of stock based on the achievement of Company performance goalsover the performance period established by the Compensation Committee of our Board of Directors. During fiscal2017, 2016 and 2015, the Company granted PSUs that may be settled for up to 139,846, 130,608 and 178,101shares of common stock with average fair values at the grant date of $97.12, $76.62 and $58.36, respectively, tothe CEO and certain members of the management team. These awards have three year performance periods endingon the last day of fiscal 2019, 2018 and 2017, respectively. The awards will vest and settle on the date theCompensation Committee certifies that the performance goals have been achieved. Expense for the new plan mustbe estimated until earned, subject to a probability assessment of achieving the various performance goals andpayout levels. 87 Table of ContentsA summary of shares available for issue under the 2008 stock incentive plan follows: SUMMARY OF SHARES AVAILABLE FOR ISSUE UNDER THE 2008 STOCK INCENTIVE PLANShares originally authorized 3,750,000Less cumulative stock option grants issued, net of forfeitures (1,182,894)Less restricted share awards previously vested and settled (439,613)Subtotal 2,127,493Less maximum RSUs issuable upon vesting (1) (123,425)Less maximum PSUs issuable upon vesting (1) (396,312)Shares available for issuance 1,607,756(1)RSUs and PSUs potentially issuable are estimated assuming the maximum payouts adjusted for actual forfeitures 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 our Board of Directors. The plan will expire by its terms on August 19, 2018. As ofFebruary 28, 2017, 78,825 shares of restricted stock have been granted and 96,175 shares remained available for futureissue under the plan. Under the 2008 Directors’ Plan for fiscal 2017, 2016 and 2015, the Company granted 5,285,5,649 and 9,267 shares of restricted stock, respectively, to certain members of our Board of Directors having weightedaverage fair values at the date of grant of $92.98, $87.04 and $61.72 per share for each year, respectively. Therestricted stock awards vested immediately, were valued at the fair value of our common 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% 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% of the share’s fair market value on either the first day of each option periodor 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 2017, 2016and 2015, plan participants acquired a total of 32,110, 28,433 and 31,128 shares of common stock at average prices of$76.77, $67.77 and $49.49 per share, respectively. As of February 28, 2017, there were 66,542 shares available forfuture issue under the plan. We recorded share-based compensation expense in SG&A as follows: SHARE-BASED PAYMENT EXPENSE Fiscal Years Ended the Last Day of February,(in thousands, except per share data)2017 2016 2015Stock options$2,614 $2,961 $3,279Directors stock compensation 700 700 816Performance based and other stock awards 11,812 4,478 1,732Employee stock purchase plan 580 552 391Share-based payment expense 15,706 8,691 6,218Less income tax benefits (2,396) (1,284) (661)Share-based payment expense, net of income tax benefits$13,310 $7,407 $5,557 Earnings per share impact of share based payment expense: Basic$0.48 $0.26 $0.19Diluted$0.48 $0.26 $0.19 88 Table of ContentsThe fair value of our stock option grants are estimated using a Black-Scholes option pricing model with the followingassumptions: ASSUMPTIONS USED FOR FAIR VALUE OF STOCK OPTION GRANTS Fiscal Years Ended the Last Day of February, 2017 2016 2015Range of risk free interest rates used 1.2% 0.9% - 1.5% 1.2% - 1.5%Expected dividend rate 0.0% 0.0% 0.0%Weighted average volatility rate 33.4% 39.1% 48.0%Range of expected volatility rates used 33.4% 35.9% - 39.7% 35.3% - 50.5%Range of expected terms used (in years) 4.1 4.1 - 4.4 4.1 - 4.4 The risk-free interest rate is based on U.S. Treasury securities with maturities equal to the expected life of the stockoption grants. The dividend yield is computed as zero because we have not historically paid dividends nor do weexpect to do so at this time. Expected volatility is based on a weighted average of the market implied volatility andhistorical volatility over the expected life of the underlying stock option grants. We use our historical experience toestimate the expected term of each stock option grant. A summary of stock option activity under all our share-based compensation plans follows: SUMMARY OF STOCK OPTION ACTIVITY Weighted Weighted Weighted Average Average Average Remaining Exercise Grant Date Contractual Price Fair Value Term Intrinsic(in thousands, except contractual term and per share data) Options (per share) (per share) (in years) ValueOutstanding at February 28, 2014 839 33.03 12.38 6.5 27,081Grants 257 63.84 25.22 Exercises (187) 29.70 6,498Forfeitures / expirations (141) 40.67 Outstanding at February 28, 2015 768 42.76 16.28 6.6 26,008Grants 186 88.17 28.82 Exercises (178) 37.86 9,480Forfeitures / expirations (127) 59.01 Outstanding at February 29, 2016 649 $53.94 $19.52 6.1 $26,847Grants 2 102.04 28.74 Exercises (170) 43.07 9,152Forfeitures / expirations (33) 65.68 Outstanding at February 28, 2017 448 $57.41 $20.54 5.0 $18,097 Exercisable at February 28, 2017 168 $46.37 $17.30 4.3 $8,647 89 Table of ContentsA summary of non-vested stock option activity and changes under all our share-based compensation plans follows: NON-VESTED STOCK OPTION ACTIVITY Weighted Average Non- Grant Date Vested Fair Value(in thousands, except per share data) Options (per share)Outstanding at February 28, 2014 728 12.74Grants 257 25.22Vested or forfeited (311) 13.87Outstanding at February 28, 2015 674 16.98Grants 186 28.82Vested or forfeited (339) 17.59Outstanding at February 29, 2016 521 $20.81Grants 2 28.74Vested or forfeited (243) 18.95Outstanding at February 28, 2017 280 $22.48 A summary of restricted stock award activity under our 2008 Stock Incentive Plan follows: SUMMARY OF RESTRICTED STOCK AWARD ACTIVITY Weighted Average Restricted Grant Date Stock Fair Value Fair Value(in thousands, except per share data) Awards (per share) OutstandingDue for Issue at February 28, 2014 62 67.10 4,073Vested and issued (1) (62) 67.10 Due for issue at February 28, 2015 - - -Granted (2) 2 89.12 Vested and issued (2) (2) 89.12 Due for issue at February 29, 2016 - $ - $ -Granted - - Vested and issued - - Due for issue at February 28, 2017 - $ - $ -(1)Fiscal 2014 performance RSAs earned by our former CEO, which vested on April 22, 2014. (2)Fiscal 2016 RSA to our current CEO, which were granted and vested on May 8, 2015. 