SecProbe.io

CORRESP
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filename1.htm

  May 8, 2009

Via
Edgar - Correspondence Only

United
States Securities and Exchange Commission

Division
of Corporation Finance

100
F Street, N.E.

Mail
Stop 3720

Washington,
DC 20549-7010

Attention:
Ms. Christy Adams

  Re:

  Helen
  of Troy Limited

  Form 10-K
  for the fiscal year ended February 29, 2008

  Filed
  May 13, 2008

  File
  No. 001-14669

Dear
Ms. Adams:

This firm represents Helen of Troy Limited (the “Company”).  On behalf of the Company, we submit this
letter setting forth the Company’s responses to the supplemental comments of
the Staff of the Securities and Exchange Commission dated May 6,
2009.  For ease of reference, each
comment has been repeated below in italics, with our responses set forth below
each comment.  The numbering below corresponds
to that used in the Staff’s comment letter.

In reviewing the responses below to the Staff’s comments, please refer
to the Company’s proposed goodwill and indefinite-lived intangibles disclosure
in critical accounting policies that was previously provided to you on May 4,
2009 (the “Goodwill and Intangible Asset Disclosure”).  The below responses reflect additional
discussion the Company would propose including in the Goodwill and Intangible
Asset Disclosure in response to the Staff’s supplemental comments.

Critical
Accounting Policies and Estimates, page 12

1.                                       We note your response to comment
1.  Please revise your disclosures as
follows:

·                                          Provide a discussion of your
historical growth rates in the Housewares segment and explain how they were considered
when determining the growth rate to be utilized in your cash flows
projections.  Please quantify the actual
rates used in your discounted cash flow valuations.

·                                          Disclose the annual growth rate
in earnings you need to achieve in your cash flow projections in order to avoid
having a goodwill impairment charge.

·                                          In view of the current economic
environment, discuss how you considered the uncertainties inherent in your
estimated future growth rates.  For
example, you should explain if and when you anticipated a recovery of the
economy in your growth rates used in your cash flows analysis.

Response:

In
response to the Staff’s comment, the Company proposes to provide the additional
disclosure set forth below in the Goodwill and Intangible Asset Disclosure.

We
acquired the Housewares reporting unit on June 1, 2004.  Since that time it has experienced annual
growth rates ranging from 6.9 to 26.0 percent with an average annual compound
revenue growth rate of 15 percent over the last five years.  In our impairment analysis during the fourth
quarter of fiscal 2009, we used revenue growth rates estimated to produce an
average annual compound revenue growth rate of 6.1 percent. In our impairment
analysis, we assumed a continued but decelerating economic contraction through
the first half of fiscal 2011, an economic recovery beginning in the second
half of fiscal 2011 and general economic growth returning to slightly above
mean levels in fiscal years 2012 through 2014.
We also assumed a normal range of new product introductions and line
extensions in the reporting unit based on our historical results.  The rates used in the forecast are management’s
estimate of the most likely results over time, given a wide range of potential
outcomes.  The assumptions and estimates
used in our impairment testing involve significant elements of subjective
judgment and analysis by the Company’s management.  While we believe that these assumptions are
reasonable, unanticipated events and circumstances may occur that may cause actual
results to differ materially from forecasted results based on these assumptions
and estimates.

Although
the Housewares reporting unit did not incur impairments based on our fourth
quarter fiscal 2009 analysis, it may be subject to future goodwill impairments.  Assuming all other factors remain constant,
the annual average compound earnings growth rate needed to avoid having a
goodwill impairment charge is approximately 11 percent.  If the annual average compound earnings
growth rate was lowered to 10 percent over the five year forecast period, the
Housewares reporting unit would incur approximately $8.50 million in goodwill
impairment charges.

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2.                                       We refer to the control premiums
used to determine the fair value of your reporting units.  Please revise to disclose the specific facts
and circumstances that support a control premium of 37.1% for the Housewares
segment and why this is significantly higher than those used in the Personal
Care segment.

Response:

In
response to the Staff’s comment, the Company proposes to provide the additional
disclosure set forth below in the Goodwill and Intangible Asset Disclosure.

The
control premium we used for the Housewares reporting unit was determined from
widely used published studies using the median premium over market
capitalization that market participants paid for controlling interest targets
within a comparable standard industrial classification group.  Management believes the Housewares reporting
unit has a higher control premium because of the fundamentals of the unit
combined with relatively more attractive fundamentals for its industry as a
whole when compared to the relative fundamentals of our other reporting
units.  We believe that the Housewares reporting
unit also has relatively higher potential for domestic and international growth
through existing product categories and expansion into allied categories than
our other reporting units.  Furthermore,
this reporting unit has generated operating income as a percentage of net sales
ranging from 14.6 to 27.9 percent over the last five years, which is
significantly higher than comparable percentages in our other reporting units.

3.                                       We note that you have assigned
weights to the valuation methods used based on management’s assessment of the
extent to which the current economic environment affects each reporting unit’s
value.  Specifically, we note that you
assigned a 10% weight and 50% weight to the discounted cash flow models used to
determine the fair value of the Personal Care and Housewares segments,
respectively.  Please expand your
disclosure to provide more insight into your basis for the specific weights
assigned to the models used in your analyses.

Response:

In
response to the Staff’s comment, the Company proposes to provide the additional
disclosure set forth below in the Goodwill and Intangible Asset Disclosure.

For
our Personal Care reporting units, we assigned a weight of 10 percent to our
DCF Models and a weight of 90 percent to our Market Models.  We utilized a lower weight on the DCF Models
with respect to our Personal Care reporting units because of declines in the
revenue and relatively flat operating income percentages in these units over
the last three years.  Additionally,
considering the current economic

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environment,
we believe it is likely that market participants will discount any forecasts
that show revenue growth over the intermediate term, even though we believe
these forecasts to be reasonable.
Conversely, for our Housewares reporting unit, we assigned a weight of
50 percent to both our DCF Models and our Market Models because our Housewares
reporting unit has shown positive revenue growth and comparatively higher
operating income percentages over the same term, which we believe makes its
current forecast of moderate revenue growth more acceptable to market
participants.  In addition, when we
computed values under the various approaches, there was significantly less
disparity between our DCF Model and Market Model estimates in the Housewares
reporting unit than the disparities that existed in the Personal Care reporting
units.   Accordingly, we believe the
higher weighting afforded the Housewares DCF Model estimates was relevant and
appropriate in describing its relative contribution to the Company’s overall
fair market value.

As
previously discussed, in order to provide a more meaningful presentation to the
Company’s investors, the Company intends to appropriately allocate the disclosures
contained in the Goodwill and Intangible Asset Disclosure between the
discussion of the Company’s critical accounting policies and the explanation of
the impairment charges in the results of operations section of the
“Management’s Discussion and Analysis of Financial Condition and Results of
Operations.”

Closing Information

In
accordance with the Staff’s request, the Company acknowledges that:

·                                          the Company is
responsible for the adequacy and accuracy of the disclosure in the filing;

·                                          Staff comments
or changes to disclosure in response to Staff comments do not foreclose the
Commission from taking any action with respect to the filing; and

·                                          the Company may
not assert staff comments as a defense in any proceeding initiated by the
Commission or any person under the federal securities laws of the United
States.

Should you have any additional questions or comments, please do not
hesitate to contact Crews Lott of Baker & McKenzie LLP at (214)
978-3042 or Vince Carson of the Company at (915) 225-8033.

  Very truly yours,

  Baker & McKenzie
  LLP

  /s/ W. Crews Lott

  W. Crews Lott

  CC:
  Terry French

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