UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[X] Annual Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the fiscal year ended December 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.)
14901 South Orange Blossom Trail,
Orlando, Florida 32837
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (407) 826-5050
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
Common Stock, $0.01 par value New York Stock Exchange
Preferred Stock Purchase Rights New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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.
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein,
and will not be contained, to the best of Registrant's knowledge,
in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K.
Aggregate market value of the Registrant's voting stock held by
non-affiliates, based upon the closing price of said stock on the
New York Stock Exchange-Composite Transaction Listing on March
12, 1999 ($20.0625 per share): $1,137,606,666.
As of March 12, 1999, 57,615,242 shares of the Common Stock,
$0.01 par value, of the Registrant were outstanding.
Documents Incorporated by Reference:
Portions of the Annual Report to Shareholders for the year ended
December 26, 1998 are incorporated by reference into Parts I, II
and IV of this Report.
Portions of the Proxy Statement relating to the Annual Meeting of
Shareholders to be held May 11, 1999 are incorporated by
reference into Part III of this Report.
PART I
Item 1. Business
(a) General Development of Business
Tupperware Corporation (the "Registrant" or "Tupperware") is
a multinational consumer products company. The Registrant is a
Delaware corporation that was organized on February 8, 1996 in
connection with the corporate reorganization of Premark
International, Inc. ("Premark"). In the reorganization, the
businesses of the Registrant and certain other assets and
liabilities of Premark and its subsidiaries were transferred to
the Registrant. On May 31, 1996, the Registrant became a
publicly held company through the pro-rata distribution by
Premark to its shareholders of all of the outstanding shares of
common stock of the Registrant.
BUSINESS OF TUPPERWARE CORPORATION
Tupperware is a worldwide direct selling consumer products
company engaged in the manufacture and sale of Tupperware
products.
Principal Products. Tupperware conducts its business through a
single business segment, manufacturing and marketing a broad line
of high-quality consumer products for the home. The core of
Tupperware's product line consists of food storage containers
that preserve freshness through the well-known Tupperware seals.
Tupperware also has an established line of children's educational
toys, serving products and gifts. The line of products has
expanded over the years into kitchen, home storage and organizing
uses with products such as Modular Mates* containers, Fridge
Stackables* containers, OneTouch* canisters, the Rock N'Serve*
line, Meals in Minutes* line, Legacy* Serving line and
TupperMagic* line, and many specialized containers. In recent
years, Tupperware has expanded its offerings in the food
preparation and servicing areas through the addition of a number
of products, including double colanders, tumblers and mugs,
mixing and serving bowls, serving centers, microwaveable cooking
and serving products, and kitchen utensils.
Tupperware continues to introduce new designs and colors in
its product lines, and to extend existing products into new
markets around the world. The development of new products varies
in different markets in order to address differences in cultures,
lifestyles, tastes and needs of the markets. New products
introduced in 1998 included a wide range of products in all four
geographic areas, including many using Disney movie and cartoon
characters under a license. Some of the new products are the
Expressions line, the Luxuria line, Ultra Plus* and OvenWorks*,
Salad spinner, E-Series* ergonomic knives, Multi Organizer*,
water filters, mixers, blenders, flower vases, ComfortClean*
Squeegees and BagKeepers. New product development and
introduction will continue to be an important part of
Tupperware's strategy.
Products sold by Tupperware are primarily produced by
Tupperware in its manufacturing facilities around the world. In
some markets, Tupperware sources certain products from third
parties and/or contracts with local manufacturers to manufacture
its products, utilizing high-quality molds that are generally
supplied by Tupperware. Promotional items provided at product
demonstrations include items obtained from outside sources.
(Words followed by * are Trademarks of the Registrant.)
Markets. Tupperware's business is operated on the basis of
four geographic segments: Europe, Asia Pacific, Latin America,
and the United States. Tupperware has operations in more than 60
countries and its products are sold in more than 100 foreign
countries and in the United States. For the past five fiscal
years, sales in foreign countries represented, on average, 85
percent of total Tupperware revenues.
Market penetration varies throughout the world. Several
"developing" areas that have low penetration, such as Latin
America, Asia and Eastern (Central) Europe, provide significant
growth potential for Tupperware. Tupperware's strategy continues
to include aggressive expansion into new markets throughout the
world.
Distribution of Tupperware Products. Tupperware's products are
distributed worldwide primarily through the "direct selling"
method of distribution, in which products are sold to consumers
outside traditional retail store channels. The distributorship
system is intended to facilitate the timely distribution of
products to the consumer, and to establish uniform practices
regarding the use of Tupperware trademarks and the administrative
arrangements with Tupperware, such as order entering and
delivering, paying and recruiting, and training of dealers.
Tupperware products sold under the direct selling method are
sold directly to distributors or dealers throughout the world.
Distributors are granted the right to market Tupperware products
using the demonstration method and utilizing the Tupperware
trademark. The vast majority of Tupperware's distributorship
system is composed of distributors, managers and dealers (known
in the United States as consultants) who are independent
contractors and not employees of Tupperware. In certain limited
circumstances, Tupperware acquires ownership of distributorships
for a period of time, until an independent distributor can be
installed, in order to maintain market presence.
In addition to the introduction of new products and
development of new geographic markets, a key element of
Tupperware's strategy is expanding its business by enlarging the
number of distributors and dealers. Under the Tupperware system,
distributors recruit, train, and motivate a large sales force to
cover the distributor's geographic area. Managers are developed
and promoted by distributors to assist the distributors in
recruiting, training, and motivating dealers, as well as
continuing to hold their own demonstrations.
As of December 26, 1998, the Tupperware distribution system
had over 1,800 distributors, over 47,000 managers, and over
940,000 dealers worldwide.
Tupperware relies primarily on the "demonstration" method of
sales, which is designed to enable the purchaser to appreciate
through demonstration the features and benefits of Tupperware
products. Demonstrations, which are sometimes referred to as
"Tupperware parties," are held in homes, offices, social clubs
and other locations. In excess of 15.7 million demonstrations
were held in 1998 worldwide. Tupperware products are also
promoted through brochures mailed to persons invited to attend
Tupperware parties and various other types of demonstrations.
Sales of Tupperware products are supported by Tupperware through
a program of sales promotions, sales and training aids and
motivational conferences for the independent sales force. In
addition, to support its sales force, Tupperware utilizes
catalogs, television and magazine advertising, which helps
increase its sales levels with hard-to-reach customers.
In 1998, Tupperware began exploring integrated access
strategies to allow consumers to obtain Tupperware products.
These strategies include infomercials, direct mail, kiosks and
the Internet. Tupperware's strategy is to use access strategies
in a way that will complement its direct selling distribution
network.
The distribution of products to consumers is primarily the
responsibility of distributors, who often maintain their own
inventory of Tupperware products, the necessary warehouse
facilities, and delivery systems. In certain markets, Tupperware
offers distributors the use of a delivery system of direct
product shipment to consumers or dealers, which is intended to
reduce the distributor's investment in inventory and enable
distributors to be more cost-efficient.
Competition. There are two primary competitive factors which
affect Tupperware's business: (i) competition with other "direct
sales" companies for sales personnel and demonstration dates; and
(ii) competition in all the markets for food storage and serving
containers, toys, and gifts in general. Tupperware believes that
it holds a significant market share in each of these markets in
many countries. This has been facilitated by innovative product
development and a large, dedicated worldwide sales force.
Tupperware's competitive strategies are to continue to expand its
direct selling distribution system, and to provide high-quality,
high-value products throughout the world.
Employees. Tupperware employs approximately 7,000 people, of
whom approximately 1,200 are based in the United States.
Tupperware's United States work force is not unionized. In
certain countries, Tupperware's work force is covered by
collective arrangements decreed by statute. The terms of most of
these arrangements are determined on an annual basis.
Additionally, approximately 130 Tupperware manufacturing
employees in the Australian mold manufacturing operation are
covered by a collective bargaining agreement which is negotiated
annually and Philippine manufacturing employees have negotiated a
collective bargaining agreement which will remain in effect until
the year 2000. There have been no work stoppages or threatened
work stoppages in over four years and Tupperware believes its
relations with its employees to be good. The independent
consultants, dealers, managers and distributors engaged in the
direct sale of Tupperware products are not employees of
Tupperware.
Research and Development. For fiscal years ended 1998, 1997
and 1996, Tupperware incurred expenses of approximately $11.5
million, $12.8 million and $7.2 million respectively, on research
and development activities for new products.
Raw Materials. Products manufactured by Tupperware require
plastic resins meeting its specifications. These resins are
purchased through various arrangements with a number of large
chemical companies located throughout Tupperware's markets. As a
result, Tupperware has not experienced difficulties in obtaining
adequate supplies and generally has been successful in mitigating
the effects of increases in resin market prices. Research and
development relating to resins used in Tupperware products is
performed by both Tupperware and its suppliers.
Trademarks and Patents. Tupperware considers its trademarks
and patents to be of material importance to its business;
however, except for the Tupperware trademark, Tupperware is not
dependent upon any single patent or trademark, or group of
patents or trademarks. The trademark on the Tupperware name is
registered on a country-by-country basis. The current duration
for such registration ranges from seven years to fifteen years;
however, each such registration may be renewed an unlimited
number of times. The patents and trademarks used in Tupperware's
business are registered and maintained on a worldwide basis, with
a variety of durations. Tupperware has followed the practice of
applying for design and utility patents with respect to most of
the significant patentable developments.
Environmental Laws. Compliance with federal, state and local
environmental protection laws has not in the past had, and is not
expected to have in the future, a material effect upon
Tupperware's capital expenditures, liquidity, earnings or
competitive position.
Other. Tupperware sales do not vary significantly on a
quarterly basis; however, third quarter sales are generally lower
than the other quarters in any year due to vacations by
Tupperware's dealers and their customers, as well as Tupperware's
reduced promotional activities during such quarter. Sales
generally increase in the fourth quarter as it includes
traditional gift giving occasions in many of Tupperware's markets
and as children return to school and households refocus on
activities that include the use of Tupperware's products. There
are no working capital practices or backlog conditions which are
material to an understanding of Tupperware's business.
Tupperware's business is not dependent on a small number of
customers, nor is any of its business subject to renegotiation of
profits or termination of contracts or subcontracts at the
election of the United States government.
Executive Officers of the Registrant. Following is a list of
the names and ages of all the Executive Officers of the
Registrant, indicating all positions and offices with the
Registrant held by each such person, and each such person's
principal occupations or employment during the past five years.
Each such person has been elected to serve until the next annual
election of officers of the Registrant (expected to occur on May
11, 1999).
Positions and Offices Held and Principal
Occupations of Employment During Past Five Years
Name and Age Office and Experience
Brian R. Biggin, age 53 Vice President, Internal Audit
since March 1996. Prior thereto,
Mr. Biggin served as Director,
Computer Systems Audit, for Premark
International, Inc. since 1986.
Gerald M. Crompton, age 55 Senior Vice President, Product
Marketing, Worldwide since November
1997, after serving as Vice
President, Product Marketing,
Worldwide since November 1996.
Prior thereto, he served as Vice
President, Product Management for
Tupperware Europe, Africa and
Middle East since 1992.
Lillian D. Garcia, age 42 Vice President, Human Resources since
March 1999, after serving in various
human resources positions within the
Corporation.
E.V. Goings, age 53 Chairman and Chief Executive
Officer since October 1997, after
serving as President and Chief
Operating Officer of Tupperware
Corporation since 1996. Mr. Goings
served as Executive Vice President
of Premark International, Inc. and
President of Tupperware Worldwide
since November 1992.
David T. Halversen, age 54 Senior Vice President, Business
Development and Communications
since May 1997. Prior thereto, he
served as Senior Vice President,
Planning, Business Development and
Financial Relations since November
1996. He previously served as Vice
President, Business Development and
Planning since February 1995, after
serving in various planning and
strategy positions with Avon
Products, Inc.
Christine J. Hanneman,
age 43 Vice President, Financial Relations
since March 1996. She served as
Director, Investor Relations for
Premark International, Inc. from
June 1994. Prior thereto, she
served as Manager Investor
Relations of Premark.
Charles H. R. Henry, age 48 Vice President since January 1999.
From 1994 to 1998, he served in
various executive positions with
Tupperware Europe, Africa and
Middle East.
Alan D. Kennedy, age 68 President, Tupperware Corporation
since April 1998. Prior thereto,
he was an independent consultant
from 1996 to 1998, and from 1989
served as President and CEO of
Nature's Sunshine Products.
Jennifer M. Moline, age 41 Vice President and Treasurer since
February 1998, after serving in
various business development and
financial management positions
within Tupperware.
Gaylin L. Olson, age 53 President, Tupperware Latin America
since September 1998. He served in
various executive positions for
Tupperware, including Senior Vice
President, Emerging Markets since
May 1996 and prior thereto as
President, Tupperware U. S. in 1994
and 1995, and as President
Tupperware Asia Pacific from 1993.
Thomas P. O'Neill, Jr.,
age 45 Senior Vice President and
Chief Financial Officer since March
1997, after serving as Vice
President and Chief Financial
Officer, Tupperware Europe, Africa
and Middle East since April 1994.
Prior thereto he served as Vice
President and Treasurer of Premark
International, Inc.
Elizabeth J. Palm, age 46 President, Tupperware U.S. since March
1999, after serving as Senior Vice
President, Sales and Marketing, Tupperware
North America since August 1998. Prior
thereto, she served as Vice President,
Sales and Marketing for The Longaberger
Co. since 1992.
Michael S. Poteshman, age 35 Vice President and Controller since
January 1998, after serving as
Assistant Controller since March
1996. Prior thereto, he served as
Director, Accounting and Reporting
Standards for Premark International,
Inc. since September 1993.
Thomas M. Roehlk, age 48 Senior Vice President, General
Counsel and Secretary since
December 1995. Prior thereto, he
served as Assistant General Counsel
and Assistant Secretary of Premark
International, Inc.
James E. Rose, Jr., age 56 Senior Vice President, Tax and
Government Affairs since March
1997, after serving as Vice
President, Tax and Government
Affairs since March 1996. Prior
thereto, he served as Vice
President, Taxes and Government
Affairs for Premark International,
Inc.
Hans Joachim Schwenzer,
age 62 Senior Vice President,
Tupperware Worldwide since May
1996. He also serves as President,
Tupperware Germany; President,
Sales Programs and Promotions,
Tupperware Europe, Africa and
Middle East; and Regional General
Manager, Russia. Prior to assuming
those positions, he served as
President, Tupperware Europe,
Africa and Middle East.
Christian E. Skroeder,
age 50 Group President, Tupperware Europe,
Africa and Middle East since April
1998. Prior thereto, he served in
various other executive positions
with Tupperware.
William E. Spears, age 53 President, Tupperware North America
since February 1997. Prior
thereto, he served as Executive
Vice President and Chief Operating
Officer of Nature's Sunshine
Products, Inc. since 1994. Prior
thereto, Mr. Spears served in
various managerial positions with
Avon Products, Inc.
Jose R. Timmerman, age 50 Senior Vice President, Worldwide
Operations, since August 1997,
after serving as Vice President
Worldwide Operations, since October
1993.
Paul B. Van Sickle, age 59 Executive Vice President since
March 1997. Prior thereto, he
served as Senior Vice President,
Finance and Operations since
November 1992.
Robert W. Williams, age 55 President, Tupperware Asia Pacific
since April 1995. Prior thereto, he
served in various management
positions in Tupperware Asia
Pacific starting in August 1993.
Item 2. Properties
The principal executive office of the Registrant is owned by
the Registrant and located in Orlando, Florida. The Registrant
owns and maintains manufacturing plants in Argentina, Belgium,
Brazil, France, Greece, Japan, Korea, Mexico, the Philippines,
Portugal, South Africa, Spain and the United States, and leases
manufacturing facilities in Venezuela and China. Tupperware
conducts a continuing program of new product design and
development at its facilities in Florida, Japan and Belgium. None
of the owned principal properties is subject to any encumbrance
material to the consolidated operations of the Registrant. The
Registrant considers the condition and extent of utilization of
its plants, warehouses and other properties to be good, the
capacity of its plants and warehouses generally to be adequate
for its needs, and the nature of the properties to be suitable
for its needs.
Item 3. Legal Proceedings
A number of ordinary course legal and administrative
proceedings against Tupperware are pending. In addition to such
proceedings, there are certain proceedings that involve the
discharge of materials into or otherwise relating to the
protection of the environment. Certain of such proceedings
involve federal environmental laws such as the Comprehensive
Environmental Response, Compensation and Liability Act of 1980,
as well as state and local laws. Tupperware establishes reserves
with respect to certain of such proceedings. Because of the
involvement of other parties and the uncertainty of potential
environmental impacts, the eventual outcomes of such actions and
the cost and timing of expenditures cannot be estimated with
certainty. It is not expected that the outcome of such
proceedings, either individually or in the aggregate, will have a
materially adverse effect upon Tupperware.
As part of the 1986 reorganization involving the formation
of Premark International, Inc., Premark was spun-off by Dart &
Kraft, Inc. and Kraft Foods, Inc. assumed any liabilities arising
out of any legal proceedings in connection with certain divested
or discontinued former businesses of Dart Industries Inc., a
subsidiary of Tupperware, including matters alleging product
liability and environmental liability. The assumption of
liabilities by Kraft Foods, Inc. remains effective subsequent to
the distribution of the equity of the Registrant to Premark
shareholders.
Item 4. Submission of Matters to a Vote of Security Holders
None.
PART II
Item 5. Market for Registrant's Common Equity and Related
Stockholder Matters
The stock price information set forth in Note 12 ("Quarterly
Financial Summary (Unaudited)") appearing on page 46 of the
Annual Report to Shareholders for the year ended December 26,
1998 is incorporated by reference into this Report. The
information set forth in Note 13 ("Rights Agreement") on page 46
of the Annual Report to Shareholders for the year ended December
26, 1998 is incorporated by reference into this Report. As of
March 12, 1999, the Registrant had 14,146 shareholders of
record.
Item 6. Selected Financial Data
The information set forth under the caption "Selected
Financial Data" on pages 17 and 18 of the Annual Report to
Shareholders for the year ended December 26, 1998 is incorporated
by reference into this Report.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The information entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" set
forth on pages 19 through 27 of the Annual Report to Shareholders
for the year ended December 26, 1998 is incorporated by reference
into this Report.
Item 7A. Quantitative and Qualitative Disclosures About Market
Risk.
The information set forth under the caption "Market Risk" on
pages 25-27, of the Annual Report to Shareholders for the year
ended December 26, 1998 is incorporated by reference into this
Report.
Item 8. Financial Statements and Supplementary Data
(a) The following Consolidated Financial Statements of
Tupperware Corporation and Report of Independent Certified Public
Accountants set forth on pages 28 through 46, and on page 47,
respectively, of the Annual Report to Shareholders for the year
ended December 26, 1998 are incorporated by reference into this
Report:
Consolidated Statements of Income, Shareholders' Equity and
Cash Flows - Years ended December 26, 1998, December 27, 1997 and
December 28, 1996.
Consolidated Balance Sheet - December 26, 1998 and December
27, 1997;
Notes to the Consolidated Financial Statements; and
Report of Independent Certified Public Accountants.
(b) The supplementary data regarding quarterly results of
operations contained in Note 12 ("Quarterly Financial Summary
(Unaudited)") of the Notes to the Consolidated Financial
Statements of Tupperware Corporation on page 46 of the Annual
Report to Shareholders for the year ended December 26, 1998 is
incorporated by reference into this Report.
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
None
PART III
Item 10. Directors and Executive Officers of the Registrant
The information as to the Directors of the Registrant set
forth under the sub-caption "Board of Directors" appearing under
the caption "Election of Directors" on pages 3 through 5 of the
Proxy Statement relating to the Annual Meeting of Shareholders to
be held on May 11, 1999 is incorporated by reference into this
Report. The information as to the Executive Officers of the
Registrant is included in Part I hereof under the caption
"Executive Officers of the Registrant" in reliance upon General
Instruction G to Form 10-K and Instruction 3 to Item 401(b) of
Regulation S-K.
Item 11. Executive Compensation
The information set forth under the caption "Compensation of
Directors" on page 17 of the Proxy Statement relating to the
Annual Meeting of Shareholders to be held on May 11, 1999 and the
information on pages 14 through 17 of such Proxy Statement
relating to executive officers' compensation is incorporated by
reference into this Report.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information set forth under the captions "Security
Ownership of Certain Beneficial Owners" on page 8 and "Security
Ownership of Management" on page 7 of the Proxy Statement
relating to the Annual Meeting of Shareholders to be held on May
11, 1999 is incorporated by reference into this Report.
