This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") should be read in conjunction with the other sections of this report, including Part I, "Item 1. Business"; Part II, "Item 6. Selected Financial Data"; and Part II, "Item 8. Financial Statements and Supplementary Data." The various sections of this MD&A contain a number of forward-looking statements, all of which are based on our current expectations. Actual results may differ materially due to a number of factors, including those discussed on page 2 of this report in the section entitled "Information Regarding Forward-Looking Statements," Item 1A., "Risk Factors," and in Item 7A. "Quantitative and Qualitative Disclosures About Market Risk."

OVERVIEW

Our financial results for the 2009 fiscal year reflect the impact of the continued deterioration of global macroeconomic conditions that began last year and accelerated throughout fiscal 2009. These conditions negatively affected consumer spending causing many of our retail partners to face declining same store sales trends and a highly promotional holiday season. This environment had an adverse impact on most of our businesses, both foreign and domestic. In addition to the impact of the global macroeconomic conditions on consumer demand, the following factors contributed to a decline in the Company's net sales in fiscal 2009:

† In anticipation of a decline in consumer spending, key retail partners reduced inventory levels across most of our product categories, resulting in lower sales orders for most of fiscal 2009. This trend reversed slightly in the fourth quarter as our retail partners replenished to support minimum inventory levels.

† A significant strengthening of the U.S. Dollar against other currencies in which we transact sales, which exposed the Company to foreign exchange losses on those sales because our foreign currency sales prices are not adjusted for short term or sudden currency fluctuations. We are attempting to adjust sales prices to help offset the impact of the currency changes.

† Disruptions in product supply due to the closure of certain suppliers in the Far East. This caused delays in the delivery of certain items and adversely affected Personal Care appliance sales. Although we have multiple sourcing partners for many of our products, we were unable to source certain items on a timely basis due to the rapid changes occurring within the Far East. We believe the contraction in suppliers was a widespread issue within our industry, which now appears to have stabilized.

† The loss of some appliance placement at retail due to branded competition, movement to private label and disruptions in the supply of product.

† An introduction of an entirely new line of hair care appliance solutions for specific hair types, VS Answers®, which replaced some of our existing product on our retailers' shelves, fell short of our expectations due to disappointing sell-through and its launch at a time when retailers were cutting back shelf space and tightening their inventory management practices.

† In fiscal 2008, we introduced the Bed Head® line of appliances and accessories. Due to a shift by consumers away from higher price points at retail, we granted certain price adjustments and allowances to our retailers as part of our commitment to Bed Head®, which negatively impacted fiscal 2009 Bed Head® net sales.

† The impact of the Linens 'n Things, Inc. ("Linens") bankruptcy liquidation in October 2008 had an adverse impact on sales. Linens is a significant Housewares segment customer. In addition to the current and future loss of sales, we believe the impact of Linens' merchandise liquidation negatively affected other competing retailers by diverting consumer purchases to Linens' deeply discounted merchandise in the third and fourth quarters of fiscal 2009.

In part as a result of these factors, fiscal 2009 consolidated net sales decreased $29.80 million or 4.6% when compared to fiscal 2008. While our Housewares segment continued to grow and expand its sales base despite the challenging retail sales environment, our Personal Care segment, whose product categories are generally in more mature market positions, experienced sales declines.

Global economic conditions also put upward pressure on our product costs for much of the fiscal year. There was significant volatility in energy costs, inbound and outbound transportation costs and in the costs of the basic materials used to manufacture our products, namely plastic resins, copper, stainless steel and other metals. In addition, declining labor availability and evolving government labor regulations and associated compliance standards caused increases in labor costs in the Far East, where we currently source a significant portion of our products. These conditions coupled with rising credit costs and increased borrowing constraints have forced certain of our suppliers to exit the business, leading to supply shortages, added services and tooling costs and product availability issues. In the fourth quarter of fiscal 2009, we saw these same costs stabilize and begin to move downward in some cases, but we believe that the full impact of such cost decreases will not meaningfully benefit our operating results until the second half of fiscal 2010. The following factors also impacted on our product and operating costs:

† Rapid weakening of many foreign currencies against the U.S. Dollar during the third and fourth quarters of fiscal 2009 resulted in significant foreign exchange losses, which are a component of operating costs.

