UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the 39 weeks ended September 26, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file number 1-11657
__________________
TUPPERWARE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-4062333
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 2353, Orlando, Florida 32802
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (407)
826-5050
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required to
file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes___X___ No_______
As of November 6, 1998, 57,609,609 shares of the Common Stock,
$0.01 par value, of the Registrant were outstanding.
<PAGE>
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
a) Financial Statements of Registrant
Page
Index Number
Consolidated Statement of Operations
(Unaudited) for the 13 week periods ended
September 26, 1998 and September 27, 1997...... 2
Consolidated Statement of Income
(Unaudited) for the 39 week periods ended
September 26, 1998 and September 27, 1997...... 3
Consolidated Balance Sheet
(Unaudited) as of September 26, 1998 and
December 27, 1997.............................. 4
Consolidated Statement of Cash Flows
(Unaudited) for the 39 week periods ended
September 26, 1998 and September 27, 1997...... 6
Notes to Consolidated Financial
Statements (Unaudited)......................... 7
The financial statements of the Registrant included herein have
been prepared, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (the
Commission). Although certain information normally included in
financial statements prepared in accordance with generally
accepted accounting principles has been condensed or omitted,
the Registrant believes that the disclosures are adequate to
make the information presented not misleading. It is suggested
that these consolidated financial statements be read in
conjunction with the financial statements and the notes thereto
included in the Annual Report on Form 10-K of the Registrant for
its fiscal year ended December 27, 1997.
The consolidated financial statements included herein reflect
all adjustments, consisting only of normal recurring items,
which, in the opinion of management, are necessary to present a
fair statement of the results for the interim periods
presented.
The results for interim periods are not necessarily indicative
of trends or results to be expected for a full year.
<PAGE>
<TABLE>
TUPPERWARE CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
13 Weeks Ended
----------------------------
September 26, September 27,
1998 1997
------------ ------------
(In millions, except per share data)
<S> <C> <C>
Net sales............................... $ 217.4 $ 251.4
------- -------
Costs and expenses:
Cost of products sold................. 90.6 95.7
Delivery, sales, and
administrative expense.............. 127.0 143.8
Interest expense...................... 7.6 5.7
Interest income....................... (0.3) (0.8)
Other expense, net.................... 1.1 2.4
------- -------
Total costs and expenses........... 226.0 246.8
------- -------
(Loss) income before income taxes....... (8.6) 4.6
(Benefit from) provision for
income taxes.......................... (2.1) 1.2
------- -------
Net (loss) income....................... $ (6.5) $ 3.4
======= =======
Net (loss) income per common share:
Basic.................................. $ (0.11) $ 0.06
======= =======
Diluted................................ $ (0.11) $ 0.06
======= =======
See Notes to Consolidated Financial Statements (Unaudited).
</TABLE>
<PAGE>
<TABLE>
TUPPERWARE CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<CAPTION>
39 Weeks Ended
----------------------------
September 26, September 27,
1998 1997
------------ ------------
(In millions, except per share data)
<S> <C> <C>
Net sales............................... $ 769.1 $ 909.2
------- -------
Costs and expenses:
Cost of products sold................. 295.3 340.8
Delivery, sales, and
administrative expense.............. 412.1 458.8
Interest expense...................... 18.2 15.8
Interest income....................... (1.7) (2.5)
Other expense......................... 3.0 6.7
------- -------
Total costs and expenses........... 726.9 819.6
------- -------
Income before income taxes.............. 42.2 89.6
Provision for income taxes.............. 10.3 23.3
------- -------
Net income.............................. $ 31.9 $ 66.3
======= =======
Earnings per common share:
Basic.................................. $ 0.54 $ 1.08
======= =======
Diluted................................ $ 0.54 $ 1.07
======= ========
See Notes to Consolidated Financial Statements (Unaudited).