Item 13. Certain Relationships and Related Transactions
The information set forth under the caption "Indebtedness of
Management" on page 9 of the Proxy Statement relating to the
Annual Meeting of Shareholders to be held on May 11, 1999 is
incorporated by reference into this Report.
PART IV
Item 14. Exhibits, Financial Statement Schedules and Reports On
Form 8-K
(a) (1) List of Financial Statements
The following Consolidated Financial Statements of
Tupperware Corporation and Report of Independent Certified Public
Accountants set forth on pages 28 through 46 and on page 47,
respectively, of the Annual Report to Shareholders for the year
ended December 26, 1998 are incorporated by reference into this
Report by Item 8 hereof:
Consolidated Statements of Income, Shareholders' Equity
and Cash Flows - Years ended December 26, 1998, December 27, 1997
and December 28, 1996;
Consolidated Balance Sheet - December 26, 1998 and
December 27, 1997;
Notes to the Consolidated Financial Statements; and
Report of Independent Certified Public Accountants.
(a) (2) List of Financial Statement Schedules
The following consolidated financial statement schedule
(numbered in accordance with Regulation S-X) of Tupperware
Corporation is included in this Report:
Report of Independent Certified Public Accountants on
Financial Statement Schedule, page 15 of this Report; and
Schedule II--Valuation and Qualifying Accounts for each of
the three years ended December 26, 1998, page 16 of this Report.
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and Exchange
Commission are not required under the related instructions, are
inapplicable, or the information called for therein is included
elsewhere in the financial statements or related notes contained
or incorporated by reference herein.
(a) (3) List of Exhibits: (numbered in accordance with Item 601
of Regulation S-K)
Exhibit
Number Description
*1 Underwriting Agreement (Attached to Form
S-3 (No. 33-12125) Registration Statement
as Exhibit 1 filed with the Commission on
September 16, 1996, and incorporated herein
by reference).
*2 Distribution Agreement by and among Premark
International, Inc., Tupperware Corporation
and Dart Industries Inc. (Attached as Exhibit
2 to Tupperware Corporation's Registration
Statement on Form 10 (No. 1-11657) filed
with the Commission on March 4, 1996,
and incorporated herein by reference).
*3.1 Amended and Restated Certificate of
Incorporation of Tupperware Corporation
(Attached as Exhibit 3.1 to Form 10
(No.1-11657) filed with the Commission
on March 4, 1996, and incorporated
herein by reference).
*3.2 Amended and Restated By-laws of Tupperware
Corporation (Attached as Exhibit 3.2 to Form
10 (No. 1-11657), filed with the Commission on
March 4, 1996 and incorporated herein by
reference).
*4.1 Rights Agreement, by and between Tupperware
Corporation and the rights agent named therein
(Attached as Exhibit 4 to Form 10 (No.1-11657),
filed with the Commission on March 4, 1996,
and incorporated herein by reference).
*4.2 Indenture dated as of October 1, 1996, among
Tupperware Corporation and The First National
Bank of Chicago, as Trustee, (Attached as
Exhibit 4(a) to Tupperware Corporation's
Registration Statement on Form S-3 (No.
33-12125), filed with the Commission on
September 25, 1996, and incorporated
herein by reference).
*4.3 Form of Debt Securities (Attached as Exhibit
4(b) to Tupperware Corporation's Registration
Statement on Form S-3 (No. 33-12125), filed with
the Commission on September 25, 1996, and
incorporated herein by reference).
*4.4 Form of Warrant Agreement, including form of
Warrant Certificate (Attached as Exhibit 4(a)
to Tupperware Corporation's Registration
Statement on Form S-3 (No. 33-12125)
filed with the Commission on September
25, 1996 and incorporated herein by
reference).
*10.1 Tupperware Corporation 1996 Incentive Plan
(Attached to Form 10 (No. 1-11657) as Annex C,
filed with the Commission on March 4, 1996, and
incorporated herein by reference).
10.2 Tupperware Corporation Directors' Stock Plan
as amended November 12, 1998.
*10.3 Tax Sharing Agreement between Tupperware
Corporation and Premark International, Inc.
(Attached as Exhibit 10.3 to Form 10 (No.1-11657),
filed with the Commission on May 22, 1996, and
incorporated herein by reference).
*10.4 Employee Benefits and Compensation Allocation
Agreement between Tupperware Corporation and
Premark International, Inc. (Attached as
Exhibit 10.4 to Form 10 (No. 1-11657),
filed with the Commission on March 4,
1996, and incorporated herein by reference).
*10.5 Form of Change of Control Agreement (Attached
as Exhibit 10.5 to Form 10 (No. 1-11657),
filed with the Commission on March 4, 1996, and
incorporated herein by reference).
*10.6 Credit Agreement dated May 16, 1996 (Attached
to the Registrant's Registration Statement on
Form 10 (No. 1-11657), filed with the
Commission on May 22, 1996, as Exhibit
10.8 and incorporated herein by
reference).
*10.7 Form of Franchise Agreement between a
subsidiary of the Registrant and distributors
of Tupperware products in the United States
(Attached as Exhibit 10.10 to the
Registrant's Annual Report on Form 10-K
for the year ended December 28, 1996,
filed with the Commission on March 25,
1997, and incorporated herein by
reference).
*10.8 First Amendment dated August 8, 1997 to
Credit Agreement dated May 16, 1996 (Attached
as Exhibit 10.9 to the Registrant's Annual
Report on Form 10-K for the year ended December
27, 1997, and filed with the Commission
on March 24, 1998, and incorporated
herein by reference).
10.9 Loan Agreement, Promissory Note, and Stock Pledge
Agreement dated November 13, 1998
between Tupperware and E. V. Goings.
13 Pages 17 through 47 of the Annual Report to
Shareholders of the Registrant for the year
ended December 26, 1998.
21 Subsidiaries of Tupperware Corporation as
of March 12, 1999.
23 Manually signed Consent of Independent
Certified Public Accountants to the
incorporation of their report by reference
into the prospectus contained in specified
registration statements on Form S-8 and
Form S-3.
24 Powers of Attorney
27 Financial Data Schedule
*Document has heretofore been filed with the Commission and is
incorporated by reference and made a part hereof.
The Registrant agrees to furnish, upon request of the Commission,
a copy of all constituent instruments defining the rights of
holders of long-term debt of the Registrant and its consolidated
subsidiaries.
(b) Reports on Form 8-K
During the quarter ended December 26, 1998, the Registrant
did not file any reports on Form 8-K.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
ON FINANCIAL STATEMENT SCHEDULE
To the Board of Directors
of Tupperware Corporation
Our audits of the consolidated financial statements referred to in
our report dated February 19, 1999 appearing on page 47 of the
1998 Annual Report to Shareholders of Tupperware Corporation
(which report and consolidated financial statements are
incorporated by reference in this Annual Report on Form 10-K) also
included an audit of the Financial Statement Schedule listed in
Item 14(a)(2) of this Form 10-K. In our opinion, this Financial
Statement Schedule presents fairly, in all material respects, the
information set forth therein when read in conjunction with the
related consolidated financial statements.
PricewaterhouseCoopers LLP
Orlando, Florida
February 19, 1999
<TABLE>
TUPPERWARE CORPORATION
SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS
FOR THE THREE YEARS ENDED DECEMBER 26, 1998
(In millions)
<CAPTION>
Col. A Col. B. Col. C. Col. D Col E.
- -------- ------- -------- ------
Additions
---------------------
Balance at Charged Charged Balance
Beginning of to Costs & to Other at end of
Description of Period Expenses Accounts Deductions Period
- ----------- ------------ --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Allowance for
doubtful accounts,
current and long
term:
Year ended
December 26, 1998 $81.9 $15.0 $(0.5) $(22.3) <F1> $77.4
3.3 <F2>
Year ended
December 27, 1997 67.9 27.5 0.8 (12.1) <F1> 81.9
(2.2) <F2>
Year ended
December 28, 1996 50.9 20.9 -- (3.7) <F1> 67.9
(0.2) <F2>
Valuation allowance
for deferred tax assets:
Year ended
December 26, 1998 $14.4 $ 9.5 -- -- $23.9
Year ended
December 27, 1997 25.8 (11.4) -- -- 14.4
Year ended
December 28, 1996 25.9 (0.1) -- -- 25.8
<FN>
<F1> Represents write-offs less recoveries.
<F2> Foreign currency translation adjustment.
</FN>
</TABLE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Signature Title
Chairman of the Board of Directors,
E. V. Goings Chief Executive Officer and Director
(Principal Executive Officer)
Senior Vice President and Chief
Thomas P. O'Neill, Jr. Financial Officer (Principal Financial
Officer)
Vice President and Controller
Michael S. Poteshman (Principal Accounting Officer)
* Director
Rita Bornstein, Ph.D
* Director
Ruth M. Davis, Ph.D
* Director
Lloyd C. Elam, M.D.
* Director
Clifford J. Grum
* Director
Betsy D. Holden
* Director
Joe R. Lee
* Director
Bob Marbut
* Director
Angel R. Martinez
* Director
David R. Parker
* Director
Robert M. Price
* Director
Joyce M. Roche
*By:
Thomas M. Roehlk
Attorney-in-fact
March 24, 1999
EXHIBIT INDEX
Exhibit No. Description
10.2 Tupperware Corporation Directors' Stock Plan
as Amended November 12, 1998
10.9 Loan Agreement, Promissory Note and Stock
Pledge Agreement dated November 13, 1998,
between Tupperware and E. V. Goings
13 Pages 17 through 47 of the
Annual Report to Shareholders
of the Registrant for the year
ended December 26, 1998
21 Subsidiaries of Tupperware
Corporation as of March 12, 1999
23 Manually signed Consent of
Independent Certified Public
Accountants to the incorporation
of their report by reference into the
prospectus contained in specified
registration statements on Form S-8
and Form S-3
24 Powers of Attorney
27 Financial Data Schedule
EXHIBIT 10.2
TUPPERWARE CORPORATION
DIRECTOR STOCK PLAN
(as amended November 12, 1998)
Section 1. Purpose
The purposes of the Plan are to assist the Company in (1)
promoting a greater identity of interests between the Company's
non-employee directors and its shareholders, and (2) attracting
and retaining directors by affording them an opportunity to share
in the future successes of the Company.
Section 2. Definitions
"Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Award" shall mean an award of Common Stock as contemplated
by Section 7 of this Plan.
"Board" shall mean the Board of Directors of the Company.
"Change of Control" shall mean the happening of any of the
following events:
An acquisition by any individual, entity or group (within the
meaning of Section 13(d)(3) or 14(d)(2) of the Act) (a "Person")
of beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Act) of 20% or more of either (1) the then
outstanding shares of Common Stock (the "Outstanding Company
Common Stock") or (2) the combined voting power of the then
outstanding voting securities of the Company entitled to vote
generally in the election of directors (the "Outstanding Company
Voting Securities"); excluding, however, the following: (1) any
acquisition directly from the Company, other than an acquisition
by virtue of the exercise of a conversion privilege unless the
security being so converted was itself acquired from the Company,
(2) any acquisition by the Company, (3) any acquisition by any
employee benefit plan (or related trust) sponsored or maintained
by the Company or any corporation controlled by the Company or (4)
any acquisition by any Person pursuant to a transaction which
complies with clauses (1), (2) and (3) of subsection (iii) of this
definition; or
A change in the composition of the Board such that the
individuals who, as of the Distribution Date of the Plan,
constitute the Board (such Board shall be hereinafter referred to
as the "Incumbent Board") cease for any reason to constitute at
least a majority of the Board; provided, however, for purposes of
this definition, that any individual who becomes a member of the
Board subsequent to such Distribution Date, whose election, or
nomination for election by the Company's stockholders, was
approved by a vote of at least a majority of those individuals who
are members of the Board and who were also members of the
Incumbent Board (or deemed to be such pursuant to this proviso)
shall be considered as though such individual were a member of the
Incumbent Board; but, provided further, that any such individual
whose initial assumption of office occurs as a result of either an
actual or threatened election contest (as such terms are used in
Rule 14a-11 of Regulation 14A promulgated under the Act) or other
actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board shall not be so considered
as a member of the Incumbent Board; or
(iii) The approval by the stockholders of the Company of a
reorganization, merger or consolidation or sale or other
disposition of all or substantially all of the assets of the
Company or the acquisition of assets of another corporation
("Corporate Transaction") or, if consummation of such Corporate
Transaction is subject, at the time of such approval by
stockholders, to the consent of any government or governmental
agency, the obtaining of such consent (either explicitly or
implicitly by consummation); excluding, however, such a Corporate
Transaction pursuant to which (1) all or substantially all of the
individuals and entities who are the beneficial owners,
respectively, of the Outstanding Company Common Stock and
Outstanding Company Voting Securities immediately prior to such
Corporate Transaction will beneficially own, directly or
indirectly, more than 60% of, respectively, the outstanding shares
of common stock, and the combined voting power of the then
outstanding voting securities entitled to vote generally in the
election of directors, as the case may be, of the company
resulting from such Corporate Transaction (including, without
limitation, a corporation which as a result of such transaction
owns the Company or all or substantially all of the Company's
assets either directly or through one or more subsidiaries) in
substantially the same proportions as their ownership, immediately
prior to such Corporate Transaction, of the Outstanding Company
Common Stock and Outstanding Company Voting Securities, as the
case may be, (2) no Person (other than the Company, any employee
benefit plan (or related trust) sponsored or maintained by the
Company or any corporation controlled by the Company or such
corporation resulting from such Corporate Transaction) will
beneficially own, directly or indirectly, 20% or more of,
respectively, the outstanding shares of common stock of the
corporation resulting from such Corporate Transaction or the
combined voting power of the outstanding voting securities of such
corporation entitled to vote generally in the election of
directors except to the extent that such ownership existed with
respect to the Company prior to the Corporate Transaction and (3)
individuals who were members of the Incumbent Board will
constitute at least a majority of the board of directors of the
corporation resulting from such Corporate Transaction; or
(iv) The approval by the stockholders of the Company of a complete
liquidation or dissolution of the Company.
"Change of Control Price" means the higher of (i) the highest
reported sales price, regular way, of a share of Common Stock in
any transaction reported on the New York Stock Exchange Composite
Tape or other national exchange on which such shares are listed or
on NASDAQ during the 60-day period prior to and including the date
of a Change of Control or (ii) if the Change of Control is the
result of a tender or exchange offer or a Corporate Transaction,
the highest price per share of Common Stock paid in such tender or
exchange offer or Corporate Transaction; provided, however, that
in the case of a Stock Option which was granted within 240 days of
the Change of Control, then the Change of Control Price for such
Stock Option shall be the Fair Market Value of the Common Stock on
the date such Stock Option is exercised or deemed exercised. To
the extent that the consideration paid in any such transaction
described above consists all or in part of securities or other
noncash consideration, the value of such securities or other
noncash consideration shall be determined in the sole discretion
of the Committee.
"Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time, and the rules and regulations thereunder.
"Common Stock" shall mean the common stock, $.01 par value, of the
Company.
"Company" shall mean Tupperware Corporation, a Delaware
corporation.
"Distribution Date" shall mean the date determined by the Board of
Directors of Premark International, Inc., a Delaware corporation
("Premark"), on which shall be effected the distribution on a pro
rata basis to the holders of the outstanding shares of common
stock of Premark the shares of Common Stock held by Premark on
such date.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended from time to time, and the rules and regulations
thereunder.
"Fair Market Value" shall mean, as of any given date, the mean
between the highest and lowest reported sales prices of the Common
Stock on the New York Stock Exchange Composite Tape, or, if not
listed on such exchange, on any other national securities exchange
on which the Common Stock is listed or on NASDAQ, adjusted to the
next higher five cents if such mean is not divisible by five
cents. If there is no regular public trading market for such
Common Stock, the Fair Market Value of the Common Stock shall be
determined by the Committee in good faith.
"Fees" shall mean the annual retainer fee for a Participant in
connection with his or her service on the Board for any fiscal
year of the Company.
"Participant" shall mean each member of the Board who is not an
employee of the Company or any subsidiary of the Company.
"Plan" shall mean the Tupperware Corporation Director Stock Plan.
"Retirement" shall mean the retirement by a Participant from the
Board in accordance with the Company's stated policy on Director
retirement.
"Rules" shall mean the rules promulgated under the Act from time
to time and the interpretations issued by Securities and Exchange
Commission in respect thereof.
"Stock Option" shall mean a non-qualified stock option, which is
further defined as any right to Common Stock which does not
qualify as an "incentive stock option" as defined under the Code.
Section 3. Eligibility
Each member of the Board who is not an employee of the Company or
any subsidiary of the Company shall be eligible to participate in
the Plan.
Section 4. Shares Subject to the Plan
The maximum number of shares of Common Stock which shall be
available for use under the Plan shall be 300,000, subject to
adjustment pursuant to Section 17 hereunder. The shares issued
under the Plan may be authorized and unissued shares or issued
shares heretofore or hereafter acquired and held as treasury
shares or shares purchased on the open market.
Section 5. Duration of Plan
Unless earlier terminated pursuant to Section 11 hereof, this Plan
shall automatically terminate on, and no grants, awards or
elections may be made after, the date of the tenth anniversary of
the approval by stockholders of the Plan pursuant to Section 19
hereof.
Section 6. Administration
The Plan shall be administered by the Board or any committee
thereof so designated by the Board (the "Committee"), which shall
have full authority to construe and interpret the Plan, to
establish, amend and rescind rules and regulations relating to the
Plan, and to take all such actions and make all such
determinations in connection with the Plan as it may deem
necessary or desirable.
Notwithstanding any other provision of the Plan, neither the Board
nor the Committee shall be authorized to exercise any discretion
with respect to the selection of Participants to receive Awards or
Stock Options under the Plan or concerning the amount, timing or
vesting of such Awards or Stock Options under the Plan, and no
amendment or termination of the Plan shall adversely affect the
interest of any Director in Awards or Stock Options previously
granted to the Director without that Director's express written
consent.
Section 7. Initial Awards
Each Participant shall receive a one-time grant of one thousand
(1,000) shares of Common Stock, upon serving his or her initial
three months as a member of the Board.
Section 8. Stock in Lieu of Retainer
Each Participant who, in any year of the Plan, delivers to the
Company written notice of an irrevocable election concerning the
Fees to be earned in the next fiscal year of the Company, may
receive in lieu of cash an amount of shares of Common Stock equal
in value to all or any portion of the Fees (but only increments of
25% or a multiple thereof, and in no event to exceed 100% of the
Fees) as so designated by the Participant in such written notice,
which amount shall be determined by dividing the Fees payable in
each fiscal quarter of the Company by the Fair Market Value of a
share of Common Stock on the last business day of such fiscal
quarter (but if such date is not a day on which the New York Stock
Exchange is open, then on the next preceding day on which the New
York Stock Exchange is open), except that only whole numbers of
shares shall be obtainable pursuant to this Section, and any
remainder Fees which otherwise would have purchased a fractional
share shall be paid in cash. Any such written notice pursuant to
this Section 8 shall remain in effect for subsequent Plan years
unless such Participant delivers a written notice setting forth a
different election with respect to Fees which shall be applied to
future Plan years until further written notice is received by the
Company pursuant to this Section 8.
Section 9. Stock Options
(a) Each Participant who, in any year of the Plan, delivers to
the Company an irrevocable election concerning the Fees to be
earned in the next fiscal year of the Company, may receive in lieu
of all or any portion of the cash Fees (but only increments of 25%
or a multiple thereof) as so designated by the Participant, a
Stock Option for an amount of shares of Common Stock in each
fiscal year of the Company as follows:
Percent of Annual Number of Shares
Retainer Forgone Subject to Option
100% 2,000
75% 1,500
50% 1,000
25% 500
The exercise price of such shares shall be determined as follows
Fair Market Value
Of a Share - 100% of Fee = Exercise Price
Of Common Stock 2,000 Per Share
Fair Market Value
Of a Share - 75% of Fee = Exercise Price
Of Common Stock 1,500 Per Share
Fair Market Value
Of a Share - 50% of Fee = Exercise Price
Of Common Stock 1,000 Per Share
Fair Market Value
Of a Share - 25% of Fee = Exercise Price
Of Common Stock 500 Per Share
In no event, however, shall the exercise price be less than 50% of
the Fair Market Value of a share of Common Stock on the date of
the grant.
