UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

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

For the quarterly period ended August 31, 2004

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

For the transition period from                     to                    

Commission file number 001-14669

HELEN OF TROY LIMITED

Clarendon House
Church Street
Hamilton, Bermuda
(Address of Principal Executive Offices)

Registrant’s telephone number, including area code: (915) 225-8000

     Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X]  No [  ]

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).
Yes [X]  No [  ]

     As of October 6, 2004 there were 29,815,775 shares of Common Stock, $.10 Par Value, outstanding.

HELEN OF TROY LIMITED AND SUBSIDIARIES

INDEX

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PART 1. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

HELEN OF TROY LIMITED AND SUBSIDIARIES

Consolidated Condensed Balance Sheets

See accompanying notes to consolidated condensed financial statements.

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HELEN OF TROY LIMITED AND SUBSIDIARIES

Consolidated Condensed Statements of Income

See accompanying notes to consolidated condensed financial statements.

4

HELEN OF TROY LIMITED AND SUBSIDIARIES

Consolidated Condensed Statements of Cash Flows

See accompanying notes to consolidated condensed financial statements.

5

HELEN OF TROY LIMITED AND SUBSIDIARIES

See accompanying notes to consolidated condensed financial statements.

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HELEN OF TROY LIMITED AND SUBSIDIARIES

Note 1 -		In our opinion, the accompanying consolidated condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly its consolidated financial position as of August 31, 2004 and February 29, 2004, and the results of its consolidated operations for the three- and six-month periods ended August 31, 2004 and 2003. While we believe that the disclosures presented are adequate to make the information not misleading, these statements should be read in conjunction with the consolidated financial statements and the notes included in our latest annual report on Form 10-K, and other reports on file with the Securities and Exchange Commission.
Note 2 -		We are involved in various claims and legal actions arising in the ordinary course of business. In the opinion of management, the ultimate disposition of such claims and legal actions will not have a material adverse effect on our consolidated financial position, results of operations, or cash flows.
Note 3 -		Basic earnings per share is computed based upon the weighted average number of common shares outstanding during the period. Diluted earnings per share is computed based upon the weighted average number of common shares plus the effects of dilutive securities. The number of dilutive securities was 3,142,863 and 3,214,405 for the three- and six-months ended August 31, 2004, respectively, and 2,590,398 and 2,139,977 for the three- and six-months ended August 31, 2003, respectively. All dilutive securities during these periods consisted of stock options issued under our stock option plans. There were options to purchase common stock that were outstanding but not included in the computation of earnings per share because the exercise prices of such options were greater than the average market prices of our common stock. These options totaled 36,000 and 335,133 at August 31, 2004 and 2003, respectively.
Note 4 -		During the quarter ended August 31, 2003, our Board of Directors authorized us to purchase, in open market or through private transactions, up to 3,000,000 shares of our common stock over a period extending to May 31, 2006. During the quarter ended August 31, 2004, we purchased and retired a total of 732,710 shares under this resolution at a total purchase price of $24,344,966, for a $33.23 per share average price. We did not purchase any shares during the three months ended August 31, 2003. The following schedule sets forth the purchase activity for the latest fiscal quarter just ended:

Note 5 -

In the tables that follow, we have revised our segment information for prior periods to reflect a change in operating segments reported. In the first fiscal quarter of 2005, we reported a single segment: Personal Care. The Personal Care Segment reflects the global operations of hair care appliances, hair brushes, combs, hair accessories, hair and skin care liquids and powders and other personal care products business. We are also reporting a Discontinued Segment, which summarizes the operations of Tactica International, Inc. (“Tactica”). Beginning with the second fiscal quarter of 2005 we have added an additional operating segment:

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		housewares, to report the operations of OXO International (“OXO”), which offers home product tools in several categories, including: kitchen, cleaning, barbecue, barware, garden, automotive, storage, and organization (See Note 15 for a further discussion of the OXO acquisition). We believe this segmentation is appropriate based on the evolution of our business and believe the new segments more closely align the Company’s external segment reporting to how management evaluates and allocates resources and will provide more transparent disclosure to our investors.
		The accounting policies of our new segments are the same as those described in the summary of significant accounting policies in Note 1 to the consolidated financial statements in the Company’s 2004 Annual Report in Form 10-K.
		Operating profit for each operating segment is computed based on net sales, less cost of goods sold, less any selling, general, and administrative expenses associated with the segment. The selling, general, and administrative expense (“SG&A”) totals used to compute each segment’s operating profit are comprised of SG&A directly associated with those segments, plus overhead expenses (certain corporate costs, including those related to finance, legal, risk management, human resources, corporate management, and information technology systems) that are allocable to operating segments. Other items of income and expense, including income taxes, are not allocated to operating segments.
		The tables below and on the following page contain segment information for the periods covered by our consolidated condensed income statements:

THREE MONTHS ENDED AUGUST 31, 2004 AND 2003
(in thousands)

SIX MONTHS ENDED AUGUST 31, 2004 AND 2003
(in thousands)

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        IDENTIFIABLE SEGMENT ASSETS, NET AT AUGUST 31, 2004 AND FEBRUARY 29, 2004
        (in thousands)