</TABLE>
<PAGE>
<TABLE>
TUPPERWARE CORPORATION
CONSOLIDATED BALANCE SHEET
ASSETS
(UNAUDITED)
<CAPTION>
September 26, December 27,
1998 1997
------------- ------------
(In millions)
<S> <C> <C>
Cash and cash equivalents........... $ 18.4 $ 22.1
Accounts receivable................. 132.7 137.4
Less allowances for
doubtful accounts............... (36.0) (40.4)
-------- --------
96.7 97.0
Inventories......................... 170.1 184.2
Deferred income tax benefits........ 51.5 44.4
Prepaid expenses and other.......... 54.1 55.4
-------- --------
Total current assets............ 390.8 403.1
-------- --------
Deferred income tax benefits........ 77.2 82.7
Property, plant, and equipment...... 935.5 944.0
Less accumulated depreciation..... (670.0) (651.0)
-------- --------
265.5 293.0
Long-term receivables, net of
allowances of $37.7 million at
September 26, 1998, and $39.3
million at December 27, 1997...... 42.3 36.4
Other assets........................ 49.0 32.0
-------- --------
Total assets.................... $ 824.8 $ 847.2
======== ========
See Notes to Consolidated Financial Statements (Unaudited).
</TABLE>
<PAGE>
<TABLE>
TUPPERWARE CORPORATION
CONSOLIDATED BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY
(UNAUDITED)
<CAPTION>
September 26, December 27,
1998 1997
------------- ------------
(Dollars in millions, except per share amounts)
<S> <C> <C>
Accounts payable................... $ 56.0 $ 75.4
Short-term borrowings and current
portion of long-term debt........ 53.1 -
Accrued liabilities................ 188.1 224.4
------ ------
Total current liabilities...... 297.2 299.8
------ ------
Long-term debt..................... 315.1 236.7
Accrued postretirement
benefit cost..................... 38.6 38.0
Other liabilities.................. 55.7 58.5
Shareholders' equity:
Preferred stock, $0.01 par value,
200,000,000 shares authorized;
none issued................... - -
Common stock, $0.01 par value,
600,000,000 shares authorized;
62,367,289 shares issued...... 0.6 0.6
Capital surplus.................. 19.5 19.5
Retained earnings................ 434.3 441.4
Treasury stock, 4,650,137 shares
at September 26, 1998, and
1,400,207 shares at
December 27, 1997, at cost.... (140.9) (54.0)
Unearned portion of restricted
stock issued for future
service (1.8) (2.4)
Cumulative foreign currency
adjustments................... (193.5) (190.9)
------ ------
Total shareholders' equity..... 118.2 214.2
------ ------
Total liabilities and
shareholders' equity......... $824.8 $847.2
====== ======
See Notes to Consolidated Financial Statements (Unaudited).
</TABLE>
<PAGE>
<TABLE>
TUPPERWARE CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<CAPTION>
39 Weeks Ended
---------------------------
September 26, September 27,
1998 1997
------------- -------------
(In millions)
<S> <C> <C>
Cash flows from operating activities:
Net income............................. $ 31.9 $ 66.3
Adjustments to reconcile net income to
net cash provided by operating
activities:
Depreciation....................... 47.4 49.3
Loss on sale of assets............. 1.5 1.5
Foreign exchange (gain) loss, net.. (0.5) 0.9
Changes in assets and liabilities:
Increase in accounts receivable.... (8.0) (9.4)
Decrease in inventory.............. 13.1 20.7
Decrease in accounts payable and
accrued liabilities.............. (13.8) (24.2)
Decrease in income taxes payable... (39.3) (15.3)
Increase in net deferred
income taxes..................... (2.4) (10.0)
Other, net......................... (8.4) (6.4)
------- -------
Net cash provided by operating
activities....................... 21.5 73.4
------- -------
Cash flows from investing activities:
Capital expenditures................... (28.0) (48.2)
------- -------
Cash flows from financing activities:
Dividend payments to shareholders...... (39.0) (40.8)
Proceeds from exercise of
stock options........................ 1.4 3.4
Payments to acquire treasury stock..... (91.6) (55.7)
Net increase in short-term debt........ 133.1 46.6
Proceeds from issuance of long-term
debt................................. - 15.0
------- -------
Net cash provided by (used in)
financing activities............. 3.9 (31.5)
------- -------
Effect of exchange rate changes on cash
and cash equivalents................... (1.1) (8.0)
------- -------
Net decrease in cash and
cash equivalents....................... (3.7) (14.3)
Cash and cash equivalents at beginning
of year................................ 22.1 53.0
------- -------
Cash and cash equivalents at end
of period.............................. $ 18.4 $ 38.7
======= =======
See Notes to Consolidated Financial Statements (Unaudited).
