EX-99.1 2 a17-28966_1ex99d1.htm EX-99.1

EXHIBIT 99.1

 

UNAUDITED CONSOLIDATED CONDENSED PRO FORMA FINANCIAL INFORMATION

 

On December 20, 2017, Helen of Troy Limited (“the Company”), designer, developer and worldwide marketer of consumer brand-name housewares, health and home, nutritional supplement and beauty products, sold Healthy Directions, LLC (“Healthy Directions”) and its subsidiaries, which make up the Company’s Nutritional Supplements segment, to Direct Digital, LLC (“Direct Digital”).  Healthy Directions is a leading provider of premier doctor-formulated nutritional supplements, products, and expert natural health guidance sold directly to consumers.

 

The purchase price is comprised of $46 million in cash paid at the closing and a supplemental payment with a target value of $25 million payable on or before August 1, 2019.  The final amount of the supplemental payment may be adjusted up or down based on the performance of Healthy Directions through February 28, 2018.  The final purchase price is also subject to a customary working capital adjustment.  Proceeds  from the sale will be used to pay down debt and general corporate purposes, which may include accretive acquisitions or opportunistic share repurchases to create further shareholder value.

 

To provide a better understanding of the impact of the sale of Healthy Directions, the following unaudited consolidated condensed pro forma financial information is presented to reflect how the sale of Healthy Directions might have affected the historical financial statements had the transaction been consummated at an earlier date.

 

The following unaudited consolidated condensed pro forma statements of income for the six months ended August 31, 2017 and the fiscal year ended February 28, 2017, as well as the consolidated condensed pro forma balance sheet as of August 31, 2017 (collectively, the “Pro Formas”), have been derived from the Company’s historical consolidated financial statements. The unaudited consolidated condensed pro forma statements of income have been prepared as if the sale of Healthy Directions had occurred on March 1, 2016 (the first day of fiscal year 2017), while the unaudited consolidated condensed pro forma balance sheet has been prepared as if the sale of Healthy Directions occurred on August 31, 2017. The Pro Formas and the accompanying notes should be read together with the Company’s Annual Report on Form 10-K for the fiscal year ended February 28, 2017, filed with the Securities and Exchange Commission (the “SEC”) on May 1, 2017 and the Company’s Quarterly Reports on Form 10-Q for the quarter ended May 30, 2017, filed with the SEC on July 10, 2017, and the six-month period and quarter ended August 31, 2017, filed with the SEC on October 10, 2017.

 

The Pro Formas do not purport to represent what the Company’s financial position and results of operations would have been had the sale of Healthy Directions occurred on the dates indicated or to project financial performance for any future period or as of a future date. In addition, the Pro Formas are based on currently available information and certain assumptions that the Company believes are reasonable, and are provided for illustrative and informational purposes only. The Pro Formas conform to Generally Accepted Accounting Principles in the United States of America (“U.S. GAAP”). The Pro Formas have been prepared to reflect adjustments to the Company’s historical annual and interim consolidated financial statements that are (1) directly attributable to the sale of Healthy Directions; (2) factually supportable; and (3) with respect to the unaudited consolidated condensed proforma statements of operations, expected to have a continuing impact on the Company’s results of operations.

 

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HELEN OF TROY LIMITED AND SUBSIDIARIES

Consolidated Condensed Pro Forma Statements of Income

For the Six Months Ended August 31, 2017

 

 

 

(a), (b), (c)

 

(in thousands, except per share data)

 

As Reported

 

Pro Forma
Adjustments

 

Pro
Forma

 

Sales revenue, net

 

$

738,067

 

$

62,876

 

$

675,191

 

Cost of goods sold

 

413,685

 

18,292

 

395,393

 

Gross profit

 

324,382

 

44,584

 

279,798

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

 

253,438

 

49,406

 

204,032

 

Asset impairment charges

 

54,070

 

50,070

 

4,000

 

Operating Income (loss)

 

16,874

 

(54,892

)

71,766

 

Nonoperating income, net

 

247

 

 

247

 

Interest expense

 

(7,708

)

(2,178

)

(5,530

)

Income (loss) before income taxes

 

9,413

 

(57,070

)

66,483

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

(5,388

)

(6,707

)

1,319

 

Net income (loss)

 

$

14,801

 

$

(50,363

)

$

65,164

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic

 

$

0.55

 

 

 

$

2.40

 

Diluted

 

$

0.54

 

 

 

$

2.38

 

 

 

 

 

 

 

 

 

Weighted average shares of common stock used in computing net earnings per share:

 

 

 

 

 

 

 

Basic

 

27,154

 

 

 

27,154

 

Diluted

 

27,323

 

 

 

27,323

 

 

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HELEN OF TROY LIMITED AND SUBSIDIARIES

Consolidated Condensed Pro Forma Statements of Income

For the Year Ended February 28, 2017

 

 

 

(a), (b), (c)

 

(in thousands, except per share data)

 

As Reported

 

Pro Forma
Adjustments

 

Pro
Forma

 

Sales revenue, net

 

$

1,537,219

 

$

130,543

 

$

1,406,676

 

Cost of goods sold

 

861,751

 

37,632

 

824,119

 