90 Table of ContentsA summary of restricted stock unit activity and changes under our 2008 Stock Incentive Plan follows: SUMMARY OF RESTRICTED STOCK UNIT ACTIVITY Weighted Average Restricted Grant Date Stock Fair Value Fair Value(in thousands, except per share data) Units (per share) OutstandingOutstanding at February 28, 2014 (1) 100 32.88 6,531Granted (2) 118 58.35 Vested (1) (100) 32.88 Outstanding at February 28, 2015 118 58.35 9,041Granted (2) 95 76.62 Vested - - Outstanding at February 29, 2016 213 $66.50 $20,311Granted (2) 162 96.90 Vested or forfeited (3) (53) 70.14 Outstanding at February 28, 2017 322 $81.19 $31,418(1)Fiscal 2014 PSUs earned by our former CEO, which vested and settled on April 22, 2014 at a fair value of $67.10 per share. (2)Includes target level RSUs and PSUs granted to our current CEO and members of management in connection with long-term incentivecompensation for fiscal 2015, 2016 and 2017. (3)Includes 15,643 RSUs which vested and settled throughout the year at an weighted average fair value of $60.28 per share.A summary of our total unrecognized share-based compensation expense as of February 28, 2017 is as follows: UNRECOGNIZED SHARE-BASED COMPENSATION EXPENSE Weighted Average Unrecognized Period of Compensation Recognition(in thousands, except weighted average expense period data) Expense (in months)Stock options $3,578 25.4Restricted stock units (RSUs and PSUs) 10,804 23.5 Note 17 – 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 plans for fiscal 2017, 2016 and 2015 were $3.6, $3.5 and $3.2 million,respectively. 91 Table of ContentsNote 18 – Accumulated Other Comprehensive Income (Loss) The changes in accumulated other comprehensive income (loss) by component and related tax effects for fiscal 2017and 2016 were as follows: CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT(in thousands)Unrealized Holding Gains (Losses) on Cash FlowHedges (1)Balance at February 28, 2015$(76)Other comprehensive income before reclassification 1,978Amounts reclassified out of accumulated other comprehensive income (1,203)Tax effects (34)Other comprehensive income (loss) 741Balance at February 29, 2016 665Other comprehensive income before reclassification 2,205Amounts reclassified out of accumulated other comprehensive income (1,454)Tax effects (243)Other comprehensive income (loss) 508Balance at February 28, 2017$1,173(1)Includes net deferred tax benefits (expense) of ($0.2) and $0.0 million at the end of fiscal 2017 and 2016, respectively. See Notes 1, 12 and 13 to these consolidated financial statements for additional information regarding our hedgingactivities. Note 19 – 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 2017: May August November February TotalSales revenue, net $347,938 $368,170 $444,414 $376,697 $1,537,219Gross profit 152,427 162,968 194,215 165,858 675,468Asset impairment charges 7,400 - - 5,000 12,400Net income 19,026 28,355 57,612 35,696 140,689 Earnings per share (1) Basic 0.69 1.02 2.10 1.31 5.11Diluted 0.68 1.00 2.07 1.30 5.04 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(1)Earnings per share calculations for each quarter are based on the weighted average number of shares outstanding for each period, andthe sum of the quarterly amounts may not necessarily equal the annual earnings per share amounts. 92 Table of ContentsNote 20 – Segment and Geographic Information The following table contains segment information: SEGMENT INFORMATION (in thousands) Nutritional Fiscal 2017 Housewares (1) Health & Home Supplements Beauty TotalSales revenue, net $418,128 $632,769 $130,543 $355,779 $1,537,219Asset impairment charges - - 9,500 2,900 12,400Operating income 89,641 52,294 (7,933) 30,330 164,332Identifiable assets 642,967 679,248 205,889 284,992 1,813,096Capital and intangible asset expenditures 5,652 5,192 5,112 4,663 20,619Depreciation and amortization 5,723 20,374 8,408 9,836 44,341 Nutritional Fiscal 2016 Housewares Health & Home Supplements Beauty TotalSales revenue, net $310,663 $642,735 $153,126 $439,177 $1,545,701Asset impairment charges - - - 6,000 6,000Operating income 56,659 38,078 11,446 24,432 130,615Identifiable assets 610,176 715,104 216,963 306,651 1,848,894Capital and intangible asset expenditures 1,560 9,131 3,927 5,985 20,603Depreciation and amortization 4,183 21,300 9,424 7,842 42,749 Nutritional Fiscal 2015 Housewares Health & Home Supplements (2) Beauty TotalSales revenue, net $296,252 $613,253 $100,395 $435,231 $1,445,131Asset impairment charges - - - 9,000 9,000Operating income 59,392 50,821 9,512 41,994 161,719Identifiable assets 387,663 667,954 216,798 349,824 1,622,239Capital and intangible asset expenditures 2,019 2,602 613 1,287 6,521Depreciation and amortization 3,615 20,532 5,380 10,126 39,653(1)Includes eleven and a half months of operating results for Hydro Flask, acquired on March 18, 2016. (2)Includes eight months of operating results for Healthy Directions, acquired on June 30, 2014. 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 2016, we began making an allocation of shared service and corporate overhead costs to theNutritional Supplements segment. For fiscal 2017 and 2016, those allocations totaled $6.0 and $4.7 million,respectively. We do not allocate nonoperating income and expense, including interest or income taxes, to operatingsegments.93 Table of ContentsOur domestic and international net sales revenue and long-lived assets were as follows: GEOGRAPHIC INFORMATION Fiscal Years Ended the Last Day of February,(in thousands) 2017 2016 2015SALES REVENUE, NET: United States $1,241,653 $1,233,464 $1,139,959International 295,566 312,237 305,172Total $1,537,219 $1,545,701 $1,445,131 LONG-LIVED ASSETS: United States $599,451 $606,925 $631,326International: Barbados 498,077 315,182 319,298Other international 159,490 171,699 133,608Subtotal 657,567 486,881 452,906Total $1,257,018 $1,093,806 $1,084,232 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 15%, 16% and 18% of our netsales revenue in fiscal 2017, 2016 and 2015, respectively. Sales to this customer are made within the Beauty and Health& Home segments. Of these sales, approximately 94%, 94% and 84% were within the U.S. during fiscal 2017, 2016and 2015, respectively. No other customers accounted for 10% or more of net sales revenue during those fiscal years. 