Note 6 -		Hong Kong Income Taxes - The Inland Revenue Department (“the IRD”) in Hong Kong has assessed a total of $32,086,000 (U.S.) in tax on certain profits of our foreign subsidiaries for the fiscal years 1995 through 2003. Hong Kong taxes income earned from certain activities conducted in Hong Kong. We are vigorously defending our position that we conducted the activities that produced the profits in question outside of Hong Kong. We also assert that we have complied with all applicable reporting and tax payment obligations. In connection with the IRD’s tax assessment for the fiscal years 1995 through 1997, we were required to purchase $3,282,000 (U.S.) in tax reserve certificates in Hong Kong, which represented approximately 49 percent of the liability assessed by the IRD. We purchased additional tax reserve certificates in the amount of $3,583,000 (U.S.) on April 26, 2004 as required by the IRD which represents 100 percent of the tax liability assessed for fiscal year 1998. Tax reserve certificates represent the prepayment by a taxpayer of potential tax liabilities. The amounts paid for tax reserve certificates are refundable in the event that the value of the tax reserve certificates exceeds the related tax liability. These certificates are denominated in Hong Kong dollars and are subject to the risks associated with foreign currency fluctuations.
		If the IRD’s position were to prevail and if it were to assert the same position for fiscal years after fiscal year 2003, the resulting assessment could total $15,215,000 (U.S.) in tax for fiscal year 2004 and the first two fiscal quarters of 2005. We vigorously disagree with the proposed adjustments and intend to aggressively contest this matter through applicable taxing authority and judicial procedures, as appropriate. Although the final resolution of the proposed adjustments is uncertain and involves unsettled areas of the law, based on currently available information, we have provided our best estimate of the probable tax liability for this matter. While the resolution of the issue may result in tax liabilities which are significantly higher or lower than the reserves established for this matter, management currently believes that the resolution will not have a material effect on our consolidated financial position or liquidity. However, an unfavorable resolution could have a material effect on our consolidated results of operations or cash flows in the quarter in which an adjustment is recorded or the tax is due or paid.
		United States Income Taxes - The Internal Revenue Service (“the IRS”) is currently auditing the U.S. federal tax returns of our largest U.S. subsidiary for fiscal years 2000, 2001, and 2002. The IRS has provided notice of proposed adjustments to taxable income in the amount of $39,483,000 for the three years under audit. We vigorously disagree with the proposed adjustments and intend to aggressively contest this matter through applicable IRS and judicial procedures, as appropriate. Although the final resolution of the proposed adjustments is uncertain and involves areas of law subject to varying interpretation, based on currently available information, we have provided for our best estimate of the probable tax liability for these matters. This estimate includes additional tax liabilities related to U.S. taxable income for all periods subsequent to fiscal year 2002, as well as the years currently under audit. While the resolution of the issue may result in tax liabilities which are significantly higher or lower than the reserves established for this matter, management currently believes that the resolution will not have a material effect on our consolidated financial position or liquidity. However, an unfavorable resolution could have a material effect on our consolidated results of operations or cash flows in the quarter in which an adjustment is recorded or the tax is due or paid.
		We plan to permanently reinvest all of the undistributed earnings of the non-U.S. subsidiaries of certain U.S.

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		subsidiaries. We have made no provision for U.S. federal income taxes on these undistributed earnings. At August 31, 2004, undistributed earnings for which we had not provided deferred U.S. federal income taxes totaled $37,748,000.
		Income Tax Provisions - We must make certain estimates and judgments in determining income tax expense for financial statement purposes. These estimates and judgments occur in the calculation of certain tax assets and liabilities, which arise from differences in the timing of recognition of revenue and expense for tax and financial statement purposes. We must assess the likelihood that we will be able to recover our deferred tax assets. If recovery is not likely, we must increase our provision for taxes by recording a valuation allowance against the deferred tax assets that we estimate will not ultimately 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 1994, we engaged in a corporate restructuring that, among other things, resulted in a greater portion of our income not being subject to taxation in the United States. If such income were subject to U.S. federal income taxes, our effective income tax rate would increase materially. In addition to potential changes in tax laws, our position on various tax matters may be challenged. Our ability to maintain our position that the parent company is not a Controlled Foreign Corporation (as defined under the U.S. Internal Revenue Code) is critical to the tax treatment of our non-U.S. earnings. A Controlled Foreign Corporation is a non-U.S. corporation whose largest U.S. shareholders (i.e., those owning 10 percent or more of its stock) together own more than 50 percent of the stock in such corporation. If a change of ownership were to occur such that the parent company became a Controlled Foreign Corporation, such a change could have a material negative effect on the largest U.S. shareholders and, in turn, on our business.
		In addition, the calculation of our tax liabilities involves dealing with uncertainties in the application of other complex tax regulations. We recognize liabilities for anticipated tax audit issues in the United States and other tax jurisdictions based on our estimate of whether, and the extent to which, additional taxes will be due. If we ultimately determine that payment of these amounts are not probable, we reverse the liability and recognize a tax benefit during the period in which we determine that the liability is no longer probable. We record an additional charge in our provision for taxes in the period in which we determine that the recorded tax liability is less than we expect the ultimate assessment to be.
Note 7 -		In accordance with Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”), the Company does not record amortization expense on goodwill or other intangible assets that have indefinite useful lives. Amortization expense is recorded for intangible assets with definite useful lives. SFAS 142 also requires at least an annual impairment review of goodwill and other intangible assets. Any asset deemed to be impaired is to be written down to its fair value. We completed our annual impairment test during the first quarter of fiscal 2005 as required by SFAS 142, and have determined that none of our goodwill or other intangible assets were impaired at that time.
		The following table discloses information regarding the carrying amounts and associated accumulated amortization for intangible assets other than goodwill.

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		August 31, 2004 and February 29, 2004 gross and net carrying amounts include $127,975,000 and $50,520,000, respectively, of trademarks and $18,000,000 of licenses not subject to amortization because they have indefinite useful lives. The $18,000,000 license not subject to amortization is for a perpetual, royalty free license to the Sea Breeze® brand of products which we acquired in October 2002. All other licenses are amortized over the primary life of the underlying license agreements, ranging from 8 to 25 years. During the fiscal fourth quarter of 2004, we recorded additional trademarks with indefinite useful lives (and thus not subject to amortization) of $33,600,000 associated with the acquisition of certain assets related to the Western Hemisphere production and distribution of Brut® fragrances, deodorants, and antiperspirants from Conopco, Inc., a wholly owned subsidiary of Unilever NV. In the first fiscal quarter of 2005, as part of the proceeds of our sale of Tactica, we recorded $2,255,000 for the Epil Stop® trademark, which we believe to have an indefinite useful life (see Note 14). In the second fiscal quarter of 2005, we recorded additional trademarks with indefinite useful lives (and thus not subject to amortization) of $75,200,000, and other intangible assets totaling $18,155,000. The other intangible assets are subject to amortization over varying lives ranging from 2 to 13 years and consist of patents, customer lists and a non-compete agreement (see Note 15).
		The following table summarizes the amortization expense attributable to intangible assets for the three months and six months ending August 31, 2004 and 2003, as well as estimated amortization expense for the fiscal years ending the last day of February 2005 through 2010.

