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 Part I, Item 3. "Quantitative and Qualitative Disclosures about Market Risk" and "Information Regarding Forward Looking Statements" in this report and "Risk Factors" in the Company's most recent annual report on Form 10-K and its other filings with the Securities and Exchange Commission (the "SEC"). This discussion should be read in conjunction with our consolidated condensed financial statements included under Part I, Item 1 of this report.

OVERVIEW OF THE QUARTER'S RESULTS:

U.S. and global macroeconomic conditions continue to fuel consumer uncertainty. Over our latest fiscal quarter, domestic and global economic indicators have signaled a slowing of the domestic economic recovery, parts of the Euro zone slipping back into recession and weakening overall world economic growth. While gasoline prices have declined off recent highs and housing markets have stopped their downward trend in most major domestic markets, consumers are pulling back on discretionary purchases as evidenced by a decline in reported U.S. retail sales in April and May (after adjusting for declining gasoline prices). Industrial production, exports and consumer confidence have declined in recent months as a result of daily coverage of European sovereign debt issues, weak employment reports and the potential U.S. fiscal impact of tax increases and spending cuts. With demand for our products highly correlated to consumer sentiment, our ability to achieve our business plans is constrained by current economic conditions. With the prospect of weak consumer demand, our competitors and customers across many businesses are beginning to push highly promotional pricing to keep shelf space and help entice consumers. This pressure on our top line revenues, combined with cost pressures from our suppliers and the general economic uncertainties discussed above, continue to keep us cautious regarding our outlook for the remainder of fiscal 2013.

Consolidated net sales revenue for the three month period ended May 31, 2012 increased 10.6 percent to $300.21 million, compared to $271.47 million for the same period last year. Net sales revenue in our Personal Care segment was down $5.17 million, or 4.2 percent, for the three month period ended May 31, 2012, when compared to the same period last year. Net sales revenue in our Housewares segment was up $7.3 million, or 13.8 percent, for the three month period ended May 31, 2012, when compared to the same period last year. Net sales revenue in our Healthcare / Home Environment segment was up $26.61 million, or 27.8 percent, for the three month period ended May 31, 2012, when compared to the same period last year. The Healthcare / Home Environment segment's results include $24.29 million of incremental net sales revenue from our PUR water filtration business, which was acquired from The Procter & Gamble Company and certain of its affiliates on December 30, 2011. In addition to our net sales revenue performance discussed above, key results for the three month period ended May 31, 2012 include the following:

† Consolidated gross profit margin as a percentage of net sales revenue decreased 0.1 percentage point to 40.4 percent for the three month period ended May 31, 2012 compared to 40.5 percent for the same period last year.

† SG&A as a percentage of net sales revenue increased by 0.8 percentage points to 30.0 percent for the three month period ended May 31, 2012, compared to 29.2 percent for the same period last year.

† Operating income was $31.15 million for the three month period ended May 31, 2012, compared to $30.65 million for the same period last year.

† For the three month period ended May 31, 2012, our net income was $23.47 million compared to $24.61 million for the same period last year. Our diluted earnings per share was $0.74 for the three month period ended May 31, 2012, compared to $0.78 for the same period last year.

RESULTS OF OPERATIONS

Comparison of the three month period ended May 31, 2012 to the three month period ended May 31, 2011

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

SELECTED OPERATING DATA

(dollars in thousands)

                                Three Months Ended May 31,                                 % of Sales Revenue, net
                                  2012               2011        $ Change     % Change      2012          2011

Sales revenue, net
Personal Care                 $      117,552    $      122,718   $  (5,166 )     -4.2%         39.2 %        45.2 %
Housewares                            60,249            52,946       7,303       13.8%         20.1 %        19.5 %
Healthcare / Home
Environment *                        122,410            95,803      26,607       27.8%         40.8 %        35.3 %
Total sales revenue, net             300,211           271,467      28,744       10.6%        100.0 %       100.0 %
Cost of goods sold                   179,063           161,554      17,509       10.8%         59.6 %        59.5 %
Gross profit                         121,148           109,913      11,235       10.2%         40.4 %        40.5 %