94 Table of ContentsHELEN OF TROY LIMITED AND SUBSIDIARIESSchedule II - Valuation and Qualifying Accounts Additions Charged to Net charge Beginning cost and (credit) to Ending(in thousands) Balance expenses (1) sales revenue (2) Deductions (3) BalanceYear Ended February 28, 2017 Allowances for doubtful accounts $1,733 $2,326 $ - $697 $3,362Allowances for back-to-stock returns 4,165 - (1,871) - $2,294 Year Ended February 29, 2016 Allowances for doubtful accounts $1,849 $225 $ - $341 $1,733Allowances for back-to-stock returns 4,033 - 132 - $4,165 Year Ended February 28, 2015 Allowances for doubtful accounts $2,127 $299 $ - $577 $1,849Allowances for back-to-stock returns 2,552 - 1,481 - $4,033(1)Represents periodic charges to the provision for doubtful accounts. (2)Represents net charges (credits) during the period to sales returns and allowances. (3)Represents write-offs of doubtful accounts, net of recoveries of previously reserved amounts. 95 Table of Contents Item 9. Changes In and Disagreements with Accountants on Accounting and Financial 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 Executive Officer(CEO) and Chief Financial Officer (CFO), we have evaluated the effectiveness of the design and operation of ourdisclosure controls and procedures as defined in Rule 13a-15(e) promulgated under the Exchange Act as of February28, 2017. Based upon that evaluation, our CEO and CFO concluded that our disclosure controls and procedures areeffective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Actis accumulated and communicated to management, including the CEO and CFO, as appropriate to allow timelydecisions regarding required disclosure and is recorded, processed, summarized, and reported within the time periodsspecified 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 internal controls overfinancial reporting of the independent registered public accounting firm required by this item are set forth under Item 8.,“Financial Statements and Supplementary Data” of this report on pages 52 through 53, and are incorporated herein byreference. Changes in Internal Control Over Financial Reporting In connection with the evaluation described above, we identified no change in our internal control over financialreporting as defined in Rule 13a-15(f) promulgated under the Exchange Act that occurred during our fiscal year endedFebruary 28, 2017, that has materially affected, or is reasonably likely to materially affect, our internal control overfinancial reporting. 96 Table of Contents PART III Item 10. Directors, Executive Officers and Corporate Governance Information in our definitive Proxy Statement for the 2017 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 “audit committeefinancial experts” is set forth under “Corporate Governance” and “Board Committees and Meetings”; 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 and Related 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 Director Independence 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 Public AccountingFirm” in our Proxy Statement is incorporated by reference in response to this Item 14.97 Table of Contents PART IV Item 15. Exhibits, Financial Statement Schedules (a)1.Financial Statements: See “Index to Consolidated Financial Statements” under Item 8 on page 51 of this report 2.Financial Statement Schedule: See “Schedule II” on page 95 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. 2.1Agreement and Plan of Merger dated as of December 8, 2010, among Helen of Troy Texas Corporation, KIAcquisition Corp., Kaz, Inc., the Company, and the Kaz, Inc. shareholders party thereto (incorporated byreference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the Securities andExchange Commission on December 9, 2010).3.1Memorandum 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”)).3.2Bye-Laws, as amended (incorporated by reference to Appendix A to the Company’s Definitive ProxyStatement on Schedule 14A, File No. 001-14669, filed with the Securities and Exchange Commission onJune 27, 2016).10.1†Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 of the Company's AnnualReport on Form 10-K for the fiscal year ended February 28, 2014, filed with the Securities and ExchangeCommission 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 byreference to Appendix A to the Company's Definitive Proxy Statement on Schedule 14A, 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 to Exhibit10.25 of the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 2006, filed withthe 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 to Exhibit10.26 of the 2006 10-K).10.5†Helen of Troy Limited 2008 Employee Stock Purchase Plan (incorporated by reference to Appendix A to the(incorporated by reference to Appendix A to the Company's Definitive Proxy Statement on Schedule 14Afiled with the Securities and Exchange Commission on June 27, 2008 (the “2008 Proxy Statement”)).10.6†Helen of Troy Limited 2008 Non-Employee Directors Stock Incentive Plan (incorporated by reference toAppendix C to the 2008 Proxy Statement).10.7†Form of Restricted Stock Agreement for the Company’s 2008 Non-Employee Directors Stock Incentive Plan(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with theSecurities and Exchange Commission on August 26, 2009). 98 Table of Contents10.8Note Purchase Agreement, dated January 12, 2011, by and among Helen of Troy, L.P., the Company, Helenof Troy Limited, a Barbados company, and the purchasers party thereto (incorporated by reference to Exhibit10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission onJanuary 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 10.1 of the Company’s Quarterly Report on 10-Q, filed with the Securities and ExchangeCommission on October 11, 2016).10.11Loan 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 on Form8-K, filed with the Securities and Exchange Commission on March 26, 2013).10.12Guaranty Agreement, dated as of March 1, 2013, by Helen of Troy Limited and certain of its subsidiaries infavor of Bank of America, N.A. (incorporated by reference to Exhibit 10.2 to the Company’s Current Reporton Form 8-K, filed with the Securities and Exchange Commission on March 26, 2013).10.13Trust Indenture, dated as of March 1, 2013 between Mississippi Business Finance Corporation and DeutscheBank National Trust, as trustee (incorporated by reference to Exhibit 10.2 to the Company’s Current Reporton 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 to theCompany’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 Incentive Plan(incorporated by reference to Exhibit 10.35 of the 2013 10-K).10.16First 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, Helenof Troy Texas Corporation, Idelle Labs Ltd., OXO International Ltd., Helen of Troy Macao CommercialOffshore Limited, Kaz, Inc., Kaz USA, Inc., Kaz Canada, Inc., and Pur Water Purification Products, Inc., infavor of Bank of America, N.A. (incorporated by reference to Exhibit 10.2 to the Company's Current Reporton Form 8-K, filed with the Securities and Exchange Commission on February 10, 2014).10.17Second Amendment to Guaranty Agreement, dated as of June 11, 