In the event that the effect of the foregoing sentence is to limit
the reduction of the exercise price, any portion of the Fees which
are so prevented from reducing the exercise price shall be paid to
the affected Participant, in cash or Common Stock (as elected by a
Participant) in an equitable fashion over the remainder of the
year in which the Fees are earned, as if an election to receive a
Stock Option pursuant to this Section 9 (a) has not been made.
(b) The date of grant of a Stock Option pursuant to this
Section 9 shall be the date of the annual meeting of stockholders
of the Company, provided that such meeting occurs at least six (6)
months and one day after the Participant's election to receive a
Stock Option in lieu of cash Fees; otherwise, the date of grant
shall be six (6) months and one day after the Participant's
election to receive a Stock Option in lieu of cash Fees. If such
day would not be a day on which the New York Stock Exchange is
open, then on the next succeeding day on which the New York Stock
Exchange is open.
(c) A Stock Option granted pursuant to this Section 9 shall
vest and be exercisable on the last day of the fiscal year in
which the Stock Option is granted. In the event that a
Participant is not a member of the Board on the last day of the
fiscal year in which the Stock Option is granted, except in the
case of a Participant's Retirement or termination for cause, such
Participant's Stock Option which has not become vested and
exercisable as of such time shall (i) be reduced to an amount of
shares of Common Stock which reflects the amount of Fees earned as
of the date of termination from service on the Board which amount
shall be determined by multiplying the number of shares of Common
Stock subject to the Stock Option as determined pursuant to
Section 9(a), above, by a fraction, the numerator of which shall
be the number of days of the fiscal year of the Company in which
the Stock Option is granted that the Participant was a member of
the Board and the denominator of which shall be 365, provided,
that any Stock Option for a fractional share of Common Stock shall
be rounded up to the nearest whole number of shares, and (ii)
shall continue to vest. The term of exercisability for a Stock
Option granted under this Section 9 shall be ten (10) years.
(d) The remaining terms and conditions of each such Stock
Option shall be as set forth in this Plan and in the form of Stock
Option Agreement used in connection with this Plan.
Section 10. Transferability
Rights, grants and Awards under the Plan may not be assigned,
transferred, pledged or hypothecated, and shall not be subject to
execution, attachment or similar process. Notwithstanding the
foregoing, any such right, grant or award constituting a
"derivative security" under the Rules shall not be transferable by
a Participant other than by will or by operation of applicable
laws of descent and distribution or pursuant to a domestic
relations order or qualified domestic relations order as such
terms are defined by the Code or ERISA.
Section 11. Amendment
The Board may from time to time make such amendments to the Plan
as it may deem proper and in the best interest of the Company
without further approval of the Company's stockholders, provided
that to the extent required to qualify transactions under the Plan
for exemption under Rule 16b-3 promulgated under the Act ("Rule
16b-3") no amendment to the Plan shall be adopted without further
approval by the holders of at least a majority of the shares of
Common Stock present, or represented, and entitled to vote at a
meeting held for such purpose, and provided further, that if and
to the extent required for the Plan to comply with Rule 16b-3, no
amendment to the Plan shall be made more than once in any six-
month period that would change the amount, price or timing of the
grants of Awards or Stock Options hereunder other than to comport
with changes in the Code, ERISA, or the regulations thereunder.
Section 12. Termination
The Plan may be terminated at any time by the Board or by the
approval by the holders of at least a majority of the shares of
Common Stock present, or represented, and entitled to vote at a
meeting held for such purpose.
Section 13. Withholding Taxes
No later than the date as of which an amount first becomes
includible in the gross income of the Participant for Federal
income tax purposes with respect to any Award under the Plan or
with respect to any exercise of any Stock Option granted under the
Plan, the Participant shall pay to the Company, or make
arrangements satisfactory to the company regarding the payment of,
any Federal, state, local or foreign taxes of any kind required by
law to be withheld. Such withholding obligations may be settled
with Common Stock, including Common Stock that is part of the
Award or that is received upon the exercise of the Stock Option
that gives rise to the withholding requirement. The obligations
of the Company under the Plan shall be conditional upon such
payment or arrangements, and the Company shall, to the extent
permitted by law, have the right to deduct any such taxes from any
payment otherwise due to the Participant. The Company may
establish such procedures as it deems appropriate, including the
making of irrevocable elections or the timing of the use of Common
Stock, for the settlement of its withholding obligations.
Section 14. Effect of Change of Control
Notwithstanding any other provision of the Plan to the contrary,
in the event of a Change of Control, any Stock Options outstanding
and not then exercisable and vested as of the date such Change of
Control is determined to have occurred, shall become fully
exercisable and vested to the full extent of the original grant.
During the 60-day period from and after a Change of Control (the
"Exercise Period"), a Participant who holds an Award or a Stock
Option shall have the right, in lieu (in the case of a Stock
Option) of the payment of the exercise price for the shares of
Common Stock being purchased under the Stock Option, by giving
notice to the Company, to elect (within the Exercise Period) to
surrender all or part of an Award or a Stock Option to the company
and to receive cash, within 30 days of such notice, in an amount
equal to (a) in the case of a Stock Option, the amount by which
the Change of Control Price per share of Common Stock on the date
of such election shall exceed the exercise price per share of
Common Stock under the Stock Option (the "Spread") multiplied by
the number of shares of Common Stock granted under the Stock
Option as to which the right granted under this Section shall have
been exercised, or (b) in the case of an Award, an amount equal to
the Change of Control Price multiplied by the number of shares of
Common Stock granted pursuant to such Award as to which the right
granted under this Section shall have been exercised; provided,
however, that if the Change of Control is within six (6) months of
the date of grant of a particular Award or Stock Option held by a
Participant no such election shall be made by such Participant
with respect to such Award or Stock Option prior to six (6) months
from the date of grant. If the end of such 60-day period from and
after a Change of Control is within six (6) months from the date
of grant of a Stock Option or the date of an Award, such Stock
Option or Award shall be cancelled in exchange for a cash payment
to the Participant, effected on the day which is six (6) months
and one day after the date of grant of such Stock Option or Award,
as the case may be, equal to (a) in the case of a Stock Option,
the Spread multiplied by the number of shares of Common Stock
granted under the Stock Option, or (b) in the case of an Award,
the Change of Control Price multiplied by the number of shares of
Common Stock comprising an outstanding Award.
Section 15. Death, Disability, Termination or Retirement
of Participant
(a) Death While A Director. Notwithstanding any other
provision of the Plan to the contrary, in the event of the death
of a Participant while a member of the Board, any Stock Options
outstanding as of the date of death and not then exercisable shall
become immediately exercisable, and all outstanding Stock Options
held by such Participant shall remain exercisable by the person to
whom the Stock Option is transferred by will or by the laws of
descent and distribution for a period of the lesser of (i) the
remaining term of the Stock Option or (ii) three (3) years after
the date of death.
(b) Disability, Retirement or Other Termination.
Except as otherwise provided by the Plan, in the event of a
Participant's termination of membership on the Board as a result
of the Participant's disability or Retirement or for another
reason other than cause, any Stock Options outstanding as of the
date of such termination and not then exercisable shall (i) be
adjusted in amount to reflect the proportion of Fees earned in the
final year of such Participant's service in such year (in
accordance with the operation of Sections 8 and 9 of this Plan and
in consideration of such Participant's elections for such year),
and (ii) become exercisable on the last day of the Company's then-
current fiscal year. All outstanding Stock Options held by such
Participant shall remain exercisable for the full period
contemplated by the terms of such Stock Options. In the event of
the death of a Participant subsequent to termination of membership
from the Board as a result of circumstances described in this
Section 15(b), any Stock Options outstanding as of the date of
death and not then exercisable shall become immediately
exercisable, and all outstanding Stock Options held by such
Participant shall remain exercisable by the person to whom the
Stock Option is transferred by will or by the laws of descent and
distribution for a period of the lesser of (i) the remaining term
of the Stock Option, or (ii) three (3) years after the date of
death.
Section 16. Effect of Termination for Cause
If a Participant incurs a termination of membership on the Board,
for cause, such Participant's Stock Options which are not then
exercisable shall be automatically cancelled immediately. Unless
otherwise determined by the Board, for purposes of the Plan
"cause" shall mean (i) the conviction of the Participant for
commission of a felony under Federal law or the law in the state
in which such action occurred, or (ii) dishonesty in the course of
fulfilling the Participant's duties as a director.
Section 17. Adjustments Upon Changes in Capitalization
In the event of any change in corporate capitalization, such as a
stock split or a corporate transaction, such as any merger,
consolidation, separation, including a spin off, or other
distribution of stock or property of the Company, any
reorganization (whether or not such reorganization comes within
the definition of such term in Section 368 of the Code) or any
partial or complete liquidation of the company, the Committee or
Board may make such substitution or adjustments in the aggregate
number and class of shares reserved for issuance under the Plan,
in the number, kind and option price of shares subject to
outstanding Stock Options, in the number and kind of shares
subject to other outstanding Awards granted under the Plan and/or
such other equitable substitution or adjustments as it may
determine to be appropriate in its sole discretion; provided,
however, that the number of shares subject to any Award shall
always be a whole number.
Section 18. Regulatory Matters
The Plan is intended to be construed so that participation in the
Plan will be exempt from Section 16(b) of the Act, pursuant to
Rule 16b-3 as promulgated thereunder, as may be further amended or
interpreted by the Securities and Exchange Commission. In the
event that any provision of the Plan shall be deemed not to be in
compliance with the Rules in order to enjoy the exemption from the
Act, such provision shall be deemed of no force or effect and the
remaining provisions of the Plan shall remain in effect.
Section 19. Effectiveness of Plan
The Plan shall become effective as of the Distribution Date.
Section 20. Governing Law
To the extent not preempted by Federal law, the Plan, and all
agreements hereunder, shall be construed in accordance with and
governed by the laws of the State of Delaware.
EXHIBIT 10.9
PROMISSORY NOTE
$7,650,000.00
November 30, 1998
FOR VALUE RECEIVED, E. V. GOINGS (the "Maker") promises to pay to
the order of TUPPERWARE CORPORATION, a Delaware corporation (which
together with any successor, assignee or endorsee is hereinafter
referred to as the "Holder"), at 14901 South Orange Blossom Trail,
Orlando, Florida 32837, or at such other place as the Holder may
designate in writing, in lawful money of the United States of
America, the principal sum of Seven Million, Six Hundred and Fifty
Thousand and No/100 Dollars ($7,650,000.00), as described below
and in accordance with the following terms and provisions:
1. Non-Interest Bearing. No interest shall be payable on
the outstanding principal balance of this Note.
2. Security and Purpose of Loan. The Maker's payment and
performance of all the terms and conditions of this Note are
secured by a stock pledge agreement of even date herewith executed
by the Maker and the Holder (the "Pledge Agreement"). The loan
evidenced by this Note is made to assist the Maker in the purchase
of 400,000 shares of the common stock (the "Stock") of Tupperware
Corporation and for no other purpose.
3. Principal Payments. Payments against the principal of this
Note will be made in amounts equal to ten percent (10%) of the
gross amount of each annual bonus award payment payable by the
Holder to the Maker, and shall be made by payroll deduction. Any
such amounts paid by the Maker shall be refunded by the Holder in
the event that the Maker surrenders or forfeits the Stock as
contemplated by this Note, together with interest thereon from the
time of payment by payroll deduction at the prime rate in effect
at Chase Manhattan Bank at the time of refund. The entire
remaining outstanding principal balance will be due and payable on
November 12, 2006. At such date, the Maker shall have the option
of repaying such outstanding balance (a) in cash, (b) by tendering
an amount of the common stock of Tupperware Corporation equal in
value to the outstanding balance if the per share price of such
common stock then equals or exceeds $19.125 (adjusted for any
stock splits or reverse splits), or (c) by tendering any remaining
amount of the Stock subject to the lien of the Pledge Agreement if
the per share price of the common stock of Tupperware Corporation
is then less than $19.125 (adjusted for any stock splits or
reverse splits).
4. Prepayment. This Note may be prepaid in whole or in part
at any time on or after November 12, 2002, without penalty. In
addition, partial prepayments of principal will be made by the
Maker in accordance with Section 3 of this Note.
5. Accelerated Maturity: The entire outstanding
principal balance of this Note will become immediately due and
payable without notice on (1) the date of any voluntary or
involuntary termination of the Maker's employment with the Holder,
subject to subsection (b) below, and subject to subsections (c)
and (d) below respectively, in the case of (i) death of the Maker,
or (ii) the total disability of the Maker; or (2) the date on
which a Change of Control occurs, as that term is defined by that
certain Change of Control Employment Agreement between the Maker
and the Holder dated May 31, 1996, or any successor agreement;
In the event of a voluntary or involuntary termination of the
Maker's employment as contemplated in clause 5 (a) above prior to
November 12, 2002 (or a termination for "cause" at any time), all
right, title and ownership to the Collateral shall transfer to the
Holder in full satisfaction of the principal amount of this Note,
and the Maker shall not be entitled to receive from the Holder any
amount representing an excess in the value of the Collateral over
the then-outstanding balance of the loan amount under this Note.
For purposes of this Note, "cause" shall mean an act of
dishonesty, a conviction of a felony, a willful and deliberate
failure of the Maker to perform his duties to the Holder, or any
other events as determined by the Compensation and Directors
Committee of the Board of Directors of the Holder. In the event
of a voluntary or involuntary termination of the Maker's
employment as contemplated by clause 5(a) above on or after
November 12, 2002 (except for a termination for "cause"), the
Maker shall, at his option, pay the then-outstanding principal
amount of the Note in cash or surrender all his right, title and
ownership in and to the Stock in full satisfaction of the Note.
In the event of the death of the Maker, provided the debt
evidenced by this Note is assumed in writing by all heirs,
beneficiaries and other persons or entities succeeding to the
Maker's ownership interest in all or any portion of the
"Collateral" (as defined in the Pledge Agreement) within ninety
(90) days after the Maker's death, then the entire outstanding
balance of this Note will become due and payable without notice on
the earlier of (i) November 12, 2006, or (ii) the first
anniversary of the Maker's death. Upon the debt evidenced by the
Note becoming due and payable pursuant to this subsection, the
then-obligor under the Note shall have the same repayment
obligations as if the Note was payable on November 12, 2006
pursuant to Section 3 of this Note.
In the event of involuntary termination of the Maker's employment
with the Holder as a consequence of the Maker's total disability,
then the entire outstanding balance of this Note will become due
and payable without notice on the earlier of (i) November 12,
2006, or (ii) the third anniversary of the date of termination for
reasons of total disability. Upon the debt evidenced by the Note
becoming due and payable pursuant to this subsection, the Maker
under the Note shall have the same repayment obligations as if the
Note was payable on November 12, 2006 pursuant to Section 3 of
this Note.
In the event of a Change of Control as defined in clause 5(a)(2)
above, all then-outstanding indebtedness of the Maker under this
Note shall be deemed forgiven and the lien upon the Stock then
subject to the Pledge Agreement shall be deemed automatically
released.
6. Late Charge. The Maker will pay to the Holder a late
charge equal to five percent (5%) of any amount due under this
Note but not received by the Holder within fifteen (15) days after
the due date. The Maker agrees that the late charge will be
collected not as a penalty, but as compensation to the Holder for
the costs of collecting the late payment. This provision will not
be construed to extend the due date for any amount required to be
paid under this Note. The Holder will have no obligation to
accept any late payment not accompanied by the required late
charge.
7. Waiver; Extensions. Presentment, demand, notice of
dishonor and all other exemptions provided the Maker are waived.
No delay, failure or omission by the Holder in exercising any of
its rights hereunder or at law or in equity (including, without
limitation, the right of acceleration) will be construed as a
novation of this Note or will operate as a waiver or prevent the
subsequent exercise of any or all of such rights. Acceptance by
the Holder of any sum payable under this Note, whether before, on
or after the due date of such payment, will not be a waiver of
the Holder's right to require prompt payment when due of all other
sums payable under this Note or to exercise any of the Holder's
rights, powers or remedies under this Note. No extension of the
time for any payment under this Note will operate to release,
discharge, modify or otherwise affect the liability of the Maker
unless the Holder agrees in writing.
8. Collection Costs, Documentary Stamp Tax and Other
Expenses. The Maker will pay all costs, fees and expenses
(including court costs and attorneys' fees) incurred by the Holder
in collecting or attempting to collect any amount that becomes due
under this Note or in seeking legal advice with respect to a
default under this Note. In addition, the Maker will pay all
costs and expenses arising out of the execution and delivery of
this Note, including but not limited to all documentary stamp
taxes and other taxes that may be charged or imposed by local,
state or federal governments.
9. Governing Law. This Agreement is governed by Florida Law.
10. Notices. All notices, requests, demands and other
communications with respect to this Note will be in writing and
will be delivered by hand, sent prepaid by air courier or sent by
the United States mail, certified, postage prepaid, return receipt
requested, at the addresses designated below:
If to Holder: Tupperware Corporation
Attn: Senior Vice President, Human Resources
14901 South Orange Blossom Trail
Orlando, Florida 32837
If to Maker: E. V. Goings
5163 Fairway Oaks Drive
Windermere, Florida 34786
Any notice, request, demand or other communication delivered
or sent in such manner will be deemed given or made when actually
received by the intended recipient. Rejection or other refusal to
accept, or the inability to deliver because of a changed address
of which no notice was given, will be deemed to be receipt of the
notice, request, demand or other communication sent. The Maker or
the Holder may change its address by notifying the other party of
the new address in any manner permitted by this section.
11. Amendments Only in Writing. This Note or any provision
hereof may be waived, changed, modified or discharged only by an
agreement in writing signed by the Maker and the Holder.
12. Time of Essence. TIME IS OF THE ESSENCE with respect to
the performance by the Maker of each of its obligations hereunder.
13. Authorization for Payroll Deduction. The Maker authorizes
the Holder to deduct amounts due under this Note from payroll
installments payable by the Holder to the Maker. The Maker agrees
that all mandatory payments due under this Note will be made by
way of payroll deduction for so long as the Maker remains on the
Holder's active payroll, and that no additional authorization,
consent or notice will be required for the Holder to commence or
continue payroll deduction for these purposes.
14. Right of Set-Off. The Maker expressly agrees that, if a
default or accelerated maturity occurs pursuant to this Note, the
Holder has a right of set-off to satisfy the debt evidenced by
this Note. The right of set-off will entitle the Holder (a) to
withhold any payments owing from the Holder to the Maker,
including but not limited to, salary and bonus payments, pension
and retirement benefits, and expense reimbursements, and (b) to
draw upon any account maintained by the Holder or its agent for
the benefit of the Maker or in the Maker's name. The Holder will
provide written notice to the Maker prior to exercising this right
of set-off.
IN WITNESS WHEREOF, the Maker has executed this Note in the County
of Osceola.
_______________________________
Name: E. V. Goings
COUNTY OF OSCEOLA
STATE OF FLORIDA
This instrument was executed before me and in my presence this
30th day of NOVEMBER, 1998, in Osceola County, Florida, by E. V.
Goings.
________________________________
Notary Public
My Commission Expires:____________
STOCK PLEDGE AGREEMENT
THIS STOCK PLEDGE AGREEMENT dated as of November 30, 1998,
(the "Agreement"), by and between E. V. Goings (the "Pledgor),
Susan Goings (the "Pledgor's Spouse") and Tupperware Corporation,
a Delaware corporation (the "Secured Party"), recites and
provides:
RECITALS
The Pledgor has executed and delivered a promissory note of
even date herewith (the "Note") made by the Pledgor payable to the
order of the Secured Party in the principal amount of
$7,650,000.00. The Pledgor has agreed to pledge and deliver to
the Secured Party as security for the payment of the indebtedness
evidenced by the Note, 400,000 shares of common stock of
Tupperware Corporation, a Delaware corporation, in accordance with
the terms and conditions set forth in this Agreement. The
Pledgor's Spouse has agreed to join in the execution of this
Agreement to release all marital property rights, if any, in and
to the "Collateral" (defined below).
PLEDGE AGREEMENT
NOW, THEREFORE, the parties to this Agreement agree as
follows:
1. Pledge of Collateral. The Pledgor hereby assigns and
delivers to the Secured Party, with appropriate stock powers and
endorsements in blank or other appropriate instruments of
assignment, a certificate or certificates for 400,000 shares of
common stock of Tupperware Corporation. (Such securities, and any
replacements or substitutions thereof, and all accessions thereto,
are referred to in this document as the "Collateral"). All of the
Collateral will be held by the Secured Party subject to the terms
and conditions of this Agreement.