† Appreciation of the Chinese Renminbi with respect to the U.S. Dollar increased cost of sales during fiscal 2009. The appreciation of the Renminbi has slowed over the last half of the fiscal year. Continued stabilization of the Renminbi can be expected to favorably affect our future cost of sales.

The economic environment provided an opportunity to study our cost structure and position the Company for profitable growth going forward. We were able to partially offset rising product costs with operating expense efficiencies that enabled us to complete fiscal 2009 with selling, general and administrative expense ("SG&A") as a percentage of sales improving 1.6 percentage points to 30.2 percent compared to 31.8 percent for the same period last year. We achieved this improvement despite the unfavorable year over year impact of foreign exchange fluctuations totaling $5.73 million, which increased SG&A by 0.9 percentage points.

Net earnings in fiscal 2009 decreased by $118.30 million when compared to fiscal 2008. In addition to a decline in sales and increasing cost of sales, a significant amount of this decline is due to the unfavorable impact of significant items in fiscal 2009, including: the effects of intangible impairment charges of $107.27 million ($106.67 million after tax) and a charge to bad debt of $3.88 million ($2.52 million after tax) associated with the Linens bankruptcy, partially offset by $0.46 million in benefits of a tax settlement and a $2.70 million ($2.64 million after tax) gain on casualty insurance settlements. This compares to the favorable impact of significant items in fiscal 2008, including: the benefits of various tax settlements, a litigation settlement and a gain on the sale of land, partially offset by impairment charges and a tax valuation allowance on a net operating loss in Brazil. Excluding these items from both years, fiscal 2009 earnings without significant items decreased by $6.42 million or 11.5 percent when compared to fiscal 2008, and fiscal 2009 earnings per diluted share without significant items decreased to $1.59 as compared to $1.75 in fiscal 2008. The remaining decline in earnings without significant items of $0.16 per diluted share is a result of the impact of global economic, and other factors referred to previously. Earnings and related earnings per diluted share without significant items may be considered non-GAAP financial measures as contemplated by SEC Regulation G, Rule 100. These measures are discussed further, and reconciled to their applicable GAAP-based measures, on page 54.

Significant Developments and Events Other significant developments and events that occurred during fiscal year 2009 are described below.

† Impairment Charges: As further discussed under the sections "Impairment Charges" and "Critical Accounting Policies", and Notes (1) and (3) to the accompanying consolidated financial statements, we have recorded non-cash impairment charges totaling $107.27 million ($106.67 million after tax) in fiscal 2009 in order to reflect the carrying value of goodwill and certain trademarks in our Personal Care segment at current estimates of their fair values. With respect to all trademarks for which such impairments were recorded, we currently expect to continue to hold these trademarks for use. See page 54 for a table showing the impact of impairment charges and other significant items on net earnings (loss) and earnings per share.

† Acquisition of Ogilvie: On October 10, 2008, we acquired the trademarks, customer lists, distribution rights, formulas and inventory of the Ogilvie brand of home permanent and hair-straightening products for $4.77 million from Ascendia Brands, Inc. The products are now being sold through our Personal Care segment. Ogilvie is the leading brand of "at home" permanent and straightening products sold in the food, drug and mass merchandising markets. The Ogilvie brand maintains a loyal core user base of consumers who are interested in "do it yourself" products for their hair care needs. We have begun the integration of the Ogilvie operations into our Idelle division of grooming, skin and hair care solutions and expect the business to be fully integrated during the first quarter of fiscal 2010.