2014, made by Helen of Troy Limited andcertain of its subsidiaries in favor of Bank of America, N.A. (incorporated by reference to Exhibit 10.1 tothe Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 17,2014).10.18Amended 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 to theCompany's Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 20,2015).10.19First Amendment to Amended and Restated Credit Agreement dated December 7, 2016, by and among Helenof Troy, L.P., a Texas limited partnership, Helen of Troy Limited, a Bermuda company, Bank of America,N.A., as administrative agent, and the other lenders party thereto (incorporated by reference to Exhibit 10.1to the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission onDecember 13, 2016).99 Table of Contents10.20Guaranty, dated January 16, 2015, made by Helen of Troy Limited and certain of its subsidiaries in favor ofBank of America, N.A. and other lenders, pursuant to the Amended and Restated Credit Agreement, datedJanuary 16, 2015 (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K,filed with the Securities and Exchange Commission on January 20, 2015).10.21Third Amendment to Guaranty Agreement, dated as of January 16, 2015, made by Helen of Troy Limitedand certain of its subsidiaries in favor of Bank of America, N.A. (incorporated by reference to Exhibit 10.3to the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission onJanuary 20, 2015).10.22*Fourth Amendment to Guaranty Agreement, dated as of December 7, 2016, made by Helen of Troy Limitedand certain of its subsidiaries in favor of Bank of America, N.A.10.23First Supplemental Trust Indenture, dated as of March 1, 2014, by and between Mississippi Business FinanceCorporation and Deutsche Bank National Trust, as trustee (incorporated by reference to Exhibit 10.24 of the2015 10-K).10.24Second Supplemental Trust Indenture, dated as of February 18, 2015 but effective February 1, 2015, by andbetween 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*Third Supplemental Trust Indenture, dated as of December 7, 2016, but effective December 1, 2016, by andbetween Mississippi Business Finance Corporation and Deutsche Bank National Trust, as trustee.10.26†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).10.27†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).10.28†Amended and Restated Employment Agreement among Helen of Troy Nevada Corporation, Helen of TroyLimited and Julien Mininberg, dated January 7, 2016 (incorporated by reference to Exhibit 10.1 to theCompany'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 to Section302 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 to Section302 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 100 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant has duly caused this report to besigned on its behalf by the undersigned, thereunto duly authorized. a HELEN OF TROY LIMITED By:/s/ Julien R. Mininberg Julien R. Mininberg Chief Executive Officer and Director May 1, 2017 Pursuant to the requirements of the Exchange Act, this report has been signed below by the following persons on behalfof the registrant and in the capacities and on the dates indicated. /s/ Julien R. Mininberg /s/ Brian L. GrassJulien R. Mininberg Brian L. GrassChief Executive Officer, Director and Principal ExecutiveOfficerMay 1, 2017 Chief Financial Officerand Principal Financial OfficerMay 1, 2017 /s/ Richard J. Oppenheim /s/ Timothy F. MeekerRichard J. Oppenheim Timothy F. MeekerVice President and Principal Accounting Officer Director, Chairman of the BoardMay 1, 2017 May 1, 2017 /s/ Gary B. Abromovitz /s/ Krista BerryGary B. Abromovitz Krista BerryDirector, Deputy Chairman of the Board DirectorMay 1, 2017 May 1, 2017 /s/ John B. Butterworth /s/ Thurman K. CaseJohn B. Butterworth Thurman K. CaseDirector DirectorMay 1, 2017 May 1, 2017 /s/ Beryl B. Raff /s/ William F. SusetkaBeryl B. Raff William F. SusetkaDirector DirectorMay 1, 2017 May 1, 2017 /s/ Darren G. Woody Darren G. Woody Director May 1, 2017 101 Table of Contents INDEX 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. 2.1Agreement and Plan of Merger dated as of December 8, 2010, among Helen of Troy Texas Corporation, KIAcquisition Corp., Kaz, Inc., the Company, and the Kaz, Inc. shareholders party thereto (incorporated byreference to Exhibit 2.1 to the Company’s Current Report on Form 8-K, filed with the Securities andExchange Commission on December 9, 2010).3.1Memorandum 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”)).3.2Bye-Laws, as amended (incorporated by reference to Appendix A to the Company’s Definitive ProxyStatement on Schedule 14A, File No. 001-14669, filed with the Securities and Exchange Commission onJune 27, 2016).10.1†Form of Indemnification Agreement (incorporated by reference to Exhibit 10.1 of the Company's AnnualReport on Form 10-K for the fiscal year ended February 28, 2014, filed with the Securities and ExchangeCommission 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 byreference to Appendix A to the Company's Definitive Proxy Statement on Schedule 14A, 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 to Exhibit10.25 of the Company's Annual Report on Form 10-K for the fiscal year ended February 28, 2006, filed withthe 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 to Exhibit10.26 of the 2006 10-K).10.5†Helen of Troy Limited 2008 Employee Stock Purchase Plan (incorporated by reference to Appendix A to the(incorporated by reference to Appendix A to the Company's Definitive Proxy Statement on Schedule 14Afiled with the Securities and Exchange Commission on June 27, 2008 (the “2008 Proxy Statement”)).10.6†Helen of Troy Limited 2008 Non-Employee Directors Stock Incentive Plan (incorporated by reference toAppendix C to the 2008 Proxy Statement).10.7†Form of Restricted Stock Agreement for the Company’s 2008 Non-Employee Directors Stock Incentive Plan(incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with theSecurities and Exchange Commission on August 26, 2009).10.8Note Purchase Agreement, dated January 12, 2011, by and among Helen of Troy, L.P., the Company, Helenof Troy Limited, a Barbados company, and the purchasers party thereto (incorporated by reference to Exhibit10.1 to the Company’s Current Report on Form 8-K, filed with the Securities and Exchange Commission onJanuary 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 10.1 of the Company’s Quarterly Report on 10-Q, filed with the Securities and ExchangeCommission on October 11, 2016).10.11Loan 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 on Form 8-K, filed with the Securities and Exchange Commission on March 26, 2013).102 Table of Contents10.12Guaranty