2. Certificates. The Pledgor agrees to deliver promptly to
the Secured Party, with stock powers or endorsements in blank or
other appropriate instruments of assignment, all certificates (if
any) representing stock splits or rights to purchase or subscribe
for additional stock, or other rights, accessions or increments
with respect to any securities constituting a portion of the
Collateral. Such certificates (if any) will be held by the
Secured Party subject to the terms and conditions of this
Agreement.
3. Secured Indebtedness. This pledge of the Collateral
secures all indebtedness of the Pledgor to the Secured Party
evidenced by the Note, including any attorney's fees and other
expenses incurred in the collection of the Note.
4. Satisfaction of Indebtedness. Upon payment of the entire
indebtedness of the Pledgor to the Secured Party evidenced by the
Note, this Agreement will terminate and any remaining Collateral
will be returned and delivered by the Secured Party to the
Pledgor.
5. Reduction of Collateral. On any date subsequent to
November 12, 2002, the Pledgor shall be entitled to reduce the
amount of the Collateral subject to this Agreement, conditioned on
a pro rata payment of the indebtedness evidenced by the Note. In
the event the Pledgor elects to reduce the Collateral, the Pledgor
will notify the Secured Party and simultaneously pay to the
Secured Party an amount (the "Paydown") equal to the principal
then outstanding under the Note times a fraction, the numerator of
which equals the number of shares of common stock by which the
Collateral is to be reduced and the denominator of which equals
the number of shares of common stock comprising the Collateral
prior to reduction. Any mandatory prepayment amounts paid by the
Pledgor to the Secured Party pursuant to Section 3 of the Note,
and not included in the calculation of any earlier Paydown, shall
be credited towards the Paydown. The secured Party will apply the
Paydown against the indebtedness evidenced by the Note and release
to the Pledgor the number of shares of common stock by which the
Collateral is to be reduced.
Except as permitted by this Agreement, the Collateral may not
be reduced or otherwise released prior to the full and final
payment of all indebtedness evidenced by the Note.
6. Pledgor's Representation. The Pledgor represents,
warrants and covenants that he is the lawful owner of all of the
Collateral, free and clear of all liens or claims of any sort
whatsoever, other than the lien established by this Agreement, and
that he will maintain the Collateral free of all such liens or
claims until all indebtedness evidenced by the Note is fully and
finally paid.
7. Further Assurances. The Pledgor covenants and agrees to
execute and deliver or cause to be executed and delivered, and to
do or make or cause to be done or made, upon the request of the
Secured Party, any and all agreements, instruments, acts or
things, supplemental, confirmatory or otherwise, as may reasonably
be required by the Secured Party for the purpose of, or in
connection with, perfecting and completing the pledge of the
Collateral in accordance with the terms and conditions of this
Agreement.
8. Dividends and Voting Rights. So long as there exists no
event of default under this Agreement or under the Note, subject
to the provisions of paragraphs 2 and 9 hereof, the Pledgor will
have and enjoy all rights attaching to the Collateral, including
the right to receive all dividends and the right to exercise any
and all voting rights.
9. Default and Remedies. In the event of any default by
the Pledgor in the payment of any sum under this Agreement or any
indebtedness of the Pledgor evidenced by the Note, which default
continues for a period of five (5) days, or any other default
under the Note or under this Agreement which continues for a
period of fifteen (15) days after written notice given by the
Secured Party to the Pledgor in accordance with the provisions of
the Note, all right, title and ownership in and to the Collateral
will transfer ipso facto to the Secured Party, at its option. The
transfer of the Collateral to the Secured Party will include all
rights attaching to the Collateral, including the right to receive
all dividends and the right to exercise any and all voting rights.
Such transfer and delivery of the Collateral will be accepted by
the Secured Party in full satisfaction of the outstanding
indebtedness evidenced by the Note.
10. Expenses. The Pledgor will pay any and all expenses
related to the execution of this Agreement and pledge of the
Collateral, including any taxes or assessments imposed by local,
state or federal governments. The Pledgor will also pay all costs
of collection and enforcement of this Agreement and the Note
(including reasonable attorneys' fees) in the event of default or
failure of the Pledgor to fulfill any term, covenant or condition
under this Agreement or the Note. Any other expenses incurred in
connection with this Agreement or the pledge of the Collateral
hereunder will be borne by the Secured Party and will not be
charged against or paid from the Collateral.
11. Binding Agreement; Governing Law. This Pledge Agreement
will bind the parties hereto and their respective heirs, personal
representatives, successors and assigns. This Agreement will be
governed by Florida Law.
12. Joinder of Pledgor's Spouse. The Pledgor's Spouse joins
in the execution of this Agreement to evidence her consent to the
pledge of the Collateral by the Pledgor, and to release any and
all marital rights that may exist in and to the Collateral.
IN WITNESS WHEREOF, the Pledgor, the Pledgor's Spouse and the
Secured Party have executed or caused this Pledge Agreement to be
executed in their names as of the date first above written.
PLEDGOR PLEDGOR'S SPOUSE
_______________________ ____________________________
Name: E. V. GOINGS Name: SUSAN GOINGS
SECURED PARTY
TUPPERWARE CORPORATION
By:_____________________
Title: ___________________
COUNTY OF _____________
STATE OF _______________
This instrument was executed before me and in my presence
this 30th day of November, 1998, in Osceola County, Florida.
______________________________
Notary Public
My Commission Expires:__________
November 30, 1998
Mr. E. V. Goings
Chairman & Chief Executive Officer
Tupperware Corporation
14901 South Orange Blossom Trail
Orlando, Florida 32837
Dear Mr. Goings:
This letter agreement is to memorialize an arrangement between you
and Tupperware Corporation (the "Corporation") in which the
Corporation agrees to advance funds to you to enable your
purchase of 400,000 shares of the common stock (the "Stock") of
the Corporation. The intent of this transaction is to serve as an
incentive for your retention as Chairman and Chief Executive
Officer of the Corporation and to increase the operating results
of the Corporation, as well as increasing an identity of your
interests with those of the Corporation's shareholders.
In connection with this transaction, you will execute and deliver
the promissory note and the stock pledge agreement in the form of
Exhibits A and B, respectively, attached hereto and forming a part
of this agreement. The Corporation shall pay the cost of any
brokerage fees incurred in acquiring the stock. The amount of the
loan set forth in Exhibit A shall be $7,650,000. The Corporation
shall provide you with a gross-up at your marginal Federal income
tax rate for (a) imputed income from the actual cost of acquiring
the stock which exceeds $7,650,000, (b) imputed income from the
brokerage fees for the acquisition of the Stock, and (c) deemed
interested on the amount of the loan, if required to offset any
taxable income to you.
In the event of a Change of Control of the Corporation or any
successor entity to the Corporation, as defined in the Change of
Control Employment Agreement between you and the Corporation dated
May 31, 1996, or any successor agreement, the Corporation shall
provide a gross-up to you for any excise tax imposed by Section
4999 of the Internal Revenue Code, or any successor provisions.
All other terms and conditions will be as set forth in the
aforementioned promissory note and stock pledge agreement.
Mr. E. V. Goings
November 30, 1998
Page Two
If the foregoing accurately sets forth the terms and conditions of
the transaction, and intentions of the Board of Directors of the
Corporation with respect thereto, please indicate your acceptance
by signing in the space provided below for the purpose and
returning a fully executed letter agreement to me.
TUPPERWARE CORPORATION
By:________________________
Carol A. Kiryluk
Senior Vice President
Human Resources
Accepted and Agreed To
This 30th day of November, 1998.
By:________________________
E. V. Goings
<TABLE>
Selected Financial Data
<CAPTION>
1998 1997 1996 1995 1994
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
(Dollars in millions,
except per share amounts)
Operating results
Net sales:
Europe $ 518.7 $ 546.6 $ 581.7 $ 595.1 $ 540.1
Asia Pacific 211.5 279.0 338.0 355.1 329.3
Latin America 186.8 247.2 268.5 200.6 176.4
United States 165.8 156.5 181.1 208.6 228.8
-------- ------- -------- -------- --------
Total net sales $1,082.8 $1,229.3 $1,369.3 $1,359.4 $1,274.6
======== ======== ======== ======== ========
Operating profit (loss):
Europe $ 123.9 $ 144.6 $ 153.0 156.8 125.0
Asia Pacific 20.2 37.2 61.0 59.4 46.3
Latin America (16.4) (5.7)<Fa> 43.3 19.4 15.7
United States 4.0 (29.5)<Fa> 10.4 10.3 16.0
-------- -------- -------- -------- --------
Total operating
profit 131.7 146.6 267.7 245.9 203.0
-------- -------- -------- -------- --------
Unallocated expenses (17.5) (18.0)<Fa> (16.1) (22.9) (12.0)
Costs associated
with becoming an
independent company -- -- (9.1) -- --
Interest (expense)
Income (22.7) (17.8) (8.0) 1.9 0.2
-------- -------- -------- -------- --------
Income before
income taxes and
cumulative effect
of accounting changes 91.5 110.8<Fa> 234.5 224.9 191.2
Provision for
income taxes 22.4 28.8 59.8 53.5 42.0
-------- -------- -------- -------- --------
Income before
cumulative effect of
accounting changes $ 69.1 $ 82.0<Fa> $ 174.7 $ 171.4 $ 149.2
======== ======== ======= ======== ========
Net income (pre-1997
pro forma) $ 69.1 $ 82.0<Fa> $ 170.4 $ 161.1
======== ======== ======= ========
Earnings per common
share (pre-1997
pro forma):<Fc>,<Fd>
Basic $ 1.19 $ 1.34 $ 2.75 $ 2.60
======== ======== ======= ========
Diluted $ 1.18 $ 1.32 $ 2.71 $ 2.57
======== ======== ======= ========
Selected Financial Data
1993 1992
-------- --------
(Dollars in millions)
Operating results
Net sales:
Europe $ 505.1 $ 490.7
Asia Pacific 286.9 268.3
Latin America 154.4 138.7
United States 225.4 207.1
-------- --------
Total net sales $1,171.8 $1,104.8
======== ========
Operating profit (loss):
Europe 110.3 $ 92.4
Asia Pacific 40.3 32.9
Latin America 15.7 5.9
United States 12.5 (139.6)
-------- --------
Total operating
profit (loss) 178.8 (8.4)<Fb>
-------- --------
Unallocated expenses (17.8) (24.1)
Costs associated with
becoming an
independent company -- --
Interest (expense)
income, net (12.6) (9.3)
-------- --------
Income (loss) before
income taxes and
cumulative effect
of accounting changes 148.4 (41.8)<Fb>
Provision for
income taxes 30.5 1.9
-------- --------
Income (loss) before
cumulative effect of
accounting changes $ 117.9 $ (43.7)<Fb>
======== ========
<FN>
<Fa> Includes a $42.4 million fourth quarter pretax charge ($31.3
million after tax): $22.2 million in Latin America, primarily
for bad debts in Brazil; $16.0 million in the United States,
primarily for inventory obsolescence; and $4.2 million in unallocated
expenses, primarily for corporate downsizing.
<Fb> Includes a $136.7 million pretax charge ($111.4 million after
tax) primarily related to consolidation of manufacturing capacity
and restructuring the U.S. distribution system.
<Fc> Pro forma net income is based on historical net income adjusted
for pro forma interest expense related to the increase in borrowings
incurred in connection with the distribution of the Company's
equity to Premark International, Inc.'s. shareholders in May 1996.
See also Note 1 to the consolidated financial statements.
Information is not applicable prior to 1995.
<Fd> For all periods prior to the Distribution, the number of
shares used was the 62.0 million (basic) and 62.8 million
(diluted) shares as of the date of the Distribution.
</FN>
</TABLE>
<TABLE>
Selected Financial Data
<CAPTION>
1998 1997 1996 1995 1994
------ ------ ------ ------ ------
(Dollars in millions, except
per share amounts)
<S> <C> <C> <C> <C> <C>
Profitability ratios
Operating profit as a
percent of sales:
Europe 23.9% 26.5% 26.3% 26.3% 23.1%
Asia Pacific 9.5 13.3 18.0 16.7 14.1
Latin America nm nm 16.1 9.7 8.9
United States 2.4 nm 5.7 4.9 7.0
Total operating
profit 12.2 11.9 19.5 18.1 15.9
Return on average
equity<Fe),<Ff> 47.5 30.5 65.0
Return on average
invested
capital<Fe>,<Ff> 17.6 17.1 32.6
Financial Condition
Working capital $ 95.5 $103.3 $156.2 $88.1 $72.9
Property, plant, and
equipment, net 271.0 293.0 331.0 317.7 310.2
Total assets 823.4 847.2 978.5 944.0 882.6
Short-term borrowings
and current portion
of long-term debt 18.7 - 25.3 83.8 58.3
Long-term debt 300.1 236.7 215.3 0.4 0.5
Shareholders' equity 135.8 214.2 305.5 415.6 395.1
Current ratio 1.33 1.34 1.43 1.20 1.18
Long-term debt-
to-equity<Fe> 221.0% 110.5% 70.5%
Total debt-
to-capital<Fe> 70.1% 52.5% 44.1%
Other Data
Net cash provided by
operating activities $118.1 $161.8 $150.5 $179.2 $142.7
Capital expenditures 46.2 67.5 96.0 69.3 72.9
Depreciation 64.0 66.1 65.3 61.3 55.7
Common Stock Data<Fe>
Dividends declared
per share $ 0.88 $0.88 $0.44<Fh>
Dividend payout
ratio<Fh> 74.6% 66.7% 32.5%
Average common
shares outstanding
(thousands):
Basic 58,235 61,334 62,016
Diluted 58,736 61,827 62,806
Year-end book value
per share $ 2.36 $ 3.51 $ 4.90
Year-end price/
earnings ratio 13.6 20.7 20.1
Year-end market/
book ratio 6.8 7.8 11.1
Year-end shareholders
(thousands) 15.6 20.5 21.6
Selected Financial Data
1993 1992
------ ------
(Dollars in millions, except
per share amounts)
<S> <C> <C>
Profitability ratios
Operating profit as a
percent of sales:
Europe 21.8% 18.8%
Asia Pacific 14.1 12.3
Latin America 10.2 4.3
United States 5.6 nm
Total operating
Profit 15.3 nm
Return on average
equity<Fe>,<Ff>
Return on average
invested capital<Fe>,<Ff>
Financial Condition
Working capital $(49.6) $(11.3)
Property, plant, and
equipment, net 277.2 250.8
Total assets 785.1 661.1
Short-term borrowings
and current portion
of long-term debt 139.9<Fg> 19.3
Long-term debt 45.6 153.3
Shareholders' equity 163.3 68.2
Current ratio 0.90 0.97
Long-term debt-
to-equity<Fe>
Total debt-
to-capital<Fe>
Other Data
Net cash provided by
operating activities $150.3 $152.0
Capital expenditures 85.6 80.0
Depreciation 44.7 50.1
Common Stock Data<Fe>
Dividends declared
per share
Dividend payout ratio<Fh>
Average common shares
outstanding (thousands):
Basic
Diluted
Year-end book value
per share
Year-end price/
earnings ratio
Year-end market/
book ratio
Year-end shareholders
(thousands)
<FN>
<Fe> Due to the change in the Company's capital structure in
connection with the Distribution, this information is not
applicable or not meaningful for the omitted periods.
<Ff> Returns on average equity and invested capital are
calculated using net income or pro forma net income and the
monthly balances of equity and invested capital beginning at
the date of the Distribution. Invested capital equals
equity plus debt.
<Fg> Includes $105.0 million of the $150.0 million of 8.375
percent notes that were called at par on February 1, 1994.
<Fh> The Company initiated regular quarterly dividends of $0.22
per share beginning in the third quarter of 1996. The dividend
payout ratio is dividends declared per share divided by diluted
earnings per share. 1996 assumes four quarterly dividend
declarations.
nm - Not meaningful.
</FN>
</TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the results of operations
for 1998 compared with 1997, and of 1997 compared with 1996, and
changes in financial condition during 1998. This information
should be read in conjunction with the consolidated financial
information provided on pages 28 to 46 of this Annual Report.
The Distribution
On May 31, 1996, Tupperware Corporation (Tupperware, the Company)
became an independent company through the distribution by Premark
International, Inc. (Premark) to its shareholders of the equity of
the Company (the Distribution). The Distribution was effected
through a 1-for-1 distribution of stock, which was tax free to
Premark's shareholders pursuant to a ruling received from the
Internal Revenue Service.
Results of Operations
Net Sales and Net Income
Net sales in 1998 of $1.1 billion were 12 percent lower than
1997 net sales, reflecting decreases from operations in all
areas except the United States, which had a modest improvement.
In addition, foreign exchange had a significant negative impact
on the comparison of $63.5 million, or 5 percentage points.
In 1997, sales decreased 10 percent to $1.2 billion compared
with 1996 sales of $1.4 billion, reflecting a modest increase
from operations in Europe and decreases in the other areas of
the world. Foreign exchange had a $105.2 million, or 7
percentage point, negative impact on the comparison.
Net income of $69.1 million in 1998 was $12.9 million, or 16
percent, lower than 1997 net income of $82.0 million. The 1997
results include a fourth quarter pretax charge totaling $42.4
million ($31.3 million after tax), primarily for provisions for
bad debts in Brazil, inventory obsolescence in the United States,
and to a lesser extent, corporate downsizing. Only a small
portion of the charge involved cash outlays by the Company.
Excluding the 1997 charge, net income decreased $44.2 million,
or 39 percent. As with sales, all areas other than the United
States reported worse results. Foreign exchange had a negative
impact of $9.2 million, or 11 percentage points, on the 1998
versus 1997 comparison. If year-end 1998 exchange rates were
to be in effect throughout 1999, then the 1999 foreign exchange
impact on the comparison with 1998 will be favorable.
Net income decreased 52 percent to $82.0 million in 1997
from pro forma 1996 net income of $170.4 million, including
the impact of the 1997 charge. Excluding the impact of the
charge, net income decreased 34 percent to $113.3 million.
Europe had a strong improvement in operating profit before
the impact of foreign exchange, but the other three areas had
significantly lower results and foreign exchange had a
negative impact of $20.9 million, or 7 percentage points,
on the comparison.
Unallocated corporate expenses decreased to $17.5 million
in 1998 from $18.0 million, which included $4.2 million of
the 1997 charge. This provision was primarily for severance
costs associated with corporate downsizing. The 1998 increase,
excluding the charge, reflects the addition of a corporate
president and spending on development of marketing initiatives.
Unallocated corporate expenses increased $1.9 million in 1997
compared with 1996, primarily reflecting the amount recorded
as part of the 1997 charge, which was offset by lower provisions
for annual executive incentive payments. Additionally, during
1996, the Company incurred $9.1 million of pretax costs associated
with becoming an independent company. In 1998 and 1997,
respectively, 85 percent and 87 percent of sales, and 97
percent and 100 percent of the Company's operating profit
were generated by international operations.
Costs and Expenses
The cost of products sold in relation to sales was 37.5
percent, 38.6 percent, and 35.6 percent in 1998, 1997, and
1996, respectively. The improvement in the ratio in 1998
reflects lower costs from higher production and sales in
the United States, as well as the sale of a greater proportion
of high-margin products, and the absence of the 1997 charge.
Partially offsetting these factors was the impact of lower
capacity utilization in certain plants in Latin America.
The higher ratio in 1997 compared with 1996 reflects lower
manufacturing capacity utilization, along with the inventory
obsolescence provision recorded in the United States in the
fourth quarter. Delivery, sales, and administrative expense
as a percentage of sales was 51.9 percent, 50.5 percent, and
45.8 percent in 1998, 1997, and 1996, respectively. Expenses
in 1998 and 1997 decreased, but not to as great an extent as
sales. The ratio rose in 1997 compared with 1996 in large part
due to the bad debt provision recorded in Brazil in the fourth
quarter.
Tax Rate
The effective tax rate for 1998, 1997, and 1996, was 24.5
percent, 26.0 percent, and 25.5 percent, respectively. The
1998 rate decreased from the 1997 rate as the benefit of a
much lower foreign effective rate was only partially offset
by the absence of a reduction in a valuation allowance against
federal deferred tax assets. The 1997 rate did not change
significantly from the 1996 rate as the impact of a higher
foreign effective tax rate and the absence of the 1996 benefit
of a capital loss carryforward was largely offset by the impact
of lower pretax income and the generation of a higher level of
foreign tax credits.