</TABLE>
<PAGE>
TUPPERWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Basis of Presentation
The accompanying unaudited consolidated financial statements
have been prepared in accordance with the instructions to Form
10-Q and therefore do not include all footnotes necessary for a
fair presentation of financial position, results of operations,
and changes in financial position in conformity with generally
accepted accounting principles. Certain prior year amounts have
been reclassified to conform with the current year's presentation.
In the opinion of management, the unaudited consolidated financial
statements include all adjustments, consisting only of normal
recurring items, necessary for a fair presentation of financial
position and results of operations. The results of operations of
any interim period are not necessarily indicative of the results
that may be expected for a full fiscal year.
Note 2: Inventories
Inventories, by component, are summarized as follows (in millions):
<TABLE>
<CAPTION>
September 26, December 27,
1998 1997
------------ -----------
<S> <C> <C>
Finished goods.................. $ 84.0 $ 86.2
Work in process................. 34.6 43.3
Raw materials and supplies...... 51.5 54.7
------- -------
Total inventories $ 170.1 $ 184.2
======= =======
</TABLE>
<PAGE>
Note 3: Net Income Per Common Share
In the fourth quarter of 1997, the Company adopted Statement
of Financial Accounting Standards No. 128, "Earnings Per Share."
Accordingly, these financial statements include "basic" and
"diluted" per share information for the periods presented.
Basic per share information is calculated by dividing net
income by the weighted average number of shares outstanding.
Diluted per share information is calculated by also considering
the impact of potential common stock on both net income and the
weighted average number of shares outstanding. The weighted
average number of shares used in the basic earnings per share
computations were 57.6 million and 58.5 million for the 13 and
39 weeks ended September 26, 1998, respectively, compared with
61.1 million and 61.5 million for the 1997 periods.
The only difference in the computation of basic and diluted
earnings per share is the inclusion of 0.5 million for the
quarter and year-to-date period in 1998 and 0.4 million and
0.5 million, respectively, for the quarter and year-to-date
period in 1997 of shares of potential common stock. Options
to purchase 2.6 million and 1.4 million shares of common stock
were outstanding during the first nine months of 1998 and 1997,
respectively, that were not included in the computation of
diluted earnings per share because the options' exercise prices
were greater than the average market price of the common shares
during the respective period and; therefore, would have been
anti-dilutive if included. The Company's potential common stock
consists of employee and director stock options and restricted
stock. Per share information pertaining to 1997 has been
restated to conform with the current year's presentation.
Note 4: Other Comprehensive Income
During the quarter ended March 28, 1998, the Company adopted
SFAS No. 130, "Reporting Comprehensive Income." SFAS 130
requires the Company to display "comprehensive income" which,
in addition to net income, includes certain amounts recorded
directly in equity.
The components of comprehensive income, net of related income
tax effects, for the 13 week and 39 week periods ended September
26, 1998 and September 27, 1997, were as follows (in millions):
<TABLE>
<CAPTION>
13 Weeks Ended 39 Weeks Ended
------------------- ------------------
Sept. 26, Sept. 27, Sept. 26, Sept. 27,
1998 1997 1998 1997
--------- --------- -------- --------
<S> <C> <C> <C> <C>
Net (loss) income........... $ (6.5) $ 3.4 $ 31.9 $ 66.3
Foreign currency translation
adjustments including tax
benefits (provisions) of
$2.0 and ($1.3) for the
13 weeks and 39 weeks ended
September 26, 1998,
respectively, and $1.3 and
($5.0) for the comparable
1997 periods............... 1.8 (18.9) (2.6) (34.5)
----- ------ ------ ------
Comprehensive (loss) income.. $ (4.7) $(15.5) $ 29.3 $ 31.8
====== ====== ====== ======
</TABLE>
Accumulated other comprehensive income is comprised solely of
foreign currency translation adjustments.