Agreement, dated as of March 1, 2013, by Helen of Troy Limited and certain of its subsidiaries infavor of Bank of America, N.A. (incorporated by reference to Exhibit 10.2 to the Company’s Current Reporton Form 8-K, filed with the Securities and Exchange Commission on March 26, 2013).10.13Trust Indenture, dated as of March 1, 2013 between Mississippi Business Finance Corporation and DeutscheBank National Trust, as trustee (incorporated by reference to Exhibit 10.2 to the Company’s Current Reporton 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 to theCompany’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 Incentive Plan(incorporated by reference to Exhibit 10.35 of the 2013 10-K).10.16First Amendment to Guaranty Agreement, dated as of February 7, 2014, made by Helen of Troy, L.P., Helenof Troy Limited, a Barbados company, HOT Nevada, Inc, Helen of Troy Nevada Corporation, Helen of TroyTexas Corporation, Idelle Labs Ltd., OXO International Ltd., Helen of Troy Macao Commercial OffshoreLimited, Kaz, Inc., Kaz USA, Inc., Kaz Canada, Inc., and Pur Water Purification Products, Inc., in favor ofBank of America, N.A. (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form8-K, filed with the Securities and Exchange Commission on February 10, 2014).10.17Second Amendment to Guaranty Agreement, dated as of June 11, 2014, made by Helen of Troy Limited andcertain of its subsidiaries in favor of Bank of America, N.A. (incorporated by reference to Exhibit 10.1 to theCompany's Current Report on Form 8-K, filed with the Securities and Exchange Commission on June 17,2014).10.18Amended 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 to theCompany's Current Report on Form 8-K, filed with the Securities and Exchange Commission on January 20,2015).10.19First Amendment to Amended and Restated Credit Agreement dated December 7, 2016, by and among Helenof Troy, L.P., a Texas limited partnership, Helen of Troy Limited, a Bermuda company, Bank of America,N.A., as administrative agent, and the other lenders party thereto (incorporated by reference to Exhibit 10.1to the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission onDecember 13, 2016).10.20Guaranty, dated January 16, 2015, made by Helen of Troy Limited and certain of its subsidiaries in favor ofBank of America, N.A. and other lenders, pursuant to the Amended and Restated Credit Agreement, datedJanuary 16, 2015 (incorporated by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K,filed with the Securities and Exchange Commission on January 20, 2015).10.21Third Amendment to Guaranty Agreement, dated as of January 16, 2015, made by Helen of Troy Limitedand certain of its subsidiaries in favor of Bank of America, N.A. (incorporated by reference to Exhibit 10.3to the Company's Current Report on Form 8-K, filed with the Securities and Exchange Commission onJanuary 20, 2015).10.22*Fourth Amendment to Guaranty Agreement, dated as of December 7, 2016, made by Helen of Troy Limitedand certain of its subsidiaries in favor of Bank of America, N.A.10.23First Supplemental Trust Indenture, dated as of March 1, 2014, by and between Mississippi Business FinanceCorporation and Deutsche Bank National Trust, as trustee (incorporated by reference to Exhibit 10.24 of the2015 10-K).10.24Second Supplemental Trust Indenture, dated as of February 18, 2015 but effective February 1, 2015, by andbetween Mississippi Business Finance Corporation and Deutsche Bank National Trust, as trustee (incorporatedby reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed with the Securities andExchange Commission on February 23, 2015).103 Table of Contents10.25*Third Supplemental Trust Indenture, dated as of December 7, 2016, but effective December 1, 2016, by andbetween Mississippi Business Finance Corporation and Deutsche Bank National Trust, as trustee.10.26†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).10.27†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).10.28†Amended and restated Employment Agreement among Helen of Troy Nevada Corporation, Helen of TroyLimited and Julien Mininberg, dated January 7, 2016 (incorporated by reference to Exhibit 10.1 to theCompany'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 to Section302 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 to Section302 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 104EXHIBIT 10.22FOURTH AMENDMENT TO GUARANTY AGREEMENTTHIS FOURTH AMENDMENT TO GUARANTY AGREEMENT (this “FourthAmendment”), dated effective as of December 7, 2016, is entered into among the parties listed on thesignature pages hereof as Guarantors (collectively, the “Guarantors”), and BANK OF AMERICA,N.A. (the “Guarantied Party”, and collectively with any Affiliates thereof, the “Guarantied Parties”).BACKGROUNDA. The Guarantors and the Guarantied Party are parties to that certain GuarantyAgreement, dated as of March 1, 2013, as amended by that certain First Amendment to GuarantyAgreement, dated as of February 7, 2014, that certain Second Amendment to Guaranty Agreement,dated as of June 11, 2014, and that certain Third Amendment to Guaranty Agreement, dated as ofJanuary 16, 2015 (said Guaranty Agreement, as amended, the “Guaranty Agreement”). The termsdefined in the Guaranty Agreement and not otherwise defined herein shall be used herein as defined inthe Guaranty Agreement.B. The parties to the Guaranty Agreement desire to make certain amendments to theGuaranty Agreement.C. The Guarantied Party hereby agrees to amend the Guaranty Agreement, subject to theterms and conditions set forth herein.NOW, THEREFORE, in consideration of the covenants, conditions and agreements hereafterset forth, and for other good and valuable consideration, the receipt and adequacy of which are allhereby acknowledged, the Guarantors and the Guarantied Party covenant and agree as follows:1. AMENDMENTS.(a) Section 1 of the Guaranty Agreement is hereby amended on and as of the FirstAmendment Effective Date by adding the following defined terms thereto to read as follows:“First Amendment” means that certain First Amendment to Amended and RestatedCredit Agreement, dated as of December 7, 2016, among HOT-L.P., Limited, the Lenders andthe Guarantied Party, as Administrative Agent.“First Amendment Effective Date” has the meaning specified in the First Amendment.