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 [Fee Required]
For the fiscal year ended December 31, 1994
OR
Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 [No Fee Required]
For the Transition period from to
Commission file number 1-9256
PREMARK INTERNATIONAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 36-3461320
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1717 Deerfield Road, Deerfield, Illinois 60015
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (708) 405-6000
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class Name of Each Exchange
on Which Registered
Common Stock, $1.00 par value New York Stock Exchange
Pacific Stock Exchange
Common Stock Purchase Rights New York Stock Exchange
Pacific 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. Yes X No .
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 3, 1995 ($42.75 per
share): $2,626,207,612 .
As of March 3, 1995, 62,522,614 shares of the Common Stock, $1.00 par
value, of the Registrant were outstanding.
Documents Incorporated by Reference:
Portions of the Annual Report to Shareholders for the year ended
December 31, 1994 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 3, 1995 are incorporated by reference into Part
III of this Report.
PART I
Item 1. Business
(a) General Development of Business
Premark International, Inc. (the "Registrant") is a
multinational consumer and commercial products company. The
Registrant is a Delaware corporation which was organized on
August 29, 1986 in connection with the corporate reorganization
of Kraft, Inc. ("Kraft"). In the reorganization, the businesses
of the Registrant and certain other assets and liabilities of
Kraft and its subsidiaries were transferred to the Registrant.
On October 31, 1986 the Registrant became a publicly held company
through the pro-rata distribution by Kraft to its shareholders of
all of the outstanding shares of common stock of the Registrant.
The Registrant's principal operating subsidiaries are Dart
Industries Inc. ("Dart"), which owns the operating subsidiaries
comprising the Registrant's Tupperware business; Premark FEG
Corporation, which owns the operating subsidiaries comprising the
Registrant's Food Equipment Group; Ralph Wilson Plastics Company
("Ralph Wilson Plastics"); The West Bend Company ("West Bend");
Florida Tile Industries, Inc. ("Florida Tile"); Hartco Flooring
Company ("Hartco"); and Precor Incorporated ("Precor").
Dart was organized in Delaware in 1928 as a successor to a
business originally established in 1902. Tupperware U.S., Inc.
is a Delaware corporation formed in 1989 which operates the U.S.
Tupperware business. In 1988, Ralph Wilson Plastics and West
Bend were organized in Delaware as separate corporations owned
directly by the Registrant, having previously been operating
divisions of Dart. Premark FEG Corporation was organized in
Delaware in 1984, a successor to a business originally
incorporated in 1897. Florida Tile, a Florida corporation
organized in 1954, was acquired in 1990. Hartco, acquired in
1988, was organized in Tennessee in 1946. Precor, a Delaware
corporation, was acquired in 1984.
(b) Financial Information About Industry Segments
For certain financial information concerning the
Registrant's business segments, see Note 10 ("Segments of the
Business") of the Notes to the Consolidated Financial Statements
of Premark International, Inc., appearing on pages 43 and 44 of
the Annual Report to Shareholders for the year ended December 31,
1994, which is incorporated by reference into this Report by
Item 8 hereof.
(c) Narrative Description of Business
The Registrant conducts its business through its three
business segments: Tupperware, Food Equipment Group, and Consumer
and Decorative Products. A discussion of the three business
segments follows. Words appearing in italics constitute
trademarks and tradenames utilized by the Registrant's
businesses.
TUPPERWARE
Principal Products, Markets and Distribution
Tupperware manufactures and markets a broad line of highest-
quality consumer products for the home. Important products
include Bell tumblers, Modular Mates stackable storage
containers, Wonderlier and Servalier bowls, Tuppertoys
educational toys, One Touch canisters, and Tupperwave microwave
cookware. The containers and canisters both feature highly
successful Tupperware seals.
During 1994, Tupperware continued to introduce new designs
and colors in its products lines, and to extend existing products
into new markets around the world. Tupperware also initiated a
major product expansion program, focusing on kitchenware,
children's products and gifts.
Beginning in 1989, a number of U.S. franchisees converted
to the Tupperware Express product delivery system, under which
Tupperware products are shipped directly from the plant to the
ultimate consumer. Prior to Tupperware Express, all franchisees
warehoused an inventory of Tupperware products for resale to
their consultants, who in turn were responsible for coordinating
delivery to the ultimate consumers. Under Tupperware Express,
there are presently 95 franchisees who process the orders of
their sales consultants for direct shipment and no longer are
required to maintain an inventory of Tupperware products. Since
1990, Tupperware has also tested a central services system, in
which retail customer orders are processed directly by Tupperware
through the Tupperware Express system, orders are shipped
directly to customers and various operations reports are
generated. High shipping and administrative costs have adversely
affected Tupperware Express. To address these costs, Tupperware
is testing a "consultant pack" system, in which multiple customer
orders are shipped to consultants, who are responsible for
deliveries to retail customers. Tupperware is continuing to test
alternatives in the distribution network.
In fiscal years 1994, 1993, and 1992, Tupperware contributed
approximately 39%, 40% and 38%, respectively, of the sales of the
Registrant's businesses. Tupperware products are sold in the
United States and in 60 foreign countries. In 1994, sales in
foreign countries represented approximately 82% of total
Tupperware revenues. Although Tupperware's international
distribution system is similar to that of its domestic
operations, international product lines vary. Market penetration
varies significantly throughout the world, with the highest
levels occurring in Germany and Australia.
Tupperware products are sold directly to the consumer
through over 625,000 dealers (called "consultants" in the U.S.)
worldwide. Dealers are supported by over 35,000 unit managers
and approximately 1,500 distributors or franchisees. All of such
distributors and franchisees, and the vast majority of
consultants, dealers and managers, are independent contractors.
The dealer force continued to increase overall in 1994.
Tupperware primarily relies on the "party plan" method of
sales, which is designed to enable the purchaser to appreciate
through demonstration the features and benefits of Tupperware
products. In excess of 12 million parties were held in 1994
worldwide. Parties are held in homes, offices, social clubs and
other locations. Tupperware products are also being marketed
through monthly brochures mailed to persons invited to attend
parties and various other types of demonstrations. Sales of
Tupperware products are supported through a program of sales
promotions, sales and training aids and motivational conferences.
Tupperware also utilizes catalogs, magazine advertising and
toll-free telephone ordering, which increases its success with
hard-to-reach customers, in support of its sales force.
Raw Materials and Facilities
Products manufactured by Tupperware require plastic
resins meeting its specifications. These resins are
purchased from a number of large chemical companies, and
Tupperware has experienced no difficulties in obtaining adequate
supplies. Tupperware's headquarters are in Florida.
Tupperware's domestic manufacturing plant (which is owned) is
located in South Carolina. Thirteen additional manufacturing
plants (one of which is leased) are located in 13 foreign
countries. Tupperware conducts a continuing program of new
product design and development at its facilities in Florida, Hong
Kong and Belgium. Research and development of resins used in
Tupperware products are performed by its suppliers.
Competition
The Registrant believes that Tupperware holds approximately
65% of the U.S. market in dollars for plastic storage and serving
containers. Tupperware products compete with a broad range of
food preparation, cooking, storage and serving items made of
various materials, which are sold primarily through retail
outlets. Tupperware's competitive strategy is to provide
high-quality products at premium prices through a direct-selling
distribution system. Direct selling, featuring demonstration of
its products prior to purchase, price, and new product
development are significant factors affecting competition.
Tupperware competes with other direct selling organizations for
sales personnel and party dates.
FOOD EQUIPMENT GROUP
Principal Products, Markets and Distribution
The Food Equipment Group, composed primarily of Premark FEG
Corporation and its operating subsidiaries (the "Group"), is a
leading manufacturer of commercial equipment relating to food
preparation, cooking, storage and cleaning. Its core products
include warewashing equipment; food preparation machines, such as
mixers, slicers, cutters, meat saws and grinders; weighing and
wrapping equipment and related systems; baking and cooking
equipment, such as ovens, ranges, fryers, griddles and broilers;
and refrigeration equipment. Products are marketed under the
trademarks Hobart, Stero, Vulcan, Wolf, Tasselli, Adamatic, Still
and Foster.
Food equipment products are sold to the retail food
industry, including supermarket chains, independent grocers,
delicatessens, bakeries and convenience and other food stores,
and to the foodservice industry, including independent
restaurants, fast-food chains, hospitals, schools, hotels,
resorts and airlines.
Food equipment products are distributed in more than 100
countries, either through wholly-owned subsidiaries or through
distributors, dealers or licensing arrangements covering
virtually all areas of the world where a market for such products
currently exists. The Group is the only major food equipment
manufacturer in the United States with its own nationwide service
network for the markets in which it sells, providing not only an
important source of income but also an important source for
developing new sales. The Group directly services its food
machines, warewashers, weigh/wrap equipment and cooking
equipment, while authorized independent agents service
refrigeration units and some cooking equipment.
For the fiscal years 1994, 1993, and 1992, sales by the
Group contributed approximately 33%, 32%, and 36%, respectively,
of the sales of the Registrant's businesses. Revenues from
foreign operations constituted approximately 39% of the Group's
1994 sales. Major new products introduced by the Group in the
United States in 1994 included a new oven line, a new fryer line,
an extension of the food processor line, and a new Ameriscale
countertop scale. In Europe, the Group introduced a new door-
type dishwasher line, a new Supra refrigeration line, and Phoenix
bulk brewers in 1994.
Raw Materials and Facilities
The Group uses stainless and carbon steel, aluminum and
plastics in the manufacture of its products. These materials are
readily available from several sources, and no difficulties have
been experienced with respect to their availability. In addition
to manufacturing certain component parts, the Group also
purchases many component parts, including electrical and
electronic components, castings, hardware, fasteners and
bearings, certain manufacturers of which utilize tooling provided
by the Group.
The Group owns its headquarters building and a major
manufacturing complex consisting of four plants in Troy, Ohio.
In addition, the Group operates nine manufacturing plants in
California, Georgia, Kansas, Maryland, New Jersey, Ohio, and
Virginia, and eight manufacturing plants in Canada, France,
Italy, the United Kingdom and Germany. Most of these plants are
owned.
Competition
The Group competes in a growing worldwide market which is
highly fragmented. No single manufacturer competes with respect
to all of the Group's products, and the degree of competition
varies among different customer segments and products. The
extensiveness of the Group's brand acceptance across a broad
range of products is deemed by the Registrant to be a significant
competitive advantage. Competition is also based on numerous
other factors, including product quality, performance and
reliability, labor savings and energy conservation.
