Attached files

file filename
EX-31.1 - EX-31.1 - HELEN OF TROY LTDhele-20150831ex31120cec9.htm
EX-32 - EX-32 - HELEN OF TROY LTDhele-20150831xex32.htm
EX-31.2 - EX-31.2 - HELEN OF TROY LTDhele-20150831ex312bfefce.htm

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 10-Q

 

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

 

For the quarterly period ended August 31, 2015

 

or

 

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

 

Picture 1

HELEN OF TROY LIMITED

 

(Exact name of registrant as specified in its charter)

 

 

 

 

Bermuda

 

74-2692550

(State or other jurisdiction of

 

(I.R.S. Employer

incorporation or organization)

 

Identification No.)

 

 

 

Clarenden House

2  Church Street

Hamilton, Bermuda

 

 

(Address of principal executive offices)

 

 

 

 

 

1 Helen of Troy Plaza

 

 

El Paso, Texas

 

79912

(Registrant’s United States Mailing Address)

 

(Zip Code)

 

(915) 225-8000

(Registrant’s telephone number, including area code)

 

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       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 to be 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 the registrant was required to submit and post such files).    Yes       No 

 

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 the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

 

 

 

Large accelerated filer

 

Accelerated filer       

 

 

 

Non-accelerated filer    

 

Smaller Reporting Company      

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes       No

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

 

 

 

Class

 

Outstanding at October 6, 2015

Common Shares, $0.10 par value, per share

 

28,098,773 shares

 

 

 

 

 

 

 

 


 

1


 

PART I.   FINANCIAL INFORMATION

 

ITEM 1.   FINANCIAL STATEMENTS

 

HELEN OF TROY LIMITED AND SUBSIDIARIES

Consolidated Condensed Balance Sheets (Unaudited)

(in thousands, except shares and par value)

 

 

 

 

 

 

 

 

 

August 31, 

 

February 28, 

 

    

2015

    

2015

Assets

 

 

 

 

 

 

Assets, current:

 

 

 

 

 

 

Cash and cash equivalents

 

$

19,405

 

$

12,295

Receivables - principally trade, less allowances of $7,199 and $5,882

 

 

227,147

 

 

222,499

Inventory, net

 

 

348,463

 

 

293,081

Prepaid expenses and other current assets

 

 

11,428

 

 

9,715

Income taxes receivable

 

 

 -

 

 

417

Deferred tax assets, net

 

 

27,486

 

 

26,753

Total assets, current

 

 

633,929

 

 

564,760

 

 

 

 

 

 

 

Property and equipment, net of accumulated depreciation of $87,627 and $82,154

 

 

124,659

 

 

126,068

Goodwill

 

 

582,602

 

 

549,727

Other intangible assets, net of accumulated amortization of $124,146 and $111,627

 

 

391,548

 

 

398,430

Deferred tax assets, net

 

 

1,766

 

 

2,132

Other assets, net of accumulated amortization of $9,810 and $9,166

 

 

12,482

 

 

12,638

Total assets

 

$

1,746,986

 

$

1,653,755

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

Liabilities, current:

 

 

 

 

 

 

Accounts payable, principally trade

 

$

143,102

 

$

98,564

Accrued expenses and other current liabilities

 

 

142,151

 

 

141,201

Income taxes payable

 

 

1,827

 

 

 -

Deferred tax liabilities, net

 

 

186

 

 

200

Long-term debt, current maturities

 

 

23,800

 

 

21,900

Total liabilities, current

 

 

311,066

 

 

261,865

 

 

 

 

 

 

 

Long-term debt, excluding current maturities

 

 

455,507

 

 

411,307

Deferred tax liabilities, net

 

 

48,179

 

 

52,711

Other liabilities, noncurrent

 

 

20,968

 

 

23,307

Total liabilities

 

 

835,720

 

 

749,190

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Cumulative preferred stock, non-voting, $1.00 par. Authorized 2,000,000 shares; none issued