Selling, general and
administrative expense                90,000            79,259      10,741       13.6%         30.0 %        29.2 %
Operating income                      31,148            30,654         494        1.6%         10.4 %        11.3 %

Nonoperating income
(expense), net                            23               143        (120 )    -83.9%          0.0 %         0.1 %
Interest expense                      (3,312 )          (3,429 )       117       -3.4%         -1.1 %        -1.3 %
Total other income
(expense)                             (3,289 )          (3,286 )        (3 )      0.1%         -1.1 %        -1.2 %

Income before income taxes            27,859            27,368         491        1.8%          9.3 %        10.1 %

Income tax expense                     4,387             2,763       1,624       58.8%          1.5 %         1.0 %
Net income                    $       23,472    $       24,605   $  (1,133 )     -4.6%          7.8 %         9.1 %

* Includes three months of PUR net sales revenue in fiscal 2013 of $24.29 million

Consolidated net sales revenue:

Consolidated net sales revenue for the three month period ended May 31, 2012 increased 10.6 percent to $300.21 million, compared to $271.47 million for the same period last year. Our Personal Care segment's net sales revenue declined $5.17 million, or 4.2 percent, for the three month period ended May 31, 2012, when compared to the same period last year. Our Housewares segment's net sales revenue increased $7.30 million, or 13.8 percent, for the three month period ended May 31, 2012, when compared to the same period last year. Our Healthcare / Home Environment segment's net sales revenue increased $26.61 million, or 27.8 percent, for the three month period ended May 31, 2012, when compared to the same period last year. The Healthcare / Home Environment segment's results included incremental net sales revenue of $24.29 million from our recent acquisition of the PUR water filtration business on December 30, 2011.

Impact of acquisitions on net sales revenue:

Net sales revenue from the PUR acquisition contributed 8.9 percentage points, or $24.29 million, to our consolidated net sales revenue growth for the three month period ended May 31, 2012. The PUR business operates as part of the Healthcare / Home Environment segment. Organic growth from our core business (business owned and operated over the same fiscal period last year) contributed 1.6 percentage points, or $4.45 million, of consolidated net sales revenue growth for the three month period ended May 31, 2012, when compared to the same period last year.

The following table sets forth the impact acquisitions had on our net sales revenue:

IMPACT OF ACQUISITIONS ON NET SALES REVENUE

(in thousands)



                                                      Three Months Ended May 31,
                                                        2012              2011

Prior year's sales revenue, net                    $      271,467    $      160,153

Components of net sales revenue change
Core business                                               4,453             8,998
Incremental net sales revenue from acquisitions:
Pert Plus & Sure (one month in fiscal 2012)                     -             6,513
Kaz (three months in fiscal 2012)                               -            95,803
PUR (three months in fiscal 2013)                          24,291                 -
Change in sales revenue, net                               28,744           111,314
Sales revenue, net                                 $      300,211    $      271,467

Total net sales revenue growth                              10.6%             69.5%
Core business                                                1.6%              5.6%
Acquisitions                                                 8.9%             63.9%

In the above table, core business is net sales revenue associated with product lines or brands after the first twelve months from the date a business, product line or brand was acquired. Net sales revenue from internally developed brands or product lines are always considered core business. Net sales revenue from acquisitions is net sales revenues associated with product lines or brands that we have acquired and operated for less than twelve months during each period presented.

Impact of foreign currencies on net sales revenue:

During the three month periods ended May 31, 2012 and 2011, we transacted approximately 17 and 20 percent, respectively, of our net sales revenues in foreign currencies. These were primarily denominated in British Pounds, Euros, Mexican Pesos, Canadian Dollars, Japanese Yen, Australian Dollars, Chilean Pesos, Peruvian Soles, and Venezuelan Bolivares Fuertes. For the three month period ended May 31, 2012, the impact of net foreign currency exchange rates decreased our reported international net sales revenue by approximately $2.65 million. Most of the impact of these fluctuations affected sales in our Personal Care and Healthcare / Home Environment segments.