“Qualified Acquisition” means an Acquisition by Limited or any Subsidiary, whichAcquisition has been designated to the Purchaser in a Qualified Acquisition Notice as a“Qualified Acquisition”, provided that (a) the aggregate Acquisition Consideration is greaterthan $150,000,000 and (b) at the time of such Acquisition, the unpaid principal balance of the2011 Senior Notes shall have been paid in full. “Qualified Acquisition Notice” means a written notice from Limited to the Purchaser(a) delivered not later than 5 days prior to the date of closing of the proposed QualifiedAcquisition and (b) which describes the Qualified Acquisition which is the basis for suchrequest (including, without limitation, a pro forma calculation of the Leverage Ratioimmediately prior to and after giving effect to such Qualified Acquisition, which calculationshall indicate that the Leverage Ratio immediately prior to such Qualified Acquisition is notgreater than 3.50 to 1.00), and otherwise in form reasonably satisfactory to the Purchaser.(b) Section 8(b)(9) of the Guaranty Agreement is hereby amended on and as of the FirstAmendment Effective Date to read as follows:(9)Investments as a result of Acquisitions, if each of the following conditions hasbeen satisfied: (i) immediately before and after giving effect to such Acquisition, no Defaultshall have occurred and be continuing, (ii)(A) if such Acquisition is a Qualified Acquisition,immediately before and after giving effect to such Acquisition, HOT-L.P. is in compliance withSection 8(k)(3) or (B) if such Acquisition is not a Qualified Acquisition, immediately beforeand after giving effect to such Acquisition, the Leverage Ratio on a pro forma basis is notgreater than (y) 3.00 to 1.00 if any of the 2011 Senior Notes are outstanding and (z) 3.25 to1.00 if the 2011 Senior Notes are not outstanding or the maximum leverage ratio permittedunder the 2011 Senior Note Agreement is increased to 3.50 to 1.00, (iii) immediately beforeand after giving effect to such Acquisition, Liquidity will be at least $25,000,000, (iv) suchAcquisition shall not be opposed by the board of directors or similar governing body of thePerson or assets being acquired and (v) if the Acquisition results in a Domestic Subsidiarybeing acquired having a net worth at the time of such Acquisition of more than $10,000,000,such Subsidiary shall execute and deliver to the Purchaser (x) a supplement to this GuarantyAgreement, (y) incumbency certificate, Organization Documents and documents evidencingdue organization, valid existence, good standing and qualification to do business, and (z) afavorable opinion of counsel to such Person located in the jurisdiction of organization of suchPerson, in form, content and scope reasonably satisfactory to the Purchaser;(c) Section 8(k)(3) of the Guaranty Agreement is hereby amended on and as of the FirstAmendment Effective Date to read as follows:(3)Leverage Ratio. Permit the Leverage Ratio to be greater than (i) 3.25 to 1.00 atany time during which any of the 2011 Senior Notes are outstanding and (ii) 3.50 to 1.00 at anytime during which the 2011 Senior Notes are not outstanding or the maximum leverage ratiopermitted under the 2011 Senior Note Agreement is increased to 3.50 to 1.00; provided,however, notwithstanding the foregoing, and following the delivery of a Qualified AcquisitionNotice, (A) for the fiscal quarter in which such Qualified Acquisition is consummated, theLeverage Ratio shall not at any time during thereof exceed 4.25 to 1.00, (B) for the first, secondand third fiscal quarters immediately following the fiscal quarter in which such QualifiedAcquisition was consummated, the Leverage Ratio shall not at any time during thereof exceed4.00 to 1.00, and (C) for the fourth fiscal quarter immediately following the fiscal quarter inwhich such Qualified2 Acquisition was consummated, the Leverage Ratio shall not at any time during thereof exceed3.75 to1.00.(d) Exhibit A, the Compliance Certificate, is hereby amended to be in the form ofExhibit A to this Fourth Amendment.2. REPRESENTATIONS AND WARRANTIES TRUE; NO EVENT OFDEFAULT. By its execution and delivery hereof, each of the Guarantors represents and warrants that,as of the First Amendment Effective Date:(a) the representations and warranties contained in the Guaranty Agreement and the otherLoan Documents are true and correct on and as of the date hereof as made on and as of such date,except to the extent that such representations and warranties specifically refer to an earlier date, inwhich case they shall be true and correct on such earlier date;(b) no event has occurred and is continuing which constitutes a Default or an Event ofDefault;(c) (i) each Guarantor has full power and authority to execute and deliver this FourthAmendment, (ii) this Fourth Amendment has been duly executed and delivered by the Guarantors, and(iii) this Fourth Amendment and the Guaranty Agreement, as amended hereby, constitute the legal,valid and binding obligations of the Guarantors, as the case may be, enforceable in accordance withtheir respective terms, except as enforceability may be limited by applicable Debtor Relief Laws andby general principles of equity (regardless of whether enforcement is sought in a proceeding in equityor at law) and except as rights to indemnity may be limited by federal or state securities laws;(d) neither the execution, delivery and performance of this Fourth Amendment or theGuaranty Agreement, as amended hereby, nor the consummation of any transactions contemplatedherein or therein, will conflict with any Law or Organization Documents of any of the Guarantors, orany indenture, agreement or other instrument to which the Guarantors or any of their respectiveproperty is subject; and(e) no authorization, approval, consent, or other action by, notice to, or filing with, anyGovernmental Authority or other Person not previously obtained is required for the execution, deliveryor performance by any of the Guarantors of this Fourth Amendment.3. CONDITIONS TO EFFECTIVENESS. This Fourth Amendment shall be effectiveupon satisfaction or completion of the following:(a) the Guarantied Party shall have received counterparts of this Fourth Amendmentexecuted by each of the Guarantors and acknowledged by the Borrower;(b) the representations and warranties set forth in Section 2 above shall be true and correct;and3 (c) the Guarantied Party shall have received, in form and substance satisfactory to theGuarantied Party and its counsel, such other documents, certificates and instruments as the GuarantiedParty shall reasonably require.4. REFERENCE TO THE GUARANTY AGREEMENT.(a) Upon the effectiveness of this Fourth Amendment, each reference in the GuarantyAgreement to “this Agreement”, “hereunder”, or words of like import shall mean and be a reference tothe Guaranty Agreement, as affected and amended hereby.