† Productivity and Operational Improvement Initiatives: During fiscal 2009, we implemented a comprehensive cost reduction program designed to increase the productivity of our assets and employees, streamline operations, improve our use of technology, eliminate unproductive expenditures, and effectively leverage our existing supply chain, distribution and corporate structures. As a result of these initiatives, we were able to reduce our Far East sourcing costs and increase capacity within our existing distribution structure, while reducing returns from the customer that result from warranty claims or shipment inaccuracies. The Far East sourcing savings were realized even as we completed the transition of the majority of our U.S. based Housewares sourcing to our operations in the Far East. We also focused our advertising and promotional expenditures, decreased personnel costs, and reduced a variety of operational and corporate expenses. These initiatives resulted in significant operating expense reductions in an environment of rising costs.

† New Product Development and Innovation: Despite the unfavorable macroeconomic conditions, we continue to be disciplined in our strategy of continually investing in new product development. We believe this will position us to gain market share and take advantage of the economic upturn, when it occurs. Although we must be selective and cost-conscious regarding our development efforts, we feel that an overall contraction in product development efforts would be a shortsighted strategy. Towards the end of fiscal 2008, we successfully introduced our Good Grips® POP line of modular food storage containers ("POP Containers"). In fiscal 2009, our POP Containers accounted for incremental net sales of $10.30 million, while other new product introductions in the Housewares segment overall contributed $7.89 million in incremental sales growth and allowed the segment to grow 6.9 percent in the face of strong economic headwinds and the bankruptcy of a significant customer. In total, there were over 90 new product introductions in the Housewares segment in fiscal year 2009. We plan to launch over 90 new products in the Housewares segment in fiscal 2010. In Personal Care, we introduced approximately 325 new products in fiscal 2009 and expect to launch another 175 products for fiscal 2010 under such brand names as Revlon®, Vidal Sassoon®, Bed Head®, Hot Tools®, Dr. Scholl's®, and Veet®.

† Amendment of Revolving Line of Credit: On December 15, 2008, we amended the Revolving Line of Credit Agreement, extending its maturity date until December 15, 2013, adjusting interest rate margins and modifying certain financial covenants. As of February 28, 2008, we have no outstanding borrowings and $1.52 million of open letters of credit under this line. On June 29, 2009, $75 million of unsecured floating rate senior debt will mature. We currently plan on funding this maturity from our available cash and availability under our Revolving Line of Credit Agreement.

† Liquidation of Auction Rate Securities: As a result of ongoing lack of liquidity in the ARS market, we reclassified our remaining ARS as long-term investments in the first quarter of fiscal 2009. We have recorded a

pre-tax unrealized loss of $2.68 million during fiscal 2009, which is reflected as a component of accumulated other comprehensive loss in our consolidated balance sheet at February 28, 2009 net of related tax effects of $0.91 million. Despite the liquidity issues experienced by investors throughout the market, we were able to liquidate at par $41.18 million of ARS during fiscal 2009.

† IRS Settlement: During fiscal 2009, the IRS completed its audit of our U.S. consolidated federal tax return for fiscal year 2005. As a result of its audit, the IRS proposed adjustments totaling $8.63 million to taxes. In December 2008, the Company and the IRS reached a settlement agreement. As a result of the settlement, we agreed to adjustments totaling $0.49 million to fiscal 2005 taxes and interest and reversed $5.20 million of tax provisions, including interest and penalties previously established for fiscal 2005 and other years on the basis of the terms of the settlement. Of the $5.20 million, $0.57 million was credited to fiscal year 2009 tax expense and $4.63 million was credited to additional paid-in-capital. The amount credited to additional paid-in-capital was for the tax effects of prior year stock compensation expense that was deemed deductible under the audit, and when originally accrued, was charged against additional paid-in-capital.