Miscellaneous
The Group had approximately $128 million and $102 million of
backlog orders at the end of 1994 and 1993, respectively, after
restatement of 1993 for exchange rate effects. The Group
considers such orders to be firm, though changes or cancellations
of insignificant amounts may occur, and expects that the 1994
backlog orders will be filled in 1995.
CONSUMER AND DECORATIVE PRODUCTS
Consumer and Decorative Products is composed of the
Decorative Products Group and the Consumer Products Group. It
contributed 28%, 28% and 26% of the sales of the Registrant's
businesses for the fiscal years 1994, 1993 and 1992,
respectively. Ralph Wilson Plastics, Florida Tile and Hartco make
up the Decorative Products Group, while the Consumer Products
Group contains West Bend and Precor.
DECORATIVE PRODUCTS GROUP
Principal Products, Markets and Distribution
Ralph Wilson Plastics manufactures decorative laminates
through a production process utilizing heated high pressure
presses. These laminates, sold principally under the Wilsonart
trademark in more than 550 colors, designs and finishes, are used
for numerous interior surfacing applications, including
cabinetry, countertops, vanities, store fixtures and furniture.
Approximately 50% of the Wilsonart brand decorative laminate sold
is used in residential applications, primarily for surfacing
kitchen and bathroom countertops and cabinetry. Decorative
laminate applications in the commercial market include office
furniture, retail store fixtures, restaurant and hotel furniture,
and doors. Ralph Wilson Plastics also manufactures specialty-
grade laminates, including chemical-resistant, wear-resistant,
and fire-retardant types. Among the specialized applications for
Wilsonart brand laminates are those in laboratory work surfaces,
jetways and naval vessels. In addition to laminate products,
Ralph Wilson Plastics manufactures a solid surface product which
is marketed under the Gibraltar brand. In 1994, Ralph Wilson
Plastics added 22 new designs to its laminate product line.
The company also produces and/or sells contact adhesives
under the Lokweld trademark, metallic surfacings, and decorative
edge molding for countertops and furniture.
Wilsonart brand decorative products are sold throughout the
United States through wholesale building material distributors
and directly to original equipment manufacturers. Export sales
are now made to Japan, Ireland, Canada, Mexico, Central and South
America, the Caribbean, Australia, New Zealand, Hong Kong,
Taiwan, China, Korea, Indonesia and Singapore.
Florida Tile manufactures glazed ceramic wall and floor tile
products in a wide variety of sizes, shapes, colors and finishes,
which are suitable for residential and commercial uses. Tile
products are marketed under the Florida Tile trademark through
company-owned and independent distributors. Products are
exported to Canada, the Caribbean Basin, Iceland, Ireland, the
United Kingdom, Mexico, Saudi Arabia and Pacific Rim nations.
Florida Tile also imports foreign-produced tile products to meet
the growing demand for low to mid-priced products.
Hartco manufactures and distributes high-quality,
prefinished oak and maple flooring for residential and commercial
applications. Its flooring products are pre-cut parquet panels,
laminated three and five-ply maple plank lineal flooring
products, and laminated two and three-ply oak plank lineal
flooring products, each of which is sold in a variety of colors
and finishes. Hartco also manufactures wood moldings,
installation adhesives and a full line of proprietary floor care
products to complement its line of oak flooring products. These
products are marketed under the Hartco trademark to a nationwide
network of wholesale floor covering distributors and home
improvement store chains.
Raw Materials and Facilities
The manufacture of decorative laminates requires various raw
materials, including kraft and decorative paper, overlays, and
melamine and phenolic resins. Each of these items is available
from a limited number of manufacturers, but Ralph Wilson Plastics
has not experienced difficulties in obtaining sufficient
quantities. The principal raw materials used in Florida Tile
products are talc, stains, frit (ground glass) and clay, all of
which are available to Florida Tile in sufficient quantities.
The principal raw materials used in Hartco's hardwood flooring
products are Appalachian red and white oak, maple, steel wire,
and various chemicals. All such raw materials are readily
available from many sources in sufficient quantities. Lumber
supplies are at a premium price compared to prior years, although
prices have moderated from 1993 levels.
Ralph Wilson Plastics owns and operates three manufacturing
facilities in Texas and North Carolina, giving it the largest
decorative laminate production capacity in North America.
Adhesives are produced at two plants located in Louisiana and
Texas. Solid surfacing products are manufactured in one facility
in Texas. Ralph Wilson Plastics has 14 regional distribution
centers which are geographically dispersed throughout the United
States. Stock items can be delivered in 24 hours, and non-stock
items can be produced and delivered within 10 working days.
Florida Tile manufactures products in three owned manufacturing
plants located in Florida, Georgia and Kentucky. It distributes
its products through a network of company-owned and independent
distribution outlets. Hartco manufactures its products in an
owned manufacturing facility in Tennessee and a leased facility
in Kentucky.
Competition
Wilsonart brand products are sold in highly competitive
markets in the United States. Ralph Wilson Plastics has
approximately 48% of the U.S. market for decorative laminates.
Ralph Wilson Plastics successfully competes with other companies
by providing fast product delivery, offering a broad choice of
colors, designs, and finishes, and emphasizing quality and
service. Florida Tile competes with a number of other domestic
and foreign tile manufacturers, and the Registrant believes
Florida Tile is the third largest U.S. tile manufacturer.
Foreign-manufactured products account for approximately 50% of
the U.S. tile market. Important competitive factors in the tile
market include price, style, quality, and service. Hartco
competes with a number of other domestic and foreign suppliers of
prefinished wood flooring products. Important competitive
factors include the fit, appearance and durability of the
flooring products, the variety of finishes and colors, and the
complementary molding, adhesive and floor care products.
Miscellaneous
The Decorative Products Group maintains a continuing program
of product development. Its efforts emphasize product design,
performance and durability, product enhancement, and new product
applications, as well as manufacturing processes. Materials
development for laminate products is generally performed by the
companies providing those materials.
CONSUMER PRODUCTS GROUP
Principal Products, Markets and Distribution
West Bend manufactures and sells small electric appliances
(such as breadmakers, electric skillets, slow cookers, woks, corn
poppers, beverage makers and electronic timers) primarily under
the West Bend trademark, and high-quality, direct-to-the-home
stainless steel cookware. Precor manufactures physical fitness
equipment, such as treadmills, stationary bicycles, low-impact
climbers and ski machines marketed under the Precor trademark.
During 1994, West Bend expanded its breadmaker, drip coffeemaker
and mixer lines. Precor introduced a new line of commercial
stair climbers in 1994.
West Bend small appliances are sold primarily in the United
States and Canada, directly to mass merchandisers, department
stores, hardware stores, warehouse clubs and catalog showrooms.
West Bend's stainless steel cookware is sold to consumers by
independent distributors through dinner parties and by other
direct sales methods. Cookware is sold in 31 countries under 23
separate product lines. Precor equipment is sold primarily
through specialty fitness equipment retail stores and high-end
sporting goods and bicycle stores in the United States and
Canada. In Asia, Europe, Latin America, and the Middle East,
Precor products are sold primarily through select distributors.
Raw Materials and Facilities
West Bend uses aluminum, stainless steel, plastic resins and
other materials in the manufacture of its products. Precor uses
steel, stainless steel, aluminum and other materials in the
manufacture of its products. Generally, neither West Bend nor
Precor has experienced any significant difficulties in obtaining
any of these raw materials or products, although the costs of
these raw materials have risen. West Bend owns and operates two
manufacturing plants in Wisconsin and Mexico. Precor maintains
two leased plants in Washington state.
Competition
Products sold by West Bend and Precor compete with products
sold by numerous other companies of varying sizes in highly
competitive markets. Important competitive factors include price,
development of new products, quality, name recognition, product
performance, just-in-time delivery, warranties, and service.
Miscellaneous
West Bend's sales in the fourth quarter are significantly
higher due to the gift-giving season. Precor's business is
significantly higher in the first and fourth quarters, when
winter weather forces more people to exercise indoors. The West
Bend small appliance business is dependent upon two customers for
approximately 37% of its revenues.
OTHER INFORMATION RELATING TO THE BUSINESS
Trademarks and Patents. The Registrant considers trademarks
and patents to be of importance to its businesses. The
Registrant's trademarks represent the leading brand names for
most of its product lines. Its businesses have followed the
practice of applying for patents with respect to most of the
significant patentable developments. They now own a number of
patents relating to their products, including design patents
covering Tupperware products. In certain cases the Registrant
has elected common law trade secret protection in lieu of
obtaining patent protection. In addition, exclusive and
nonexclusive licenses under patents owned by others are utilized.
No business is, however, dependent to any material extent upon
any single patent or trade secret or group of patents or trade
secrets.
Research and Development. For fiscal years ended 1994, 1993
and 1992, the Registrant spent approximately $44 million, $41
million and $41 million, respectively, on research and
development activities.
Environmental Laws. Compliance by the Registrant's
businesses 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 its capital expenditures,
liquidity, earnings or competitive position. The Registrant
expects to expend approximately $0.8 million through 1996 on
capital expenditures related to environmental facilities. In
1994, the Registrant had approximately $1.3 million of capital
expenditures for environmental facilities, and approximately $3.2
million of remedial expenditures for environmental sites. See
Item 3 for a further discussion of environmental matters.
Employees. The Registrant and its subsidiaries employ
approximately 24,000 people. Approximately 18% of such employees
are affiliated with one of the several unions with which the
Registrant's subsidiaries have collective bargaining agreements.
In recent years there has been no major effort to organize
additional persons working for the Registrant's businesses, and
there have been no significant work stoppages. The Registrant
considers its relations with its employees to be good. The
independent consultants, dealers, managers, distributors and
franchisees engaged in the direct sale of Tupperware products are
not employees of the Registrant.
Properties. The principal executive offices of the
Registrant are located in Illinois and are leased. Most of the
principal properties of the Registrant and its subsidiaries are
owned, and 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 the plants, warehouses and other properties in its
respective businesses to be generally good, and the capacity of
its plants generally to be adequate for the needs of its
businesses.
Miscellaneous. Except as disclosed above in the narrative
descriptions of the Registrant's business segments, none of the
Registrant's businesses is seasonal, has working capital
practices or backlog conditions which is material to an
understanding of their businesses, is dependent on a small
number of customers, or is subject to renegotiation of profits
or termination of contracts or subcontracts at the election of
the Federal 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
3, 1995).
Name and Age Positions and Offices Held
and Principal Occupations or
Employment During Past Five
Years
Warren L. Batts (62) Chairman of the Board and
Chief Executive Officer.