<PAGE>
Note 5: Accounting for Derivative Instruments and Hedging
Activities
In June 1998, the Financial Accounting Standards Board issued
SFAS 133, "Accounting for Derivative Instruments and Hedging
Activities." This Statement establishes accounting and reporting
standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value.
If certain conditions are met, a derivative may be specifically
designated as a hedge. The accounting for changes in the fair
value of a derivative depends on the intended use of the
derivative and the resulting designation of the hedge exposure.
Depending on how the hedge is used and the designation, the gain
or loss due to changes in the fair value is reported either in
earnings or in other comprehensive income.
Adoption of the statement, which is required for the Company's
Year 2000 financial statements, will have no impact on the
accounting treatment for derivatives the Company currently has
in place nor the hedging programs it has undertaken.
Item 2. Management's Discussion and Analysis of Financial
Conditions and Results of Operations
The following is a discussion of the results of operations for
the 13 weeks and 39 weeks ended September 26, 1998, compared
with the 13 weeks and 39 weeks ended September 27, 1997, and
changes in financial condition during the 39 weeks ended
September 26, 1998.
Net Sales and Net Operating Results
Net sales for third quarter ended September 26, 1998 were $217.4
million, a decrease of $34.0 million, or 13.5 percent from $251.4
million in 1997. The net loss for the third quarter of 1998 of
$6.5 million, or $0.11 per share, represented a decline of $9.9
million from 1997 net income of $3.4 million, or $0.06 per share.
A stronger U.S. dollar in 1998 had a negative impact of $15.3
million, or 6 percentage points, on the sales comparison, and a
$2.1 million negative impact on the net income comparison for
the quarter.
For the year-to-date period, sales were $769.1 million, which
was a decline of $140.1 million, or 15.4 percent from $909.2
million in 1997. Net income of $31.9 million for the 39 weeks
ended September 26, 1998 decreased $34.4 million, or 51.0
percent from 1997 net income of $66.3 million. For the nine
months, the negative impact of foreign exchange was $70.0
million, or 7 percentage points, on the sales comparison and
$11.8 million, or 9 percentage points, on the comparison of 1998
net income with 1997 net income.
For both the 13-week and 39-week periods, improvement in sales
and operating profit in the United States was offset by a decline
in Europe and weak performance in Latin America and Asia Pacific.
Unallocated expenses of $4.9 million and $15.4 million for the 13
weeks and 39 weeks ended September 26, 1998, respectively, were
$1.2 million and $4.1 million more than in the comparable 1997
periods. The increases primarily were due to the timing of
corporate expenditures and the addition of a corporate president
in April 1998.
International operations contributed 84 percent and 85 percent
of third quarter and year-to-date sales, respectively, compared
with 87 percent and 88 percent, respectively, for the 1997 periods.
In 1998 and 1997, international operations generated all of the
Company's operating profit in both the third quarter and year-
to-date period.
Costs and Expenses
The cost of products sold in relation to sales increased to 41.7
percent and 38.4 percent in the third quarter and first three
quarters of 1998, respectively, from 38.1 and 37.5 percent for
the comparable 1997 periods. Gross margin in the United States
improved in both periods due to less sales discounting and higher
plant capacity utilization. Offsetting these improvements were
lower margins in Latin America as a consequence of the sales
level which led to lower capacity utilization. Also contributing
to the decrease in Latin America's gross margin was the currency
devaluation in Mexico. Since operations are accounted for as
hyperinflationary, sales are translated at the current exchange
rate while cost of products sold is translated at the rate in
effect when the product was manufactured.