 

 

 -

 

 

 -

Common stock, $0.10 par. Authorized 50,000,000 shares; 28,093,109 and 28,488,411 shares

 

 

 

 

 

 

issued and outstanding

 

 

2,809

 

 

2,849

Additional paid in capital

 

 

188,809

 

 

179,934

Accumulated other comprehensive income (loss)

 

 

321

 

 

(76)

Retained earnings

 

 

719,327

 

 

721,858

Total stockholders' equity

 

 

911,266

 

 

904,565

Total liabilities and stockholders' equity

 

$

1,746,986

 

$

1,653,755

 

See accompanying notes to consolidated condensed financial statements.

 

 

2


 

HELEN OF TROY LIMITED AND SUBSIDIARIES

Consolidated Condensed Statements of Income (Unaudited)

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended August 31, 

 

Six Months Ended August 31, 

 

    

2015

    

2014

    

2015

    

2014

Sales revenue, net

 

$

369,129

 

$

319,949

 

$

714,474

 

$

631,727

Cost of goods sold

 

 

221,124

 

 

186,205

 

 

423,150

 

 

378,463

Gross profit

 

 

148,005

 

 

133,744

 

 

291,324

 

 

253,264

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

115,573

 

 

109,141

 

 

229,349

 

 

196,538

Asset impairment charges

 

 

 -

 

 

 -

 

 

3,000

 

 

9,000

Operating income

 

 

32,432

 

 

24,603

 

 

58,975

 

 

47,726

 

 

 

 

 

 

 

 

 

 

 

 

 

Nonoperating income, net

 

 

(46)

 

 

97

 

 

91

 

 

147

Interest expense

 

 

(2,503)

 

 

(3,998)

 

 

(5,394)

 

 

(7,415)

Income before income taxes

 

 

29,883

 

 

20,702

 

 

53,672

 

 

40,458

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax expense (benefit):

 

 

 

 

 

 

 

 

 

 

 

 

Current

 

 

9,708

 

 

2,888

 

 

13,722

 

 

4,927

Deferred

 

 

(4,277)

 

 

(1,025)

 

 

(4,912)

 

 

294

Net income

 

$

24,452

 

$

18,839

 

$

44,862

 

$

35,237

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

0.86

 

$

0.66

 

$

1.58

 

$

1.23

Diluted

 

$

0.84

 

$

0.65

 

$

1.54

 

$

1.21

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average shares of common stock used in

 

 

 

 

 

 

 

 

 

 

 

 

computing net earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

28,435

 

 

28,372

 

 

28,478

 

 

28,738

Diluted

 

 

28,986

 

 

28,769

 

 

29,037

 

 

29,192

 

See accompanying notes to consolidated condensed financial statements.

 

3


 

HELEN OF TROY LIMITED AND SUBSIDIARIES

Consolidated Condensed Statements of Comprehensive Income (Unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended August 31, 

 

 

2015

 

2014

 

 

Before

 

 

 

 

Net of

 

Before

 

 

 

 

Net of

 

 

Tax

 

Tax

 

Tax

 

Tax

 

Tax

 

Tax

Income

 

$

29,883

 

$

(5,431)

 

$

24,452

 

$

20,702

 

$

(1,863)

 

$

18,839

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedge activity - interest rate swaps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in fair market value

 

 

 -

 

 

 -

 

 

 -

 

 

16

 

 

(5)

 

 

11

Settlements reclassified to income

 

 

 -

 

 

 -

 

 

 -

 

 

285

 

 

(100)

 

 

185

Subtotal

 

 

 -

 

 

 -

 

 

 -

 

 

301

 

 

(105)

 

 

196

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedge activity - foreign currency contracts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in fair market value

 

 

545

 

 

(142)

 

 

403

 

 

136

 

 

(21)

 

 

115

Settlements reclassified to income

 