Net Interest
The Company had $22.7 million of net interest expense in
1998, compared with $17.8 million in 1997, and $8.0 million
in 1996. The 1998 increase resulted from a higher level of
borrowing to fund the repurchase of 5 million of the Company's
shares in 1997 and the first half of 1998, which was only
partially offset by lower 1998 interest rates on variable-rate
borrowing. Until immediately before the Distribution, the
Company was capitalized primarily through Premark's net
investment. No interest was charged to the Company for this
funding, which was the reason for the significantly lower net
interest expense in 1996.
<TABLE>
Regional Results
1998 vs. 1997
<CAPTION>
Increase Negative Percent
(decrease) Restated<Fa> foreign of total
--------------- increase exchange ----------
1998 1997 Dollar Percent (decrease) impact 1998 1997
------- ------- ------- ------- ---------- -------- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales
Europe $ 518.7 $ 546.6 $ (27.9) (5)% (3)% $ (11.6) 48% 44%
Asia Pacific 211.5 279.0 (67.5) (24) (8) (49.4) 20 23
Latin America 186.8 247.2 (60.4) (24) (24) (2.5) 17 20
United States 165.8 156.5 9.3 6 6 - 15 13
-------- -------- ------- ------- --- ---
$1,082.8 $1,229.3 $(146.5) (12)% (7)% $ (63.5) 100% 100%
======== ======== ======= ======= === ===
Operating Profit (Loss)
Europe $ 123.9 $ 144.6 $ (20.7) (14)% (13)% $ (1.8) 94% 99%
Asia Pacific 20.2 37.2 (17.0) (46) (25) (10.3) 15 25
Latin America (16.4) (5.7)<Fb> (10.7) - - (0.2) nm nm
United States 4.0 (29.5)<Fb> 33.5 nm nm - 3 nm
-------- -------- ------- ------- --- ---
$ 131.7 $ 146.6 $ (14.9) (10)% (2)% $ (12.3) nm nm
======== ======== ======= ======= === ===
<FN>
<Fa> 1998 actual compared with 1997 translated at 1998 exchange rates.
<Fb> Includes charge: $22.2 million in Latin America, primarily
for bad debt expense in Brazil; and $16.0 million in the
United States, primarily for inventory obsolescence.
nm - Not meaningful.
</FN>
</TABLE>
Europe
Europe's sales decrease was primarily the result of lower
volume in Germany. Italy and Scandinavia also had lower sales
volume, while several of the smaller markets had increases.
During the second half Germany continued to face the impact of
a smaller active sales force following an ineffective recruiting
promotion in the second quarter; however, the year-over-year
gap in the active sales force decreased through the fourth
quarter. The German market is the Company's largest with sales
of $241.2 million in 1998 and $260.8 million in 1997. Foreign
exchange had a $3.3 million negative impact on the comparison.
The German market also accounts for a substantial portion of
Europe's operating profit. The decrease in the area's
operating profit primarily reflected the lower sales level
along with a slightly lower gross margin percentage and
slightly higher operating expenses, although the area's
profitability benefited from improvements in the United
Kingdom and France as spending in these markets was reduced
in 1998 while sales were about even with 1997.
Asia Pacific
Excluding the negative impact of foreign exchange that related
to currencies throughout the region, the sales decline in Asia
Pacific was primarily due to lower volume in Japan and Korea.
Difficult economic conditions seriously curtailed consumers'
purchasing power in the Asian markets. The Philippines had a
strong sales increase resulting from good recruiting results
and success in increasing the activity level of the sales force.
The emerging markets of Indonesia and India had sharply higher
sales off of low bases. Throughout the region, other than in
Japan, 1998 sales force recruiting was very strong, which is a
key focus in struggling economies where the Tupperware earnings
opportunity is particularly appealing. The decrease in operating
profit was attributable to the lower sales along with operating
expenses running at a higher percentage of sales in 1998 than
in 1997. While the dollar amount of operating expense decreased,
since a portion of these costs do not vary directly with sales
volume, they decreased at a lower rate than sales.
Latin America
Latin America's decrease in sales was attributable to
significantly lower volume in Brazil and Argentina, along
with the impact of the weakening Mexican peso. Sales in
local currency in Mexico increased modestly for the year.
The fall off in sales in Brazil and Argentina reflected the
impact of a much smaller sales force than in 1997. Early in
the year, the number of distributors in these markets was
reduced about 30 percent, which led to the decrease in the
sales force. This action was taken to strengthen the remaining
distributors to provide a base for future growth. Progress
has been made in Brazil with programs to better train the sales
force in the fundamentals of the group demonstration, but this
process is taking longer in Argentina than had been expected.
The 1998 operating loss versus the $16.5 million operating
profit in 1997 before the charge reflects the impact of the
lower sales volume, along with a lower gross margin from a
lower level of production, and the impact of the Mexican
peso devaluation. Through the end of 1998, the Company was
accounting for the operations of Mexico as hyperinflationary.
Consequently, the translation of balance sheet items impacted
the income statement. Additionally, local currency sales were
translated at less favorable rates, but the cost of the product
sold was translated at rates in effect when the product was
manufactured. Due to the relatively low inflation rate in
Mexico over the past three years, as of the beginning of 1999,
Mexico will no longer be accounted for as hyperinflationary.
United States
Sales in 1998 increased in spite of a smaller sales force as
volume rose due to a significant sales force productivity
improvement. The Company is continuing to address the gap
in the size of the sales force, which began to narrow in the
second half of the year, with new initiatives in sales
force compensation and by updating the demonstration. The
1998 operating profit versus the 1997 operating loss of $13.5
million before the charge reflected the impact of the higher
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.
<TABLE>
Regional Results
1997 vs. 1996
<CAPTION>
Negative Percent of
Decrease Restated<Fa> foreign total
--------------- increase exchange ----------
1997 1996 Dollar Percent (decrease) impact 1997 1996
------- -------- ------- ------- ---------- -------- ---- ----
(Dollars in millions)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Sales
Europe $ 546.6 $ 581.7 $ (35.1) (6)% 7% $ (68.8) 44% 42%
Asia Pacific 279.0 338.0 (59.0) (18) (8) (35.6) 23 25
Latin America 247.2 268.5 (21.3) (8) (8) (0.8) 20 20
United States 156.5 181.1 (24.6) (14) (14) - 13 13
------- -------- ------- ------- --- ---
$1,229.3 $1,369.3 $(140.0) (10)% (3)% $(105.2) 100% 100%
======== ======== ======= ======= === ===
Operating Profit (Loss)
Europe $ 144.6 $ 153.0 $ (8.4) (6)% 8% $ (19.3) 99% 57%
Asia Pacific 37.2 61.0 (23.8) (39) (28) (9.2) 25 23
Latin America (5.7)<Fb> 43.3 (49.0) nm nm (0.2) nm 16
United States (29.5)<Fb> 10.4 (39.9) nm nm - nm 4
-------- -------- ------- ------ --- ---
$ 146.6 $ 267.7 $(121.1) (45)% (39)% $(28.7) nm 100%
======== ======== ======= ====== === ===
<FN>
<Fa> 1997 actual compared with 1996 translated at 1997 exchange rates.
<Fb> Includes charge: $22.2 million in Latin America,
primarily for bad debt expense in Brazil; and $16.0
million in the United States, primarily for inventory
obsolescence.
nm - Not meaningful.
</FN>
</TABLE>
Europe
The 1997 sales improvement before the impact of foreign
exchange was attributable to higher volume in Germany and
Italy, along with the sale of a better mix of product in
South Africa. Partially offsetting these factors were
decreases in the United Kingdom and France due to lower
volume. In Germany, higher volume resulted from successful
recruiting programs that led to a larger sales force, as
1997 sales rose to $260.8 million compared with 1996 sales of
$239.9 million translated at 1997 exchange rates. For 1996,
reported German sales were $275.4 million. Italy's sales
force also increased due to better recruiting results. In
the United Kingdom, the reduced volume reflected the inability
to recruit a dynamic sales organization, while the shortfall
in France resulted from the difficult consumer market and
recruiting environment given the country's social welfare
system, which can encourage people to stay out of the work
force.
The 1997 operating profit increase before the impact of
foreign exchange reflected the net improvement in sales volume
along with more efficient promotional spending, which were
partially offset by other higher operating expenses throughout
the area. The negative impact of foreign exchange on both
sales and operating profit related to currencies throughout
the region.
Asia Pacific
Excluding the negative impact of foreign exchange, which was
due to the dollar's strength against currencies throughout
the region, sales decreased primarily due to lower volume in
Japan and the Philippines. In both countries, the number of
demonstrations fell, reflecting smaller sales forces.
Operating profit fell more significantly due to higher per
unit manufacturing costs, in addition to the lower sales
volume, which was only partially offset by a volume-related
decline in promotional spending.
Latin America
The 1997 results reflected significant sales decreases due
to lower volume in Brazil and Argentina, which were partially
offset by higher volume in Mexico. The decreases in Brazil
and Argentina were due to significantly lower sales force
productivity and activity levels, which reflected the need
for additional training of distributors and the sales forces
in direct selling fundamentals and by refocusing on group
demonstration versus one-on-one selling. In Mexico, the
number of sellers increased substantially. The operating
profit decrease resulted from the impact of the net sales
decline, along with $22.2 million of the fourth quarter
charge, which was primarily for bad debt reserves in Brazil.
The higher reserve position became necessary in the fourth
quarter due to sales and past due receivables levels and
due to a decision to significantly reduce the number of
distributors. This action was taken after promotional
programs and programs to refocus on party plan direct
selling fundamentals were not as effective as expected, and
as a result of the negative general economic conditions in
the Brazilian market.
United States
The 1997 U.S. sales decline resulted from implementation of
higher sales force standards in the latter half of 1996.
The new standards led to a smaller active sales force
compared with 1996, although fourth quarter sales exceeded
those of 1996 as a result of an improvement in sales force
productivity. New programs, including a two-tiered vehicle
program, were implemented to increase recruiting and
activity. Excluding the $16.0 million of the fourth quarter
charge that relates to the United States, the operating loss
was $13.5 million, or $23.9 million worse than 1996,
reflecting the lower sales volume and higher per unit
manufacturing costs due to lower production volume. These
factors were only partially offset by a reduction in
operating expenses that reflected the effort to improve
profitability. The fourth quarter charge was primarily for
inventory obsolescence, due to a decision to undertake a
rationalization of the product line after exhausting
opportunities to reduce inventories through normal channels.
Also having an impact was a decision to change the focus of
the demonstration more toward education rather than selling
product at a discount.
Financial Condition
Liquidity and Capital Resources
Working capital decreased to $95.5 million as of December
26, 1998, compared with $103.3 million as of December 27,
1997, and $156.2 million as of December 28, 1996. The
current ratio was 1.3 to 1 at the end of 1998 and 1997,
and 1.4 to 1 at the end of 1996. In 1998, working capital
decreased from a lower level of net inventories reflecting
the Company's reduction initiatives, as well as provisions
for obsolescence, and a higher accounts payable balance.
Also, whereas only a portion of the Company's borrowings
that were current by their terms were classified as long-
term debt as of the end of 1998, due to the Company's ability
and intent to have them outstanding throughout the following
year, at the end of 1997 all such borrowings were classified
as long-term debt. These factors were offset primarily
due to an increase in deferred tax assets as temporary
differences grew, and lower taxes payable as a result of
lower pretax earnings.
The 1997 decrease in working capital resulted primarily from
a lower level of inventories reflecting the Company's
reduction initiative. Other significant factors contributing
to the decrease were a lower cash balance resulting from
efforts to reduce overseas deposits, and a reduction in
accounts receivable reflecting lower sales and higher
reserves for doubtful accounts. Partially offsetting these
factors were lower accounts payable and accrual balances,
due to lower levels of production, employee incentives earned,
and promotional awards earned by the sales forces. Also, the
classification of only a portion of current borrowings as
long-term in 1996 versus the classification of all such
borrowings as long-term in 1997, offset a portion of the 1997
decrease in working capital. In addition, working capital
decreased from the impact of a stronger U.S. dollar versus
foreign currencies at the end of 1997 compared with the end
of 1996.
The Company had significant allowances for uncollectible
trade accounts receivable at the end of both 1998 and 1997.
These amounts were determined based on the Company's best
estimate of the amounts that will ultimately be collected
based on available information that includes historical
collection patterns and the profitability of distributors.
The net decrease in the allowances in 1998 compared with
1997 reflects the write-off of certain accounts for which
it was determined that no further collection efforts were
warranted.
The Company has a $300 million unsecured multicurrency
credit facility that matures on August 8, 2002. The total
debt-to-capital ratio at the end of 1998 was 70.1 percent
compared with 52.5 percent at the end of 1997. As of
December 26, 1998, the Company had $220.0 million
available under the multicurrency credit facility. The
multicurrency credit facility, along with $216.9 million of
foreign uncommitted lines of credit, and cash generated by
operating activities, are expected to be adequate to finance
any additional working capital needs and capital expenditures.
On November 30, 1998, the Company made a non-recourse, non-
interest bearing loan of $7.7 million (the loan) to its
chairman and chief executive officer (chairman), the proceeds
of which were used by the chairman to buy in the open market
400,000 shares of the Company's common stock (the shares).
The shares are pledged to secure the repayment of the loan.
The loan has been recorded as a subscription receivable and
is due November 12, 2006, with voluntary prepayments permitted
subsequent to November 12, 2002. Ten percent of any annual
cash bonus award will be applied against the balance of the
loan. As the loan is reduced by voluntary payments after
November 12, 2002, the lien against the shares will be reduced.
The subscription receivable will be reduced as payments are
received.
Operating Activities
Cash provided by operating activities was $118.1 million in
1998, compared with $161.8 million in 1997, and $150.5
million in 1996. The 1998 decrease in cash flow reflects
lower earnings, a smaller decrease in working capital and
cash taxes in excess of the effective tax rate to a larger
extent than in 1997. In 1997, the benefit of improved
working capital management was only partially offset by the
decrease in net income.
Investing Activities
For 1998, 1997, and 1996, respectively, capital expenditures
totaled $46.2 million, $67.5 million, and $96.0 million.
The most significant individual component of capital
spending was new molds. The steadily decreasing level of
overall expenditures reflects lower spending on plant and
equipment in light of the Company's sales decreases. The
higher 1996 expenditures, compared with 1997, primarily
related to the increase of manufacturing capacity in Latin
America and higher spending on molds. Capital expenditures
are expected to be between $50 million and $60 million in 1999.
In 1998, the Company sold its Halls, Tennessee distribution
center for $10.6 million in notes receivable. The notes are
due in 1999 through 2004, with the majority due under a
balloon payment to be received in the final year. There was
no significant income statement impact from the sale.
Dividends
Quarterly dividends were initiated in August 1996 at $0.22
per share. During 1998, 1997, and 1996, the Company declared
dividends of $0.88, $0.88, and $0.44 per share of common stock.
Share Repurchases
In November 1996, the Company announced it would repurchase
up to 5 million shares of its common stock, with volume and
timing to depend on market conditions. In 1998 and 1997,
respectively, the Company repurchased 3.5 million and 1.5
million shares in the open market, completing the program,
for a total cost of $150.2 million, or an average of $30
per share.
New Accounting Standards
In June 1998, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (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 significant impact on the accounting treatment
related to the hedging programs the Company has undertaken.
The American Institute of Certified Public Accountants adopted
Statement of Position (SOP) 98-1, "Accounting for the
Costs of Computer Software Developed or Obtained for Internal
Use" in March 1998. The SOP provides that software development
costs, including external direct costs, internal payroll and
related costs, and interest costs be capitalized and amortized
over their useful lives. The financial statement impact of
adopting the SOP was not material.
In June 1997, the FASB adopted two standards, SFAS Nos. 130
and 131, "Reporting Comprehensive Income" and "Disclosures
about Segments of an Enterprise and Related Information,"
respectively. Both of these new standards relate to the
display of financial information rather than impacting the
computation of net income or earnings per share, and both
are effective for the Company beginning in 1998. SFAS 130
requires that companies display "comprehensive income,"
which in addition to the current definition of net income
includes certain amounts recorded directly in equity. For
the Company the only such item is foreign currency
translation adjustments. The new standard has been adopted
by adding a column, which shows comprehensive income, to the
statement of changes in shareholders' equity.
SFAS 131 mandates the management approach to identifying
business segments. Under the management approach, segments
are defined as the organizational units that have been
established for internal performance evaluation purposes.
In adopting this standard, the Company has defined the four
regions in which it operates to be its business segments.
Since this information was already displayed as geographic
information in the Company's prior years' financial
statements, and the information included in management's
discussion and analysis of results of operations was also
organized in this manner, adoption of this standard did not
have a significant impact on the Company's financial
statements.
Year 2000 Issues
The Company has studied the "Year 2000" issues affecting its
information technology and non-information technology systems
and has prepared and implemented a plan to address them. The
issues are not expected to have a material adverse effect on
the Company's operations. Although it believes that its
remediation plan has addressed all of its Year 2000 issues,
the Company has developed a contingency plan for business
critical systems in the event that it has not remediated all
issues. The Company estimates that the cost of addressing
its Year 2000 issues was $5.3 million. These costs
have not had 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. Based on the
information received from these third parties, the Company is
not aware of any Year 2000 issues of third parties expected 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. Due to the Company's extensive foreign operations, it
is exposed to Year 2000 issues related to the infrastructures
of the countries where these operations are located; however,
the Company is not aware of any specific issues that have not
been addressed through implementation of its plan.
Euro Implementation
On January 1, 1999, several European countries that are
members of the European Monetary Union replaced 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 have been implemented to deal with both types of issues.
To date there has been no significant impact from the adoption
of the euro, and none is expected. The incremental cost to
the Company of addressing the euro conversion has not been
and is not expected to be material.
Impact of Inflation
Inflation as measured by consumer price indices has continued
at a low level in most of the countries in which the Company
operates.
Market Risk
One of the Company's market risks is its exposure to the
impact of interest rate changes. The Company has elected
to manage this risk through the maturity structure of its
borrowings. Under its present policy, the Company has set
a target of having approximately half of its borrowings
with extended terms.
A significant portion of the Company's sales and profits
comes from its international operations. Although these
operations are geographically dispersed, which partially
mitigates the risks associated with operating in particular
countries, the Company is subject to the usual risks
associated with international operations. These risks
include local political and economic environments, and
relations between foreign and U.S. governments.
Another economic risk of the Company, which is associated
with its operating internationally, is the exposure to
fluctuations in foreign currency exchange rates on the
earnings, cash flows, and financial position of the
Company's international operations. The Company is not
able to project in any meaningful way the possible effect
of these fluctuations on translated amounts or future
earnings. This is due to the Company's constantly changing
exposure to various currencies, the fact that all foreign
currencies do not react in the same manner in relation to
the U.S. dollar, and the large number of currencies involved,
although the Company's most significant exposure is to the
euro.
Although this currency risk is partially mitigated by the
natural hedge arising from the Company's local manufacturing
in many markets, a strengthening U.S. dollar generally has a
negative impact on the Company. In response to this fact, the
Company uses financial instruments, such as cross-currency
interest rate swaps and forward contracts, to hedge its
exposure to certain foreign exchange risks associated with
a portion of its investment in international operations.
In addition to hedging against the balance sheet impact of
changes in exchange rates, the hedge of investments in
international operations also has the effect of hedging a
portion of the cash flows from those operations. The Company
also hedges with these instruments certain other exposures
to various currencies arising from non-permanent intercompany
loans and firm purchase commitments.