Net Interest Expense
In the third quarter and first three quarters of 1998, the Company
incurred net interest expense of $7.3 million and $16.5 million,
respectively. For the comparable 1997 periods, the Company
incurred net interest expense of $4.7 million and $13.3 million,
respectively. Net expense for both the quarter and year-to-date
periods was higher due to borrowings for share repurchases.
Tax Rate
The effective tax rates for the third quarter and first three
quarters of 1998 were 24.5 percent compared with 26.0 percent
for the third quarter and year-to-date period in 1997. The
effective tax rates were below the U.S. statutory rate. In 1997,
the rate reflected the availability of excess foreign tax
credits and the reduction of certain valuation allowances against
deferred tax assets. In 1998, the rate continues to reflect
excess foreign tax credits along with lower foreign effective
tax rates.
Year 2000 Issues
The Company has studied the "Year 2000" issues affecting its
information technology and non-information technology systems
and has prepared a plan to address them. That plan is now being
implemented and the issues are not expected to have a material
adverse effect on the Company's operations. The Company
estimates that its Year 2000 remediation plan was 80 percent
complete as of the end of the third quarter of 1998, and
expects to be substantially complete by the end of 1998.
The Company has prioritized systems so that business critical
systems are remediated first and is currently developing a
contingency plan for business critical systems, in the event
that its Year 2000 remediation plan is not completed by the
target completion date. However, if the planned modifications
and conversions are not made, or are not completed in a timely
manner, the Year 2000 issues could, but are not expected to, have
a material adverse impact on the Company. The Company estimates
that its total cost of addressing its Year 2000 issues is $4.8
million, of which $3.4 million has been expended through the
third quarter of 1998. These costs are not expected to have a
material effect on the Company's financial position or results
of operations in any one period, in part because they represent
the re-deployment of existing information technology resources
and because they would have been incurred as part of normal
software upgrades and replacements.
The Company has initiated formal communications with significant
suppliers and other third party companies doing business with the
Company to determine the extent to which the Company's systems
and operations are vulnerable to those third parties' failure to
remediate their Year 2000 issues. The Company is not aware of
any Year 2000 issues of third parties that it expects to have a
material adverse effect on its operations, however, there can
be no guarantee that the systems of these other companies will
be converted before the turn of the century or that their
failure to do so would not have a material adverse effect on the
Company.
Euro Implementation
On January 1, 1999, several European countries that are members
of the European Monetary Union plan to replace their respective
currencies with one common currency - the euro. The Company
has studied the "euro" implementation issues affecting its
operations and has formed a task force to address them from both
a business and systems point of view. Plans are in place to
deal with both types of issues and are being carried out in time
for the January 1, 1999 implementation. The incremental cost to
the Company of addressing the euro conversion is not expected to
be material.
Regional results (dollars in millions)
Europe
<TABLE>
<CAPTION>
Foreign
exchange
impact
positive Percent of
Decrease Restated (negative) Total
1998 1997 Dollar Percent decrease Dollar pp 1998 1997
------ ----- ------ ------- -------- ------ --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Quarter:
Net sales $ 90.6 $ 97.2 $ (6.6) (7)% (8)% $ 1.6 1% 42% 39%
Operating
profit 8.9 12.8 (3.9) (30) (33) 0.7 3 248 98
Year to date:
Net sales $358.7 $396.9 $(38.2) (10)% (5)% $(19.7) (5)% 46% 44%
Operating
profit 75.9 88.7 (12.8) (14) (8) (5.8) (6) 101 78
</TABLE>
Sales decreased during the quarter as the impact of an
ineffective recruiting promotion in Germany in the second
quarter carried into the third quarter. The recruiting
shortfall has meant a lower total and active sales force,
leading to a shortfall in sales. For the quarter, partially
offsetting the decrease in Germany, were higher sales in Belgium,
Scandinavia and Greece, resulting from higher sales force
activity levels. The sales decrease during the third quarter
more than offset the sales improvement earlier in the year,
generating a modest sales decline for the year-to-date period.