† Linens 'n Things Bankruptcy Liquidation:On May 2, 2008, Linens filed for protection under chapter 11 of the U.S. Bankruptcy Code. During the fiscal quarter ended November 30, 2008, Linens announced plans to liquidate by December 31, 2008. Our accounts receivable balance with Linens at the date of bankruptcy was $4.17 million and was fully written off during fiscal 2009. We expect no further sales to Linens and we have fully collected all post-petition receivables as of the quarter ended November 30, 2008. Linens was a significant customer of the Company with net sales for fiscal 2009 of $0.55 million and $7.24 million for the Personal Care and Housewares segments, respectively, compared to net sales of $1.30 million and $17.30 million in the same segments, respectively, for fiscal 2008. In addition to the current and future loss of sales, we believe the impact of Linens' merchandise liquidation negatively affected other competing retailers by diverting consumer purchases to Linens' deeply discounted merchandise in the third and fourth quarters of fiscal 2009.

† First Quarter Fiscal 2010 Acquisition of Infusium 23®: On March 31, 2009, we completed the acquisition of certain assets, trademarks, customer lists, distribution rights, patents and formulas for Infusium 23® hair care products from The Procter & Gamble Company for a cash purchase price of $60 million, which we paid with cash on hand. Infusium 23® has a heritage of over 80 years and its shampoos, conditioners and leave-in treatments have an established reputation for product performance with stylists and consumers. We will market Infusium 23® products into both retail and professional trade channels. We have begun to integrate the product line into our operations and are in the process of completing our analysis of the economic lives of the assets acquired and appropriate allocation of the initial purchase price.

Financial Recap of Fiscal 2009

† Consolidated net sales decreased 4.6 percent, or $29.80 million, to $622.75 million in fiscal 2009 compared to $652.55 million in fiscal 2008. Personal Care segment consolidated net sales decreased 8.4 percent in fiscal 2009 when compared to fiscal 2008. Housewares segment net sales increased 6.9 percent in fiscal 2009 when compared to fiscal 2008. Our fiscal 2009 net sales include the unfavorable impact of a net foreign exchange loss of $8.78 million compared to a net gain of $5.61 million in fiscal 2008.

† Consolidated gross profit margin as a percentage of net sales decreased 2.2 percentage points to 41.0 percent in fiscal 2009 compared to 43.2 percent in fiscal 2008.

† SG&A as a percentage of net sales decreased 1.6 percentage points to 30.2 percent in fiscal 2009 compared to 31.8 percent in fiscal 2008. Fiscal 2009 SG&A includes net foreign exchange losses of $5.21 million, bad debt expense of $5.71 million and insurance claim gains of $2.78 million, which resulted in a net unfavorable impact to SG&A of $8.14 million. Fiscal 2008 SG&A includes net foreign exchange gains of $0.53 million and bad debt expense of $0.48 million, which resulted in a net favorable impact to SG&A of $0.04 million. Excluding the impact of these items from both years, SG&A as a percentage of net sales decreased 2.9 percentage points to 28.9 percent in fiscal 2009 compared to 31.8 percent in fiscal 2008. SG&A excluding these items may be a non-GAAP financial measure as contemplated by SEC Regulation G, Rule 100. These measures are discussed further, and reconciled to their applicable GAAP-based measure, on page 44.

† As further discussed under the sections "Impairment Charges" and "Critical Accounting Policies", and Notes (1) and (3) to the accompanying consolidated financial statements, we have recorded non-cash impairment charges totaling $107.27 million ($106.67 million after tax) in fiscal 2009 in order to reflect the carrying value of goodwill and certain trademarks in our Personal Care segment at current estimates of their fair value. During the third quarter of fiscal 2008, we recorded non-cash impairment charges, on certain intangible assets totaling $4.98 million ($4.88 million after tax).

† Interest expense was $13.69 million in fiscal 2009 compared to $15.03 million in fiscal 2008. The decrease in interest expense is due to lower amounts of debt outstanding, when compared to the same periods last year.

† Income tax expense was $5.33 million in fiscal 2009 compared to a benefit of $0.24 million in fiscal 2008. Fiscal 2009 income tax expense includes a benefit of $0.46 million due to a tax settlement with the IRS. Fiscal 2008 taxes include benefits of $9.31 million due to various tax settlements with the Hong Kong Inland Revenue Department and the IRS and an expense of $0.98 million resulting from a net operating loss valuation allowance.