Note 8 -		The consolidated group’s parent company, Helen of Troy Limited, a Bermuda company, and various subsidiaries guarantee certain obligations and arrangements on behalf of some members of the consolidated group of companies whose financial position and results are included in our consolidated financial statements.
		Debt Agreements Outstanding at February 29, 2004

	The following current and long-term borrowings were available or outstanding at February 29, 2004.
	On September 22, 2003, certain subsidiaries of the Company entered into a $50,000,000 unsecured revolving credit facility with Bank of America to facilitate short-term borrowings and the issuance of letters of credit. The $50,000,000 unsecured revolving credit facility was cancelled effective June 1, 2004.
	On January 5, 1996, one of our U.S. subsidiaries issued guaranteed Senior Notes at face value of $40,000,000. Interest is paid quarterly at an annual rate of 7.01 percent. The Senior Notes are unsecured,

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		and are guaranteed by Helen of Troy Limited and certain of our subsidiaries. Annual principal payments of $10,000,000 each begin January 5, 2005, with the final payment due January 5, 2008.
		On July 18, 1997, one of our U.S. subsidiaries issued a $15,000,000 Senior Note. Interest is paid quarterly at an annual rate of 7.24 percent. The $15,000,000 Senior Note is unsecured, is guaranteed by Helen of Troy Limited and certain of our subsidiaries and is due July 18, 2012. Annual principal payments of $3,000,000 each begin July 18, 2008, with the final payment due July 18, 2012.
		Both the $40,000,000 and $15,000,000 Senior Notes contain covenants that require that we meet certain net worth and other financial requirements. Additionally, the notes restrict us from incurring liens on any of our properties, except under certain conditions as defined in the Senior Note agreements. We are in compliance with all the terms of these notes. Under the terms of the Senior Notes, one of our U.S. subsidiaries is the borrower. Our consolidated group’s parent company, located in Bermuda, one of our subsidiaries located in Barbados, and three of our U.S. subsidiaries fully guarantee the Senior Notes on a joint and several basis.

Debt Agreements Entered into During the Current Fiscal Quarter

		On June 1, 2004, we entered into a five year $75,000,000 Revolving Line of Credit Agreement, dated as of June 1, 2004, with Bank of America, N.A. and other lenders and a one year $200,000,000 Term Loan Credit Agreement, dated as of June 1, 2004, with Banc of America Mezzanine Capital, LLC. The Term Loan Credit Agreement was a temporary financing to fund the balance of OXO’s purchase price (see Note 15). We entered into this Term Loan Credit Agreement until more permanent long-term financing could be put into place. The purchase price of the OXO International acquisition was funded by borrowings of $73,173,000 under the new Revolving Line of Credit Agreement and $200,000,000 under the Term Loan Credit Agreement. Borrowings under the Term Loan Credit Agreement were subsequently paid off with the proceeds of the funding of $225,000,000 Floating Rate Senior Notes on June 29, 2004 (see below). For the period outstanding, borrowings under the Term Loan Credit Agreement accrued interest at LIBOR plus a margin of 1.125%.
		Borrowings under the Revolving Line of Credit Agreement accrue interest equal to the higher of the Federal Funds Rate plus 0.50% or Bank of America’s prime rate. Alternatively, upon timely election by the Company, borrowings accrue interest based on the respective 1, 2, 3, or 6-month LIBOR rate plus a margin of 0.75% to 1.25% based upon the “Leverage Ratio” at the time of the borrowing. The “Leverage Ratio” is defined by the Revolving Line of Credit Agreement as the ratio of total consolidated indebtedness, including the subject funding on such date to consolidated EBITDA (“Earnings Before Interest, Taxes, Depreciation and Amortization”) for the period of the four consecutive fiscal quarters most recently ended, with EBITDA adjusted on a pro forma basis to reflect the acquisition of OXO and the disposition of Tactica. At the time of funding, we elected LIBOR based funding with an initial margin rate of 1.125%. The new credit line allows for the issuance of letters of credit up to $10,000,000. Outstanding letters of credit reduce the $75,000,000 borrowing limit dollar for dollar. Upon the execution of this new credit facility, our previous $50,000,000 unsecured revolving credit facility with Bank of America was cancelled. As of August 31, 2004, there were $34,000,000 of revolving loans and $3,339,985 of open letters of credit outstanding against this facility (including the $389,000 standby letter of credit to a lessor, as more fully discussed under “Other Letters of Credit” below).
		The Revolving Line of Credit Agreement continues to require and Term Loan Credit Agreement required the maintenance of certain Debt/EBITDA, fixed charge coverage ratios, and other customary covenants. The agreements were guaranteed, on a joint and several basis, by the parent company, Helen of Troy Limited, and certain U.S. subsidiaries.
		On June 29, 2004, we closed on a $225,000,000 Floating Rate Senior Note (“Senior Notes”) financing arranged by Banc of America Securities LLC with a group of ten financial institutions. The Senior Notes consist of $100,000,000 of five year notes, $50,000,000 of seven year notes, and $75,000,000 of ten year

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		notes. Interest on the notes is payable quarterly. Interest rates are reset quarterly based on the 3 month LIBOR rate plus 85 basis points for the five and seven year notes, and the 3 month LIBOR rate plus 90 basis points for the ten year notes. At closing, the initial interest rates were 2.436 percent for the five and seven year notes, and 2.486 percent for the ten year notes. On September 29, 2004, the interest rates on these notes were reset for the next three months at 2.82 percent for the five and seven year notes and 2.87 percent for the ten year notes. The Senior Notes allow for prepayment subject to the following terms: five year notes can be prepaid in the first year with a 2 percent penalty, thereafter there is no penalty; seven and ten year notes can be prepaid after one year with a 1 percent penalty, and after two years with no penalty.
		The proceeds of the Senior Notes financing were used to repay the $200,000,000 borrowings under the Term Loan Credit Agreement, and $25,000,000 of the outstanding borrowings on our $75,000,000 Revolving Line of Credit Agreement.
		The Senior Notes are unsecured and require the maintenance of certain Debt/EBITDA, fixed charge coverage ratios, consolidated net worth levels, and other customary covenants. The Senior Notes have been guaranteed, on a joint and several basis, by the parent company, Helen of Troy Limited, and certain U.S. subsidiaries.

Other Letters of Credit

One of the Company’s U.S. subsidiaries had issued a $389,000 standby letter of credit to the lessor of Tactica’s office space in New York City. The lessor could draw funds from the standby letter of credit if Tactica failed to meet its obligations under the lease. After our sale of Tactica (see Note 14), we took measures to cancel the original letter of credit and issue another standby letter of credit under a new banking relationship. The lessor currently believes the original standby letter of credit should remain in force. We are currently in the process of seeking a resolution to this issue.