Segment net sales revenue:

We operate our business under three segments: Personal Care, Housewares and Healthcare / Home Environment. Our Personal Care segment's 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 Housewares segment provides a broad range of innovative consumer products for the home. Product offerings include food preparation and storage, cleaning, organization, and baby and toddler care products. The Healthcare / Home Environment segment focuses on health care devices such as thermometers, blood pressure monitors, humidifiers, and heating pads; water filtration systems; and small home appliances such as air purifiers, portable heaters, fans, and bug zappers.

Personal Care Segment - Net sales revenue in the Personal Care segment for the three month period ended May 31, 2012 decreased $5.17 million, or 4.2 percent, to $117.55 million compared with $122.72 million for the same period last year. Modest overall net sales revenue gains in appliance and accessories categories were offset by declines in our grooming, skin care and hair care solutions product categories. Personal Care net sales revenue was negatively impacted by the following factors:

† A difficult U.S. retail sales environment reflected in recent year-over-year sales declines reported by some of the major retailers;

† Challenging macroeconomic conditions in Europe and Latin America;

† Increases in competitive trade promotional activities, including a major hair category launch by a significant competitor;

† Product availability issues due primarily to the closure of a third-party supplier in the Far East; and

† The impact of foreign currency fluctuations on U.S. Dollar reported net sales.

We continue to expect that net sales revenue performance in our Personal Care segment will be heavily dependent on the direction of consumer sentiment, which requires continued improvements in employment, housing markets and consumers' personal finances.

Housewares Segment - Net sales revenue in the Housewares segment for the three month period ended May 31, 2012 increased $7.30 million, or 13.8 percent, to $60.25 million compared with $52.95 million for the same period last year. A portion of the Housewares segment's growth came from aggressive seasonal closeout sales to improve the segment's inventory position. The remainder of the Housewares segment's growth was fueled by price increases, new item sales and expanded distribution in the OXO tot baby and toddler category, shipments of new OXO POP container lines, and expanded international distribution. As a result of the closeout sales activity, we believe that some level of sales have been concentrated in the three month period ended May 31, 2012 that might otherwise normally occur over the remainder of the fiscal year. As such, we believe that the year-over-year growth achieved in the three month period ended May 31, 2012 will not be indicative of year-over-year growth for the full fiscal year 2013. We currently believe net sales revenue annual growth rates for the segment will normalize around mid to high single digits over the remainder of fiscal 2013.

Healthcare / Home Environment - Net sales revenue in the Healthcare / Home Environment segment for the three month period ended May 31, 2012 increased $26.61 million, or 27.8 percent, to $122.41 million compared with $95.80 million for the same period last year. The Healthcare / Home Environment segment's results included incremental net sales revenue of $24.29 million from our recent acquisition of the PUR water filtration business on December 30, 2011. Organic growth accounted for $2.32 million, or 2.4 percent, of the sales growth when compared to the same period last year, which was driven by increases in thermometer and fan shipments. Sales gains were partially offset by the impact of high inventory levels at retail due to the warm winter and mild cold and flu season.

Consolidated gross profit margin:

Consolidated gross profit margin as a percentage of net sales revenue for the three months ended May 31, 2012 decreased 0.1 percentage point to 40.4 percent compared to 40.5 percent for the same period last year. Our consolidated gross profit margin was unfavorably impacted by the combined effects of foreign currency exchange rates on net sales, increased air freight costs incurred in the Personal Care segment to mitigate product availability issues due primarily to the closure of a supplier, higher closeout sales in the Housewares segment, and general product cost increases across all segments. These unfavorable impacts were mostly offset by the PUR water filtration acquisition, which had a favorable impact of 1.9 percentage points on consolidated gross profit margin.

Our product sourcing mix is heavily dependent on imports from China. China's currency is no longer pegged solely to the U.S. dollar. As a result, we believe China's currency will continue to appreciate against the U.S. Dollar in the short-to-intermediate-term, resulting in increased product costs over time. Furthermore, if increases in the underlying costs of labor and commodities in China occur, we expect that they would also result in future increases in our product costs.