Partially offsetting the year-to-date decrease in Germany were
higher sales in Belgium, Greece, Israel and the newer markets of
Hungary, Turkey and the Central Mediterranean Countries. The
improvement in these countries was attributable to increased
volume from a more active sales force.
Operating profit was down for both the quarter and year-to-date
period due to the lower sales, partially offset by profitability
improvement in the United Kingdom, France and Spain. Foreign
exchange had a positive impact on the sales and profit
comparisons during the quarter, primarily due to strengthening
of the German mark, but not enough to offset the negative impact
during the first and second quarters of 1998. Foreign exchange
had a negative impact on the year-to-date sales and profit
comparisons due to the dollar's strength against currencies
throughout the region.
<PAGE>
Asia Pacific
<TABLE>
<CAPTION>
Negative
foreign
exchange Percent of
(Decrease) Restated impact Total
1998 1997 Dollar Percent (decrease) Dollar pp 1998 1997
------ ------ ------ ------- -------- ------ --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Quarter:
Net sales $ 48.2 $ 69.1 $(20.9) (30)% (9)% $(16.4) (21)% 22% 27%
Operating
profit 2.9 8.8 (5.9) (67) (45) (3.5) (22) 81 67
Year to date:
Net sales $145.3 $210.2 $(64.9) (31)% (10)% $(48.8) (21)% 19% 23%
Operating
profit 7.6 21.7 (14.1) (65) (35) (10.0) (30) 10 19
</TABLE>
The sales decreases for both the quarter and nine-month period
reflect the continuing weak economic conditions in the region,
particularly in Japan and Korea, causing consumers to limit
spending. The Company has countered these economic issues by
emphasizing the Tupperware earnings opportunity in recruiting
and focusing on cost containment throughout the region. As a
result, total and active sales forces in Asia Pacific are larger
than last year for the quarter and year-to-date period.
Partially offsetting the year-to-date sales decline in Japan
and Korea were increases in local currency sales due to
increased volume from a larger number of sellers in India,
Indonesia and the Philippines.
Operating profit was down for both the quarter and year-to-date
period due to lower sales. Operating expenses decreased, but
not in line with the decrease in sales, since certain costs do
not vary in proportion to changes in volume. Foreign exchange
had a negative impact on the sales and profit comparisons due
to the dollar's strength against currencies throughout the region.
The Chinese government banned direct selling in that country
and communicated this directive to the Company in April 1998.
In August 1998, the Chinese government issued to the Company a
"retail/wholesale" license to resume selling in Guangzhou
and the Company is anticipating approval to resume selling in
several other locations. The Company does not have a significant
investment recorded in its balance sheet for its operations in
China and the existing limitation placed on the direct selling
method will not have a material adverse effect on the Company
or its operations.
<PAGE>
Latin America
<TABLE>
<CAPTION>
Negative
foreign
exchange Percent of
(Decrease) Restated impact Total
1998 1997 Dollar Percent (decrease) Dollar pp 1998 1997
------ ------ ------ ------- -------- ------ --- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Quarter:
Net sales $ 43.6 $ 53.2 $ (9.6) (18)% (17)% $(0.5) (1)% 20% 21%
Operating
loss (6.7) (2.6) (4.1) (165) (164) - (1) nm nm
Year to date:
Net sales $148.0 $192.8 $(44.8) (23)% (23)% $(1.5) - 19% 21%
Operating
(loss)
profit (6.2) 19.8 (26.0) (131) (132) (0.1) - nm nm
</TABLE>
Latin America
The sales decreases for both the quarter and nine-month period
were due to significantly lower volume in Brazil and Argentina
and the impact of the devaluation in the Mexican peso. The
Company is addressing the issues in Brazil and Argentina by re-
emphasizing training and focusing more on demonstration selling
rather than one-on-one selling. In the first quarter of 1998, a
number of distributorships in Brazil and Argentina were
consolidated to enhance the continuing distributors' profitability,
allowing them to better focus on sales growth. The shortfall in
sales in Mexico for both the quarter and nine-month period was
primarily related to the negative currency impact.