Product Warranties

The Company’s products are under warranty against defects in material and workmanship for a maximum of two years. We have established accruals to cover future warranty costs of approximately $4,837,000 and $4,114,000 as of August 31, 2004 and February 29, 2004, respectively. We estimate our warranty accrual using historical trends. We believe that these trends are the most reliable method by which we can estimate our warranty liability. The following table summarizes the activity in the Company’s accrual for the three months and six months ended August 31, 2004 and fiscal year ended February 29, 2004:

ACCRUAL FOR WARRANTY RETURNS
(in thousands)

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Contractual Obligations

Our contractual obligations and commercial commitments as of August 31, 2004 were:

PAYMENTS DUE BY PERIOD
(in thousands)

Note 9 -		The Company sponsors four stock-based compensation plans. The plans consist of two employee stock option plans, a non-employee director stock option plan and an employee stock purchase plan. These plans are described below. As all options were granted at or above market prices on the dates of grant, no compensation expense has been recognized for our stock option plans.
		The following table sets forth the computation of basic and diluted earnings per share for the three months and six months ended August 31, 2004 and 2003, respectively, and illustrates the effect on net income and earnings per share if we had applied the fair value recognition provisions of SFAS 123, “Accounting for Stock-Based Compensation” to stock-based employee compensation.

PROFORMA STOCK-BASED EMPLOYEE COMPENSATION
(in thousands, except per share data)

Under stock option and restricted stock plans adopted in 1994 and 1998 (the “1994 Plan” and the “1998 Plan,” respectively) the Company reserved a total of 14,000,000 shares of its common stock for issuance to key officers and employees. Pursuant to the 1994 and 1998 Plans, we grant options to purchase our common stock at a price equal to or greater than the fair market value on the grant date. Both plans contain provisions for incentive stock options, non-qualified stock options, and restricted stock grants. Generally, options granted under the 1994 and 1998 Plans become exercisable immediately, or over a one, four, or five-year vesting period and expire on a date ranging from seven to ten years from their date of grant. 21,586 and 80,411 shares remained available for future grants under the 1998 Plan at August 31, 2004 and February 29, 2004,

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15

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intellectual properties, and the right to certain tax refunds. The fair value of net assets received was equal to the book value of net assets transferred; accordingly, no gain or loss was recorded as a result of this sale. The schedule below shows the assets we received in a non-cash exchange for our ownership interest in Tactica.

    Assets Received in Noncash Exchange for Ownership Interest in Tactica
    at April 29, 2004
    (in thousands)

		The marketable securities received in the Tactica sale carry a restriction that prevents us from disposing of the stock prior to July 31, 2005. At August 31, 2004 the market value of these securities was $1,020,000. The decline in market value has been considered temporary and recorded in other comprehensive income.
		Tactica was sold because we believed it no longer fit into our business model and that a sale was the most appropriate course of action to maximize our long-term shareholder value.
		Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”) requires at least an annual impairment review of goodwill and other intangible assets, which we normally undertake on March 1 of each year. SFAS 142 also requires a review of goodwill for impairment upon the occurrence of certain events that would more likely than not reduce the fair value of a segment below its carrying amount. One of those events is the impending disposal of a segment. After evaluating the facts and circumstances surrounding the fiscal 2004 operations of our Tactica operating segment and its subsequent sale, against the guidelines established by SFAS 142, we recorded a loss of $5,699,000 for the impairment of 100 percent of the Tactica goodwill, net of $1,938,000 of related tax benefits, in the fourth fiscal quarter of 2004.
		Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”) provides accounting guidance for accounting segments to be disposed by sale and, in our circumstances, required us to report Tactica as a discontinued operation. In accordance with SFAS 144, we classified all assets and liabilities of Tactica as “Assets of discontinued segment held for sale” and “Liabilities of discontinued segment held for sale” in the accompanying consolidated condensed balance sheet as of February 29, 2004. SFAS 144 also requires us to report Tactica’s operating results, net of taxes, as a separate summarized component after income from continuing operations for each year presented. The accompanying consolidated condensed statements of income and consolidated condensed statements of cash flows contain all appropriate reclassifications for each period presented.
Note 15 -		On June 1, 2004, we acquired certain assets and liabilities of OXO International (“OXO”) for a net cash purchase price of approximately $273,173,000 including the assumption of certain liabilities. The results of OXO’s operations have been included in the consolidated financial statements since that date.
		The assets acquired in the OXO acquisition included intellectual property, contracts, goodwill, inventory and books and records. The assumed liabilities included contractual obligations and accruals, and certain lease obligations assumed in connection with OXO’s office facilities in New York City. Thirty five OXO employees, including its President, have joined the Company as part of the acquisition.
		OXO is a world leader in providing innovative consumer products in a variety of product areas. OXO offers approximately 500 consumer product tools in several categories, including: kitchen, cleaning, barbecue, barware, garden, automotive, storage, and organization. OXO also has strong customer relationships with leading

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		specialty and department store retailers. Each year approximately 90 products are introduced through the OXO Good Grips®, OXO Steel™, OXO Good Grips i-Series®, and OXO SoftWorks® product lines.
		The following schedule presents the net assets of OXO acquired at closing:

OXO — Net Assets Acquired on June 1, 2004
(in thousands)

		The allocations above reflect the completion of our analysis of the economic lives of the assets acquired and appropriate allocation of the initial purchase price based upon independent appraisals. We believe that the OXO acquisition resulted in recognition of goodwill primarily because of its industry position, management strength, and business growth potential. “Other intangible assets” are subject to amortization over varying lives ranging from 2 to 13 years and consist of patents, customer lists and a non-compete agreement.
		The following pro forma unaudited financial data for the three- and six-month periods ending August 31, 2004 and August 31, 2003 is presented to illustrate the estimated effects of the OXO acquisition as if the transaction had occurred as of the beginning of the fiscal periods presented.