Selling, general and administrative expense:

SG&A increased 0.8 percentage points, or $10.74 million, to 30.0 percent of net sales revenue for the three month period ended May 31, 2012, compared to 29.2 percent for the same period last year. The year-over-year increase in SG&A as a percentage of net sales revenue is primarily due to:

† Higher media advertising costs to support the grooming, skin care and hair care solutions product categories and the PUR water filtration business;

† Transition service fees incurred during the fiscal quarter ended May 31, 2012 in connection with the acquisition of the PUR business, which we did not incur during the same fiscal quarter last year;

† Higher incentive compensation expense associated with a new performance bonus plan for our Chief Executive Officer;

† Higher depreciation as a result of an upgrade of our Enterprise Resource Planning system;

† Higher amortization of intangible assets as a result of the PUR acquisition; and

† The impact of revaluation losses from foreign currency exchange rate fluctuations.

Operating income (loss) by segment:

The following table sets forth, for the periods indicated, our operating income
(loss) by segment as a year-over-year percentage change and as a percentage of net sales revenue for each segment and the Company overall:

OPERATING INCOME (LOSS) BY SEGMENT

(dollars in thousands)



                               Three Months Ended May 31,                                % of Sales Revenue, net
                                 2012              2011        $ Change    % Change       2012            2011

Personal Care                $      11,880    $       19,852   $  (7,972 )   -40.2%          10.1 %          16.2%
Housewares                          11,277            10,865         412       3.8%          18.7 %          20.5%
Healthcare / Home
Environment **                       7,991               (63 )     8,054          *           6.5 %          -0.1%
Total operating income       $      31,148    $       30,654   $     494       1.6%          10.4 %          11.3%

* Calculation is not meaningful

** Includes three months of PUR operating income in fiscal 2013

We compute operating income for each segment based on net sales revenue, less cost of goods sold and any SG&A associated with the segment. The SG&A used to compute each segment's operating income is comprised of SG&A directly associated with the segment, plus overhead expenses that are allocable to the segment. We make allocations of overhead between operating segments using a number of relevant allocation criteria, depending on the nature of the expense, the most significant of which are relative revenues, estimates of relative labor expenditures, headcount, and facilities square footage. In fiscal 2013, we began making certain additional cost allocations to the Healthcare / Home Environment segment that were not made in fiscal 2012. These allocations are costs of corporate and operating functions that are shared by the segments. We made this change because we now have a complete fiscal year's operating experience with the Healthcare / Home Environment segment. In the past year we have integrated certain of the segment's corporate and operating functions that were redundant. For the three month period ended May 31, 2012, the allocation totaled $4.12 million compared to $1.50 million for the same period last year.

The Personal Care segment's operating income decreased $7.97 million, or 40.2 percent, for the three month period ended May 31, 2012 compared to the same period last year. The decline was principally due to:

† A difficult U.S. retail sales environment reflected in recent year-over-year sales declines reported by some of the major retailers;

† Challenging macroeconomic conditions in Europe and Latin America;

† Increases in competitive trade promotional activities, including a major hair category launch by a significant competitor;

† The impact of foreign currency fluctuations on U.S. Dollar reported net sales;

† Increased air freight costs incurred to mitigate the impact of product availability issues due primarily to the closure of a supplier;

† Product cost increases across most product categories;

† Higher media advertising;

† Higher depreciation as a result of an upgrade of our Enterprise Resource Planning system; and

† The impact of revaluation losses from foreign currency exchange rate fluctuations.

The Housewares segment's operating income increased $0.42 million, or 3.8 percent, for the three month period ended May 31, 2012, when compared to the same period last year. The increase in operating income is principally due to an increase in net sales revenue partially offset by higher cost of goods sold as a result of costs increases and lower margin closeout sales.

The Healthcare / Home Environment segment's operating income increased $8.05 million for the three month period ended May 31, 2012, when compared to the same period last year. The increase in operating income was primarily due to the incremental impact of the PUR acquisition. In addition, the segment's core business experienced organic sales growth, gross margin improvement and a reduction in SG&A as a percentage of sales, which contributed to the segment's increase in operating income.

Interest expense:

Interest expense for the three month period ended May 31, 2012 was $3.31 million compared to $3.43 million for the same period last year. Interest expense was lower when compared to the same period last year despite higher levels of debt due to lower interest rates on short-term debt.