† Our net loss of $56.79 million in fiscal 2009 compares to net earnings of $61.51 million in fiscal 2008. In addition to a decline in sales and increasing cost of sales, this decline is due to the unfavorable impact of significant items in fiscal 2009, including: the effects of non-cash intangible impairment charges and a charge to bad debt associated with the Linens bankruptcy, partially offset by the benefits of a tax settlement and gains on casualty insurance settlements. This compares to the favorable impact of significant items in fiscal 2008, including; the benefits of various tax settlements, a gain on a litigation settlement and a gain on the sale of land, partially offset by impairment charges and a tax valuation allowance on a net operating loss in Brazil. Earnings excluding the impact of the respective significant items for the year was $49.29 million in fiscal 2009 compared to $55.71 million in fiscal 2008. Our diluted earnings (loss) per share was ($1.88) in fiscal 2009 compared to diluted earnings per share of $1.93 in fiscal 2008. Excluding the significant items referred to above from both years, fiscal 2009 diluted earnings per share was $1.59 compared to $1.75 in fiscal 2008. Earnings and related diluted earnings per share excluding these items may be non-GAAP financial measures as contemplated by SEC Regulation G, Rule 100. These measures are discussed further, and reconciled to their applicable GAAP-based measures, on page 54.

Key Revenue and Net Earnings Growth Drivers for Fiscal 2010: We plan to implement the following specific initiatives for fiscal 2010 with the goal of achieving sales and net earnings growth:

† Continued growth and expansion of OXO® product lines and global market distribution;

† Continued investment in new product line development and introductions to gain market share;

† Integration and development of our new Ogilvie® and Infusium 23® product lines;

† Pursuit of additional acquisitions of complementary businesses or product lines;

† Development of licensing opportunities for the OXO® brand;

† Implementation of certain price increases to retailers in categories with increased cost of goods;

† Improved cost of goods sold for all products, particularly those sourced in the Far East;

† Continued implementation of productivity initiatives to reduce operating expenses; and

† Working capital improvement through the reduction of inventories throughout the Company.

RESULTS OF OPERATIONS

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

                          Fiscal Year Ended (in thousands)          % of Net Sales (1)          % Change
                          2009            2008         2007       2009     2008     2007     09/08     08/07

Net sales
Personal Care
Segment               $    447,244    $    488,414   $ 497,824    71.8%    74.8%    78.4%     -8.4%     -1.9%
Housewares Segment         175,501         164,134     137,108    28.2%    25.2%    21.6%      6.9%     19.7%
Total net sales            622,745         652,548     634,932   100.0%   100.0%   100.0%     -4.6%      2.8%

Cost of sales              367,343         370,853     355,552    59.0%    56.8%    56.0%     -0.9%      4.3%
Gross profit               255,402         281,695     279,380    41.0%    43.2%    44.0%     -9.3%      0.8%

Selling, general,
and administrative
expense                    188,344         207,771     208,964    30.2%    31.8%    32.9%     -9.4%     -0.6%
Operating income
before impairment
and gain                    67,058          73,924      70,416    10.8%    11.3%    11.1%     -9.3%      5.0%

Impairment charges         107,274           4,983           -    17.2%     0.8%     0.0%       *         *
Gain on sale of
land                             -          (3,609 )         -     0.0%    -0.6%     0.0%       *         *
Operating income
(loss)                     (40,216 )        72,550      70,416    -6.5%    11.1%    11.1%   -155.4%      3.0%

Other income
(expense):
Interest expense           (13,687 )       (15,025 )   (17,912 )  -2.2%    -2.3%    -2.8%     -8.9%    -16.1%
Other income, net            2,438           3,748       2,643     0.4%     0.6%     0.4%    -35.0%     41.8%
Total other income
(expense)                  (11,249 )       (11,277 )   (15,269 )  -1.8%    -1.7%    -2.4%     -0.2%    -26.1%

Earnings (loss)
before income taxes        (51,465 )        61,273      55,147    -8.3%     9.4%     8.7%   -184.0%     11.1%

Income tax expense
(benefit)                    5,328            (236 )     5,060     0.9%     0.0%     0.8%       *     -104.7%

Net earnings (loss)   $    (56,793 )  $     61,509   $  50,087    -9.1%     9.4%     7.9%   -192.3%     22.8%

* Calculation is not meaningful

(1) Net sales percentages by segment are computed as a percentage of the related segment's net sales to total net sales. All other percentages are computed as a percentage of total net sales.