<TABLE>
Following is a listing of the Company outstanding derivative
financial instruments as of December 26, 1998, and December 27,
1997:
<CAPTION>
Forward Contracts
1998 1997
---------------------- -------------------------
Weighted Weighted
average average
contract contract
rate of rate of
(Dollars in millions) Buy Sell exchange Buy Sell exchange
------ ------ --------- ------ ------ ---------
<S> <C> <C> <C> <C> <C> <C>
Belgian francs
with U.S. dollars $ 82.0 33.8132 $ 31.6 36.5482
French francs
with U.S. dollars 36.0 5.4611 31.9 5.9278
Swiss francs
with U.S. dollars 20.8 1.3254 10.9 1.4343
Portuguese escudos
with U.S. dollars 17.9 167.9783 7.6 180.6614
Philippine pesos
with U.S. dollars 12.7 39.4400 8.1 40.2700
Austrian shillings
with U.S. dollars 8.7 11.6527 7.2 12.4690
Italian lira
with U.S. dollars 7.2 1,635.250 7.5 1,741.340
Netherlands guilders
with U.S. dollars 6.6 1.8462 5.7 1.9948
Australian dollars
with U.S. dollars 6.1 1.6054
British pounds
with U.S. dollars 13.5 0.6044
Belgian francs
for U.S. dollars $ 29.8 36.0269 $ 41.0 35.1055
German marks
for U.S. dollars 19.1 1.6565
Swiss francs
for U.S. dollars 18.4 1.3620 7.2 1.3849
French francs
for U.S. dollars 16.3 5.9456 19.2 5.7896
Spanish pesetas
for U.S. dollars 13.7 140.3850 10.9 150.0700
Japanese yen
for U.S. dollars 10.1 116.6352
Portuguese escudos
for U.S. dollars 7.5 181.2634 8.9 175.4878
Hong Kong dollars
for U.S. dollars 5.5 7.7551
Argentine pesos
for U.S. dollars 20.6 1.0090
Other currencies 7.2 9.5 various 14.3 7.5 various
------ ------ ------ ------
Total $205.2 $129.9 $138.3 $115.3
====== ====== ====== ======
</TABLE>
<TABLE>
Cross-Currency Interest Rate Swaps
(Dollars in millions)
1998<Fa>
-----------------------------
Weighted average
Amount at contract rate of
Currency owed inception exchange
- ------------- --------- ----------------
<S> <C> <C>
Belgian francs $ 44.2 33.9250
French francs 27.2 5.5075
Japanese yen 14.2 141.3300
Portuguese escudos 11.9 168.3600
Swiss francs 11.1 1.3539
Netherlands guilders 5.4 1.8550
------
Total $114.0
======
<FN>
<Fa> The Company had no cross-currency interest rate swaps
at the end of 1997.
</FN>
</TABLE>
The Company's derivative financial instruments at December 26,
1998, and December 27, 1997, consisted solely of the financial
instruments summarized above. All of the contracts mature
within 12 months with the exception of the Japanese yen cross-
currency interest rate swap, which matures in July, 2000.
Related to the forward contracts, the "buy" amounts represent
the U.S. dollar equivalent of commitments to purchase foreign
currencies and the "sell" amounts represent the U.S. dollar
equivalent of commitments to sell foreign currencies, all
translated at the year-end market exchange rates for the U.S.
dollar. The Company's open forward contracts as of December
28, 1998, include approximately $60 million of contracts to
sell foreign currencies, which were initially entered into to
hedge a portion of the Company's foreign net investments. The
Company began instead to hedge these net investment positions
with the cross-currency interest rate swaps shown above, and
as a consequence it entered into offsetting forward contracts
to buy an equivalent amount of local currencies. All other
forward contracts are hedging cross-currency intercompany
loans that are not permanent in nature or firm purchase
commitments. As of the end of fiscal 1998, under the cross-
currency interest rate swaps, the Company was to receive
interest at a weighted average rate of 5.0 percent and was
obligated to pay interest at a weighted average rate of 3.0
percent.
Forward-Looking Statements
Statements contained in this report that are not based on
historical facts are forward-looking statements involving
risks and uncertainties, including sales force recruiting
and activity levels, success of new products and promotional
programs, economic and market conditions generally and foreign
exchange risk in particular, and other risks detailed in the
Company's Securities and Exchange Commission filings. These
risks and uncertainties may cause actual results to differ
materially from those projected in forward-looking statements.
<TABLE>
TUPPERWARE CORPORATION
CONSOLIDATED STATEMENT OF INCOME
<CAPTION>
Year Ended
------------------------------------
Dec. 26, Dec. 27, Dec. 28,
1998 1997 1996
--------- -------- --------
(In millions, except per share amounts)
<S> <C> <C> <C>
Net sales $1,082.8 $1,229.3 $1,369.3
-------- -------- --------
Costs and expenses:
Cost of products sold 406.3 473.9 487.3
Delivery, sales, and
administrative expense 562.3 620.7 627.2
Interest expense 24.8 24.1 13.2
Interest income (2.1) (6.3) (5.2)
Costs associated with
becoming an
independent company -- -- 9.1
Other expense, net -- 6.1 3.2
-------- -------- --------
Total costs
and expenses 991.3 1,118.5 1,134.8
-------- -------- --------
Income before
income taxes 91.5 110.8 234.5
Provision for
income taxes 22.4 28.8 59.8
-------- -------- --------
Net income $ 69.1 $ 82.0 $ 174.7
======== ======== ========
Net income
per common share
(1996 pro forma
and unaudited):
Basic $ 1.19 $ 1.34 $ 2.75
======== ======== ========
Diluted $ 1.18 $ 1.32 $ 2.71
======== ======== ========
See Notes to the Consolidated Financial Statements.
</TABLE>
<TABLE>
TUPPERWARE CORPORATION
CONSOLIDATED BALANCE SHEET
<CAPTION>
Dec. 26, Dec. 27,
1998 1997
-------- --------
(Dollars in millions, except per share amounts)
<S> <C> <C>
Assets
Cash and cash equivalents $ 23.0 $ 22.1
Accounts receivable,
less allowances of $32.7
in 1998 and $40.4 in 1997 92.3 97.0
Inventories 157.1 184.2
Deferred income
tax benefits 55.5 44.4
Prepaid expenses
and other 57.7 55.4
------- ------
Total current assets 385.6 403.1
------- ------
Deferred income tax benefits 84.7 82.7
Property, plant, and
equipment, net 271.0 293.0
Long-term receivables,
net of allowances of $41.4
in 1998 and $39.3 in 1997 40.3 36.4
Other assets 41.8 32.0
------- -------
Total assets $ 823.4 $ 847.2
======= =======
Liabilities and
shareholders' equity
Accounts payable $ 85.3 $ 75.4
Short-term borrowings
and current portion of
long-term debt 18.7 --
Accrued liabilities 186.1 224.4
------- -------
Total current
liabilities 290.1 299.8
------- -------
Long-term debt 300.1 236.7
Accrued post-retirement
benefit cost 38.4 38.0
Other liabilities 59.0 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
Subscription receivable (7.7) --
Retained earnings 457.2 441.4
Treasury stock, 4,753,287 and
1,400,207 shares at cost in
1998, and 1997, respectively (142.0) (54.0)
Unearned portion of
restricted stock issued
for future service (1.4) (2.4)
Accumulated other
comprehensive income (190.4) (190.9)
------- -------
Total shareholders'
equity 135.8 214.2
------- -------
Total liabilities
and shareholders'
equity $ 823.4 $ 847.2
======= =======
See Notes to the Consolidated Financial Statements.
</TABLE>
<TABLE>
TUPPERWARE CORPORATION
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
<CAPTION>
Accumulated
Net other
Investment compre- Compre-
Common stock Treasury stock by Capital Retained hensive hensive
Shares Dollars Shares Dollars Premark surplus earnings income<Fa> income
------ ------- ------ ------- ------- ------- -------- -------- -------
(In millions, except per share amounts)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
December 30,
1995 -- -- -- -- $ 533.5 -- -- $(117.9)
Net income 31.6 $ 143.1 $174.7
Other compre-
hensive
income-foreign
currency
translation
adjustments,
net of tax
provision of
$2.3 million (10.6) (10.6)
------
Comprehensive
Income $164.1
======
Shares issued
to Premark 62.1 $ 0.6 (0.6)
Net transactions
with Premark
other than
special dividend 31.7
Special dividend
to Premark (293.7) $ 8.8
Distribution of
equity of the
Company to
Premark's
Shareholders (302.5) 302.5
Cash dividends
declared
($0.44
per share) (27.4)
Stock issued for
incentive plans
and related
tax benefits 0.3 -- 10.3
---- ---- ---- ---- ------- ----- ------ ------ -----
December 28,
1996 62.4 0.6 -- -- -- 19.1 418.2 (128.5)
Net income 82.0 $ 82.0
Other comprehensive
income-foreign
currency transla-
tion adjustments,
net of tax provision
of $5.0 million (62.4) (62.4)
-----
Comprehensive
Income $ 19.6
=====
Distribution of
equity of the
Company to
Premark's
shareholders (2.7)
Cash dividends
declared
($0.88 per share) (53.9)
Purchase of
treasury stock 1.5 $(57.6)
Stock issued for
incentive plans
and related tax
benefits (0.1) 3.6 0.4 (2.2)
---- ---- ----- ------ ------ ------ ------ -------
December 27,
1997 62.4 $ 0.6 1.4 $(54.0) -- $ 19.5 $441.4 $(190.9)
Net income 69.1 $ 69.1
Other comprehensive
income-foreign
currency translation
adjustments, net of
tax benefit of
$3.7 million 0.5 0.5
------
Comprehensive
Income $ 69.6
======
Cash dividends
declared
($0.88 per share) (50.9)
Purchase of
treasury stock 3.5 (93.1)
Stock issued for
incentive plans
and related tax
benefits (0.1) 5.1 (2.4)
---- ---- ---- ------- ------- ------ ------ -------
December 26,
1998 62.4 $0.6 4.8 $(142.0) -- $ 19.5 $457.2 $(190.4)
==== ==== ==== ======= ======= ====== ====== =======
<FN>
<Fa> Represents foreign currency translation adjustments.
</FN>
See Notes to the Consolidated Financial Statements.
</TABLE>
<TABLE>
TUPPERWARE CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended
---------------------------------------
Dec. 26, Dec. 27, Dec. 28,
1998 1997 1996
-------- -------- ----------
(In millions)
<S> <C> <C> <C>
Cash flows from
operating activities:
Net income $ 69.1 $ 82.0 $ 174.7
Adjustments to
reconcile net
income to net
cash provided
by operating
activities:
Depreciation 64.0 66.1 65.3
Loss on sale
of assets 3.4 2.7 5.2
Foreign exchange
(gain) loss, net (0.6) 1.2 1.3
Changes in assets
and liabilities:
Decrease (increase)
in accounts and
notes receivable 2.2 15.5 (14.1)
Decrease (increase)
in inventories 29.8 44.7 (54.0)
(Decrease) increase
in accounts payable
and accrued
liabilities (1.8) (13.6) 2.0
(Decrease) increase
in income taxes
payable (27.9) 5.1 0.6
Increase in net
deferred income
taxes (15.1) (33.2) (16.3)
Other, net (5.0) (8.7) (14.2)
------ ------- -------
Net cash provided
by operating
activities 118.1 161.8 150.5
------ ------- -------
Cash flows from
investing activities:
Capital expenditures (46.2) (67.5) (96.0)
------ ------- -------
Cash flows from
financing activities:
Special dividend
to Premark -- -- (284.9)
Net transactions with
Premark other than
special dividend -- -- 37.6
Dividend payments
to shareholders (51.6) (54.2) (13.7)
Payments to acquire
treasury stock (93.1) (57.1) --
Proceeds from
exercise of
stock options 1.4 3.4 6.3
Issuance of subscription
receivable (7.7) -- --
Net increase
(decrease) in
short-term debt 80.9 (14.8) (54.1)
Proceeds from
issuance of
long-term debt -- 15.0 315.5
Repayment of
long-term debt -- -- (100.6)
------ ------- -------
Net cash used
in financing
activities (70.1) (107.7) (93.9)
------ ------- -------
Effect of exchange
rate changes on cash
and cash equivalents (0.9) (17.5) (4.9)
------ ------ -------
Net increase (decrease)
in cash and
cash equivalents 0.9 (30.9) (44.3)
Cash and cash
equivalents at
beginning of year 22.1 53.0 97.3
------ ------ -------
Cash and cash
equivalents at
end of year $ 23.0 $ 22.1 $ 53.0
====== ====== =======
See Notes to the Consolidated Financial Statements.
</TABLE>
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1: Summary of Significant Accounting Policies
Principles of Consolidation
The consolidated financial statements include the accounts of
Tupperware Corporation and all of its subsidiaries (the
Company or Tupperware). All significant intercompany accounts
and transactions have been eliminated. The Company's fiscal
year ends on the last Saturday of December.
Use of Estimates
The preparation of financial statements in conformity with
generally accepted accounting principles requires management
to make estimates and assumptions. These estimates and
assumptions affect the reported amounts of assets and
liabilities and disclosure of contingent assets and
liabilities at the date of the financial statements, as well
as the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these
estimates.
Cash and Cash Equivalents
The Company considers all highly liquid investments with
a maturity of three months or less when purchased to be cash
equivalents. As of December 26, 1998, and December 27, 1997,
$6.8 million and $13.5 million, respectively, of the cash and
cash equivalents included on the consolidated balance sheet
were held in the form of time deposits or certificates of
deposit.
Inventories
Inventories are valued at the lower of cost or market.
Inventory cost includes cost of raw material, labor, and
overhead. Domestic inventories, approximately 16 percent
and 15 percent of total inventories, at December 26, 1998,
and December 27, 1997, respectively, are valued on the
last-in, first-out (LIFO) cost method. The first-in,
first-out (FIFO) cost method is generally used for the
remaining inventories. If inventories valued on the LIFO
method had been valued using the FIFO method, they would
have been $13.7 million higher at the end of 1998 and $16.0
million higher at the end of 1997.
Internal Use Software Development Costs
As of the beginning of 1998, the Company adopted American
Institute of Certified Public Accountants Statement of
Position (SOP) 98-1, "Accounting for the Costs of Computer
Software Developed or Obtained for Internal Use." In
accordance with the provisions of the SOP, the Company
capitalizes internal use software development costs
as they are incurred and then amortizes such costs over their
three-year useful lives beginning when the software is placed
in service. The impact of adopting the SOP was not material
to the Company's financial statements.
Property and Depreciation
Properties are initially stated at cost. Depreciation is
determined on a straight-line basis over estimated useful
lives. Generally, the estimated useful lives are 10 to 45
years for buildings and improvements and 3 to 20 years for
machinery and equipment. Upon the sale or retirement of
property, plant, and equipment, a gain or loss is recognized.
If the carrying value of an asset, including associated
intangibles, exceeds the sum of estimated undiscounted future
cash flows, then an impairment loss is recognized for the
difference between estimated fair value and carrying value.
Expenditures for maintenance and repairs are charged to
expense.
Subscription Receivable
On November 30, 1998, the Company made a non-recourse, non-
interest bearing loan of $7.7 million (the loan) to its
chairman and chief executive officer (chairman), the proceeds
of which were used by the chairman to buy in the open market
400,000 shares of the Company's common stock (the shares).
The shares are pledged to secure the repayment of the loan.
The loan has been recorded as a subscription receivable and
is due November 12, 2006, with voluntary prepayments
permitted subsequent to November 12, 2002. Ten percent of
any annual cash bonus award to the chairman will be applied
against the balance of the loan. As the loan is reduced by
voluntary payments after November 12, 2002, the lien against
the shares will be reduced. The subscription receivable will
be reduced as payments are received.
Revenue Recognition
Revenue is recognized when product is shipped.
Advertising and Research and Development Costs
Advertising and research and development costs are charged to
expense as incurred. Advertising expense totaled $7.2 million,
$6.2 million, and $7.3 million in 1998, 1997, and 1996,
respectively. Research and development costs totaled $11.5
million, $12.8 million, and $7.2 million, in 1998, 1997, and
1996, respectively.
Accounting for Stock-Based Compensation
The Company measures compensation expense for employee and
director stock options as the aggregate difference between the
market and exercise prices of the options on the date that
both the number of shares the grantee is entitled to receive
and the purchase price are known. Compensation expense
associated with restricted stock grants is equal to the market
value of the shares on the date of grant and is recorded pro
rata over the required holding period. Pro forma information
relating to the fair value of stock-based compensation is
presented in Note 9 to the consolidated financial statements.
Income Taxes
Deferred tax assets and liabilities are recognized for the
future tax consequences attributable to temporary differences
between the financial statement carrying amounts of assets and
liabilities and their respective tax bases. Deferred tax
assets also are recognized for credit carryforwards. Deferred
tax assets and liabilities are measured using the rates
expected to apply to taxable income in the years in which the
temporary differences are expected to reverse and the credits
are expected to be used. The effect on deferred tax assets
and liabilities of the change in tax rates is recognized in
income in the period that includes the enactment date. An
assessment is made as to whether or not a valuation allowance
is required to offset deferred tax assets. This assessment
includes anticipating future income.
The results of the Company's domestic operations were
included in Premark International, Inc.'s (Premark)
consolidated U.S. federal tax return through May 31, 1996, the
date of the Distribution. The provision for income taxes
included in these financial statements for the period prior to
the Distribution is the Company's allocated share of Premark's
domestic income tax expense, representing the expense that the
Company would have incurred on a separate return basis, and
the actual income tax provisions of its foreign subsidiaries.
As part of the plan of Distribution, Tupperware and Premark
entered into a tax-sharing agreement. This agreement
generally provides that for periods prior to the Distribution,
the two companies will retain the liability for any unpaid
taxes attributable to their respective operations.
Net Income Per Common Share
These financial statements include "basic" and "diluted" per
share information for all 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 58.2 million, 61.3 million, and 62.0 million,
in 1998, 1997, and 1996, respectively. The only difference
in the computation of basic and diluted earnings per
share is the inclusion of 0.5 million in 1998 and 0.5 million
in 1997 and 0.8 million in 1996, of shares of potential common
stock. The Company's potential common stock consists of
employee and director stock options and restricted stock.
Pro forma unaudited net income per common share is calculated
for the period prior to the Distribution as if the Distribution
had occurred at the beginning of fiscal 1995. The pro forma
amounts assume that the Company used $25.0 million of available
cash and $271.9 million of additional borrowings to fund a
special dividend payment to Premark of $284.9 million, and
$12.0 million for the amount that the Company paid in July
1996 related to the quarterly dividend declared on Premark's
common stock on May 1, 1996. Pro forma net income in 1996
is based on the Company's historical net income adjusted for
$7.0 million of additional pro forma interest expense, net of
$2.7 million of tax benefits, related to the increase in
borrowings at an assumed weighted average interest rate of
6.2 percent. Pro forma net income per share includes pro
forma net income divided by an assumed average common shares
of 62.0 million for basic and 62.8 million for diluted, for
the period prior to the Distribution and actual net income
per share for the period subsequent to the Distribution.
Comprehensive Income
In 1998 the Company adopted SFAS No. 130, "Reporting
Comprehensive Income." SFAS 130 requires that companies
display "comprehensive income," which in addition to net
income includes all other changes in shareholders' equity
except those resulting from investments by owners and
distributions to them. For all years presented, the
Company's comprehensive income, which encompasses net income
and foreign currency translation adjustments, is displayed
in the consolidated statement of shareholders' equity.
Derivative Financial Instruments
The Company uses derivative financial instruments,
principally cross-currency interest rate swaps and over-
the-counter forward exchange contracts with major international
financial institutions, to offset the effects of exchange
rate changes on net investments in certain foreign
subsidiaries, firm purchase commitments, and certain
intercompany loan transactions. Gains and losses on
instruments designated as hedges of net investments in a
foreign subsidiary or intercompany transactions that are
permanent in nature are accrued as exchange rates change, and
are recognized in shareholders' equity, along with any points
on forward exchange contracts, as foreign currency translation
adjustments. The net interest differential on cross-currency
interest rate swaps is included within interest expense.
Gains and losses on contracts designated as hedges of
intercompany transactions that are not permanent in nature
are accrued as exchange rates change and are recognized in
income. Gains and losses on contracts designated as hedges
of identifiable foreign currency firm commitments are deferred
and included in the measurement of the related foreign currency
transaction. Contracts hedging non-permanent intercompany
transactions and identifiable foreign currency firm commitments
are held to maturity.
Fair Value of Financial Instruments
Due to their short maturity or their insignificance, the
carrying amounts of cash and cash equivalents, accounts and
notes receivable, accounts payable, accrued liabilities,
short-term borrowings, and outstanding forward exchange
contracts approximated their fair values at December 26,
1998, and December 27, 1997. The approximate fair value
of the Company's $100 million of 7.25 percent notes due in
2006, determined through reference to market yields, was
$104.3 million and $105.5 million as of December 26, 1998,
and December 27, 1997, respectively. The fair value of the
remaining long-term debt approximated its book value at the
end of 1998 and 1997.