 

(121)

 

 

22

 

 

(99)

 

 

50

 

 

(15)

 

 

35

Subtotal

 

 

424

 

 

(120)

 

 

304

 

 

186

 

 

(36)

 

 

150

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other comprehensive income

 

 

424

 

 

(120)

 

 

304

 

 

487

 

 

(141)

 

 

346

Comprehensive income

 

$

30,307

 

$

(5,551)

 

$

24,756

 

$

21,189

 

$

(2,004)

 

$

19,185

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Six Months Ended August 31, 

 

 

2015

 

2014

 

 

Before

 

 

 

 

Net of

 

Before

 

 

 

 

Net of

 

 

Tax

 

Tax

 

Tax

 

Tax

 

Tax

 

Tax

Income

 

$

53,672

 

$

(8,810)

 

$

44,862

 

$

40,458

 

$

(5,221)

 

$

35,237

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedge activity - interest rate swaps

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in fair market value

 

 

 -

 

 

 -

 

 

 -

 

 

28

 

 

(10)

 

 

18

Settlements reclassified to income

 

 

 -

 

 

 -

 

 

 -

 

 

1,199

 

 

(420)

 

 

779

Subtotal

 

 

 -

 

 

 -

 

 

 -

 

 

1,227

 

 

(430)

 

 

797

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flow hedge activity - foreign currency contracts

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Changes in fair market value

 

 

812

 

 

(210)

 

 

602

 

 

214

 

 

(38)

 

 

176

Settlements reclassified to income

 

 

(240)

 

 

35

 

 

(205)

 

 

216

 

 

(42)

 

 

174

Subtotal

 

 

572

 

 

(175)

 

 

397

 

 

430

 

 

(80)

 

 

350

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total other comprehensive income

 

 

572

 

 

(175)

 

 

397

 

 

1,657

 

 

(510)

 

 

1,147

Comprehensive income

 

$

54,244

 

$

(8,985)

 

$

45,259

 

$

42,115

 

$

(5,731)

 

$

36,384

 

See accompanying notes to consolidated condensed financial statements.

 

4


 

HELEN OF TROY LIMITED AND SUBSIDIARIES

Consolidated Condensed Statements of Cash Flows (Unaudited)

(in thousands)

 

 

 

 

 

 

 

 

 

 

Six Months Ended August 31, 

 

  

2015

  

2014

Cash provided (used) by operating activities:

 

 

 

 

 

 

Net income

  

$

44,862

  

$

35,237

Adjustments to reconcile net income to net cash provided by operating activities:

  

 

 

  

 

 

Depreciation and amortization

  

 

21,227

  

 

18,493

Amortization of financing costs

  

 

580

  

 

858

Provision for doubtful receivables

  

 

128

  

 

16

Non-cash share-based compensation

  

 

3,938

  

 

3,212

Intangible asset impairment charges

  

 

3,000

  

 

9,000

Loss on the sale of property and equipment

  

 

 -

  

 

40

Deferred income taxes and tax credits

  

 

(5,679)

  

 

294

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

  

 

 

  

 

 

Receivables

  

 

(4,776)

  

 

(3,771)

Inventories

  

 

(55,382)

  

 

(56,468)

Prepaid expenses and other current assets

  

 

(1,715)

  

 

701

Other assets and liabilities, net

  

 

(1,691)

  

 

1,222

Accounts payable

  

 

44,538

  

 

32,648

Accrued expenses and other current liabilities

  

 

1,397

  

 

(20,563)

Accrued income taxes

  

 

1,191

  

 

(2,924)

Net cash provided by operating activities

  

 

51,618

  

 

17,995

 

  

 

 

  

 

 

Cash provided (used) by investing activities:

  

 

 

  

 

 

Capital and intangible asset expenditures

  

 

(5,946)

  

 

(3,688)

Proceeds from the sale of property and equipment

  

 

7

 

 