Gross profit

 

675,468

 

92,911

 

582,557

 

 

 

 

 

 

 

 

 

Selling, general and administrative expense

 

498,736

 

91,344

 

407,392

 

Asset impairment charges

 

12,400

 

9,500

 

2,900

 

Operating Income (loss)

 

164,332

 

(7,933

)

172,265

 

 

 

 

 

 

 

 

 

Nonoperating income, net

 

414

 

 

414

 

Interest expense

 

(14,857

)

(3,431

)

(11,426

)

Income (loss) before income taxes

 

149,889

 

(11,364

)

161,253

 

 

 

 

 

 

 

 

 

Income tax expense (benefit)

 

9,200

 

(2,926

)

12,126

 

Net income (loss)

 

$

140,689

 

$

(8,438

)

$

149,127

 

 

 

 

 

 

 

 

 

Earnings per share:

 

 

 

 

 

 

 

Basic

 

$

5.11

 

 

 

$

5.42

 

Diluted

 

$

5.04

 

 

 

$

5.35

 

 

 

 

 

 

 

 

 

Weighted average shares of common stock used in computing net earnings per share:

 

 

 

 

 

 

 

Basic

 

27,522

 

 

 

27,522

 

Diluted

 

27,891

 

 

 

27,891

 

 

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HELEN OF TROY LIMITED AND SUBSIDIARIES

Consolidated Condensed Pro Forma Balance Sheet

As of August 31, 2017

 

 

 

 

 

(d), (e), (f)

 

 

 

(in thousands, except per share data)

 

As Reported

 

Pro Forma
Adjustments

 

Pro
Forma

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Assets, current:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

13,720

 

$

46,374

 

$

60,094

 

Receivables

 

238,421

 

24,817

 

263,238

 

Inventory

 

325,562

 

(6,861

)

318,701

 

Income taxes receivable

 

 

30,455

 

30,455

 

Prepaid expenses and other current assets

 

14,999

 

(2,245

)

12,754

 

Total assets, current

 

592,702

 

92,540

 

685,242

 

 

 

 

 

 

 

 

 

Property and equipment, net

 

134,672

 

(8,166

)

126,506

 

Goodwill

 

672,929

 

(70,609

)

602,320

 

Other intangible assets, net

 

386,856

 

(63,806

)

323,050

 

Deferred tax assets, net

 

8,809

 

(6,801

)

2,008

 

Other assets, net

 

2,519

 

(590

)

1,929

 

Total assets

 

$

1,798,487

 

$

(57,432

)

$

1,741,055

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Equity

 

 

 

 

 

 

 

Liabilities, current:

 

 

 

 

 

 

 

Accounts payable

 

$

136,225

 

$

(5,699

)

$

130,526

 

Accrued expenses and other current liabilities

 

147,283

 

(4,272

)

143,011

 

Income taxes payable

 

8,484

 

(8,484

)

 

Long-term debt, current maturities

 

20,789

 

 

20,789

 

Total liabilities, current

 

312,781

 

(18,455

)

294,326

 

 

 

 

 

 

 

 

 

Long-term debt, current maturities

 

423,477

 

 

423,477

 

Deferred tax liabilities, net

 

7,030

 

6,372

 

13,402

 

Other liabilities, noncurrent

 

17,860

 

(4,174

)

13,686

 

Total liabilities

 

761,148

 

(16,257

)

744,891

 

 

 

 

 

 

 

 

 

Commitments and contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stockholders’ equity

 

 

 

 

 

 

 

Cumulative preferred stock

 

 

 

 

Common stock

 

2,726

 

 

2,726

 

Additional paid in capital

 

224,689

 

 

224,689

 

Accumulated other comprehensive loss

 

(2,947

)

 

(2,947

)

Retained earnings

 

812,871

 

(41,175

)

771,696

 

Total Stockholders’ equity

 

1,037,339

 

(41,175

)

996,164

 

Total liabilities and Stockholders’ equity

 

$

1,798,487

 

$

(57,432

)

$

1,741,055

 

 

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HELEN OF TROY LIMITED

NOTES TO UNAUDITED CONSOLIDATED CONDENSED PRO FORMA FINANCIAL STATEMENTS

 

The following is a summary of the pro forma adjustments reflected in the unaudited consolidated condensed pro forma financial statements:

 

(a)           Includes the revenue and expenses associated with Healthy Directions.

 

(b)           Includes direct and indirect overhead expenses allocated to Healthy Directions.

 

(c)            Income tax as accounted for in the tax provision for the applicable periods.

 

(d)           Includes the impact of a loss from the sale of Healthy Directions and the related tax impact as of an assumed date of March 1, 2016.

 

(e)            Includes the elimination of assets and liabilities associated with Healthy Directions from the Company’s consolidated balance sheet.

 

(f)             Includes the purchase price related to the closing of the sale of Healthy Directions on December 20, 2017, as of an assumed date of August 31, 2017. The purchase price from the sale is comprised of $46 million in cash paid at closing and a supplemental payment with a target value of $25 million payable on or before August 1, 2019.  The final amount of the supplemental payment may be adjusted up or down based on the performance of Healthy Directions through February 28, 2018.

 

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