FOOL CONFERENCE CALL SYNOPSIS*
By Debora Tidwell (TMF Debit)

Helen of Troy, Limited
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6827 Market Avenue
El Paso, TX 79915
(915) 779-6363

UNION CITY, CA (May 20, 1997)/FOOLWIRE/ --- Helen of Troy released their fourth quarter and year-end results on May 6th. They reported record sales and earnings for the fourth quarter and the year. Fourth quarter net earnings were up 40% to $2.875 million or $0.20 per share compared with $2.052 million or $0.15 per share for the same period last year. Record net earnings for the year rose 31% to $17.158 million or $1.24 per share from $13.057 million or $0.98 per share in the prior year. Sales rose 25% to a record $44.231 million in the quarter compared with sales of $35.474 million for the same quarter last year. Fiscal 1997 total year sales climbed 28% to a record $213 million from $167 million for the previous year. All the earnings were restated to reflect the 2-for-1 stock split they had last July.

PROFIT MARGIN & EXPENSES FOR THE YEAR. Gross profit for the year was $80,174,000 which is 37.63% compared with $64,711,000 which was 38.74%. Total SG&A as a percent of sales this year was 26.96% compared with 28.35% last year. In the other expense category the numbers are relatively the same with $595,000 this year versus $514,000 for last year. Their tax expense for this year was $4,093,000 versus $3,793,000 last year.

PROFIT MARGIN & EXPENSES FOR THE QUARTER. For the fourth quarter, gross profit was $16,814,000 which is 38.01% versus $14,027,000 or 39.54%. Total SG&A as a percent of sales for the fourth quarter was 29.13% or versus 32.65% last year. Other income was $245,000 versus other expense in the fourth quarter last year of $195,000. Tax expense for the fourth quarter was $829,000 versus $596,000 last year.

DISCUSSION OF MARGIN FLUCTUATIONS. The gross profit fluctuates with the product mix, advertising expenses and other expenses that they give the retailers. The operating income percentage-wise increased over the year before. Sometimes it just has to do with a shift on who the retailer is and what they are buying and how much advertising is built into the price and that determines whether it is on the gross profit line or the SG&A line.

GOOD BRAND NAMES PAYING OFF. The company has achieved record results in every quarter for the last year. They are benefitting from the brand recognition of the products they are selling, Vidal Sassoon and the Revlon products and, of course, Dr. Scholl and Dazey brands they acquired last October.

APPLIANCES DOING WELL. Their appliances are doing very well. They had new introductions this past year of 1875 watt hairdryers for both Revlon and Vidal Sassoon. They are the leader in hot-air curling brushes. Revlon shavers, which they introduced this past quarter with limited supply were shipped to Walgreens and had terrific success. The first national rollout was the houseware show in January and they had tremendous appeal for that product. So, it looks like they are going to have a very good Christmas season on the shavers.

DR. SCHOLL/DAZEY PRODUCTION MOVED TO MEXICO. They moved production on the Dr. Scholl's which they acquired in October from Kansas City to Mexico this past February. They are just starting in production. They will be making hard-hat hair dryers under the Dazey brand and four models of foot baths in Mexico. They can make these items as cost effectively in Mexico because it is ejection molding and because of the bulk of the items, they save a lot in freight from not having to ship the items from Hong Kong. The net cost will be cheaper certainly than making them in Kansas City and cheaper than making it in China. They are perfect products to make in Juarez. They do not own the factories in Juarez, they are subcontracted out just as they are in Asia. They repackaged the Dr. Scholl's line and are looking for an increase in business this coming Fall season because of the new packaging and because of the increased distribution they have over what the Dazey company had when they acquired it. Dr. Scholl's, which is a company owned by Schering-Plough, is spending over $50 million a year on television and other media to advertise the Dr. Scholl's name, so they think they have a tremendous brand name there.

INTERNATIONAL BUSINESS GROWING. Their international business was up nicely. They have their own company in England and it had a nice increase. Their sales in other areas of the world increased. About 4% of their sales were in international for the year, up from 2% the year before. It will continue to go up.