 -

Payments to acquire businesses

  

 

(42,750)

  

 

(195,943)

Net cash used by investing activities

  

 

(48,689)

  

 

(199,631)

 

  

 

 

  

 

 

Cash provided (used) by financing activities:

  

 

 

  

 

 

Proceeds from line of credit

  

 

289,900

  

 

640,900

Repayment of line of credit

  

 

(241,900)

  

 

(152,000)

Repayment of long-term debt

  

 

(1,900)

  

 

(76,900)

Payment of financing costs

  

 

(19)

  

 

(2,321)

Proceeds from share issuances under share-based compensation plans, including tax benefits

  

 

7,507

  

 

4,528

Payment of tax obligations resulting from cashless share award exercises

  

 

 -

  

 

(4,569)

Payments for repurchases of common stock

  

 

(50,000)

  

 

(273,599)

Share-based compensation tax benefit

  

 

593

  

 

296

Net cash provided by financing activities

  

 

4,181

  

 

136,335

 

  

 

 

  

 

 

Net increase (decrease) in cash and cash equivalents

  

 

7,110

  

 

(45,301)

Cash and cash equivalents, beginning balance

  

 

12,295

  

 

70,027

Cash and cash equivalents, ending balance

  

$

19,405

  

$

24,726

 

See accompanying notes to consolidated condensed financial statements.

 

 

 

 

 

 

 

 

5


 

HELEN OF TROY LIMITED AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited)

August 31, 2015

 

Note 1 - Basis of Presentation and Conventions Used in this Report

 

The accompanying consolidated condensed financial statements contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly our consolidated financial position as of August 31, 2015 and February 28, 2015, and the results of our consolidated operations for the interim periods presented. We follow the same accounting policies when preparing quarterly financial data as we use for preparing annual data. These statements should be read in conjunction with the consolidated financial statements and the notes included in our latest annual report on Form 10-K for the fiscal year ended February 28, 2015, and our other reports on file with the Securities and Exchange Commission (the “SEC”).

 

In this report and the accompanying consolidated condensed financial statements and notes, unless otherwise indicated or the context suggests otherwise, references to “the Company”, “our Company”, “Helen of Troy”, “we”, “us”, or “our” refer to Helen of Troy Limited and its subsidiaries. We refer to the Company's common shares, par value $0.10 per share, as “common stock.” References to “OXO” refer to the operations of OXO International and certain of its affiliated subsidiaries that comprise our Housewares segment. References to “Kaz” refer to the operations of Kaz, Inc. and its subsidiaries, which comprise a segment within the Company referred to as the Healthcare / Home Environment segment. References to “Healthy Directions” refer to the operations of Healthy Directions, LLC and its subsidiaries, acquired on June 30, 2014, that comprise the Nutritional Supplements segment. We use product and service names in this report for identification purposes only and they may be protected in the United States and other jurisdictions by trademarks, trade names, service marks, and other intellectual property rights of the Company and other parties. The absence of a specific attribution in connection with any such mark does not constitute a waiver of any such right. All trademarks, trade names, service marks, and logos referenced herein belong to their respective owners. References to “the FASB” refer to the Financial Accounting Standards Board. References to “GAAP” refer to U.S. 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 are a global designer, developer, importer, marketer, and distributor of an expanding portfolio of brand-name consumer products. We have four segments: Housewares, Healthcare / Home Environment, Nutritional Supplements, and Beauty (formerly referred to as “Personal Care”). Our Housewares segment provides a broad range of innovative consumer products for the home. Product offerings include food preparation tools, gadgets, storage containers, cleaning, organization, and baby and toddler care products. The Healthcare / Home Environment segment focuses on healthcare devices such as thermometers, humidifiers, blood pressure monitors, and heating pads; water filtration systems, and small home appliances such as portable heaters, fans, air purifiers, and insect control devices. Our Nutritional Supplements segment is a leading provider of premium branded vitamins, minerals and supplements, as well as other health products sold directly to consumers. Our Beauty segment products include electric hair care, beauty care and wellness appliances; grooming tools and accessories; and liquid-, solid- and powder-based personal care and grooming products.