Consolidated Net Sales:

Consolidated net sales decreased $29.80 million or 4.6 percentage points in fiscal 2009 compared to fiscal 2008. New product acquisitions accounted for an increase of $6.84 million, or 1.0 percentage point, partially offsetting the decline in core business net sales (net sales without acquisitions). Net sales from new product acquisitions included $4.13 million of sales from our Belson Products acquisition, which represents two months of Belson's fiscal 2009 sales through the first anniversary of their acquisition, and $2.71 of sales from our Ogilvie acquisition, which represents 4.3 months of sales of Ogilvie products since acquisition. Core business sales showed an overall decline in fiscal 2009 of $36.64 million or 5.6 percent. Our Housewares segment provided 1.7 percentage points of consolidated net sales growth, or an increase of $11.37 million. Housewares net sales increased 6.9 percent in fiscal 2009 when compared to fiscal 2008, consisting of unit volume growth of 14.1 percent, partially offset by a decline in average unit selling prices of 7.2 percent. Housewares growth was more than offset by a decline in net sales of 8.4 percent, or $41.17 million, in our Personal Care segment. The 8.4 percent decrease in our Personal Care segment consisted of a 4.7 percent unit volume decline and a 3.8 percent overall price decline. Fiscal 2009 net sales include a net unfavorable foreign exchange impact of $8.78 million compared to a net foreign exchange gain of $5.61 million in fiscal 2008.

Consolidated net sales increased 2.8 percent or $17.62 million in fiscal 2008 over fiscal 2007. New product acquisitions accounted for 4.2 percentage points, or $26.68 million of the sales growth over fiscal 2007. Net sales from product acquisitions included $26.56 million from our Belson Products acquisition, which represents ten months of Belson's sales since acquisition, and $0.12 million from our Candela lighting products acquisition, which represents seven months of sales of Candela products since acquisition. Core business net sales showed an overall decline in fiscal 2008 of $9.06 million or 1.4 percent. Our Housewares segment provided 4.3 percentage points of consolidated net sales growth, or an increase of $27.03 million. Housewares consolidated net sales increased 19.7 percent in fiscal 2008 when compared to fiscal 2007. This growth was partially offset by a decline of 1.5 percentage points, or $9.41million, in our Personal Care segment. Overall, shifts in selling mix between segments and product categories resulted in higher average unit selling prices, which were offset by overall unit volume declines.

The following table summarizes, for the periods indicated, the impact that acquisitions had on our net sales:

IMPACT OF ACQUISITION ON NET SALES

(in thousands)


                                            Fiscal Years Ended
                                       2009        2008        2007

Prior year's net sales               $ 652,548   $ 634,932   $ 589,747

Components of net sales change
Core business net sales change         (36,640 )    (9,061 )    45,147
Net sales from acquisitions              6,837      26,677          38
Change in net sales                    (29,803 )    17,616      45,185
Net sales                            $ 622,745   $ 652,548   $ 634,932

Total net sales growth                   -4.6%        2.8%        7.7%
Core business net sales change           -5.6%       -1.4%        7.7%
Net sales change from acquisitions        1.0%        4.2%        0.0%

Segment Net Sales:

Personal Care

Our Personal Care segment currently offers products in three categories:
appliances; grooming, skin care and hair care solutions; and brushes, combs and accessories. Our Personal Care segment is dedicated to being the preferred supplier of personal care and wellness products recognized for value added consumer driven innovation and unsurpassed customer support.

. . .