Results of Operations if OXO Acquisition Had Been Completed at the Beginning of Each Period
(in thousands, except per share data)

Note 16 -

On September 29, 2004, we acquired certain assets related to the worldwide production and distribution of TimeBlock® and Skin Milk® body and skin care products lines from Naterra International, Inc. TimeBlock® is a line of clinically tested anti-aging skin care products. Skin Milk® is a line of body, bath and skin care products enriched with real milk proteins, vitamins and botanical extracts. The assets consist principally of patents, trademarks and trade names, product formulations and production technology, distribution rights, and

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		customer lists. The Company paid the purchase price of $12,000,000 in cash funded out of the Company’s revolving line of credit.
		The Company is in the process of completing its analysis of the economic lives of the assets acquired and appropriate allocation of the initial purchase price. The Company expects to complete its analysis at some time during the late third fiscal quarter or early fourth fiscal quarter of 2005. Depending on the results of this analysis, the Company might, in future periods, record amortization expense on one or more of the intangible assets associated with the acquisition.

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

     This discussion contains a number of forward-looking statements, all of which are based on current expectations. Actual results may differ materially due to a number of factors, including those discussed in the section entitled “Forward-Looking Information and Factors That May Affect Future Results”, Item 3. “Quantitative and Qualitative Disclosures About Market Risk”, and in the Company’s most recent report on Form 10-K.

OVERVIEW OF THE QUARTER’S ACTIVITIES:

     Our first fiscal quarter of each year is our seasonal low point in terms of overall activity, with sales tending to run approximately 20 percent of the year’s total on a historical basis. Our second fiscal quarter is characterized by stable sales in the June through first half of July timeframe with increasing sales in the second half of the July through August timeframe as we build towards a peak shipping season in the third quarter. The second fiscal quarter of 2005 also includes the first three full months of operations of our housewares segment (the operations of OXO acquired on June 1, 2004), offering home product tools in several categories, including: kitchen, cleaning, barbecue, barware, garden, automotive, storage, and organization. Overall, revenues were up 34.1 and 26.3 percent for the second fiscal quarter of 2005 and year-to-date, respectively, over the same periods in the prior year. Profitability followed revenue growth with fiscal second quarter and year-to-date increases of 40.6 and 30.7 percent, respectively, for operating income and 28.1 and 14.4 percent, respectively, for income from continuing operations.

     Personal Care Segment

•		Appliances. Products in this group include electronic curling irons, thermal brushes, hair straighteners, hair crimpers, hair dryers, massagers, spa products, foot baths, electric clippers, and trimmers. Revenues increased approximately 8.5 and 8.1 percent over the same quarter and year-to-date periods in the prior year. Ceramic hair straighteners and variable heat ion select hair dryers are the strongest performing products in this category. Revlon®, Sunbeam®, Vidal Sassoon®, Hot Tools®, Wigo®, and Dr. Scholl’s® were key brands in this group.
•		Grooming, Skin Care, and Hair Products. Sales for this group are up 97 and 113 percent over the same quarter and year-to-date periods in the prior year, driven by the addition of the Brut® men’s grooming product line throughout the Western Hemisphere. Brut® was acquired in September of 2003 so it was not part of our brand portfolio in the first and second quarters of fiscal 2004. Our Grooming, Skin Care, and Hair Care portfolio includes these names: Vitalis®, Sea Breeze®, Ammens®, Condition 3-in-1®, Final Net®, Vitapointe®, Brut® and Epil-Stop®.
•		Brushes, Combs, and Accessories. This very traditional category of our business was up 3.0 and down 9.4 percent in total dollar volume compared to the same quarter and year-to-date periods in the prior year. With the trend towards straighter, cleaner hair styles, the accessory business has suffered. In order to address this general trend in this market, we continue to look to new technologies such as ceramic brushes, Ionic brushes and Ion-ceramic brushes to capitalize on grooming trends.

     Housewares Segment

•

This was the first quarter of operations for our new housewares segment (the operations of OXO acquired on June 1, 2004). We are now offering home product tools in several categories, including: kitchen, cleaning, barbecue, barware, garden, automotive, storage, and organization. Kitchen tools are leading sales in this category with the introduction of several new products, including the OXO Good Grips Mandoline Slicer (a tool used for making an easy chore of slicing fruits, vegetables and creating attractive garnishes), and Nylon Flexible Turners and Spatulas in an array of colors. Good Grips®, OXO Steel™, OXO Grind it™, and OXO SoftWorks® are our key brands in this group. OXO also has customer relationships with leading specialty and department store retailers. We

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currently expect OXO to contribute approximately $100,000,000 of sales in its first twelve months as part of our Company.

In addition to the above activities, we continued to invest in our business, with a view toward potential future growth, through the following activities:

•		During the second fiscal quarter, we substantially completed Phase 1 of development and implementation of a new Global Enterprise Resource Planning system. On September 7, 2004, we went live on the new system. With the implementation of this new system, most of our businesses run under one integrated information system. We believe this system will help to promote uniform business processes and practices amongst our subsidiaries. We are currently in the process of closely monitoring the new system and making normal and expected adjustments to improve its effectiveness. We expect this process to continue over the remainder of the third fiscal quarter. During the third fiscal quarter, we currently expect to begin the implementation and transition of our housewares segment to the new system. We also are investigating several significant functionality enhancements planned for implementation under Phase 2 of our IT enhancement program. Through the end of the second fiscal quarter of 2005, we invested approximately $10,400,000 on this project, which is included in property and equipment on our consolidated condensed balance sheet at August 31, 2004.
•		During the second fiscal quarter of 2005, we closed several financings to fund the OXO acquisition, and expand our capital base for potential future growth. As disclosed in Notes 8 and 15 to the accompanying consolidated condensed financial statements, during the second fiscal quarter of 2005, we concluded a series of transactions that established a new five year, $75,000,000 revolving credit facility, cancelled our existing $50,000,000 revolving credit facility, and placed $225,000,000 of floating rate senior debt with five, seven, and ten year maturities.
•		We continue to expand our brand offerings in our Skin Care Category. On September 29, 2004, we acquired certain assets related to the worldwide production and distribution of TimeBlock® and Skin Milk® body and skin care product lines from Naterra International, Inc. TimeBlock® is a line of clinically tested anti-aging skin care products. Skin Milk® is a line of body, bath and skin care products enriched with milk proteins, vitamins and botanical extracts. The Company paid $12,000,000 in cash in the transaction funded out of the Company’s revolving line of credit. We currently project the brand acquisition to contribute approximately $15,000,000 of sales in fiscal 2006.