REVLON ARTIFICIAL NAILS - NEW PRODUCT. They acquired the Revlon nail license this past year and they are happy to announce that the first week of May they shipped over $600,000 of product to their first customer which is Walgreen. They think they have a big success in that product. They are the worldwide licensee of Revlon for artificial nails. They think that within a year or two they should be the leader in the US in artificial nails.

REVLON SHAVERS EXPECTED TO BE STRONG SELLERS. The electric shavers should be sold to the same stores they sell to now. Although they are competing with Remington, Norelco, and Panasonic, they believe they can be the leader within 24 months because they are the only ones out there with a female-oriented name such as Revlon versus the others. The potential, as they mentioned, for Revlon artificial nails is tremendous. There is also no reason why the Revlon nails can't be the leader in the category within 2 years. They are shipping everything they can produce right now and their goal is to hit the major retailers first and then fill out national distribution. By the end of the year they hope to be shipping to K-Mart, Wal-Mart, and Target as well as Walgreens. They should have 30-40% of the market in any category they compete in after a certain length of time. It is going to take them that long to get full national distribution in these products.

BRUSHES, COMBS, & ACCESSORIES. In the brush, combs, and accessories division it is a fast growing division, growing in the high 30% range, and they are selling customers that they previously haven't sold to such as grocery store chains and other distributors who normally don't handle appliances are making inroads into that. The Dr. Scholl's products are giving them distribution access to a few retailers where they had limited sales but were heavy users of Dr. Scholl's so that helped them.

BALANCE SHEET HIGHLIGHTS. At year end, cash was $25,798,000 versus cash a year ago of $44,195,000. Accounts receivable was $36,951,000 versus $28,854,000 last year. Inventory was $68,267,000 versus $48,572,000. Total current assets were $133,231,000 compared to $122,866,000 last year with total assets of $182,226,000 this year versus $154,588,000 last year. Total current liabilities were $21,656,000 this year versus $12,260,000. Total long-term liabilities were $40,450,000 this year, the same as last year, with stockholders equity of $120,120,000 this year versus $101,878 last year.

STRONG SELL-THROUGH. The first quarter is continuing with strong sales. They were asked about sell-through versus filling channels. They said that sell-through is consistent with the topline growth. They are selling to major retailers all over the country and they do not stock up as they did in previous years because of new efficiencies in ordering and distribution. They buy what they are selling and what Helen of Troy ships is what is being sold. They haven't found any retailer is overstocked and won't be buying over the next couple of months. They want to buy as little as possible but they want it every day because they don't want to carry the inventory.

DISTRIBUTION CENTERS. They were asked where they stand on the new distribution center and the other distribution centers. They responded that they had five regional warehouses and they are down to two warehouses. They have the warehouse in El Paso which is 90% operational and is a 408,000 square foot warehouse and they consolidated 3 warehouses into that one. It gives them more control, they consolidated the inventory which they hope will help them lower inventory and be able to ship to a customer all the products from one warehouse at one time rather than different divisional products from 3 or 4 different warehouses. They think there will be a big advantage to that. There was additional expense associated with consolidating the 3 warehouses and moving product to the El Paso facility. All of that was included in fourth quarter numbers, so they achieved the sales and earnings numbers despite the additional expenses. They also have a warehouse in Memphis which they are also keeping and will see how things work out for the season. Memphis is a public warehouse so they are only occupying space as needed. They think they will probably leave some merchandise there, but are not under any heavy commitment there. A lot of it depends on what happens with Dazey/Dr. Scholl's. If the business increases to what they think it should be, they may not have enough space in their El Paso warehouse. They have a warehouse in Canada, in England, in Amsterdam, and in Hong Kong to service customers outside the US.

* A Fool conference call synopsis represents an effort to highlight the salient points of a conference call and should not be taken as an authoritative accounting or transcription of the entire event. Note: Statements made by a company other than historical information may constitute forward-looking statements for which the company can claim protection under the Safe Harbor Act. Please consult the company's filings with the SEC for information on risk factors which might cause actual results to differ materially from the information contained in these forward-looking statements.