James M. Ringler (49) President and Chief Operating
Officer since June 1992,after
having served as Executive
Vice President, Consumer and
Commercial Products since
January, 1990, and President,
Food Equipment Group since
August, 1990.
E. V. Goings (49) Executive Vice President of
Premark and President of
Tupperware Worldwide since
November 1992, after serving
as a Senior Vice President of
Sara Lee Corporation. Prior
thereto, Mr. Goings served in
various executive positions
with Avon Products, Inc.
Joseph W. Deering (54) Group Vice President of
Premark and President of
Premark's Food Equipment
Group since June 1992, after
serving as President of
Leucadia National's
Manufacturing group. Prior
thereto, Mr. Deering served
in various executive
positions with Philips
Industries, Inc.
Thomas W. Kieckhafer (56) Corporate Vice President and
President of West Bend.
James C. Coleman (55) Senior Vice President, Human
resources since July 1991.
Prior thereto, Mr. Coleman
served as Staff Vice
President, Personnel
Relations for General
Dynamics Corporation.
John M. Costigan (52) Senior Vice President,
General Counsel and
Secretary.
Lawrence B. Skatoff (55) Senior Vice President and
Chief Financial Officer since
September 1991. Mr. Skatoff
served as Vice President-
Finance of Monsanto Company
prior to joining the
Registrant.
L. John Fletcher (51) Vice President and Assistant
General Counsel.
Isabelle C. Goossen (43) Vice President-Planning since
June 1994, after serving as
Director of Financial
Relations since 1992, and
prior thereto as Director in
the Planning Department.
Robert W. Hoaglund (56) Vice President, Control &
Information Systems since
December 1990, after serving
as Vice President, Control &
Administrative Services.
Wendy R. Katz (37) Vice President, Internal
Audit since May 1992. Prior
thereto, Ms. Katz served in
various financial positions
at Tupperware.
William R. Reeb (47) Corporate Vice President
since November 1994, and
President and Chief Operating
Officer of Ralph Wilson
Plastics Company since August
1993. Prior thereto, Mr.
Reeb served as Vice
President, Marketing for the
Decorative Products Group and
Executive Vice President and
Vice President of Marketing
for Ralph Wilson Plastics
Company.
Lisa Kearns Richardson (42) Vice President and Treasurer
since April 1994, after
serving as Vice President,
Planning and Analysis since
February 1991. Prior
thereto, Ms. Kearns
Richardson served as
Assistant Controller.
James E. Rose, Jr. (52) Vice President, Taxes and
Government Affairs.
For information concerning foreign and domestic operations
and export sales, see Note 7 ("Income Taxes") appearing on pages
39 and 40, and "Segments of Business by Geographical Areas" in
Note 10 ("Segments of the Business") appearing on page 44 of the
Annual Report to Shareholders for the year ended December 31,
1994, which are incorporated by reference into this Report by
Item 8 hereof.
Item 2. Properties
For information concerning material properties of the
Registrant and its subsidiaries, see the information under the
sub-captions "Narrative Description of Business" in Section (c)
of Item 1 above and "Properties" under the caption "Other
Information Relating To The Business" in Section (c) of Item 1
above.
Item 3. Legal Proceedings
The Registrant and its subsidiaries are parties against
which are pending a number of legal and administrative
proceedings. Among such proceedings are those involving 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. The Registrant establishes
reserves with respect to certain of such sites. 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 the Registrant's consolidated
financial position or operations.
Kraft has assumed any liabilities arising out of any legal
proceedings in connection with certain divested or discontinued
former Dart businesses, including matters alleging product
liability, environmental liability and infringement of patents.
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
Summary (unaudited)") appearing on page 45 of the Annual Report
to Shareholders for the year ended December 31, 1994 is
incorporated by reference into this Report. The information set
forth in Note 13 ("Shareholders' Rights Plan") on page 45 of the
Annual Report to Shareholders for the year ended December 31,
1994 is incorporated by reference into this Report. As of March
3, 1995, the Registrant had 25,044 shareholders of record.
Item 6. Selected Financial Data
The information set forth under the caption "Selected
Financial Data" on pages 30 and 31 of the Annual Report to
Shareholders for the year ended December 31, 1994 is incorporated
by reference into this Report.
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
The information entitled "Financial Review" set forth on
pages 26 through 29 of the Annual Report to Shareholders for the
year ended December 31, 1994 constitutes "Management's Discussion
and Analysis of Financial Condition and Results of Operations"
and is incorporated by reference into this Report.
Item 8. Financial Statements and Supplementary Data
(a) The following Consolidated Financial Statements of
Premark International, Inc. and Report of Independent Accountants
set forth on pages 32 through 45, and on page 46, respectively,
of the Annual Report to Shareholders for the year ended December
31, 1994 are incorporated by reference into this Report:
Consolidated Statements of Operations, Cash Flows and
Shareholders' Equity--Years ended December 31, 1994, December 25,
1993 and December 26, 1992;
Consolidated Balance Sheet--December 31, 1994 and December
25, 1993;
Notes to the Consolidated Financial Statements; and
Report of Independent Accountants dated January 31, 1995.
(b) The supplementary data regarding quarterly results of
operations contained in Note 12 ("Quarterly Summary (unaudited)")
of the Notes to the Consolidated Financial Statements of Premark
International, Inc. on page 45 of the Annual Report to
Shareholders for the year ended December 31, 1994 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 1 through 3 of the
Proxy Statement relating to the Annual Meeting of Shareholders to
be held on May 3, 1995 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" and on page 16 of the Proxy Statement relating to the
Annual Meeting of Shareholders to be held on May 3, 1995, and the
information on pages 10 through 15 of such Proxy Statement
relating to executive officers' compensation, except the Report
of the Compensation and Employee Benefits Committee on Executive
Compensation and the Performance Graph, 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 5 and "Security
Ownership of Management" on page 4 of the Proxy Statement
relating to the Annual Meeting of Shareholders to be held on May
3, 1995 is incorporated by reference into this Report.
Item 13. Certain Relationships and Related Transactions
None
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 Premark
International, Inc. and Report of Independent Accountants set
forth on pages 32 through 45, and on page 46, respectively, of
the Annual Report to Shareholders for the year ended December 31,
1994 are incorporated by reference into this Report by Item 8
hereof:
Consolidated Statements of Operations, Cash Flows and
Shareholders' Equity--Years ended December 31, 1994, December 25,
1993 and December 26, 1992;
Consolidated Balance Sheet--December 31, 1994 and December
25, 1993;
Notes to the Consolidated Financial Statements; and
Report of Independent Accountants dated January 31, 1995.
(a) (2) List of Financial Statement Schedules
The following consolidated financial statement schedule
(numbered in accordance with Regulation S-X) of Premark
International, Inc. is included in this Report:
Report of Independent Accountants on Financial Statement
Schedule, page 22 of this Report; and
Schedule VIII--Valuation and Qualifying Accounts for the
three years ended December 31, 1994, page 23 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 thereto
contained or incorporated by reference herein.
(a) (3) List of Exhibits: (numbered in accordance with Item 601
of Regulation S-K)
Exhibit
Number Description
* 3A Restated Certificate of Incorporation (Exhibit 3A
to the Registrant's Annual Report on Form 10-K for
the year ended December 28, 1991)
* 3B Amended By-Laws (Exhibit 3B to the Registrant's
Annual Report on Form 10-K for the year ended
December 28, 1991)
* 4A Form of Common Stock Certificate (Exhibit 3 to the
Registrant's Current Report on Form 8-K dated
March 20, 1989)
* 4B Rights Agreement dated March 7, 1989 (Exhibit 1 to
the Registrant's Current Report on Form 8-K dated
March 20, 1989)
* 4C Form of Right Certificate of Common Stock Purchase
Right (Exhibit 1 to the Registrant's Current
Report on Form 8-K dated March 20, 1989)
* 4D Form of Indenture (Revised) in connection with the
Registrant's Form S-3 Registration Statement No.
33-35137 (Exhibit (c)(3) to the Registrant's
Current Report on Form 8-K dated September 17,
1990)
*10A Reorganization and Distribution Agreement dated as
of September 4, 1986 (Exhibit 2 to Registration of
Securities on Form 10 dated September 8, 1986,
File No. 1-9256)
*10B Tax Sharing Agreement dated as of September 4,
1986 (Exhibit 10C to Registration of Securities on
Form 10 dated September 8, 1986, File No. 1-9256)
*10C Facilities and Guarantee Agreement, as amended,
and Termination Agreement dated as of September 4,
1986 (Exhibit 10D to Registration of Securities on
Form 10 dated September 8, 1986, File No. 1-9256)
*10D $250,000,000 Credit Agreement dated as of June 15,
1994 (Exhibit (10) to the Registrant's
Quarterly Report on Form 10-Q for the 27 weeks
ended July 2, 1994)
COMPENSATORY PLANS OR ARRANGEMENTS [10E-10L]
*10E Premark International, Inc. 1994 Incentive Plan
(Exhibit 4.1 to the Registrant's Form S-8
Registration Statement No. 33-53561 dated
May 4, 1994)
*10F Premark International, Inc. Supplemental Benefits
Plan (Exhibit 10L to the Registrant's Annual
Report on Form 10-K for the year ended December
28, 1991)
*10G Premark International, Inc. Change of Control
Policy, as amended 1989 (Exhibit 4 to the
Registrant's Current Report on Form 8-K dated
March 20, 1989)
*10H Employment Agreement entered into on July 11, 1991
between the Registrant and Lawrence B. Skatoff
(Exhibit 10K to the Registrant's Annual Report on
Form 10-K for the year ended December 26, 1992)
*10I Form of Employment Agreement entered into on March
7, 1989 between the Registrant and certain
executive officers (Exhibit 5 to the Registrant's
Current Report on Form 8-K dated March 20, 1989)
*10J Employment Agreement entered into on June 2, 1992
between the Registrant and Joseph W. Deering
(Exhibit 10M to the Registrant's Annual Report on
Form 10-K for the year ended December 26, 1992)
*10K Employment Agreement dated November 9, 1992
between Registrant and E. V. Goings (Exhibit 10N
to the Registrant's Annual Report on Form 10-K for
the year ended December 25, 1993)
*10L Premark International, Inc. Director Stock Plan,
as amended 1993 (Exhibit 10O to the Registrant's
Annual Report on Form 10-K for the year ended
December 25, 1993)
11 A statement of computation of 1994 per share
earnings
22 Subsidiaries of the Registrant as of March 10,
1995
24 Manually signed Consent of Independent Accountants
to the incorporation of their report by reference
into the prospectuses contained in specified
registration statements on Form S-8 and Form S-3
25 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
No Current Reports on Form 8-K were filed by the Registrant
for the quarter ended December 31, 1994.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS ON FINANCIAL STATEMENT
SCHEDULE
To the Board of Directors and Shareholders
of Premark International, Inc.