The lower operating profit for the quarter and nine-month period
was based on decreased sales volume, along with a lower gross
margin percentage due to a lower level of production, and the
impact of the Mexican peso devaluation. The Company accounts for
Mexico as a hyperinflationary country, and as such, the
translation of balance sheet items impacts the income statement.
Additionally, local currency sales are translated at less
favorable rates, but the cost of the product sold is translated
at rates in effect when the product was manufactured.
United States
<TABLE>
<CAPTION>
Percent of
Improvement total
1998 1997 Dollar Percent 1998 1997
------ ------ ------ ------- ---- ----
<S> <C> <C> <C> <C> <C> <C>
Quarter:
Net sales $ 35.0 $ 31.9 $ 3.1 10% 16% 13%
Operating
loss (1.5) (6.0) 4.5 75 nm nm
Year to date:
Net Sales $117.1 $109.3 $ 7.8 7% 15% 12%
Operating
loss (3.2) (16.0) 12.8 80 nm nm
</TABLE>
Sales for the quarter and nine-month period in the United States
increased in spite of a smaller sales force as productivity
improved significantly. The Company is continuing to address
the gap in the size of the sales force versus last year with new
initiatives in sales force compensation and by updating the
demonstration. These programs are still fairly new and are
being assimilated throughout the sales force. The significant
decreases in the operating loss for the quarter and nine-month
period reflected the impact of increased sales, improvement in
the gross margin percentage due to less sales discounting and
higher plant capacity utilization, and lower operating expenses
resulting from cost containment efforts.
<PAGE>
Financial Condition
Working capital was $93.6 million as of September 26, 1998,
compared with $103.3 million as of the end of 1997. The
decrease primarily relates to higher current borrowings due to
share repurchases and a decrease in the cash balance, which was
partially offset by a decrease in accounts payable and accrued
liabilities. The Company classifies a portion of its outstanding
borrowings that are due within one year by their terms as non-
current due to its ability and intent that they be outstanding
throughout the succeeding twelve months. Based on the timing
of the Company's cash inflows during the year, as well as its
planned uses of cash flow, no amount was classified as current
at the end of 1997. The decrease in accounts payable and
accrued liabilities reflects the seasonal reduction of accounts
payable along with lower accruals for promotions.
Net cash provided by operating activities in the first nine
months of 1998 was $21.5 million, compared with $73.4 million
in the comparable 1997 period. The decrease was primarily due
to lower net income and lower inventory reduction. Partially
offsetting these factors was a lower use of cash for paying
down accounts payables and accruals. The $28.0 million of cash
used in investing activities was for capital expenditures,
primarily for new molds.
As of September 26, 1998, the Company had $300.0 million available
under its unsecured multicurrency credit facility, which matures
on August 8, 2002. The multicurrency credit facility, along with
$257 million of unused lines of credit and cash generated by
operating activities, are expected to be adequate to finance any
additional working capital needs and capital expenditures.
During the first three quarters of 1998, the Company repurchased
approximately 3.5 million shares of its common stock at an average
cost of approximately $27 per share. The Company has now completed
its 5 million share repurchase authorization at an average cost
of $30 per share.
<PAGE>
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits (numbered in accordance with Item 601
of Regulation S-K)
(27) A Financial Data Schedule for the third
quarter of 1998 is filed as an exhibit to this
report.
(b) Reports on Form 8-K
During the quarter, the Registrant did not file
any current reports on Form 8-K.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this Report to be signed on its
behalf by the undersigned thereunto duly authorized.
TUPPERWARE CORPORATION
By: Thomas P. O'Neill, Jr.
-------------------------
Senior Vice President
and Chief Financial
Officer
By: Michael S. Poteshman
-------------------------
Vice President
and Controller
Orlando, Florida
November 9, 1998
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
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<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM TUPPERWARE CORPORATION'S THIRD QUARTER 1998 FINANCIAL STATEMENTS
AS FILED IN ITS QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
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