(b) The Guaranty Agreement, as amended by the amendments referred to above, shallremain in full force and effect and is hereby ratified and confirmed.5. COSTS, EXPENSES AND TAXES. The Guarantors agree to pay on demand allreasonable costs and expenses of the Guarantied Party in connection with the preparation,reproduction, execution and delivery of this Fourth Amendment and the other instruments anddocuments to be delivered hereunder (including the reasonable fees and out-of-pocket expenses ofcounsel for the Guarantied Party with respect thereto).6. BORROWER’S ACKNOWLEDGMENT. By signing below, the Borrower(a) acknowledges, consents and agrees to the execution, delivery and performance by the Guarantorsof this Fourth Amendment, (b) acknowledges and agrees that its obligations in respect of the GuarantyAgreement (i) are not released, diminished, waived, modified, impaired or affected in any manner bythis Fourth Amendment or any of the provisions contemplated herein, (c) ratifies and confirms itsobligations under the Guaranty Agreement, and (d) acknowledges and agrees that it has no claims oroffsets against, or defenses or counterclaims to, its obligations under the Loan Agreement.7. REPLACEMENT. This Fourth Amendment replaces in all respects that certain ThirdAmendment to Guaranty Agreement, dated as of December 7, 2016, among the Guarantors and theGuarantied Party, the terms and provisions of which shall be null and void.8. EXECUTION IN COUNTERPARTS. This Fourth Amendment may be executed inany number of counterparts and by different parties hereto in separate counterparts, each of whichwhen so executed and delivered shall be deemed to be an original and all of which when takentogether shall constitute but one and the same instrument. For purposes of this Fourth Amendment, acounterpart hereof (or signature page thereto) signed and transmitted by any Person party hereto to theGuarantied Party (or its counsel) by facsimile machine, telecopier or electronic mail is to be treated asan original. The signature of such Person thereon, for purposes hereof, is to be considered as anoriginal signature, and the counterpart (or signature page thereto) so transmitted is to be considered tohave the same binding effect as an original signature on an original document.9. GOVERNING LAW; BINDING EFFECT. This Fourth Amendment shall begoverned by and construed in accordance with the laws of the State of Texas applicable to agreementsmade and to be performed entirely within such state, provided that each party shall retain all rightsarising under federal law, and shall be binding upon the parties hereto and their respective successorsand assigns.4 10. HEADINGS. Section headings in this Fourth Amendment are included herein forconvenience of reference only and shall not constitute a part of this Fourth Amendment for any otherpurpose.11. ENTIRE AGREEMENT. THE GUARANTY AGREEMENT, AS AMENDED BYTHIS FOURTH AMENDMENT, AND THE OTHER LOAN DOCUMENTS REPRESENT THEFINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BYEVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTENORAL AGREEMENTS BETWEEN THE PARTIES.REMAINDER OF PAGE LEFT INTENTIONALLY BLANK 5 IN WITNESS WHEREOF, this Fourth Amendment is executed as of the date first set forthabove. a Texas limited partnershipHELEN OF TROY NEVADACORPORATION,a Nevada corporation, General Partnera Bermuda company a Texas corporationa Texas limited partnershipHELEN OF TROY NEVADACORPORATION, a Nevada corporation, General Partnera Texas limited partnershipHELEN OF TROY NEVADACORPORATION, a Nevada corporation, General Partnera Nevada corporationa New York corporationa Massachusetts corporationa Massachusetts corporationa Delaware limited liability companya Delaware limited liability companyan Oregon limited liability companyHEALTHY DIRECTIONS PUBLISHING, LLC,a Delaware limited liability company /s/ Brian L. GrassBrian L. GrassTitle for all: Chief Financial OfficerSignature Page to Fourth Amendment to Guaranty Agreement GUARANTORS: HELEN OF TROY L.P.,a Texas limited partnershipBy:HELEN OF TROY NEVADACORPORATION,a Nevada corporation, General PartnerHELEN OF TROY LIMITED,a Bermuda companyHELEN OF TROY LIMITED,a Barbados corporationHOT NEVADA, INC.,a Nevada corporationHELEN OF TROY NEVADA CORPORATION,a Nevada corporationHELEN OF TROY TEXAS CORPORATION, a Texas corporationIDELLE LABS LTD., a Texas limited partnershipBy:HELEN OF TROY NEVADACORPORATION, a Nevada corporation, General PartnerOXO INTERNATIONAL LTD., a Texas limited partnershipBy:HELEN OF TROY NEVADACORPORATION, a Nevada corporation, General PartnerPUR WATER PURIFICATION PRODUCTS,INC., a Nevada corporationKAZ, INC.,a New York corporationKAZ USA, INC., a Massachusetts corporationKAZ CANADA, INC.,a Massachusetts corporation HEALTHY DIRECTIONS, LLC,a Delaware limited liability companyDOCTORS’ PREFERRED, LLC,a Delaware limited liability companySTEEL TECHNOLOGY, LLC,an Oregon limited liability companyHEALTHY DIRECTIONS PUBLISHING, LLC,a Delaware limited liability company By:/s/ Brian L.GrassBrian L. GrassTitle for all: Chief Financial OfficerSignature Page to Fourth Amendment to Guaranty Agreement  HELEN OF TROY MACAO COMMERCIALOFFSHORE LIMITED, a Macau corporationBy:/s/ Vincent D.CarsonName: Vincent D. CarsonTitle: Director NOTARIAL CERTIFICATE OF BRIAN L. GRASS NOTARY PUBLIC DO HEREBY CERTIFY AND ATTEST that on the day of the date hereofpersonally came and appeared before me Brian L. Grass, the duly authorized Chief Financial Officer ofHelen of Troy Limited, a Barbados corporation, one of the executing parties to the within writtendocument and did in my presence sign and deliver the same as and for his free and voluntary act anddeed. IN FAITH AND TESTIMONY WHEREOF I the said Rosemary Vasquez have hereunto set andsubscribed my name and caused my Seal of Office to be hereunto put and affixed this 24th day ofJanuary, 2017. Signature Page to Fourth Amendment to Guaranty Agreement GUARANTIED PARTY:BANK OF AMERICA, N.A., as Guarantied PartyBy:/s/ Adam RoseName:Adam RoseTitle:SVP Signature Page to Fourth Amendment to Guaranty AgreementEXHIBIT 10.25 MISSISSIPPI BUSINESS FINANCE CORPORATIONtoU.S. BANK NATIONAL ASSOCIATION(successor to Deutsche Bank National Trust Company),as Trustee THIRD SUPPLEMENTAL TRUST INDENTUREDated effective as of December 1, 2016 Relating to:Mississippi Business Finance CorporationTaxable Industrial Development Revenue Bonds, Series 2013(Helen of Troy Olive Branch, MS Project) THIRD SUPPLEMENTAL TRUST INDENTURE dated as of December 7, 2016 buteffective as of December 1, 2016 (the “Supplemental Indenture”) between the MISSISSIPPIBUSINESS FINANCE CORPORATION, a public corporation duly created and validly existingpursuant to the Constitution and laws of the State of Mississippi (the “Issuer”), and U.S. BANKNATIONAL ASSOCIATION (successor to Deutsche Bank National Trust Company), Olive