Income tax expense:

Income tax expense for the three month period ended May 31, 2012 was 15.7 percent of income before income taxes compared to 10.1 percent for the same period last year. Over the past two fiscal years, our effective tax rates have been trending up primarily due to the acquisitions of Kaz and PUR, which increased the proportion of taxable income in higher tax rate jurisdictions relative to total taxable income.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Selected measures of our liquidity and capital resources for the three month periods ended May 31, 2012 and 2011 are shown below:

SELECTED MEASURES OF OUR LIQUIDITY AND CAPITAL UTILIZATION

                                            Three Months Ended May 31,
                                              2012             2011

Accounts Receivable Turnover (Days) (1)            61.0             63.8
Inventory Turnover (Times) (1)                      2.9              2.8
Working Capital (in thousands)                 $143,203         $150,212
Current Ratio                                   1.4 : 1          1.5 : 1
Debt to Equity Ratio (2)                          40.6%            40.0%
Return on Average Equity (1)                      14.3%            15.1%

(1) 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) Debt is defined as all debt outstanding at the balance sheet date. This includes the sum of the following lines on our consolidated balance sheets:
"Revolving line of credit," "Long-term debt, current maturities" and "Long-term debt, excluding current maturities."

Operating activities:

Operating activities provided $9.02 million of cash during the first three months of fiscal 2012, compared to $4.42 million of cash provided during the same period in fiscal 2011. The increase in operating cash flow was primarily due to the timing of fluctuations in working capital components, when compared to the same period last year.

Accounts receivable decreased $7.02 million to $188.26 million as of May 31, 2012, compared to $195.28 million at the end of fiscal 2012. Accounts receivable turnover improved to 61.0 days at May 31, 2012 from 63.8 days at May 31, 2011. This calculation is based on a rolling five quarter accounts receivable balance.

Inventories increased $13.85 million to $259.99 million as of May 31, 2012, compared to $246.14 million at the end of fiscal 2012. Inventory turnover was 2.9 times at May 31, 2012 compared to 2.8 times at May 31, 2011. Inventories as of May 31, 2012 increased $31.75 million, when compared to May 31, 2011. The increase is primarily due to the warm winter and mild cold and flu season's negative impact on our Healthcare / Home Environment segment shipments.

Working capital was $143.20 million at May 31, 2012, compared to $150.21 million at May 31, 2011. Our current ratio decreased to 1.4:1 at May 31, 2012, compared to 1.5:1 at May 31, 2011.

Investing activities:

Investing activities used $2.62 million of cash during the three month period ended May 31, 2012. Highlights of those activities follow:

† We spent $0.94 million on molds and tooling, $2.15 million on information technology infrastructure, $0.10 million on the development of new patents, and $0.18 million on other capital asset additions; and

† We received proceeds of $0.74 million on a note receivable associated with the fiscal 2012 sale of a land parcel in El Paso, Texas.

Financing activities:

Financing activities used $7.36 million of cash during the three month period ended May 31, 2012. Highlights of those activities follow:

† We had draws of $59.95 million against our revolving credit agreement;

† We repaid $73.05 million drawn against our revolving credit agreement;

† Employees exercised options to purchase 93,005 shares of common stock, providing $0.67 million of cash; and

† Tax benefits associated with the exercise of options provided $4.87 million of cash.

Revolving Line of Credit Agreement and Other Debt Agreements:

We have a Credit Agreement (the "2010 RCA") with Bank of America, N.A. that provides for an unsecured total revolving commitment of up to $250.00 million. The commitment under the 2010 RCA terminates on December 30, 2015. Borrowings under the 2010 RCA accrue interest at a "Base Rate" plus a margin of 0.00 to 1.125 percent per annum based on the Leverage Ratio (as defined in the 2010 RCA) at the time of borrowing. The base rate is equal to the highest of the Federal Funds Rate (as defined in the 2010 RCA) plus 0.50 percent, Bank of America's prime rate or the one-month LIBOR rate plus 1.00 percent. Alternatively, if we elect, borrowings accrue interest based on the respective 1-, 2-, 3-, or 6-month LIBOR rate plus a margin of 1.00 to 2.125 percent per annum based upon the Leverage Ratio at the time of the borrowing. We also incur loan commitment fees and letter of credit fees under the 2010 RCA. Outstanding letters of credit . . .