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RESULTS OF OPERATIONS

Comparison of fiscal quarter and six-month periods ended August 31, 2004 to the same periods ended August 31, 2003

     The following table sets forth, for the periods indicated, our selected operating data, in dollars, as a percentage of net sales, and as a year-over-year percentage change.

*

Calculation is not meaningful

*

Calculation is not meaningful

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     As more fully discussed in Note 5 to the accompanying consolidated condensed financial statements, in the first fiscal quarter of 2005, we reported a single operating segment, Personal Care and a discontinued segment. The Personal Care Segment includes the hair care appliances, hair brushes, combs, hair accessories, hair and skin care liquids and powders and other personal care products business. The Discontinued Segment includes the operations of Tactica International, Inc. (See Note 14 to the consolidated condensed financial statements for a further discussion of the sale of Tactica). Beginning with the second fiscal quarter of 2005, we are presenting an additional operating segment: housewares, to report the operations of OXO (“OXO”), which offers home product tools in several categories, including: kitchen, cleaning, barbecue, barware, garden, automotive, storage, and organization (See Note 15 to the consolidated condensed financial statements for a further discussion of the OXO acquisition). The accompanying discussion and analysis reflects this new change in operating segments.

Consolidated Sales and Gross Profit Margins

     Our net sales for the three- and six-months ended August 31, 2004 increased 34.1 and 26.3 percent, or $35,894,000 and $51,679,000, respectively, versus the same periods a year earlier. In September 2003, we acquired the rights to produce and distribute the Brut® men’s grooming product line throughout the Western Hemisphere. In June 2004, we acquired OXO product lines from WKI Holding Company to form our new housewares operating segment. These new product acquisitions accounted for 30.8 and 21.2 percent, respectively, or $32,446,000 and $41,610,000, respectively, of the percentage sales growth for the three- and six-months ended August 31, 2004 versus the same periods a year earlier. Core growth (growth without acquisitions) accounted for 3.3 and 5.1 percent, respectively, or $3,448,000 and $10,069,000, respectively, of the sales growth over the same three-and six-month periods last year. The core growth for the first six months came from strong sales volume performance from our appliance business and growth in grooming, skin care and hair products, offset somewhat by sales volume declines in our brushes, combs and accessories business.

     Also contributing to growth has been the strengthening of the British Pound and the Euro versus the U.S. Dollar, offset somewhat by the impact of the weakening Mexican Peso vs. the U.S. Dollar. With the growth in our Latin American operations, the Mexican Peso exposure is growing and will be included in our foreign currency impact analysis. The overall net impact of foreign currency changes was to provide approximately $522,000 and $1,242,000 of additional sales dollars for the three- and six-month periods ended August 31, 2004, respectively, versus the same periods a year earlier.

     Consolidated gross profit, as a percentage of sales for the three- and six-month periods ended August 31, 2004, increased 2.7 and 1.1 percentage points, respectively, to 47.4 and 47.2 percent compared to the same periods in the prior year. The increase is primarily due to a combination of sales mix changes to higher margin items resulting from Brut and OXO acquisitions and margin improvement due to selected product purchase cost decreases.

Selling, general, and administrative expenses

     Selling, general, and administrative expenses, expressed as a percentage of net sales, increased from 27.7 to 29.5 percent for the three-months, and from 28.9 to 29.4 percent for the six-months ended August 31, 2004 compared to the same periods in the prior year. These increases were primarily due to higher media advertising and trade show costs. We have increased spending on advertising to help grow our grooming, skin care and hair products business. Additionally, we incurred foreign currency exchange losses of $214,000 and $624,000, respectively, for the three- and six-month periods ended August 31, 2004 versus exchange losses of $653,000 and $87,000 for the same periods a year earlier.

Interest expense and other income / expense

     Interest expense for the three- and six-month periods ended August 31, 2004 increased compared with the three- and six-month periods ended August 31, 2003, to $2,681,000 and $3,675,000 from $956,000 and $1,965,000. The overall increase in interest expense is the result of the use of both short-term and long-term debt to fund the $273,173,000 acquisition of OXO (See Notes 8 and 15 for related discussions of new debt financings and the OXO acquisition).

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     Other income, net for the three- and six-month periods ended August 31, 2004 was $15,000 and $119,000, respectively, compared with other income, net of $819,000 and $3,738,000, respectively, for the same periods in the prior year. The following schedule shows key components of other income and expense:

     Interest income is lower for the three- and six-month periods ended August 31, 2004 compared to the same periods last year due to lower levels of temporarily investable cash being held this year. In the fiscal quarter ended August 31, 2003 we recorded other income of $2,600,000 in connection with the settlement of litigation.

Income tax expense

     Income tax expense for the three- and six-month periods ended August 31, 2004 was 16.6 and 17.4 percent of earnings before income taxes, respectively, versus 17.5 and 17.5 percent of earnings before income taxes, respectively, for the same periods in the prior year. The overall year-to-year decline in rates is due to more of our income in fiscal 2005 being taxed in lower tax rate jurisdictions.

DISCONTINUED OPERATIONS

     On April 29, 2004, we completed the sale of our 55 percent interest in Tactica back to certain shareholder-operating managers. In exchange for our 55 percent ownership share of Tactica and the release of $16,936,000 of its secured debt and accrued interest owed to us, we received marketable securities, intellectual properties, and the right to certain tax refunds. The fair value of net assets received was equal to the book value of net assets transferred. Accordingly, no gain or loss was recorded as a result of this sale.

     Statement of Financial Accounting Standards No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”) requires at least an annual impairment review of goodwill and other intangible assets, which we normally undertake on March 1 of each year. SFAS 142 also requires a review of goodwill for impairment upon the occurrence of certain events that would more likely than not reduce the fair value of a segment below its carrying amount. One of those events at the end of fiscal 2004 was the impending disposal of Tactica. After evaluating the facts and circumstances surrounding Tactica’s fiscal 2004 operations and its subsequent sale, against the guidelines established by SFAS 142, we recorded a loss of $5,699,000 as of February 29, 2004 for the impairment of 100 percent of the Tactica goodwill, net of $1,938,000 of related tax benefits.

     Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”) provides accounting guidance for accounting segments to be disposed by sale and, in our circumstances, required us to report Tactica as a discontinued operation. In accordance with SFAS 144, we classified all assets and liabilities of Tactica as “Assets of discontinued segment held for sale” and “Liabilities of discontinued segment held for sale” in the accompanying consolidated condensed balance sheet as of February 29, 2004. SFAS 144 also requires us to report Tactica’s operating results, net of taxes, as a separate summarized component after income from continuing operations for each year presented. The accompanying consolidated condensed statements of income and consolidated condensed statements of cash flows contain all appropriate reclassifications for each period presented.

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FINANCIAL CONDITION, LIQUIDITY, AND CAPITAL RESOURCES

     Selected measures of our liquidity and capital resources as of August 31, 2004 and August 31, 2003 are shown below:

(1)		Beginning with the first fiscal quarter ended May 31, 2004 we changed our method of calculating these measures for more meaningful and consistent comparison. Accounts receivable turnover, inventory turnover, and return on average equity computations use 12 month trailing sales, cost of sales or net income components as required by the particular measure. The current and four prior quarters’ ending balances of accounts receivable, inventory, and equity are used for the purposes of computing the average balance component as required by the particular measure.
(2)		Total debt is defined as all debt outstanding at the balance sheet date. This includes the sum of the following lines on our consolidated condensed balance sheets: “Revolving line of credit”, “Current portion of long-term debt”, and “Long-term debt, less current portion”. The significant increase in the ratio is due to the additional financing we incurred to acquire OXO (see Notes 8 and 15, and our discussion below under “Financing Activities”).

Operating Activities

     Our cash balance was $11,771,000 at August 31, 2004 compared to $53,048,000 at February 29, 2004. Operating activities used $19,137,000 of cash during the first six months of fiscal 2005, compared to $11,414,000 used during the first six months of fiscal 2004. Inventories increased $42,878,000 during the first six months of fiscal 2005 compared to $34,229,000 during the first six months of fiscal 2004. The increased inventory spending in fiscal 2005 was primarily due to the acquisition and building of inventory for our new housewares segment, which accounted for $19,095,000 of our inventory balance at August 31, 2004.

     The increase in accounts receivable of $30,131,000 for the first six months of fiscal 2005, compared to $22,265,000 for the first six months of fiscal 2004 was primarily due to the Company’s growth in sales, including receivables added by the new housewares segment. Sales increased $51,679,000, or 26.3 percent, for the six months ended August 31, 2004, compared to the six months ended August 31, 2003.

     Our accounts receivable turnover days decreased to 64.4 days at August 31, 2004 from 66.3 days at August 31, 2003. This improvement is due to the addition of the accounts receivable of our housewares segment which has shorter receivable terms than some of our other businesses. Our inventory turnover improved to 2.3 times at August 31, 2004 compared to 2.1 times at August 31, 2003. The improvement is due to the fact that in fiscal 2004, we accelerated inventory purchases and receipts in advance of anticipated ocean freight rate increases, and built inventory levels of newly acquired skin and hair care brands.

     Working capital decreased to $147,096,000 at August 31, 2004, which was a $46,347,000 decrease from August 31, 2003. Our current ratio decreased to 2.1:1 at August 31, 2004 from 3.9:1 at August 31, 2003. The decrease in working capital levels and in the current ratio was due to a change in the classification of a $10,000,000 note payment due in January 2005 to a current liability, $34,000,000 of revolving credit outstanding, and a reduction of our cash balances in

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order to reduce our short-term borrowings. The $10,000,000 note payment due in January 2005 is the first in a series of scheduled payments we will make against our $55,000,000 unsecured Senior Notes.

Investing Activities

     Investing activities used $268,305,000 of cash during the six months ended August 31, 2004. Listed below are some significant highlights of our investing activities:

•		On June 1, 2004 we spent $273,173,000 to acquire certain assets and liabilities of OXO International from WKI Holding Company, Inc. OXO serves as the underlying business platform for our new housewares segment, offering home product tools in several categories, including: kitchen, cleaning, barbecue, barware, garden, automotive, storage, and organization. $261,129,000 of the purchase price is recorded under the investing activities section of the cash flow statement for the six months ended August 31, 2004. OXO is currently expected to contribute approximately $100,000,000 of sales in its first twelve months as part of our Company.
•		For the three- and six-month periods ended August 31, 2004, we spent $2,816,000 and $4,831,000 on our Global Enterprise Resource Planning System. On September 7, 2004, we went live on the new system. Management currently expects to spend approximately $850,000 to complete the initial implementation. Beyond the initial implementation, additional funds will be required to convert our latest acquisition, OXO, to the new system, and to add several significant functionality enhancements to the newly installed system. Management is currently evaluating these costs. Preliminary estimates are that additional spending on these items will range from $1,800,000 to $2,200,000.
•		During the second fiscal quarter, we also invested $1,709,000 on land adjacent to our El Paso Headquarters, $294,000 in connection with the opening of a new office in Macao, $138,000 on computer software and hardware and $253,000 for recurring additions and/or replacements of fixed assets in the normal and ordinary course of business. Our total investment for the first two quarters of fiscal 2005 for this group of assets has been $2,787,000.

Financing Activities

     Financing activities provided $246,165,000 of cash during the six months ended August 31, 2004.

     During the three- and six-month periods ended August 31, 2004, 32,900 and 277,104 stock option grants, respectively, were exercised for shares of our common stock providing $391,000 and $2,675,000 of cash. Purchases through our employee stock purchase plan of 5,614 shares at an average price of $23.33 provided an additional $131,000 of cash during the same periods. An additional 1,000,000 stock options were exercised during the fiscal quarter ending August 31, 2004 in a non-cash transaction in which the key employee tendered company stock having a market value of $5,757,900 as payment of the options’ exercise price.

     During the three- and six-month periods ended August 31, 2004, we also repurchased 732,710 and 757,710 shares of our common stock for $24,344,966 and $25,039,465, respectively for an average share price of $33.23 and $33.05. These repurchases were made pursuant to our August 31, 2003 Board of Directors resolution authorizing us to purchase, in open market or private transactions, up to 3,000,000 shares of our common stock. From September 1, 2003 through August 31, 2004, we have repurchased in total 1,563,836 shares at a total cost of $45,611,690 or $29.17 average share price under the aforementioned resolution.