 

Our business is seasonal due to different calendar events, holidays and seasonal weather patterns. Historically, our highest sales volume and operating income occur in our third fiscal quarter ending November 30th. We purchase our products from unaffiliated manufacturers, most of which are located in China, Mexico and the United States.

 

Our consolidated condensed financial statements are prepared in U.S. Dollars and in accordance with GAAP, which requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, expenses, and the disclosure of contingent assets and liabilities. Actual results could differ from those estimates. We have reclassified, combined or separately disclosed certain amounts in the prior period’s consolidated condensed financial statements and accompanying footnotes to conform to the current period’s presentation. These reclassifications had no effect on previously reported results of operations, working capital or stockholders’ equity.

6


 

Note 2 – New Accounting Pronouncements

 

From time to time, new accounting pronouncements are issued by the FASB or other standards setting bodies that we adopt according to the various timetables the FASB specifies. Unless otherwise discussed below, we believe the impact of recently issued standards that are not yet effective will not have a material impact on our consolidated financial position, results of operations and cash flows upon adoption.

 

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers”, issued as a new Topic, ASC Topic 606. The new revenue recognition standard provides a five-step analysis of transactions to determine when and how revenue is recognized. The core principle of the guidance is that a Company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In July 2015, the FASB affirmed its proposal to defer the effective date of the standard to annual reporting periods beginning after December 15, 2017 (and interim reporting periods within those years). Accordingly, we will be required to adopt the new standard in our fiscal year 2019 and can adopt either retrospectively or as a cumulative effect adjustment as of the date of adoption. We are currently evaluating the effect this new accounting guidance may have on our consolidated results of operations, cash flows and financial position.

 

Note 3 – Commitments and Contingencies

 

We are involved in various legal claims and proceedings in the normal course of operations. We believe the outcome of these matters will not have a material adverse effect on our consolidated financial position, results of operations or liquidity.

 

Notes 7, 10, 12, and 13 to these consolidated condensed financial statements provide additional information regarding certain of our significant commitments and certain significant contingencies we have provided for in the accompanying consolidated condensed financial statements.

 

Our products are under warranty against defects in material and workmanship for periods ranging from two to five years. We estimate our warranty accrual using historical trends and believe that these trends are the most reliable method by which we can estimate our warranty liability. The following table summarizes the activity in our warranty accrual for the periods covered below:

 

ACCRUAL FOR WARRANTY RETURNS

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended August 31, 

 

Six Months Ended August 31, 

 

 

2015

    

2014 (1)

    

2015

 

2014 (1)

Beginning balance

 

$

20,894

 

$

19,140

 

$

23,553

 

$

19,269

Additions to the accrual

 

 

13,244

 

 

16,828

 

 

26,758

 

 

29,514

Reductions of the accrual - payments and credits issued

 

 

(13,341)

 

 

(13,476)

 

 

(29,514)

 

 

(26,291)

Ending balance

 

$

20,797

 

$

22,492

 

$

20,797

 

$

22,492

(1)

Includes opening balance accrual additions totaling $3.19 million and related payments and credits issued of $1.82 

million attributed to the Healthy Directions acquisition.

 

 

 

 

 

 

 

 

 

 

 

 

7


 

Note 4 – Earnings per Share

 

We compute basic earnings per share using the weighted average number of shares of common stock outstanding during the period. We compute diluted earnings per share using the weighted average number of shares of common stock outstanding plus the effect of dilutive securities. Dilutive securities at any given point in time may consist of outstanding stock options, issued and contingently issuable unvested restricted share units, and other performance-based share awards. Options for common stock are excluded from the computation of diluted earnings per share if their effect is antidilutive. See Note 15 to these consolidated condensed financial statements for more information regarding share-based payment arrangements. 