Foreign Currency Translation
Results of operations for foreign subsidiaries are translated
into U.S. dollars using the average exchange rates during the
year. The assets and liabilities of those subsidiaries, other
than those of operations in highly inflationary countries, are
translated into U.S. dollars using the exchange rates at the
balance sheet date. The related translation adjustments are
"Accumulated other comprehensive income." Foreign currency
transaction gains and losses, as well as translation of
financial statements of subsidiaries in highly inflationary
countries, are included in income.
Note 2: Relationship and Transactions with Premark
International, Inc.
On May 31, 1996, Tupperware became an independent Company
through the distribution by Premark to its shareholders of
the equity of the Company (the Distribution). The
Distribution was effected through a 1-for-1 distribution of
stock, which was tax free to Premark's shareholders pursuant
to a ruling received from the Internal Revenue Service.
Under a Distribution Agreement with Premark dated May 24,
1996, Dart Industries Inc. (Dart), which is now a wholly-
owned subsidiary of Tupperware, paid a $284.9 million special
dividend (the Dividend Payment) to Premark. Dart funded the
Dividend Payment with new bank borrowings and available cash.
In addition, the Company paid Premark $12.0 million in July
1996 to fund a portion of the quarterly dividend on Premark's
common stock declared in May 1996. Included in the
consolidated statement of income is an allocation of general
corporate expenses related to services provided for the
Company by Premark in the amount of $4.4 million for 1996
through the date of the Distribution. This allocation was
based on an estimate of the proportion of corporate expenses
related to the Company for the period presented and, in the
opinion of management, has been made on a reasonable basis
and approximates the incremental costs that would have been
incurred had the Company been operating on a stand-alone basis.
Prior to the Distribution, there were no material intercompany
purchase or sale transactions between Premark and the Company.
Under Premark's centralized cash management system, short-term
advances from Premark and excess cash sent to Premark were
reflected as "Net transactions with Premark" during the period
prior to the Distribution. No interest was charged or
otherwise allocated by Premark to the Company.
Note 3: Inventories
(In millions)
1998 1997
------- -------
Finished goods $ 74.5 $ 86.2
Work in process 31.7 43.3
Raw materials and supplies 50.9 54.7
------ ------
Total inventories 157.1 $184.2
====== ======
Note 4: Property, Plant, and Equipment
(In millions)
1998 1997
------- -------
Land $ 12.5 $ 11.8
Buildings and improvements 182.9 172.2
Machinery and equipment 773.6 738.2
Construction in progress 3.9 21.8
------- -------
Total property, plant,
and equipment 972.9 944.0
Less accumulated depreciation (701.9) (651.0)
------- -------
Property, plant,
and equipment, net $ 271.0 $ 293.0
======= =======
In 1998, the Company sold its Halls, Tennessee distribution
center for $10.6 million in notes receivable. The notes
are due in 1999 through 2004, with the majority due under
a balloon payment to be received in the final year. There
was no significant income statement impact from the sale.
Note 5: Accrued Liabilities
(In millions)
1998 1997
------- -------
Compensation and
employee benefits $ 51.3 $ 52.7
Advertising and promotion 31.1 36.5
Taxes other than income taxes 22.0 34.2
Income taxes 1.9 27.3
Other 79.8 73.7
------- -------
Total accrued liabilities $ 186.1 $ 224.4
======= =======
Note 6: Financing Arrangements
Short-term Borrowings
<TABLE>
(Dollars in millions)
1998 1997 1996
-------- -------- --------
<S> <C> <C> <C>
Total short-term
borrowings at year-end $ 187.3 $105.0 $123.7
Weighted average
interest rate at year-end 4.7% 6.4% 5.3%
Average borrowings
during the year $ 197.2 $166.2 $186.4
Weighted average
interest rate
for the year 5.7% 5.5% 5.0%
Maximum borrowings
during the year $ 240.8 $212.5 $316.6
</TABLE>
The average borrowings and weighted average interest rates
were determined using month-end borrowings and the interest
rates applicable to them. Of total year-end borrowings at
December 26, 1998, $80.0 million was under the Company's
$300 million multicurrency financing facility with a group
of banks, and $22.2 million was through outstanding commercial
paper. The remaining $85.1 million of short-term borrowings
was from several banks, with $31.9 million payable in Swiss
francs, $13.1 million in Japanese yen, $10.6 million in German
marks, and $10.0 million in Belgian francs. As of December 26,
1998, $168.6 million of the Company's outstanding borrowings
that were due within one year by their terms were classified
as non-current due to the Company's ability and intent that
those borrowings be outstanding throughout 1999.
Operating Leases
Rental expense for operating leases totaled $36.7 million in
1998, $40.5 million in 1997, and $32.8 million in 1996.
Approximate minimum rental commitments under noncancelable
operating leases in effect at December 26, 1998, were: 1999
- -- $6.7 million; 2000 -- $6.7 million; 2001 -- $3.6 million;
2002 -- $2.1 million; 2003 -- $1.8 million; and after 2003 --
$0.7 million.
Long-term Debt
(In millions)
1998 1997
-------- --------
6.84% Series Notes due 2000 $ 15.0 $ 15.0
7.05% Series Notes due 2003 15.0 15.0
7.25% Notes due 2006 100.0 100.0
Short-term borrowings
classified as non-current 168.6 105.0
Other 1.5 1.7
------ ------
Total long-term debt $300.1 $236.7
====== ======
As of December 26, 1998, the Company had $436.9 million of
unused lines of credit, including $220.0 million under the
$300.0 million unsecured multicurrency facility that was
entered into in May 1996 and amended in August 1997. This
facility supports the Company's commercial paper borrowing
capability and expires in August 2002. Interest paid on
total debt in 1998, 1997 and 1996, was $26.2 million,
$23.7 million, and $10.8 million, respectively.
<TABLE>
Derivative Financial Instruments
The following is a listing of the Company's outstanding
derivative financial instruments as of December 26, 1998,
and December 27, 1997:
<CAPTION>
Forward Contracts 1998 1997
---------------------- -------------------------
Weighted Weighted
average average
contract contract
rate of rate of
(Dollars in millions) Buy Sell exchange Buy Sell exchange
------ ------ --------- ------ ------ --------
<S> <C> <C> <C> <C> <C> <C>
Belgian francs
with U.S. dollars $ 82.0 33.8132 $ 31.6 36.5482
French francs
with U.S. dollars 36.0 5.4611 31.9 5.9278
Swiss francs
with U.S. dollars 20.8 1.3254 10.9 1.4343
Portuguese escudos
with U.S. dollars 17.9 167.9783 7.6 180.6614
Philippine pesos
with U.S. dollars 12.7 39.4400 8.1 40.2700
Austrian shillings
with U.S. dollars 8.7 11.6527 7.2 12.4690
Italian lira
with U.S. dollars 7.2 1,635.250 7.5 1,741.340
Netherlands guilders
with U.S. dollars 6.6 1.8462 5.7 1.9948
Australian dollars
with U.S. dollars 6.1 1.6054
British pounds
with U.S. dollars 13.5 0.6044
Belgian francs
for U.S. dollars $ 29.8 36.0269 $ 41.0 35.1055
German marks
for U.S. dollars 19.1 1.6565
Swiss francs
for U.S. dollars 18.4 1.3620 7.2 1.3849
French francs
for U.S. dollars 16.3 5.9456 19.2 5.7896
Spanish pesetas
for U.S. dollars 13.7 140.3850 10.9 150.0700
Japanese yen
for U.S. dollars 10.1 116.6352
Portuguese escudos
for U.S. dollars 7.5 181.2634 8.9 175.4878
Hong Kong dollars
for U.S. dollars 5.5 7.7551
Argentine pesos
for U.S. dollars 20.6 1.0090
Other currencies 7.2 9.5 various 14.3 7.5 various
------ ------ ------ ------
Total $205.2 $129.9 $138.3 $115.3
====== ====== ====== ======
</TABLE>
<TABLE>
Cross-Currency Interest Rate Swaps
(Dollars in millions)
1998<Fa>
----------------------------
Weighted average
Amount at contract rate of
Currency owed inception exchange
- ------------- --------- ----------------
<S> <C> <C>
Belgian francs $ 44.2 33.9250
French francs 27.2 5.5075
Japanese yen 14.2 141.3300
Portuguese escudos 11.9 168.3600
Swiss francs 11.1 1.3539
Netherlands guilders 5.4 1.8550
------
Total $114.0
======
<FN>
<Fa> The Company had no cross-currency interest rate swaps
at the end of 1997.
</FN>
</TABLE>
The Company's derivative financial instruments at December
26, 1998, and December 27, 1997, consisted solely of the
financial instruments summarized above. All of the
contracts mature within 12 months with the exception of
the Japanese yen cross-currency interest rate swap, which
matures in July 2000. Related to the forward contracts,
the "buy" amounts represent the U.S. dollar equivalent of
commitments to purchase foreign currencies and the "sell"
amounts represent the U.S. dollar equivalent of commitments
to sell foreign currencies, all translated at the year-end
market exchange rates for the U.S. dollar. The Company's
open forward contracts as of December 28, 1998, include
approximately $60 million of contracts to sell foreign
currencies, which were initially entered into to hedge
a portion of the Company's foreign net investments. The
Company began instead to hedge these net investment
positions with the cross-currency interest rate swaps shown
above, and as a consequence it entered into offsetting forward
contracts to buy an equivalent amount of local currencies.
All other forward contracts are hedging cross-currency
intercompany loans that are not permanent in nature or firm
purchase commitments. As of the end of fiscal 1998, under the
cross-currency interest rate swaps, the Company was to receive
interest at a weighted average rate of 5.0 percent and to pay
interest at a weighted average rate of 3.0 percent.
The Company's theoretical credit risk for each derivative
instrument is its replacement cost, but management believes
that the risk of incurring credit losses is remote and that
such losses, if any, would not be material. The Company also
is exposed to market risk on its derivative instruments due to
potential changes in foreign exchange rates; however, such
market risk would be substantially offset by changes in the
valuation of the underlying items being hedged. For all
outstanding derivative instruments, at December 26, 1998, the
net accrued loss was $7.5 million, and at December 27, 1997,
the net accrued gain was $1.6 million. The aggregate impact
of all foreign currency transactions was not material to the
Company's income.
Note 7: Income Taxes
For income tax purposes, the domestic and foreign
components of income before taxes were as follows:
<TABLE>
(In millions)
1998 1997 1996
--------- -------- --------
<S> <C> <C> <C>
Domestic $ 24.5 $ 59.9 $ 97.8
Foreign 67.0 50.9 136.7
------ ------ ------
Total $ 91.5 $110.8 $234.5
====== ====== ======
</TABLE>
The provision for income taxes was as follows:
<TABLE>
(In millions)
1998 1997 1996
--------- -------- --------
<S> <C> <C> <C>
Current:
Federal $ (2.1) $ (1.3) $ 7.7
Foreign 43.9 55.1 63.3
State 1.4 2.8 3.4
------ ------ ------
43.2 56.6 74.4
------ ------ ------
Deferred:
Federal (10.3) (10.5) (6.8)
Foreign (9.3) (16.1) (6.6)
State (1.2) (1.2) (1.2)
------ ------ ------
(20.8) (27.8) (14.6)
------ ------ ------
Total $ 22.4 $ 28.8 $ 59.8
====== ====== ======
</TABLE>
The differences between the provision for income taxes and
income taxes computed using the U.S. federal statutory rate
were as follows:
<TABLE>
(In millions)
1998 1997 1996
--------- -------- --------
<S> <C> <C> <C>
Amount computed using
statutory rate $ 32.0 $ 38.8 $ 82.1
Increase (reduction)
in taxes resulting
from:
Net benefit from
repatriating
foreign earnings (22.0) (22.7) (6.8)
Foreign income taxes 11.1 21.3 --
Changes in valuation
allowance for federal
deferred tax assets -- (10.0) (9.9)
Benefit of capital
loss carryforward -- -- (10.0)
Other 1.3 1.4 4.4
------ ------- ------
$ 22.4 $ 28.8 $ 59.8
====== ======= ======
</TABLE>
In 1998, 1997, and 1996, the Company recognized $0.6 million,
$0.3 million, and $3.1 million, respectively, of benefits for
deductions associated with the exercise of employee stock options.
These benefits were added directly to capital surplus, and are
not reflected in the provision for income taxes.
Deferred tax assets (liabilities) are composed of the
following:
<TABLE>
(In millions)
1998 1997
---------- ----------
<S> <C> <C>
Depreciation $ (8.9) $(16.8)
Deferred costs (0.4) (2.2)
Other (3.4) (9.3)
------ ------
Gross deferred
tax liabilities (12.7) (28.3)
------ ------
Credit carry forwards 62.2 42.4
Fixed assets basis differences 20.5 24.6
Employee benefits accruals 18.0 19.8
Post-retirement benefits 16.4 15.7
Inventory reserves 16.3 17.8
Bad debt reserves 3.4 6.0
Computer leasing transactions 3.1 3.1
Other accruals 34.5 33.6
------ ------
Gross deferred tax assets 174.4 163.0
------ ------
Valuation allowances (23.9) (14.4)
------ ------
Net deferred tax assets $137.8 $120.3
====== ======
</TABLE>
At December 26, 1998, the Company had a domestic capital
loss carry forward of $40.7 million and foreign net operating
loss carry forwards of $86.7 million. The capital loss
carry forward expires in 2001. Of the total net operating
loss carry forwards, $59.8 million expire at various dates
from 1999 to 2005, while the remainder have unlimited lives.
During 1998, the Company recognized net benefits of $6.2
million related to foreign net operating loss carry forwards.
Repatriation of foreign earnings would not result in a
significant incremental cost to the Company. At December 26,
1998 and December 27, 1997, the Company had valuation
allowances against certain deferred tax assets totaling $23.9
million and $14.4 million, respectively. These valuation
allowances relate to tax assets in jurisdictions where it is
management's best estimate that there is not a greater than 50
percent probability that the benefit of the assets will be
realized in the associated tax returns. The likelihood of
realizing the benefit of deferred tax assets is assessed on
an ongoing basis. Consequently, future material changes in
the valuation allowance are possible.
The Company paid income taxes in 1998, 1997, and 1996, of
$65.3 million, $50.5 million, and $76.5 million, respectively.
For the period prior to the Distribution when the Company's
domestic operations were included in Premark's U.S. tax
returns, income tax payments were made only by foreign
subsidiaries of the Company.
Note 8: Retirement Benefit Plans
Pension Plans
The Company has various pension plans covering substantially
all domestic employees and certain employees in other
countries. In addition to providing pension benefits, the
Company provides certain post-retirement healthcare and life
insurance benefits for selected U.S. and Canadian employees.
Most employees and retirees outside the United States are
covered by government healthcare programs. Employees may
become eligible for these benefits if they reach normal
retirement age while working for the Company and satisfy
certain years of service requirements. The medical plans
are contributory, with retiree contributions adjusted
annually, and contain other cost-sharing features, such as
deductibles and coinsurance. The medical plans include an
allowance for Medicare for post-65 retirees. The Company
has the right to modify or terminate these plans.
In 1998, the Company adopted SFAS No. 132, "Employers'
Disclosures about Pensions and other Post-retirement Benefits."
This Statement standardizes the disclosure for pensions and
other post-retirement benefits. Prior years' information has
been restated to conform with the requirements of the statement.
<TABLE>
(In millions)
U.S. plans Foreign plans
----------------------------- -------------
Pension Post-retirement Pension
benefits benefits benefits
------------- --------------- -------------
1998 1997 1998 1997 1998 1997
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Change in benefit
obligations:
Beginning balance $ 25.7 $ 24.4 $ 38.1 $ 38.4 $ 57.0 $ 64.4
Service cost 1.1 0.9 0.3 0.3 3.0 3.3
Interest cost 1.8 1.8 2.7 2.7 2.9 3.0
Actuarial loss (gain) 2.6 1.1 2.5 (1.3) - (3.9)
Benefits paid (1.3) (2.5) (2.6) (2.0) (4.6) (1.9)
Impact of exchange rates -- -- -- -- 5.8 (7.9)
------ ------ ------ ------ ------ ------
Ending balance 29.9 25.7 41.0 38.1 64.1 57.0
------ ------ ------ ------ ------ ------
Change in plan assets
at fair value:
Beginning balance 23.1 21.7 -- -- 23.7 25.2
Actual return on
plan assets 3.2 3.9 -- -- 1.2 1.2
Company contributions 0.3 -- 2.6 2.0 4.2 2.3
Plan participant
contributions -- -- -- -- 0.2 0.2
Benefits paid (1.3) (2.5) (2.6) (2.0) (4.6) (1.9)
Impact of exchange rates -- -- -- -- 2.7 (3.3)
------ ------ ------ ------ ------ ------
Ending balance 25.3 23.1 -- -- 27.4 23.7
------ ------ ------ ------ ------ ------
Funded status of the plan (4.6) (2.6) (41.0) (38.1) (36.7) (33.3)
Unrecognized actuarial
(gain) loss -- (1.4) 2.1 (0.2) 1.8 2.3
Unrecognized prior service
benefit (0.1) -- (1.8) (2.0) - -
Unrecognized net transition
(asset) liability (0.2) (0.3) -- -- 2.0 2.4
Impact of exchange rates -- -- -- -- 0.6 (0.4)
------ ------ ------ ------ ------ ------
Accrued benefit cost $ (4.9)$ (4.3)$(40.7)$(40.3) $(32.3)$(29.0)
====== ====== ====== ====== ====== ======
Weighted average assumptions:
Discount rate 6.8% 7.3% 6.8% 7.3% 4.7% 5.2%
Return on plan assets 9.0 9.0 n/a n/a 5.2 5.3
Salary growth rate 6.0 6.0 n/a n/a 2.6 3.4
</TABLE>
Plan assets consist primarily of equity securities and corporate and
government bonds. At December 26, 1998, and December 27, 1997, the
accumulated benefit obligations of certain pension plans exceeded those
plans' assets. For those plans, the accumulated benefit obligations
were $70.7 million and $38.8 million, and the fair value of those
plans' assets as of December 26, 1998, and December 27, 1997, were
$42.5 million and $15.0 million, respectively.
<TABLE>
(In millions)
Pension benefits Post-retirement benefits
-------------------- ------------------------
1998 1997 1996 1998 1997 1996
------ ------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C> <C>
Components of net periodic
benefit cost:
Service cost $ 4.1 $ 4.2 $ 5.0 $ 0.3 $ 0.3 $ 0.5
Interest cost 4.7 4.8 5.2 2.7 2.7 2.8
Actual return on plan assets (2.3) (3.1) (3.1) -- -- --
Net amortization and (deferral) (0.3) 0.7 0.8 (0.2) (0.2) (0.1)
------ ------ ------ ------ ------ ------
Net periodic benefit cost $ 6.2 $ 6.6 $ 7.9 $ 2.8 $ 2.8 $ 3.2
====== ====== ====== ====== ====== ======
</TABLE>
The assumed healthcare cost trend rate was 8 percent for the
pre-65 plan and 6 percent for the post-65 plan for 1998. The
pre-65 plan rate is assumed to decrease by one percentage point
per year until an ultimate level of 6 percent is reached. For
the post-65 plan the rate is assumed to remain at 6 percent.
The healthcare cost trend rate assumption has a significant
effect on the amounts reported. A one percentage point change
in the assumed healthcare cost trend rates would have the
following effects:
One percentage point
Increase Decrease
-------- --------
(In millions)
Effect on total of service
and interest cost components $ 0.3 $ (0.3)
Effect on post-retirement
benefit obligation 3.6 (2.8)
The Company also has several savings, thrift, and profit-
sharing plans. Its contributions to these plans are based
upon various levels of employee participation. The total
cost of these plans was $4.5 million in 1998, $4.9 million
in 1997, and $3.5 million in 1996.
Note 9: Incentive Compensation Plans
Certain officers and other key employees of the Company
participate in the Tupperware Corporation 1996 Incentive Plan
(the Incentive Plan). Annual and long-term performance awards
and awards of options to purchase Tupperware shares and of
restricted stock are made under the Incentive Plan.
Performance Awards
Earned performance awards of $9.6 million, $7.5 million, and
$19.3 million are included in the consolidated statement
of income for 1998, 1997, and 1996, respectively.