Our audits of the consolidated financial statements referred
to in our report dated January 31, 1995 appearing on page 46 of
the 1994 Annual Report to Shareholders of Premark International,
Inc. (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.
Price Waterhouse LLP
Chicago, Illinois
January 31, 1995
<PAGE>
SCHEDULE VIII--VALUATION AND QUALIFYING ACCOUNTS
For the three years ended December 31, 1994
(In millions)
Col. A Col. B Col. C Col. D Col. E
Additions
Charged to
Balance at Charged Other Balance
Beginning to Costs Accounts Deductions at End
Description of Period Expenses Describe Describe of Period
Allowance for doubtful
accounts, current and
long term:
Year ended
December
31, 1994 $66.1 $12.2 -- {$(12.2)<F1> $66.2
{ ( .2)<F2>
{ .3 <F3>
Year ended
December $70.6 $15.5 -- {$(18.6)<F1> $66.1
25, 1993 { (1.4)<F2>
Year ended
December
26, 1992 $53.0 $33.5 -- {$(14.3)<F1> $70.6
{ ( 1.7)<F2>
{ 0.1 <F3>
Valuation allowance for deferred tax assets:
Year ended
December
31, 1994 $66.7 ($31.1) $35.6
Year ended
December
25, 1993 $84.6 ($17.9) -- -- $66.7
[FN]
<F1> Represents write-offs less recoveries.
<F2> Foreign currency translation adjustment.
<F3> Business acquired.
<PAGE>
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.
Premark International, Inc.
(Registrant)
By WARREN L. BATTS
Warren L. Batts
Chairman of the Board and
Chief Executive Officer
March 20, 1995
Pursuant to the requirements of the Securities Exchange Act
of 1934, this Report has been signed below by the following
persons on behalf of the Registrant and in the capacities and on
the date indicated.
Signature Title
Warren L. Batts Chairman of the Board of Directors,
Warren L. Batts Chief Executive Officer and Director
(Principal Executive Officer)
Lawrence B. Skatoff Senior Vice President and Chief
Lawrence B. Skatoff Financial Officer (Principal
Financial Officer)
Robert W. Hoaglund Vice President, Control and
Robert W. Hoaglund Information Systems (Principal
Accounting Officer)
* Director
William O. Bourke
* Director
Dr. Ruth M. Davis
* Director
Lloyd C. Elam, M.D.
* Director
Clifford J. Grum
* Director
Joseph E. Luecke
* Director
Bob Marbut
* Director
John B. McKinnon
* Director
David R. Parker
* Director
Robert M. Price
James M. Ringler President, Chief Operating Officer and
James M. Ringler Director
* Director
Janice D. Stoney
*By John M. Costigan
John M. Costigan
Attorney-in-fact
March 20, 1995
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
11 A statement of computation of 27-28
1994 per share earnings
13 Pages 26 through 46 of the 29-66
Annual Report to Shareholders
of the Registrant for the year
ended December 31, 1994
22 Subsidiaries of the Registrant 67-69
as of March 10, 1995
24 Manually signed Consent of 70
Independent Accountants to the
incorporation of their report
by reference into the prospec-
tuses contained in specified
registration statements on Form
S-8 and Form S-3
25 Powers of Attorney 71-72
27 Financial Data Schedule 73
Exhibit 11
PREMARK INTERNATIONAL, INC.
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS<F1>
[CAPTION]
1994 1993 1992
----- ----- -----
(Dollars in millions,
except per share,
shares in thousands)
Earnings
Income before cumulative effect
of accounting changes $225.5 $172.5 $4.6
Cumulative effect of changes in
method of accounting for:
Income Taxes - - 15.0
Postretirement Benefits - - (98.9)
------- ------- -------
Net income (loss) $225.5 $172.5 ($79.3)
======= ======= =======
PRIMARY METHOD
Shares
Cumulative average outstanding
shares 63,637 63,684 63,254
Common equivalent shares 2,891 3,359 2,574
------ ------ ------
Weighted average number of common
shares and common equivalent
shares outstanding 66,528 67,043 65,828
Primary earnings per share
Before cumulative effect of
accounting changes $3.39 $2.57 $0.07
Cumulative effect of changes in
method of accounting for:
Income Taxes - - 0.23
Postretirement Benefits - - (1.50)
------- ------- -------
Net income (loss) per share $3.39 $2.57 ($1.20)
======= ======= =======
FULLY DILUTED METHOD
Shares
Cumulative average outstanding
shares 63,637 63,684 63,254
Common equivalent shares 2,928 3,544 2,638
------ ------ ------
Weighted average number of common
shares and common equivalent
shares outstanding 66,565 67,228 65,892
Fully diluted earnings per share:
Before cumulative effect of
accounting changes $3.39 $2.57 $0.07
Cumulative effect of changes in
method of accounting for:
Income Taxes - - 0.23
Postretirement Benefits - - (1.50)
------- ------- -------
Net income (loss) per share $3.39 $2.57 ($1.20)
======= ======= =======
<F1> Reflects a 2-for-1 stock split declared May 4, 1994.
</PAGE>
EXHIBIT 13
FINANCIAL REVIEW
The information contained in this financial review should be read
in conjunction with the consolidated financial information
provided on pages 32 to 45 of this Annual Report.
RESULTS OF OPERATIONS
OVERALL
Net Sales and Net Income (Loss)
Net sales in 1994 increased by 11 percent to a record $3.5
billion. All businesses reported strong improvement over 1993,
led by a robust Food Equipment Group performance. In 1993, net
sales increased by 5 percent over 1992 as all businesses other
than the Food Equipment Group had strong gains.
Net income for 1994 was a record $225.5 million, 31 percent
higher than in 1993, reflecting double digit percentage point
gains by all businesses except Florida Tile, which had a loss.
The biggest factors in the improvement were record performance at
the Food Equipment Group, led by its U.S. operations, and a
substantial increase at Tupperware, as well as record performance
by West Bend and very strong Ralph Wilson Plastics results.
Additionally, interest expense was lower than in 1993 due to
lower average rates and outstanding borrowings. Partially
offsetting these improvements was a higher effective tax rate in
1994 compared with 1993.
In 1993, net income was $172.5 million versus a net loss of $79.3
million reported in 1992. The net loss in 1992 included a $111.4
million after-tax restructuring charge at Tupperware, and net
charges of $83.9 million for the adoption of two new accounting
standards. Net income in 1993 would have increased by 49 percent
over 1992, excluding these unusual items. The increase was
primarily the result of improvement by Tupperware.
In 1994 and 1993, 45 percent of Premark's sales, and 58 percent
and 62 percent, respectively, of its segment profit were
generated outside of the United States.
Costs and Expenses
The cost of products sold in relation to sales was 51.8 percent
in 1994 and 1993, and 53.6 percent in 1992. The more favorable
ratio in 1993 compared with 1992 was the result of reduced
manufacturing costs and increased capacity utilization at
Tupperware U.S. as a result of the consolidation of manufacturing
operations; more favorable pricing at Tupperware Europe; and
lower costs and nominally higher prices at the Food Equipment
Group in the United States. These factors were somewhat offset
by increased adhesive claims costs at Ralph Wilson Plastics.
Delivery, sales and administrative expenses as a percentage of
sales were 39.0 percent in 1994, compared with 39.9 percent in
1993 and 39.7 percent in 1992.
The $136.7 million pretax charge recorded by Tupperware in 1992
was primarily for the restructuring of the U.S. business, but
also included amounts for costs associated with realigning
international manufacturing capacity and other actions. In 1994,
$13.2 million of the pretax charge, related to international
manufacturing capacity, was reversed after management concluded
that certain planned restructuring actions would not be taken due
to changes in Tupperware's operating environment.
Tax Rate
The effective tax rate in 1994 was 27.5 percent. This compares
with 24.9 percent in 1993 and 32.0 percent in 1992 before the
restructuring charge. The most important reason for the higher
rate in 1994 was a lesser amount of available foreign tax credits
compared with 1993. Partially offsetting this was a lower
foreign effective tax rate arising from the recognition of tax
assets. The lower tax rate in 1993 compared with 1992 was
attributable to improved operating income allowing the
recognition of previously reserved tax assets for temporary
differences and foreign tax credits.
Net Interest Expense
Interest expense, net of interest income, was $18.1 million in
1994, $26.1 million in 1993, and $26.6 million in 1992. The
decrease in 1994 was the result of lower average interest rates
and borrowings. The lower rates were achieved largely due to the
redemption of the company's $150 million 8 3/8% notes on February
1, 1994. The redemption was partially funded through commercial
paper borrowings at lower rates.
SEGMENTS
TUPPERWARE
Sales and Segment Profit 1994 vs. 1993
Sales rose by 8 percent in 1994 to $1.33 billion from $1.23
billion in 1993, led by Asia Pacific and Europe. Excluding the
effect of foreign exchange, 1994 sales increased by 7 percent
over 1993. Segment profit increased 17 percent to $199.8 million
from $171.0 million in 1993. All regions had double digit
percentage point increases in segment profit, except for Canada,
which had a loss. The worldwide active sales force increased by
15 percent. For 1994 and 1993, respectively, Tupperware
accounted for 39 percent and 40 percent of Premark's sales and
generated 56 percent and 61 percent of its segment profit.
Regional Results
Sales in Europe increased by 5 percent over 1993 to $566.2
million, and the region had a 13-percent increase in segment
profit. This region continues to be Tupperware's largest market,
accounting for 42 percent of Tupperware's sales in 1994. The
1994 segment profit increase primarily reflects higher volume in
Germany, despite slower sales in the fourth quarter as
distributors reduced their inventories.
Asia Pacific's 1994 sales increased by 16 percent over 1993 to
$355.6 million, of which 7 percentage points were attributable to
favorable foreign exchange rates. Segment profit was up 15
percent, mainly from higher volume in Japan, Korea, and the
Philippines, as well as from favorable foreign exchange rates.
These gains were partially offset by a major decline in
profitability in Australia, in part due to costs incurred to shut
down a manufacturing plant. The earthquake in Japan in January
1995 has disrupted a portion of Tupperware's distribution system
in that country, and has also had a negative impact on the sales
force there. However, the overall impact of these factors is not
expected to affect the company materially.