 

For the periods covered below, the basic and diluted shares are as follows:

 

WEIGHTED AVERAGE DILUTED SECURITIES

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended August 31, 

 

Six Months Ended August 31, 

 

    

2015

    

2014

    

2015

    

2014

Weighted average shares outstanding, basic

 

28,435

 

28,372

 

28,478

 

28,738

Incremental shares from share-based payment arrangements

 

551

 

397

 

559

 

454

Weighted average shares outstanding, diluted

 

28,986

 

28,769

 

29,037

 

29,192

 

 

 

 

 

 

 

 

 

Dilutive securities, stock options

 

705

 

687

 

751

 

708

Dilutive securities, unvested or unsettled share awards

 

291

 

260

 

292

 

246

Antidilutive securities, stock options

 

150

 

241

 

173

 

237

 

 

 

 

 

 

 

Note 5 – Segment Information

 

The following tables contain segment information for the periods covered below:

 

THREE MONTHS ENDED

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare /

 

Nutritional

 

 

 

 

 

August 31, 2015

    

Housewares

    

Home Environment

    

Supplements (1)

    

Beauty

    

Total

Sales revenue, net

 

$

78,848

 

$

143,254

 

$

38,048

 

$

108,979

 

$

369,129

Asset impairment charges

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Operating income

 

 

15,142

 

 

4,808

 

 

2,969

 

 

9,513

 

 

32,432

Capital and intangible asset expenditures

 

 

291

 

 

1,224

 

 

775

 

 

939

 

 

3,229

Depreciation and amortization

 

 

1,075

 

 

5,514

 

 

1,965

 

 

2,319

 

 

10,873

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare /

 

Nutritional

 

 

 

 

 

August 31, 2014

    

Housewares

    

Home Environment

    

Supplements (1)

    

Beauty

    

Total

Sales revenue, net

 

$

69,637

 

$

126,218

 

$

24,634

 

$

99,460

 

$

319,949

Asset impairment charges

 

 

 -

 

 

 -

 

 

 -

 

 

 -

 

 

 -

Operating income

 

 

13,891

 

 

4,508

 

 

110

 

 

6,094

 

 

24,603

Capital and intangible asset expenditures

 

 

218

 

 

1,081

 

 

177

 

 

390

 

 

1,866

Depreciation and amortization

 

 

889

 

 

5,027

 

 

1,359

 

 

2,718

 

 

9,993

(1)

Includes three- and two-months of operations of the Nutritional Supplements segment for the three months ending August 31, 2015 and 2014, respectively. The segment was formed upon the acquisition of Healthy Directions on June 30, 2014.

 

8


 

SIX MONTHS ENDED

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare /

 

Nutritional

 

 

 

 

 

August 31, 2015

    

Housewares

    

Home Environment

    

Supplements (1)

    

Beauty

    

Total

Sales revenue, net

 

$

144,034

 

$

286,296

 

$

77,488

 

$

206,656

 

$

714,474

Asset impairment charges

 

 

 -

 

 

 -

 

 

 -

 

 

3,000

 

 

3,000

Operating income

 

 

26,325

 

 

13,226

 

 

5,589

 

 

13,835

 

 

58,975

Capital and intangible asset expenditures

 

 

616

 

 

1,524

 

 

1,906

 

 

1,900

 

 

5,946

Depreciation and amortization

 

 

2,083

 

 

10,577

 

 

3,933

 

 

4,634

 

 

21,227

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Healthcare /

 

Nutritional

 

 

 

 

 

August 31, 2014

    

Housewares

    

Home Environment

    

Supplements (1)

    

Beauty

    

Total

Sales revenue, net

 

$

136,393

 

$

268,707

 

$

24,634

 

$

201,993

 

$

631,727

Asset impairment charges

 

 

 -

 