Branch,Mississippi, a national banking association duly organized and existing under the laws of the UnitedStates of America, as trustee (the “Trustee”), evidencing the agreement of the parties hereto.RECITALSWHEREAS, the Issuer and the Trustee are parties to that certain Trust Indenture dated as ofMarch 1, 2013, as supplemented by that certain First Supplemental Trust Indenture, dated as of March1, 2014, and that certain Second Supplemental Trust Indenture dated as of February 18, 2015 buteffective as of February 1, 2015 (said Trust Indenture, as supplemented, the “Indenture”) relating to theissuance of the $38,000,000 maximum aggregate principal amount of Mississippi Business FinanceCorporation Taxable Industrial Development Revenue Bonds, Series 2013 (Helen of Troy OliveBranch, MS Project), dated as of March 20, 2013 (the “Bonds”);WHEREAS, each of the Issuer and the Trustee have been directed by Kaz USA, Inc., aMassachusetts corporation (the “Company”), and Bank of America, N.A. (the “Purchaser”) to amendthe Indenture pursuant to this Supplemental Indenture as provided herein;WHEREAS, in furtherance of the foregoing, each of the Issuer and the Trustee have agreed toamend the applicable provisions of the Indenture to the extent specified below upon the terms andconditions set forth below.NOW, THEREFORE, in consideration of the agreements hereinafter contained, the partieshereto agree as follows:Section 1.Definitions. Capitalized terms used herein and not otherwise defined shall have therespective meanings ascribed thereto in the Indenture.Section 2.Amendment to the Indenture. The definition of “Base Rate” set forth in Section 1.1of the Indenture is hereby amended to read as follows:“Base Rate” shall mean for any day a fluctuating rate per annum equal to the highest of(a) the Federal Funds Rate in effect for such day plus 1/2 of 1%, (b) the rate of interest in effectfor such day as publicly announced from time to time by Bank of America as its “prime rate”and (c) the Eurodollar Rate plus 1%; and if the Base Rate shall be less than zero, such rate shallbe deemed zero for purposes of this Indenture. The “prime rate” is a rate set by Bank ofAmerica based upon various factors including Bank of America’s costs and desired return,general economic conditions and other factors, and is used as a reference point for pricing someloans, which may be priced at, above, or below such announced rate. Any change in the BaseRate due to a change in the Federal Funds Rate, the prime rate or the rate for suchEurocurrency Rate Loans shall be effective1 from and including the effective date of such change in the Federal Funds Rate, the prime rateor such Eurodollar Rate.Section 3.Ratification. Except as expressly amended hereby, all of the provisions of theIndenture shall remain unaltered and in full force and effect, and, as amended hereby, the Indenture isin all respects agreed to, ratified and confirmed by the Issuer and the Trustee. Any holder of theBonds, and all successive transferees of the Bonds, by accepting such Bond, are deemed to haveagreed to the terms of this Supplemental Indenture.Section 4.Severability. In the event any provision of this Supplemental Indenture shall be heldinvalid or unenforceable by any court of competent jurisdiction, such holding shall not invalidate orrender unenforceable any other provision hereof.Section 5.Execution in Counterparts. This Supplemental Indenture may be executed in severalcounterparts, each of which shall be an original and all of which shall constitute but one and the sameinstrument.Section 6. Applicable Law. This Supplemental Indenture shall be governed by and construedin accordance with the laws of the State of Mississippi. 2 IN WITNESS WHEREOF, the Mississippi Business Finance Corporation has caused thesepresents to be signed in its name and behalf and its official seal to be hereunto affixed and attested byits duly authorized officers, and U.S. Bank National Association (successor to Deutsche Bank NationalTrust Company), as Trustee, has caused these presents to be signed in its name and behalf by its dulyauthorized officer, all as of the day and year first above written.MISSISSIPPI BUSINESS FINANCE[SEAL]CORPORATION By: /s/ E. F. MitchamExecutive Director Attest: Secretary /s/ Larry Mobley U.S. BANK NATIONAL ASSOCIATION(successor to Deutsche Bank NationalTrust Company), as Trustee By: /s/ Gail WilsonTitle: Vice President 1 Consented to: BORROWER: KAZ USA, INC. By:/s/ Brian L. GrassTitle:CFO BONDHOLDER: BANK OF AMERICA, N.A. By:/s/ Adam RoseTitle:SVP 2  EXHIBIT 21 SUBSIDIARIES OF THE REGISTRANT The following is a list of subsidiaries of the company as of February 28, 2017, omitting subsidiaries which, consideredin the aggregate, would not constitute a significant subsidiary. Name Incorporation Doing Business as Helen of Troy Limited Barbados Same Name Helen of Troy Comercial Offshore de Macau Limitada Macau Same Name Helen of Troy L.P. Texas Limited Partnership Same Name, Helen of Troy and Belson Products Idelle Labs, Ltd. Texas Limited Partnership Same Name OXO International Ltd. Texas Limited Partnership Same Name HOT (UK) Limited United Kingdom Same Name, HOT UK and OXO Goodgrips Steel Technologies, LLC Oregon Same Name and Hydro Flask Healthy Directions, LLC Delaware Same Name Kaz, Inc. New York Same Name Kaz USA, Inc. Massachusetts Same Name Pur Water Purification Products, Inc. Nevada Same Name Kaz Europe Sàrl Switzerland Same Name 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM The Board of DirectorsHelen of Troy LimitedWe have issued our reports dated May 1, 2017, with respect to the consolidated financial statements, schedule,and 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 28, 2017. 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;File No. 333-154526; File No. 333-153658; File No. 333-67349; File No. 333-90776; File No. 333-128832; and FileNo. 333-178217); and Form S-3 (File No. 333-208470)./s/ GRANT THORNTON LLPDallas, TexasMay 1, 2017 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; andb)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: May 1, 2017 /s/ Julien R. MininbergJulien R. MininbergChief Executive Officer,Director and Principal Executive Officer EXHIBIT 31.2CERTIFICATION 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; andb)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: May 1, 2017 /s/ Brian L. GrassBrian L. GrassChief Financial Officer and 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 28, 2017, 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: May 1, 2017 /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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