Sales in the United States improved by 2 percent in 1994 over
1993, totaling $239.7 million. Segment profit was $16 million, a
28-percent increase over the previous year. The improvements
were due to a larger active sales force, the effect of which was
partially offset by manufacturing and distribution
inefficiencies, as well as the costs associated with some excess
inventories.
Latin America's sales rose substantially in 1994 to $143.2
million from $120.8 million in 1993, led by higher volume in
Mexico, and a surge in Brazil, due to improved pricing as well as
higher volume. The region also had a substantial improvement in
segment profit from the higher sales. The devaluation in the
Mexican peso in December 1994 had a negative impact on the
region's reported fourth quarter 1994 sales and segment profit of
$3 million and $1 million, respectively. If the peso continues
at its present rate, it will continue to have a negative impact
on reported sales and profits compared with the previous year,
but the impact is not expected to be material.
1993 vs. 1992
Sales of $1.23 billion in 1993 were 11 percent higher than 1992's
sales of $1.11 billion. All regions made strong contributions to
the increase. Excluding foreign exchange effects, sales
increased by 15 percent. Segment profit improved to $171.0
million from a reported loss of $25.3 million in 1992. After
adjusting for the effect of 1992's pretax restructuring charge of
$136.7 million, 1993's segment profit increased by $59.6 million
from 1992. All regions had significant gains, with the United
States showing the most dramatic improvement.
FOOD EQUIPMENT GROUP
Sales and Segment Profit 1994 vs. 1993
The Food Equipment Group's 1994 sales of $1.14 billion were 12
percent higher than 1993's sales of $1.01 billion. The increase
reflects very strong U.S. sales, a good improvement in Europe,
and the acquisition of distributorships in Japan and Australia in
1994. Segment profit rose 57 percent to $80.6 million from
1993's $51.3 million as a result of the higher volume. Partially
offsetting the effect of the higher volume were costs associated
with the new operations in Japan and Australia. For 1994 and
1993, respectively, the Food Equipment Group accounted for 33
percent and 32 percent of Premark's sales and generated 23
percent and 18 percent of its segment profit.
Regional Results
Sales in the United States rose by 13 percent in 1994 to $687.8
million due to strong improvements in equipment sales and service
revenues. The higher sales were the result of significantly
better volume and nominal price increases. All product lines had
strong improvements. Segment profit increased substantially as
the higher sales were only partially offset by higher operating
costs. Domestic operations accounted for 61 percent and 60
percent of the group's sales and 77 percent and 79 percent of its
segment profit in 1994 and 1993, respectively.
European sales increased by 7 percent in 1994 reversing the
decline that occurred in 1993 compared with 1992. The
improvement was led by the United Kingdom and France as European
economies began to grow. Segment profit increased sharply as a
result of the higher sales, the absence of reduction in force
charges recorded in 1993, and the benefit of actions taken
associated with those prior year charges.
Sales by the group's other international operations in Canada,
Mexico, Japan, and Australia increased by 41 percent in 1994,
primarily from the addition of the new operations in Japan and
Australia during the year. The segment profit of these other
international operations was only modestly above last year,
despite the higher sales, primarily reflecting the start-up costs
in Japan and Australia.
1993 vs. 1992
Worldwide, the Food Equipment Group's sales in 1993 decreased by
4 percent from 1992 to $1.01 billion. Excluding the negative
effect of foreign exchange rates on the comparison, 1993 sales
were even with 1992, as moderately higher U.S. sales were offset
by a decline in Europe. Segment profit of $51.3 million was up 3
percent from the $49.6 million reported for 1992 as improved U.S.
margins more than offset weaker European results.
CONSUMER AND DECORATIVE PRODUCTS
Sales and Segment Profit 1994 vs. 1993
Consumer and Decorative Products sales in 1994 rose 15 percent to
$982.8 million from $857.7 million with all units in the segment
reporting double digit percentage point increases. Segment
profit rose by 35 percent to $75.9 million from $56.2 million in
1993 on record performances at West Bend and Hartco, continued
strength at Ralph Wilson Plastics and a substantial improvement
by Precor, partially offset by a loss at Florida Tile. Consumer
and Decorative Products accounted for 28 percent of Premark's
sales and 21 percent of its segment profit in both 1994 and 1993.
Decorative Products Group
In 1994, Decorative Products Group sales rose by 12 percent to
$690.0 million. At Ralph Wilson Plastics, sales rose 10 percent
to a record $471.4 million due to higher volume and prices.
Segment profit improved substantially as a result of the higher
sales and lower manufacturing costs, which were only partially
offset by higher operating costs.
During 1994 and 1993, respectively, Ralph Wilson Plastics
provided $18.0 million and $18.9 million for adhesive claims
costs. In late October 1994, the company reached agreement with
certain of its insurance carriers with respect to reimbursement
for a substantial portion of the adhesive claims. These
agreements resulted in fourth quarter payments to the company by
the insurance carriers of $34.3 million. Due to the confirmed
insurance coverage and the company's current assessment of
potential future adhesive claims, the company does not currently
expect to record any additional expense associated with this
issue. As of December 31, 1994, the company's balance sheet
includes accruals totaling $104.5 million associated with these
claims, and assets totaling $66.8 million representing future
amounts expected to be reimbursed by the insurers.
Florida Tile had a good increase in sales in 1994, mainly due to
its new import program. The unit, however, had a segment loss
due to costs for new computer systems and accruals made for
environmental issues, as well as higher production and operating
expenses. Hartco achieved a substantial improvement in sales and
segment profit in 1994, after recording a small loss in 1993.
The improvement was due to higher sales volume in all product
lines along with a favorable sales mix.
Consumer Products Group
West Bend had record sales and segment profit in 1994 on volume
improvement in both its housewares and direct-to-the-home
cookware businesses. Sales of bread makers were particularly
strong. As a result of the sales improvement, segment profit was
up sharply. Despite a softer market in the fourth quarter,
Precor also had a good sales increase due to higher treadmill
sales. Precor's segment profit increased sharply as a result of
the higher volume and a lower cost structure.
1993 vs. 1992
In 1993, Consumer and Decorative Products sales rose 10 percent
to $857.7 million from $779.4 million with all units in the
segment reporting strong increases. Segment profit was
essentially flat in 1993 at $56.2 million compared with $55.9
million in 1992, as the higher sales were offset by increased
costs at Ralph Wilson Plastics, Florida Tile and Precor.
FINANCIAL CONDITION
Liquidity and Capital Resources
Working capital was $353.5 million at the end of 1994, compared
with $251.8 million in 1993 and $251.0 million at the end of
1992. The current ratio was 1.4-to-1 at the end of 1994 and
1.3-to-1 at the end of 1993 and 1992. On February 1, 1994, the
company called its $150 million 8 3/8% notes, which had a stated
maturity date in 1997. The redemption was funded through
available cash and the issuance of commercial paper at more
favorable interest rates. A higher level of inventories to
support higher sales and a lower amount of current borrowings
were the primary factors in 1994's increase in working capital.
In 1993, the buildup of cash in anticipation of the
February 1, 1994 redemption, along with higher inventories and
accounts receivable, offset by higher accounts payable and the
classification of $105 million of the 8 3/8% notes as short-term,
accounted for the slight increase in working capital compared
with 1992.
The total debt-to-capital ratio at the end of 1994 was 17.5
percent compared with 27.7 percent at the end of 1993. As of
December 31, 1994, the company had unused lines of credit of
$580.7 million, including $250.0 million under an unsecured
revolving credit facility, which expires in May 1999. Future
cash flows, lines of credit, and other short-term financing
arrangements are expected to be adequate to fund operating and
investing requirements.
Operating Activities
In 1994, cash provided by operating activities was $332.7 million
compared with $254.5 million in 1993 and $239.8 million in 1992.
The 1994 increase over the previous year primarily reflects the
improvement in net income. The increase in 1993 compared with
1992 was attributable to higher net income partially offset by
increased working capital in support of higher levels of
business.
Investing Activities
Capital expenditures amounted to $148.2 million in 1994, $146.1
million in 1993, and $136.7 million in 1992. The level of
expenditures has been relatively consistent in recent years
reflecting a maintenance level of activity with relatively small
incremental projects yearly. Capital expenditures are expected
to be approximately $160 million in 1995.
Stock Split and Dividends
On May 4, 1994, the company's board of directors declared a
2-for-1 stock split, which was effected in the form of a 100
percent stock dividend issued to shareholders of record as of
June 16, 1994. Share related amounts in the Annual Report
reflect this split. In 1994, dividends declared per common share
were 74 cents, up from 54 1/2 cents in 1993 and 48 cents in 1992.
Quarterly dividends increased to 20 cents and 14 cents in the
second quarters of 1994 and 1993, respectively.
Share Repurchase
On March 14, 1995, the company completed its share repurchase
plan announced in May 1993. Under the plan, the Company
repurchased in the open market 6 million of its shares of common
stock at an average cost of $41 per share. Shares acquired are
being used to satisfy the exercise of stock options. Of the
total, 1,464,600 shares at an average cost of $42 per share were
repurchased in fiscal 1994.
NEW ACCOUNTING STANDARDS
In 1993, the company adopted Statement of Financial Accounting
Standards (SFAS) No. 112, "Employers' Accounting for
Postemployment Benefits." This standard requires the recognition
on the accrual basis of the company's obligation to provide
certain benefits to former or inactive employees after they leave
employment but before retirement. As the company's existing
policies included accrual basis accounting for many of the
benefits covered by SFAS No. 112, the cumulative pretax effect of
adopting the new standard was only $2.1 million.
In 1992, the company adopted SFAS No. 106, "Employers' Accounting
for Postretirement Benefits Other than Pensions," and SFAS No.
109, "Accounting for Income Taxes." The $98.9 million negative
after-tax effect of adopting SFAS No. 106 and the $15.0 million
benefit of adopting SFAS No. 109 were both recorded in 1992.
IMPACT OF INFLATION AND FOREIGN EXCHANGE
Inflation as measured by the Consumer Price Index has continued
at a low level in the United States. Nevertheless, the company
has experienced substantial price increases for certain raw
materials. Through the end of 1994, these price increases had
not had a significant detrimental effect on the company's gross
margins, nor had they led to significant price increases by the
company for its products. The company expects to experience
additional increases in the cost of many of its raw materials in
1995. The company expects to absorb some of these cost increases
through enhanced operating and production efficiencies and to be
able to pass along some of these increased costs to its customers
in the form of higher selling prices.