 

 -

 

 

 -

 

 

9,000

 

 

9,000

Operating income

 

 

26,926

 

 

13,225

 

 

110

 

 

7,465

 

 

47,726

Capital and intangible asset expenditures

 

 

1,042

 

 

1,487

 

 

177

 

 

982

 

 

3,688

Depreciation and amortization

 

 

1,777

 

 

10,259

 

 

1,359

 

 

5,098

 

 

18,493

(1)

Includes six- and two-months of operations of the Nutritional Supplements segment for the six months ending August 31, 2015 and 2014, respectively.  The segment was formed upon the acquisition of Healthy Directions on June 30, 2014.

 

We compute segment operating income based on net sales revenue, less cost of goods sold, SG&A, and any asset impairment charges associated with the segment. The SG&A used to compute each segment’s operating income is directly associated with the segment, plus shared service and corporate overhead expenses that are allocable to the segment. In fiscal year 2016,  we began making an allocation of shared service and corporate overhead costs to the Nutritional Supplements segment. For the three- and six-months ended August 31, 2015, those allocations totaled $0.86 and $1.60 million, respectively.  We do not allocate nonoperating income and expense, including interest or income taxes, to operating segments.

 

Note 6 – Comprehensive Income (Loss)

 

The table below presents the changes in accumulated other comprehensive income (loss) by component and the amounts reclassified out of accumulated other comprehensive income (loss) for the 2016 fiscal year-to-date:

 

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) BY COMPONENT

(in thousands)

 

 

 

 

 

 

 

Unrealized Holding
 Gains (Losses)

on Cash Flow
Hedges (1)

Balance at February 28, 2015

 

$

(76)

Other comprehensive income before reclassification

 

 

812

Amounts reclassified out of accumulated other comprehensive income

 

 

(240)

Tax effects

 

 

(175)

Other Comprehensive Income (Loss)

 

 

397

Balance at August 31, 2015

 

$

321

(1)

Represents activity associated with foreign currency contracts. Includes net deferred tax (expense) benefits of ($0.14)  and $0.03 million at August 31, 2015 and February 28, 2015, respectively.

 

 

 

 

 

9


 

Note 7 – Supplemental Balance Sheet Information

 

PROPERTY AND EQUIPMENT

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Estimated

 

 

 

 

 

Useful Lives

 

August 31, 

 

February 28, 

 

    

(Years)

    

2015

    

2015

Land

 

 

-

 

 

$

12,800

 

$

12,800

Building and improvements

 

3

-

40

 

 

102,309

 

 

102,058

Computer, furniture and other equipment

 

3

-

15

 

 

64,216

 

 

64,464

Tools, molds and other production equipment

 

1

-

10

 

 

28,979

 

 

25,861

Construction in progress

 

 

-

 

 

 

3,982

 

 

3,039

Property and equipment, gross

 

 

 

 

 

 

212,286

 

 

208,222

Less accumulated depreciation

 

 

 

 

 

 

(87,627)

 

 

(82,154)

Property and equipment, net

 

 

 

 

 

$

124,659

 

$

126,068

 

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

(in thousands)

 

 

 

 

 

 

 

 

 

 

 

August 31, 

 

February 28, 

 

    

2015

    

2015

Accrued compensation, benefits and payroll taxes

 

$

36,214

 

$

44,382

Accrued sales returns, discounts and allowances

 

 

27,814

 

 

24,271

Accrued warranty returns

 

 

20,797

 

 

23,553

Accrued advertising

 

 

25,006

 

 

18,930

Accrued product liability, legal and professional fees

 

 

6,100

 

 

6,001

Accrued royalties

 

 

7,297

 

 

7,683

Accrued property, sales and other taxes

 

 

7,773

 

 

6,850

Derivative liabilities, current

 

 

196

 

 

240

Liability for uncertain tax positions

 

 

532

 

 

 -

Other

 

 

10,422