     Included in our stock repurchases for the current fiscal quarter were 381,650 shares tendered by a key employee-shareholder as payment of the $13,797,000 of stock purchase price and related federal income tax obligations arising from the exercise of 1,000,000 stock options by the key employee-shareholder. This transaction was valued at an average share price of $36.15 using the average of the high bid and low bid prices for Helen of Troy stock as reported on the NASDAQ National Market System on the day the stock was tendered.

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     As mentioned in Note 8 to our consolidated condensed financial statements, and further discussed under “Forward-Looking Information and Factors that may affect Future Results”, during the quarter ended August 31, 2004 we entered into a series of financing transactions that established a new five-year, $75,000,000 revolving credit facility, cancelled our existing $50,000,000 revolving credit facility, borrowed and subsequently repaid a $200,000,000 Term Loan Credit Agreement, and placed $225,000,000 of floating rate senior debt with five, seven and ten year maturities.

     On June 1, 2004, we acquired certain assets and liabilities of OXO International for a net cash purchase price of approximately $273,173,000 including the assumption of approximately $4,040,000 of certain liabilities.

     To fund the acquisition, we entered into a five-year $75,000,000 Revolving Line of Credit Agreement, dated as of June 1, 2004, with Bank of America, N.A. and other lenders and a one year $200,000,000 Term Loan Credit Agreement, dated as of June 1, 2004, with Banc of America Mezzanine Capital, LLC. The purchase price of the OXO International acquisition was funded by borrowings of $73,173,000 under the Revolving Line of Credit Agreement and $200,000,000 under the Term Loan Credit Agreement.

     Borrowings under the Revolving Line of Credit Agreement accrue interest equal to the higher of the Federal Funds Rate plus 0.50% or the prime rate. Alternatively, upon timely election by the Company, borrowings accrue interest based on the respective 1, 2, 3, or 6-month LIBOR rate plus a margin of 0.75% to 1.25% based upon the “Leverage Ratio” at the time of the borrowing. The “Leverage Ratio” is defined by the Revolving Line of Credit Agreement as the ratio of total consolidated indebtedness, including the subject funding on such date to consolidated EBITDA (“Earnings Before Interest, Taxes, Depreciation and Amortization”) for the period of the four consecutive fiscal quarters most recently ended, with EBITDA adjusted on a pro forma basis to reflect the acquisition of OXO and the disposition of Tactica. At the time of funding, we elected LIBOR based funding with an initial margin rate of 1.125%. The new credit line allows for the issuance of letters of credit up to $10,000,000. Outstanding letters of credit reduce the $75,000,000 borrowing limit dollar for dollar. Upon the execution of this new credit facility, our previous $50,000,000 unsecured revolving credit facility was cancelled.

     Borrowings under the $200,000,000 Term Loan Credit Agreement were subsequently paid off with the proceeds of the funding of $225,000,000 Floating Rate Senior Notes on June 29, 2004 (see Note 15). For the period, outstanding borrowings under the Term Loan Credit Agreement accrued interest at LIBOR plus a margin of 1.125%.

     The Revolving Line of Credit Agreement requires the maintenance of certain Debt/EBITDA, fixed charge coverage ratios, and other customary covenants. The agreement has been guaranteed, on a joint and several basis, by the parent company, Helen of Troy Limited, and certain U.S. subsidiaries.

     On June 29, 2004, we closed on a $225,000,000 Floating Rate Senior Note (“Senior Notes”). The Senior Notes consist of $100,000,000 of five year notes, $50,000,000 of seven year notes, and $75,000,000 of ten year notes. Interest on the notes is payable quarterly. Interest rates are reset quarterly based on the 3 month LIBOR rate plus 85 basis points for the five and seven year notes, and the 3 month LIBOR rate plus 90 basis points for the ten year notes. At closing, the initial interest rates were 2.436 percent for the five and seven year notes, and 2.486 percent for the ten year notes. On September 29, 2004, the interest rates on these notes were reset for the next three months at 2.82 percent for the five and seven year notes and 2.87 percent for the ten year notes. The Senior Notes allow for prepayment subject to the following terms: five year notes can be prepaid in the first year with a 2 percent penalty, thereafter there is no penalty; seven and ten year notes can be prepaid after one year with a 1 percent penalty, and after two years with no penalty.

     The proceeds of the Senior Notes financing were used to repay the $200,000,000 borrowings under the Term Loan Credit Agreement, and $25,000,000 of the outstanding borrowings on our $75,000,000 Revolving Line of Credit Agreement.

     The Senior Notes are unsecured and require the maintenance of certain Debt/EBITDA, fixed charge coverage ratios, consolidated net worth levels, and other customary covenants. The Senior Notes have been guaranteed, on a joint and several basis, by the parent company, Helen of Troy Limited, and certain U.S. subsidiaries.

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     In connection with these series of financing transactions, we incurred $4,398,000 of financing costs. These costs are being amortized over the related lives of the various notes financed, ranging from 5 to 10 years.

     With the completion of these financings, the Company now operates under substantially more leverage and incurs higher interest costs. While at May 31, 2004 we had total indebtedness of $55,000,000, as of August 31, 2004 we had $314,000,000 in total indebtedness outstanding. This increase in debt has added new constraints on our ability to operate our business, including but not limited to:

•		our ability to obtain additional financing in the future for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes,
•		an increased portion of our cash flow from operations will be required to pay interest on our debt, which will reduce the funds available to us for our operations,
•		the new debt has been issued at variable rates of interest, which may result in higher interest expense in the event of increases in market interest rates,
•		our level of indebtedness will increase our vulnerability to general economic downturns and adverse industry conditions,
•		our debt service obligations could limit our flexibility in planning for, or reacting to, changes in our business and conditions in the industries in which we operate,
•		the new debt agreements contain financial and restrictive covenants, and our failure to comply with them could result in an event of default which, if not cured or waived, could have a material adverse effect on us. Significant restrictive covenants include limitations on among other things, our ability under certain circumstances to:

•		incur additional debt, including guarantees;
•		incur certain types of liens;
•		sell or otherwise dispose of assets;
•		engage in mergers or consolidations;
•		enter into substantial new lines of business; and
•		enter into certain types of transactions with our affiliates.

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     Our contractual obligations and commercial commitments as of August 31, 2004 were:

PAYMENTS DUE BY PERIOD
(in thousands)