A significant portion of the company's profits come from
international operations. As a result, its earnings and
financial position are subject to fluctuation in foreign currency
exchange rates. As a strengthening U.S. dollar generally has a
negative impact on both, the company uses financial instruments,
including forward contracts, foreign currency borrowings, and
currency swaps, to hedge its exposure to certain foreign exchange
risk as appropriate.
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA
<CAPTION>
(Dollars in millions, 1994 1993 1992 1991 1990 1989 1988 1987
except per share amounts) --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Operating results
Net Sales:
Tupperware $1,332.5 $1,229.7 $1,112.3 $1,076.3 $1,019.2 $ 949.1 $ 895.1 $ 829.4
Food Equipment Group 1,135.5 1,009.9 1,054.3 1,010.4 999.0 931.8 874.0 808.9
Consumer and Decorative
Products 982.8 857.7 779.4 729.0 703.2 634.9 555.8 489.3
--------- --------- --------- --------- --------- --------- --------- ---------
Total net sales $3,450.8 $3,097.3 $2,946.0 $2,815.7 $2,721.4 $2,515.8 $2,324.9 $2,127.6
========= ========= ========= ========= ========= ========= ========= =========
Segment profit (loss):
Tupperware $ 199.8 $ 171.0 $ (25.3) $ 121.2 $ 64.9 $ 104.2 $ 115.7 $ 65.2
Food Equipment Group 80.6 51.3 49.6 41.1 26.9 21.8 57.8 53.3
Consumer and Decorative
Products 75.9 56.2 55.9 60.9 66.1 59.4 58.1 50.7
--------- --------- --------- --------- --------- --------- --------- ---------
Total segment profit 356.3 278.5 80.2 223.2 157.9 185.4 231.6 169.2
Unallocated expenses (27.2) (22.7) (19.7) (19.8) (19.7) (20.7) (22.9) (27.8)
Interest expense, net (18.1) (26.1) (26.6) (43.5) (39.1) (22.3) (12.1) (15.3)
--------- --------- --------- --------- --------- --------- --------- ---------
Income before income taxes and
cumulative effect of accounting
changes 311.0 229.7 33.9 159.9 99.1 142.4 196.6 126.1
Provision for income taxes 85.5 57.2 29.3 57.6 47.1 64.0 75.4 54.6
------- --------- --------- --------- ------ --------- -------- ----------
Income before cumulative
effect of accounting changes 225.5 172.5 4.6 102.3 52.0 78.4 121.2 71.5
Cumulative effect of accounting
changes - - - (83.9) - - (15.9) -
--------- --------- --------- --------- --------- --------- --------- ---------
Net income (loss) $ 225.5 $ 172.5 $ (79.3) $ 102.3 $ 52.0 $ 78.4 $ 105.3 $ 71.5
========= ========= ========= ========= ========= ========= ========= =========
Per share:<F1>
Income before cumulative effect
of accounting changes $ 3.39 $ 2.57 $ 0.07 $ 1.62 $ 0.82 $ 1.12 $ 1.75 $ 1.04
--------- --------- --------- --------- --------- --------- --------- ---------
Net income (loss) $ 3.39 $ 2.57 $ (1.20) $ 1.62 $ 0.82 $ 1.12 $ 1.52 $ 1.04
========= ========= ========= ========= ========= ========= ========= =========
Profitability ratios
As a percent of sales:
Tupperware segment profit
(loss) 15.0% 13.9% (2.3)% 11.3% 6.4% 11.0% 12.9% 7.9%
Food Equipment Group
segment profit 7.1 5.1 4.7 4.1 2.7 2.3 6.6 6.6
Consumer and Decorative
Products segment profit 7.7 6.6 7.2 8.4 9.4 9.4 10.5 10.4
Total segment profit 10.3 9.0 2.7 7.9 5.8 7.4 10.0 8.0
Net income (loss) 6.5 5.6 (2.7) 3.6 1.9 3.1 4.5 3.4
Return on average equity 25.3 22.7 (10.3) 12.8 6.7 10.1 14.9 11.5
Return on average invested
capital<F2> 23.0 19.3 (5.6) 11.2 6.4 9.0 12.6 9.5
_____________
<FN>
<F1> Reflects a 2-for-1 stock split declared May 4, 1994.
<F2> Net income plus after-tax long-term interest expense divided by average long-term debt and equity.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
(Dollars in millions, 1994 1993 1992 1991 1990 1989 1988 1987
except per share amounts) --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Financial condition
Working capital $ 353.5 $ 251.8 $ 251.0 $ 256.8 $ 367.5 $ 440.4 $ 430.0 $ 477.2
Property, plant, and
equipment, net 711.8 671.5 654.6 701.8 719.9 509.5 494.0 464.2
Total assets 2,357.9 2,117.0 1,958.8 2,034.0 2,034.3 1,757.2 1,655.2 1,585.7
Short-term borrowings
and current portion
of long-term debt 83.6 143.4 24.6 121.4 73.9 77.3 88.9 53.0
Long-term debt 122.3 168.0 274.2 278.5 495.9 254.1 237.9 235.7
Shareholders' equity 972.3 811.9 710.3 836.4 757.9 800.6 754.4 663.1
Current ratio 1.4 1.3 1.3 1.3 1.6 1.7 1.8 1.9
Long-term debt-to-equity 12.6% 20.7% 38.6% 33.3% 65.4% 31.7% 31.5% 35.5%
Total debt-to-capital 17.5% 27.7% 29.6% 32.4% 42.9% 29.3% 30.2% 30.3%
Other data
Net cash provided by
operating activities $ 332.7 $ 254.5 $ 239.8 $ 323.3 $ 221.7 $ 131.4 $ 132.8 $ 182.1
Capital expenditures 148.2 146.1 136.7 96.6 183.2 103.4 104.1 87.2
Depreciation and amortization 129.5 111.9 118.0 115.3 101.2 84.3 76.0 70.5
Advertising 47.9 42.5 43.0 37.4 32.9 28.8 30.0 32.4
Research and development 44.0 41.0 41.3 31.2 31.4 28.7 24.5 25.4
Number of employees (thousands) 23.9 23.9 24.2 24.0 25.4 24.7 24.0 22.8
Common stock data
Dividends declared per share<F1> $ 0.74 $ 0.545 $ 0.48 $ 0.42 $ 0.42 $ 0.39 $ 0.265 $ 0.145
Dividend payout ratio<F2> 28.8% + 29.5% 51.2% 37.5% 25.7% 25.5% +
Average shares outstanding
(thousands)<F1> 66,528 67,043 65,828 63,022 63,649 70,156 69,442 68,627
Year-end book value per share<F1>$ 15.22 $ 12.72 $ 11.17 $ 13.43 $ 12.34 $ 11.76 $ 11.14 $ 9.84
Year-end price/earnings ratio 13.20 15.58 (17.43) 12.50 10.59 13.73 10.40 10.76
Year-end market/book ratio 2.94 3.15 1.88 1.51 0.70 1.31 1.41 1.14
Year-end shareholders (thousands) 25.3 26.9 29.0 31.3 33.7 36.3 39.3 43.5
_____________
<FN>
<F1> Reflects a 2-for-1 stock split declared May 4, 1994.
<F2> Dividends declared per share divided by prior year earnings per share.
</TABLE>
<PAGE>
<TABLE>
Consolidated Statement of Operations
<CAPTION>
(In millions, except per share amounts) Dec. 31, Dec. 25, Dec. 26,
Year ended 1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Net sales $3,450.8 $3,097.3 $2,946.0
--------- --------- ---------
Costs and expenses
Cost of products sold 1,788.6 1,604.2 1,579.0
Delivery, sales, and administrative expense 1,344.3 1,236.6 1,169.7
Interest expense 23.8 32.1 35.1
Interest income (5.7) (6.0) (8.5)
Other expense, net 2.0 0.7 0.1
Restructuring costs (13.2) - 136.7
--------- --------- ---------
Total costs and expenses 3,139.8 2,867.6 2,912.1
--------- --------- ---------
Income before income taxes and
cumulative effect of accounting changes 311.0 229.7 33.9
Provision for income taxes 85.5 57.2 29.3
--------- --------- ---------
Income before cumulative effect
of accounting changes 225.5 172.5 4.6
Cumulative effect of change in accounting for:
Income taxes - - 15.0
Postretirement benefits (net of $41.1 tax benefit) - - (98.9)
--------- --------- ---------
Net income (loss) $ 225.5 $ 172.5 $ (79.3)
========= ========= =========
Net income (loss) per common and common equivalent share:<F1>
Before cumulative effect of accounting changes $ 3.39 $ 2.57 $ 0.07
Cumulative effect of change in accounting for:
Income taxes - - 0.23
Postretirement benefits - - (1.50)
--------- --------- ---------
Net income (loss) per common and common equivalent share $ 3.39 $ 2.57 $ (1.20)
========= ========= =========
<F1> Reflects a 2-for-1 stock split declared May 4, 1994.