Stock Awards
The total number of shares initially available for grant under
the Incentive Plan was 6,100,000; however, that amount was
increased to 7,600,000 as a result of Company repurchases of
shares. Of the total number of shares available for grant, up
to 300,000 may be used for restricted stock awards. As of
December 26, 1998, shares available for award under the
Incentive Plan totaled 1,978,817, of which 81,844 could be
granted in the form of restricted stock.
Other than for options on 405,500 shares granted in
1997, for which the exercise price is 10 percent greater than
the grant-date market value of the shares, all options'
exercise prices are equal to the underlying shares' grant-
date market values. Under the options outstanding as of
December 26, 1998, 55,135 shares may be purchased at prices
less than $10.00 per share; 2,357,710 shares at prices between
$10.01 and $20.00 per share; 1,337,495 shares at prices between
$20.01 and $30.00 per share; 614,215 shares at prices between
$30.01 and $40.00 per share; and 588,400 shares at prices
greater than $40.00 per share. Outstanding options granted
in 1997 and earlier, that have exercise prices equal to the
underlying shares' grant-date market value and options granted
in 1998 on 339,000 shares, have vesting dates that are three
years from the date of grant. The remainder of the options
granted in 1998 vest ratably from the second through fifth
anniversaries of the date of grant. Options that have exercise
prices in excess of the grant-date market price will vest in
three equal tranches if the price of the Company's stock
exceeds $32.05, $36.05, and $40.05 per share for 45 of 60
consecutive trading days over the five-year period beginning
on the date of grant.
All outstanding options have exercise periods that are 10
years from the date of grant. Outstanding restricted shares
have initial vesting periods ranging from 1 to 5 years.
Options outstanding as of December 26, 1998, will expire
during the period 1999 through 2008, and have a weighted-
average remaining life of 8.0 years. As of December 26,
1998, options to purchase 1,402,105 shares were exercisable.
No compensation expense has been reflected in the consolidated
statement of income under the Company's accounting policy. As
required by SFAS 123, "Accounting for Stock-Based Compensation,"
the Company has estimated the fair value of its option grants
beginning with 1995. If these fair value estimates had been
used to record compensation expense in the consolidated
statement of income, net income/pro forma net income would
have been reduced by $3.7 million, $2.5 million, and $1.6
million, to $65.3 million, $79.5 million, and $168.8 million,
or $1.11, $1.29, and $2.69 per diluted common share ($1.12,
$1.30, and $2.72 per basic common share) in 1998, 1997, and
1996, respectively.
The fair value of the stock option grants were estimated
using the Black-Scholes option-pricing model with the
following assumptions: dividend yield of 3.0 percent for
1998 grants and 2.0 percent for previous grants; expected
volatility of 40.0 percent for 1998 grants, 35.0 percent for
1997 grants, and 30.0 percent for previous grants; risk-free
interest rates of 4.5 percent for 1998, 5.8 percent for 1997
and 1995, and 6.4 percent for 1996; and expected lives of 5
years for all grants. Compensation expense associated with
restricted stock grants is equal to the fair market value of
the shares on the date of grant and is recognized ratably over
the required holding period. Compensation expense associated
with restricted stock grants was not significant.
Under the Tupperware Corporation Director Stock Plan (Director
Plan), non-employee directors may elect to receive their
annual retainers in the form of stock or stock options.
Options granted to directors become exercisable on the last
day of the fiscal year in which they are granted, have a term
of 10 years, and have an exercise price that compensates for
the foregone cash retainer. This amount and the value of
stock grants on the date of award have been recognized as an
expense by the Company. The number of shares initially
available for grant under the Director Plan and the number of
shares available as of December 26, 1998, were 300,000 and
220,169, respectively. As of December 26, 1998, options to
purchase 69,258 shares were exercisable.
Stock option and restricted stock activity for the Incentive
Plan and the Director Plan is summarized below:
<TABLE>
Average
Shares subject option price
Stock options to option per share
- ----------------------------- -------------- ------------
<S> <C> <C>
Balance at December 28, 1996 2,437,143 $ 28.91
Options granted 1,090,000 25.24
Options canceled (96,748) 36.98
Options exercised (83,525) 15.91
---------
Balance at December 27, 1997 3,346,870 27.81
Options granted 1,975,402 19.43
Options canceled (174,646) 32.84
Options exercised (125,413) 11.65
---------
Balance at December 26, 1998 5,022,213 24.75
=========
</TABLE>
<TABLE>
Shares
Shares available
Restricted stock outstanding for issuance
- ---------------------------- ------------- ------------
<S> <C> <C>
Balance at December 28, 1996 148,311 151,689
Shares awarded 20,329 (20,329)
Shares canceled (3,244) 3,244
Shares vested (38,055) --
------- -------
Balance at December 27, 1997 127,341 134,604
Shares awarded 59,760 (59,760)
Shares canceled (7,000) 7,000
Shares vested (29,728) --
------- -------
Balance at December 26, 1998 150,373 81,844
======= =======
</TABLE>
Note 10: Segment Information
The Company operates worldwide in one line of business: the
manufacture and distribution, through independent direct
sales forces, of plastic food storage and serving containers,
microwave cookware, and educational toys. Its operations are
organized into the four geographic segments included in the
following table.
<TABLE>
(In millions)
1998 1997 1996
--------- -------- --------
<S> <C> <C> <C>
Net sales:
Europe $ 518.7 $ 546.6 $ 581.7
Asia Pacific 211.5 279.0 338.0
Latin America 186.8 247.2 268.5
United States 165.8 156.5 181.1
-------- -------- --------
Total net sales $1,082.8 $1,229.3 $1,369.3
======== ======== ========
Operating profit(loss):
Europe $ 123.9 $ 144.6 $ 153.0
Asia Pacific 20.2 37.2 61.0
Latin America (16.4) (5.7)<Fa> 43.3
United States 4.0 (29.5)<Fa> 10.4
------- -------- --------
Total operating
profit 131.7 146.6 267.7
Unallocated expenses (17.5) (18.0)<Fa> (16.1)
Costs associated with
becoming an
independent company -- -- (9.1)
Interest expense, net (22.7) (17.8) (8.0)
------- ------- --------
Income before
income taxes $ 91.5 $ 110.8 $ 234.5
======= ======== ========
Depreciation:
Europe $ 25.7 $ 26.5 $ 29.2
Asia Pacific 12.0 14.4 15.9
Latin America 12.5 10.5 7.9
United States 11.7 12.8 10.3
Corporate 2.1 1.9 2.0
------- -------- --------
Total depreciation $ 64.0 $ 66.1 $ 65.3
======= ======== ========
Capital expenditures:
Europe $ 13.1 $ 15.5 $ 22.7
Asia Pacific 5.6 9.8 20.2
Latin America 13.6 17.0 35.2
United States 9.0 16.4 11.2
Corporate 4.9 8.8 6.7
-------- -------- --------
Total capital $ 46.2 $ 67.5 $ 96.0
Expenditures ======== ======== ========
Identifiable assets:
Europe $ 260.7 $ 287.1 $ 315.6
Asia Pacific 148.4 144.9 198.5
Latin America 165.1 170.2 181.1
United States 151.7 157.1 176.3
Corporate 97.5 87.9 107.0
-------- -------- --------
Total identifiable
assets $ 823.4 $ 847.2 $ 978.5
======== ======== ========
<FN>
<Fa> Includes a fourth quarter pretax charge totaling $42.4
million ($31.3 million after tax): $22.2 million in Latin
America, primarily for bad debts in Brazil; $16.0 million in
the United States, primarily for inventory obsolescence; and
$4.2 million in unallocated expenses, primarily for corporate
downsizing.
</FN>
</TABLE>
Sales and operating profit in the preceding table are from
transactions with customers. Inter-area transfers of inventory
are accounted for at cost. Sales to a single customer did not
exceed 10 percent of total sales. Export sales were
insignificant. Sales to customers in Germany were $241.2
million, $260.8 million, and $275.4 million in 1998, 1997, and
1996, respectively ($257.5 million and $238.4 million in 1997
and 1996, respectively, at 1998 exchange rates). No other
foreign country's sales exceeded 10 percent of the Company's
total sales. Unallocated expenses are corporate expenses and
other items not directly related to the operations of any
particular geographic segment.
Corporate assets consist of cash and assets maintained
for general corporate purposes. The United States was the only
country with long-lived assets greater than 10 percent of the
Company's total assets at December 26, 1998. As of the end of
1998, 1997, and 1996, respectively, long-lived assets in the
United States were $110.3 million, $112.5 million, and $100.4
million.
As of December 26, 1998, and December 27, 1997, the Company's
net investment in international operations was $212.2 million
and $210.0 million, respectively. The Company is subject to
the usual economic risks associated with international
operations; however, these risks are partially mitigated by
the broad geographic dispersion of the Company's operations.
Note 11: Contingencies
The Company and certain subsidiaries are involved in
litigation and various legal matters that are being defended
and handled in the ordinary course of business. Included
among these matters are environmental issues. None of the
Company's contingencies are expected to have a material
adverse effect on its financial position, results of
operations, or cash flow.
Kraft Foods, Inc., which was formerly affiliated with Premark
and Tupperware, has assumed any liabilities arising out of any
legal proceedings in connection with certain divested or
discontinued businesses. The liabilities assumed include
matters alleging product liability and environmental liability,
and infringement of patents.
Note 12: Quarterly Financial Summary (Unaudited)
Following is a summary of the unaudited interim results of
operations for each quarter in the years ended December 26,
1998, and December 27, 1997.
<TABLE>
(In millions, except per share amounts)
First Second Third Fourth
quarter quarter quarter quarter
------- ------- ------- -------
<S> <C> <C> <C> <C>
Year ended December 26, 1998:
Net sales $ 268.8 $ 282.9 $ 217.4 $ 313.7
Cost of products sold 96.3 108.4 90.6 111.0
Net income (loss) 15.4 23.0 (6.5) 37.2
Net income (loss) per share:
Basic 0.26 0.40 (0.11) 0.64
Diluted 0.26 0.39 (0.11) 0.64
Dividends declared per share 0.22 0.22 0.22 0.22
Composite stock price range:
High 28 9/16 29 28 3/4 20
Low 24 1/4 24 13/16 12 7/8 11 7/16
Close 26 9/16 27 1/16 12 7/8 16
Year ended December 27, 1997:
Net sales $ 315.3 $ 342.5 $ 251.4 $ 320.1
Cost of products sold 114.0 131.1 95.7 133.1
Net income 24.9 38.0 3.4 15.7
Net income per common share:
Basic 0.40 0.62 0.06 0.26
Diluted 0.40 0.61 0.06 0.25
Dividends declared per share 0.22 0.22 0.22 0.22
Composite stock price range:
High 54 1/2 40 5/8 38 9/16 28 9/16
Low 33 5/8 29 7/8 26 5/8 22 1/2
Close 33 3/4 37 1/4 27 3/16 27 3/8
</TABLE>
The fourth quarter of 1997 includes a pretax charge totaling
$42.4 million ($31.3 million after tax), primarily for
provisions for bad debts in Brazil, inventory obsolescence
in the United States, and, to a lesser extent, corporate
downsizing.
Note 13: Rights Agreement
In 1996, the Company adopted a shareholders' rights plan with
a duration of 10 years, under which shareholders received a
right to purchase one one-hundredth of a share of preferred
stock for each right owned. The rights are exercisable if 15
percent of the Company's common stock is acquired or
threatened to be acquired, and the rights are redeemable by
the Company if exercisability has not been triggered. Under
certain circumstances, if 50 percent or more of the Company's
consolidated assets or earning power are sold, a right
entitles the holder to buy shares of the Company equal in
value to twice the exercise price of each right. Upon
acquisition of the Company by a third party, a holder could
receive the right to purchase stock in the acquirer. The
foregoing percentage thresholds may be reduced to not less
than 10 percent.
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
To the Board of Directors and Shareholders
of Tupperware Corporation:
In our opinion, the accompanying consolidated balance sheets
and the related consolidated statements of income, of share-
holders' equity and of cash flows present fairly, in all
material respects, the financial position of Tupperware
Corporation and its subsidiaries at December 26, 1998 and
December 27, 1997, and the results of their operations and
their cash flows for each of the three years in the period
ended December 26, 1998, in conformity with generally accepted
accounting principles. These financial statements are the
responsibility of Tupperware Corporation's management; our
responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of
these statements in accordance with generally accepted
auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement.
An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and
significant estimates made by management, and evaluating the
overall financial statement presentation. We believe that our
audits provide a reasonable basis for the opinion expressed
above.
PricewaterhouseCoopers LLP
Orlando, Florida
February 19, 1999
REPORT OF MANAGEMENT
The management of Tupperware is responsible for the
preparation of the financial statements and other information
contained in this Annual Report. The financial statements
were prepared in accordance with generally accepted accounting
principles and include amounts that are based upon
management's best estimate and judgments, as appropriate.
PricewaterhouseCoopers LLP has audited these financial
statements and has expressed an independent opinion thereon.
The Company maintains internal control systems, policies, and
procedures designed to provide reasonable assurance that
assets are safeguarded, that transactions are executed in
accordance with management's authorization and properly
recorded, and that accounting records may be relied upon for
the preparation of financial information. There are inherent
limitations in all internal controls systems based on the fact
that the cost of such systems should not exceed the benefits
derived. Management believes that the Company's systems
provide the appropriate balance of costs and benefits. The
Company also maintains an internal auditing function that
evaluates and reports on the adequacy and effectiveness of
internal accounting controls, policies, and procedures.
The Audit and Corporate Responsibility Committee of the Board
of Directors is composed entirely of outside directors. The
Committee meets periodically and independently with
management, the vice president of internal audit, and
PricewaterhouseCoopers LLP to discuss the Company's internal
accounting controls, auditing, and financial reporting matters.
The vice president of internal audit and PricewaterhouseCoopers
LLP have unrestricted access to the Audit and Corporate
Responsibility Committee.
Management recognizes its responsibility for conducting the
Company's affairs in a manner that is responsive to the
interests of its shareholders and its employees. This
responsibility is characterized in the Code of Conduct, which
provides that the Company will fully comply with laws, rules,
and regulations of every country in which it operates and will
observe the rules of ethical business conduct. Employees of
the Company are expected and directed to manage the business
of the Company accordingly.
Rick Goings Thomas P. O'Neill, Jr.
Chairman Senior Vice President
and Chief Executive Officer and Chief Financial Officer
Tupperware Corporation
Active Subsidiaries
The following subsidiaries are wholly owned by the Registrant or
another subsidiary of the Registrant.
Subsidiary Location
Deerfield Land Corporation Delaware
Tupperware Financial Corporation Delaware
Dart Industries Inc. Delaware
Tupperware Far East, Inc. Delaware
Tupperware Polska Sp.zo.o Poland
Tupperware Turkey, Inc. Delaware
Dart Far East Sdn. Bhd. Malaysia
Dart Argentina S.A. Argentina
Dart de Venezuela, C.A. Venezuela
Tupperware Colombia S.A. Colombia
Tupperware de Costa Rica, S.A. Costa Rica
Dart do Brasil Industria e Comercio Ltda. Brazil
Daypar Participacoes Ltda Brazil
Academia Negocios S/C Ltda. Brazil
Adota Artigos Domesticos Ltda. Brazil
Tupperware Hellas, S.A.I.C. Greece
Tupperware Israel Ltd. Israel
Tupperware Espana, S.A. Spain
Tupperware Belgium N.V. Belgium
Tupperware France S.A. France
Tupperware Deutschland G.m.b.H. Germany
Tupperware, Ltd. Russia
Tupperware Del Ecuador Tupperware Cia. Ltda. Ecuador
Tupperware Osterreich G.m.b.H. Austria
Tupperware Asia Pacific Holdings Limited Mauritius
Tupperware China, LLC. Delaware
Tupperware (China) Company Limited PRC
Dart (Philippines), Inc. Philippines
Tupperware Realty Corporation Philippines
Dart Industries Hong Kong Limited Hong Kong
Tupperware India Private Limited India
Tupperware Nederland Properties B.V. Netherlands
Tupperware Nederland B.V. Netherlands
Tupperware Southern Africa(Proprietary)Limited SouthAfrica
Dart Industries (New Zealand) Limited New Zealand
Tupperware New Zealand Staff Superannuation Plan New Zealand
Tupperware East Africa Limited Kenya
Tupperware Italia S.p.A. Italy
Dart, S.A. de C.V. Mexico
Servicios Especializados de Arrendamiento
en Latinoamerica S.A.de C.V Mexico
Tupperware (Suisse) S.A. Switzerland
Dartco Manufacturing Inc. Delaware
Tupperware Lusitana de Artigos Domesticos, Lda. Portugal
Tupperware (Portugal) Artigos Domesticos, Lda. Portugal
Premiere Products, Inc. Delaware
Tupperware Holdings, B.V. Netherlands
Tupperware Service G.m.b.H. Germany
Tupperware Products, B.V. Netherlands
Tupperware Products S.A. Switzerland
Tupperware d.o.o. Croatia
Premiere Korea Ltd. Korea
Premiere Marketing Company Korea
Tupperware Products Inc. Delaware
Exportadora Lerma, S. A. de C.V. Mexico
Tupperware General Services N.V. Belgium
Premiere Manufacturing, Inc. Delaware
Tupperware U.S., Inc. Delaware
Tupperware Distributors, Inc. Delaware
Tupperware Factors Inc. Delaware
Tupperware Canada Inc. Canada
Japan Tupperware Co., Ltd. Japan
Tupperware Australia Pty. Ltd. Australia
Dart Staff Superannuation Fund Pty Ltd. Australia
Importadora Y Distribuidora Importupp Limitada Chile
Tupperware Czech Republic, spol. s.r.o. Czech Republic
Tupperware Iberica S.A. Spain
Tupperware Singapore Pte. Ltd. Singapore
Tupperware (Thailand) Limited Thailand
Tupperware Uruguay S.A. Uruguay
Dart Executive Pension Fund Limited United Kingdom
Tupperware Home Parties Corporation Delaware
Tupperware U.K. Holdings, Inc. Delaware
Tupperware United Kingdom & Ireland Limited United Kingdom
Miracle Maid Limited United Kingdom
Tupperware Scandinavia A/S Denmark
The Tupperware Foundation
DelawareTupperware Finance Holding Company,B.V. Netherlands
Tupperware Finance Company, B.V. Netherlands
Tupperware Export Sales, Ltd. Barbados
Tupperware Services, Inc. Delaware
Tupperware Philippines, Inc. Philippines
EXHIBIT 23
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 (No. 33-04871), the
Registration Statement on Form S-8 (No. 33-04869), the
Registration Statement on Form S-8 (No. 33-18331), and the
Prospectus constituting part of the Registration Statement on
Form S-3 (No. 33-12125) of Tupperware Corporation of our
report dated February 19, 1999 appearing on page 47 of the
Annual Report to Shareholders which is incorporated in this
Annual Report on Form 10-K. We also consent to the
incorporation by reference of our report on the Financial
Statement Schedule, which appears on page 15 of this Form 10-K.
PricewaterhouseCoopers LLP
Orlando, Florida
March 22, 1999
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
director of Tupperware Corporation, a Delaware corporation, (the
"Corporation"), hereby constitutes and appoints Thomas M. Roehlk
and Charles L. Dunlap, true and lawful attorneys-in-fact and
agents of the undersigned, with full power of substitution and
resubstitution, for and in the name, place and stead of the
undersigned, in any and all capacities, to sign the Annual Report
on Form 10-K of the Corporation for its fiscal year ended
December 26, 1998, and any and all amendments thereto, and to
file or cause to be filed the same, together with any and all
exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorneys-in-fact and agents and substitutes, full power and
authority to do and perform each and every act and thing
requisite or necessary to be done in and about the premises as
fully to all intents and purposes as the undersigned might or
could do in person, hereby ratifying and confirming all that said
attorneys-in-fact and agents and substitutes, may lawfully do or
cause to be done by virtue hereof.
IN WITNESS WHEREOF, the undersigned has hereunto set
his or her hand and seal this 4th day of March, 1999.
Rita Bornstein
Ruth M. Davis
Lloyd C. Elam
Clifford J. Grum
Betsy D. Holden
Joe R. Lee
Bob Marbut
Angel R. Martinez
David R. Parker
Robert M. Price
Joyce M. Roche
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM TUPPERWARE CORPORATION'S 1998 FINANCIAL STATEMENTS AS
INCORPORATED BY REFERENCE IN ITS ANNUAL REPORT ON FORM 10-K
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</TABLE>