See Notes to the Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
Consolidated Statement of Cash Flows
<CAPTION>
Dec. 31, Dec. 25, Dec. 26,
(In millions) Year ended 1994 1993 1992
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from operating activities
Net income (loss) $ 225.5 $ 172.5 $ (79.3)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 129.5 111.9 118.0
Loss (gain) on sale of assets 2.6 3.6 (0.5)
Foreign exchange loss (gain), net 0.1 (1.9) (1.7)
Cumulative effect of changes in accounting for:
Income taxes - - (15.0)
Postretirement benefits - - 98.9
Write-down of manufacturing facilities - - 60.4
Changes in assets and liabilities, excluding effects of acquisitions:
(Increase) decrease in accounts and notes receivable (30.0) (35.7) 18.3
(Increase) decrease in inventory (58.3) (45.3) 6.8
Increase in deferred income taxes (36.8) (15.8) (30.4)
Increase in accounts payable and accruals 47.5 41.5 61.8
Increase in income taxes payable 44.4 5.4 9.0
Other 8.2 18.3 (6.5)
--------- --------- ---------
Net cash provided by operating activities 332.7 254.5 239.8
--------- --------- ---------
Cash flows from investing activities
Capital expenditures (148.2) (146.1) (136.7)
Other (6.2) 11.1 0.7
--------- --------- ---------
Net cash used in investing activities (154.4) (135.0) (136.0)
--------- --------- ---------
Cash flows from financing activities
Repayment of long-term debt (154.2) (5.5) (86.2)
Net increase (decrease) in short-term debt 49.1 15.4 (20.2)
Proceeds from long-term debt 0.3 2.5 1.9
Proceeds from equipment lease receivable - - 1.9
Payment of dividends (43.3) (33.8) (29.0)
Proceeds from exercise of stock options 16.9 12.9 14.1
Purchase of treasury stock (59.4) (36.3) -
--------- --------- ---------
Net cash used in financing activities (190.6) (44.8) (117.5)
--------- --------- ---------
Effect of exchange rate changes on cash and cash equivalents (6.9) (6.7) (2.3)
--------- --------- ---------
Net (decrease) increase in cash and cash equivalents (19.2) 68.0 (16.0)
Cash and cash equivalents at beginning of year 140.0 72.0 88.0
--------- --------- ---------
Cash and cash equivalents at end of year $ 120.8 $ 140.0 $ 72.0
========= ========= =========
See Notes to the Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
Consolidated Balance Sheet
<CAPTION>
Dec. 31, Dec. 25,
(Dollars in millions, except per share amounts) 1994 1993
--------- ---------
<S> <C> <C>
Assets
Cash and cash equivalents $ 120.8 $ 140.0
Accounts and notes receivable, less allowances of $43.5 in 1994 and $37.1 in 1993 465.6 434.4
Inventories 512.5 441.2
Deferred income tax benefits 120.9 96.3
Prepaid expenses 54.3 27.5
--------- ---------
Total current assets 1,274.1 1,139.4
--------- ---------
Investments, long-term receivables, less
allowances of $22.7 in 1994 and $29.0 in 1993, and deferred charges 194.8 123.8
Property, plant, and equipment, net 711.8 671.5
Intangibles, less accumulated amortization of $88.0 in 1994 and $73.8 in 1993 177.2 182.3
--------- ---------
Total assets $2,357.9 $2,117.0
========= =========
Liabilities and shareholders' equity
Accounts payable $ 218.8 $ 194.4
Short-term borrowings and current portion of long-term debt 83.6 143.4
Accrued liabilities 618.2 549.8
--------- ---------
Total current liabilities 920.6 887.6
--------- ---------
Long-term debt 122.3 168.0
Accrued postretirement benefit cost 151.4 144.5
Deferred income taxes 9.9 9.0
Other liabilities 181.4 96.0
Shareholders' equity:
Preferred stock, $1.00 par value, authorized 50,000,000 shares; issued - none - -
Common stock, $1.00 par value, authorized 200,000,000 shares;
issued - 69,003,840 shares <F1> 69.0 34.5
Capital surplus 571.7 582.3
Retained earnings 579.8 418.7
Treasury stock, 5,105,347 shares at December 31, 1994,
and 5,190,774 shares at December 25, 1993, at cost<F1> (125.6) (93.0)
Unearned portion of restricted stock issued for future service (0.3) (1.0)
Cumulative foreign currency adjustments (122.3) (129.6)
--------- ---------
Total shareholders' equity 972.3 811.9
--------- ---------
Total liabilities and shareholders' equity $2,357.9 $2,117.0
========= =========
<F1> Reflects a 2-for-1 stock split declared on May 4, 1994.
See Notes to the Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
Consolidated Statement of Shareholders' Equity
<CAPTION>
Number of shares Amounts
-------------------- -----------------------------------------------------------------
Cumulative
foreign
Common Treasury Common Capital Retained Treasury currency
(In millions) stock<F1> stock<F1> stock surplus earnings stock adjustments
------- --------- ------- -------- --------- --------- ------------
<S> <C> <C> <C> <C> <C> <C> <C>
December 28, 1991 69.0 (6.8) $34.5 $569.3 $396.5 $(86.8) $(75.0)
Net loss (79.3)
Cash dividends declared (30.4)
Treasury stock issued for
incentive plans 1.4 (2.9) 17.5
Translation adjustments (30.9)
------- --------- ------- -------- --------- --------- ------------
December 26, 1992 69.0 (5.4) 34.5 566.4 286.8 (69.3) (105.9)
Net income 172.5
Cash dividends declared (34.8)
Purchase of treasury stock (1.2) (39.6)
Treasury stock issued for
incentive plans and
related tax benefits 1.4 15.9 (5.8) 15.9
Translation adjustments (23.7)
------- --------- ------- -------- --------- --------- ------------
December 25, 1993 69.0 (5.2) 34.5 582.3 418.7 (93.0) (129.6)
Net income 225.5
Cash dividends declared (47.2)
Purchase of treasury stock (1.5) (61.2)
Treasury stock issued for
incentive plans and
related tax benefits 1.6 23.9 (17.2) 28.6
Effect of 2-for-1 stock split 34.5 (34.5)
Translation adjustments 7.3
------- --------- ------- -------- --------- --------- ------------
December 31, 1994 69.0 (5.1) $69.0 $571.7 $ 579.8 $(125.6) $(122.3)
======= ========= ======= ======== ========= ========= ============
<F1> Reflects a 2-for-1 stock split declared May 4, 1994.
See Notes to the Consolidated Financial Statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The consolidated financial statements include the accounts of
Premark and all of its subsidiaries. Certain prior year amounts
have been reclassified to conform with the current year's
presentation. Intercompany accounts and transactions have been
eliminated. The company's fiscal year ends on the last Saturday
of December, and in 1994 included 53 weeks versus 52 weeks
included in 1993 and 1992.
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.
Inventories
Inventories are valued at the lower of cost or market. Inventory
cost includes cost of raw material, labor, and overhead.
Substantially all domestic inventories are valued on the last-in,
first-out (LIFO) cost method. For the remaining inventories,
approximately 44 percent, the first-in, first-out (FIFO) cost
method is generally used. If inventories valued on the LIFO
method had been valued using the FIFO method, they would have
been $53.5 million higher at the end of 1994 and $56.0 million
higher at the end of 1993.
Property and Depreciation
Properties are stated at the lower of cost or fair value. An
impairment loss is recognized for the difference between
estimated fair value and carrying value when the carrying value
of an asset, including associated intangibles, exceeds the sum of
estimated undiscounted future cash flows. 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. Expenditures for
maintenance and repairs are charged to expense.
Intangibles
The excess of cost over the fair value of net assets of
businesses acquired ($160.5 million in 1994 and $164.1 million in
1993) and other intangibles are being amortized over periods
ranging up to 40 years.
Postemployment and Postretirement Benefits
The company adopted SFAS No. 112, "Employers' Accounting for
Postemployment Benefits," in 1993. This standard requires the
company to recognize the cost of certain benefits provided to
former or inactive employees on the accrual basis rather than
when they are paid. The cumulative pretax effect of adopting this
standard was $2.1 million, which has been included as a component
of "Other expense, net" in the 1993 Consolidated Statement of
Operations.
In 1992, the company adopted SFAS No. 106, "Employers' Accounting
for Postretirement Benefits Other Than Pensions," for its retiree
medical and life insurance plans. Under SFAS No. 106, the company
accrues the cost of retiree benefits during the years that
employees provide service. The company's past practice was to
recognize these costs on a cash basis. As part of adopting the
new standard, the company recorded a one-time, non-cash charge of
$140.0 million before taxes, or $98.9 million after tax in 1992.
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.
Income Taxes
In 1992, the company adopted SFAS No. 109, "Accounting for Income
Taxes." Under SFAS No. 109, 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 are also 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 a change in tax rates is recognized in income in
the period that includes the enactment date. SFAS No. 109
requires an assessment, which includes anticipating future
income, in determining the likelihood of realizing deferred tax
assets. The cumulative effect of this change was a benefit to
income of $15.0 million in 1992.
Net Income (Loss) Per Share
Net income (loss) per share is based upon the weighted average
number of common and common equivalent shares, consisting of
stock options, outstanding during the year. On May 4, 1994, the
company's board of directors declared a 2-for-1 stock split that
was effected in the form of a 100 percent stock dividend issued
to shareholders of record as of June 16, 1994. Share related
amounts reflect the effect of the stock split.
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, other than those of operations
in highly inflationary countries, are translated into U.S.
dollars using the exchange rates at the balance sheet date.
Resulting translation adjustments are recorded in a separate
component of shareholders' equity, "Cumulative Foreign Currency
Adjustments." Gains and losses on transactions that hedge the
value of investments in foreign subsidiaries also are included in
shareholders' equity. Gains and losses on foreign currency
transactions and translation of financial statements of
subsidiaries in highly inflationary countries are included in
income. Foreign exchange losses included in income before taxes
in 1994, 1993, and 1992 were $1.5 million, $1.8 million, and $1.4
million, respectively.
Note 2 TUPPERWARE RESTRUCTURING CHARGE
In 1992, the company recorded a pretax charge of $136.7 million
($111.4 million after tax, or $1.69 per share) primarily to
consolidate manufacturing capacity and restructure the Tupperware
U.S. distribution system. Of that amount, $60.4 million related
to the write-down of Tupperware's Halls, Tennessee, manufacturing
facility and certain other manufacturing assets to their
estimated net realizable values. The charge included $45.6
million to restructure and strengthen Tupperware's distribution
network in the United States. The remaining $30.7 million related
to shutdown costs, including severance, relocation, and transfer
costs.
The restructuring plan was intended to result in manufacturing
capacity and related overhead consistent with anticipated sales
levels. In 1994, after considering changes in Tupperware's
operating environment, the company determined that certain
restructuring actions that had been planned regarding
Tupperware's international manufacturing capacity would not be
taken. As a consequence, $13.2 million of 1992's pretax charge
($8.2 million after tax, or $0.12 per share) was reversed and is
included in 1994's consolidated statement of operations.
Note 3 INVENTORIES
(In millions) 1994 1993
------ ------
Finished goods $257.0 $196.8
Work in process 62.5 65.1
Raw materials and supplies 193.0 179.3
------ ------
Total inventories $512.5 $441.2
====== ======
In 1994 and 1993, certain inventories were reduced, resulting in
liquidations of LIFO inventory quantities carried at lower costs
prevailing in prior years. The effect was to increase net income
by $2.1 million in 1994 and $0.4 million in 1993.
Note 4 PROPERTY, PLANT, AND EQUIPMENT
(In millions) 1994 1993
-------- --------
Land $ 38.0 $ 32.0
Buildings and improvements 399.5 381.8
Machinery and equipment 1,261.3 1,132.6
Construction in progress 54.4 60.0
-------- --------
Total property, plant, and equipment 1,753.2 1,606.4
Less accumulated depreciation 1,041.4 934.9
-------- --------
Property, plant, and equipment, net $ 711.8 $ 671.5
======== ========
Note 5 ACCRUED LIABILITIES
(In millions) 1994 1993
-------- --------
Compensation and employee benefits $ 150.1 $ 121.8
Warranties and maintenance
service agreements 95.8 74.8
Insurance 53.1 60.9
Advertising and promotion 52.0 43.0
Taxes other than income taxes 47.1 51.4
Income taxes 37.5 17.3
Restructuring reserves 15.5 36.7
Other 167.1 143.9
-------- --------
Total accrued liabilities $ 618.2 $ 549.8
======== ========
Note 6 FINANCING ARRANGEMENTS
Short-term Borrowings
(Dollars in millions) 1994 1993 1992
------- ------- -------
Total short-term borrowings
at year-end $ 82.9 $ 35.0 $ 19.1
Weighted average interest
rate at year-end 4.5% 5.4% 11.3%
Average borrowings
during the year $160.6 $ 28.3 $ 80.7
Weighted average interest
rate for the year 4.6% 8.5% 6.3%
Maximum borrowings
during the year $218.3 $ 54.3 $117.5
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, $12 million
was in the form of U.S. commercial paper. The remaining portion
of short-term borrowings was from several banks and was payable
in various foreign currencies.
Long-term Debt
(In millions) 1994 1993
------ ------
8 3/8% notes $ - $150.0
10 1/2% notes due 2000 100.0 100.0
5.95% - 6.5% industrial revenue
bonds due 1996-2009 17.8 17.9
Other 5.2 8.5
------ ------
123.0 276.4
Less current portion 0.7 108.4
------ ------
Total long-term debt $122.3 $168.0
====== ======
Interest paid in 1994, 1993, and 1992 was $27.8 million, $30.6
million, and $37.4 million, respectively.
The company's 8 3/8% long-term notes were called at par on
February 1, 1994. The redemption was funded through available
cash and the issuance of commercial paper. As of December 25,
1993, $45.0 million of the $150 million of borrowings outstanding
was classified as long-term, representing the portion expected to
be financed throughout 1994 using commercial paper borrowings.
Based on the borrowing rates available to the company for
long-term debt with similar terms and average maturities, the
fair value of the 10 1/2% notes at the end of 1994 and 1993 was
$108.8 million and $122.6 million, respectively. The fair value
of the remaining long-term debt approximates its book value.
The company had unused lines of credit amounting to $580.7
million at December 31, 1994, including $250.0 million under an
unsecured revolving credit facility, which expires in May 1999,
and supports the company's commercial paper borrowing capability.
Total principal payments due on long-term debt in the five years
subsequent to December 31, 1994 were $8.0 million.
Operating Leases
Rental expense for operating leases (reduced by sublease income
of approximately $2 million in 1994, $1 million in 1993, and $2
million in 1992) totaled $82.3 million in 1994, $79.6 million in
1993, and $75.0 million in 1992. Approximate minimum rental
commitments under noncancelable operating leases in effect at
December 31, 1994, were: 1995 -- $40.6 million; 1996 -- $25.3
million; 1997 -- $17.7 million; 1998 -- $10.8 million; 1999 --
$6.5 million; after 1999 -- $30.1 million.
Other Financial Instruments
In order to provide certainty as to the U.S. dollar amounts
associated with a portion of its foreign currency exposures on
local currency intercompany working capital loans; significant
firm cross-border purchase commitments; and a portion of its
equity in certain major international operations, the company
enters into hedges using financial instruments that include
forward contracts, foreign currency borrowings, and currency
swaps. The counterparties to these agreements are major
international financial institutions. The company continually
monitors its positions and the credit ratings of its
counterparties and believes the risk of incurring losses related
to credit risk is remote.
At December 31, 1994, the company had forward exchange contracts
maturing between January 11 and September 22, 1995, to sell
$108.8 million and purchase $20.8 million in foreign currencies
at fixed rates on the value dates. The larger components of these
positions were contracts to sell $33.1 million of French francs,
$20.9 million of German deutsche marks, and $15.3 million of
British pounds sterling, and to buy $19.9 million of Japanese
yen. The company expects to enter into new forward exchange
contracts as existing contracts expire due to its decision to
hedge its investments in certain of its international
subsidiaries. The company also had a currency swap to exchange
37.1 million German deutsche marks on October 2, 1995, for $20.0
million. The fair value of forward exchange contracts and the
currency swap is calculated using published year-end exchange
rates.
Note 7 INCOME TAXES
For income tax purposes, the domestic and foreign components of
income (loss) before income taxes were as follows:
(In millions) 1994 1993 1992
------- ------- -------
Domestic $206.5 $164.4 $(18.9)
Foreign 104.5 65.3 52.8
------- ------- -------
Total $311.0 $229.7 $ 33.9
======= ======= =======
The provision for income taxes charged to continuing operations
was as follows:
(In millions) 1994 1993 1992
------- ------- -------
Current
Federal $ 53.4 $ 26.7 $ 20.6
Foreign 59.2 43.7 40.4
State 9.5 5.0 (0.9)
------- ------- -------
122.1 75.4 60.1
------- ------- -------
Deferred
Federal (21.4) (12.1) (22.4)
Foreign (11.3) (5.2) (9.5)
State (3.9) (0.9) 1.1
------- ------- -------
(36.6) (18.2) (30.8)
------- ------- -------
Total $ 85.5 $ 57.2 $ 29.3
======= ======= =======
The differences between the provision for income taxes and income
taxes computed using the U.S. federal statutory rate were as
follows:
(In millions) 1994 1993 1992
------- ------- -------
Amount computed using
statutory rate $108.9 $ 80.4 $ 11.5
Increase (reduction) in
taxes resulting from:
Foreign tax
benefits recognized (21.3) (27.9) (22.9)
Unrecognized portion of
federal deferred
tax assets (22.6) (16.1) 24.0
Foreign income taxes 3.8 10.9 14.1
Repatriation of
foreign earnings 5.6 4.7 1.6
Effect of U.S. statutory
rate increase on net
deferred tax asset - (2.5) -
Net amortization
of intangibles 1.5 1.6 1.6
State taxes 3.6 2.4 (1.7)
Other 6.0 3.7 1.1
------- ------- -------
Total $ 85.5 $ 57.2 $ 29.3
======= ======= =======
In 1994 and 1993, respectively, the company recognized $23.9
million and $16.3 million 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 comprised of the following:
(In millions) 1994 1993
-------- --------
Depreciation $ (71.8) $ (69.8)
Undistributed earnings
of subsidiaries (7.3) (7.3)
Other (3.6) (3.1)
-------- --------
Gross deferred tax liabilities (82.7) (80.2)
-------- --------
Postretirement benefits 61.9 59.7
Employee benefit accruals 34.7 22.6
Tax carryforwards 23.7 22.7
Restructuring reserves 23.0 32.3
Self-insurance reserves 16.9 17.5
Computer leasing transactions 15.3 25.6
Bad debt reserves 15.0 17.5
Adhesive claims 14.7 4.1
Inventory reserves 13.4 10.4
Other 55.9 50.6
-------- --------
Gross deferred tax assets 274.5 263.0
-------- --------
Valuation allowance (35.6) (66.7)
-------- --------
Net deferred tax assets $ 156.2 $ 116.1
======== ========
The net decrease in the deferred tax asset valuation allowance
during 1994 was $31.1 million. The reserve decreased due to
improvement in operating income allowing the recognition of
previously reserved domestic and foreign tax assets for temporary
differences and net operating loss carryforwards.
Undistributed earnings of certain foreign subsidiaries, totaling
$160.6 million at December 31, 1994, are expected to be
reinvested indefinitely. If these earnings were distributed,
foreign withholding taxes payable would be approximately $14.1
million but would generate foreign tax credits in the United
States.
At December 31, 1994, the company had foreign net operating loss
carryforwards of $23.7 million. Of the total, $13.1 million
expire at various dates from 1995 to 2001, and the remainder have
unlimited lives. During 1994, the company recognized net
benefits of $8.9 million related to foreign net operating loss
carryforwards.
The company paid income taxes in 1994, 1993, and 1992 of $70.8
million, $48.9 million, and $66.2 million, respectively.
Note 8 RETIREMENT BENEFIT PLANS
Pension Plans
The company has various pension plans covering substantially all
domestic employees and certain employees in other countries.
The actuarial cost method used in determining pension expense is
the projected unit credit method. Generally, annual cash
contributions are equal to the minimum funding amounts required
by ERISA for U.S. plans.
Net pension expense included the following components:
(In millions) 1994 1993 1992
------- ------- -------
Service cost on benefits
earned during the year $ 12.9 $ 11.6 $ 10.6
Interest cost on benefits
earned in prior years 22.4 22.7 21.5
Return on plan assets:
Actual loss (gain) 5.3 (32.6) (22.3)
Deferred (loss) gain (29.7) 9.0 (0.7)
------- ------- -------
Net gain recognized (24.4) (23.6) (23.0)
Net amortization (1.1) (1.6) (1.1)
------- ------- -------
Net pension expense $ 9.8 $ 9.1 $ 8.0
======= ======= =======
The assumed long-term rates of return on assets used in
determining net pension expense were: U.S. plans -- 9.0 percent;
foreign-funded plans -- various rates from 5.5 percent to 10.0
percent. The assumed discount rates used in determining the
actuarial present value of the projected benefit obligation were:
U.S. plans -- 8.75 percent at December 31, 1994, and 7.25 percent
at December 25, 1993; foreign plans -- various rates from 5.0
percent to 10.0 percent. The assumed rates of increase in future
compensation levels were: U.S. plans -- 6.0 percent; foreign
plans -- various rates from 3.0 percent to 7.0 percent.
The funded status of the company's plans was as follows:
U.S. plans Foreign plans
-------------- --------------
(In millions) 1994 1993 1994 1993
----- ----- ----- -----
Actuarial present value of
benefit obligations:
Vested benefits $184.7 $216.8 $ 60.0 $ 50.0
Nonvested benefits 6.2 7.7 4.6 4.8
------- ------- ------- -------
Accumulated benefit
obligation 190.9 224.5 64.6 54.8
Effect of projected future
salary increases 32.0 39.8 19.5 18.5
------- ------- ------- -------
Projected benefit
obligation 222.9 264.3 84.1 73.3
Plan assets at fair value -
primarily equity securities
and corporate and
government bonds 237.6 257.0 45.5 42.7
------- ------- ------- -------
Plan assets in excess of
(less than) projected
benefit obligation 14.7 (7.3) (38.6) (30.6)
Unrecognized prior
service cost 2.4 2.3 2.1 1.6
Unrecognized net (gain) loss (7.2) 22.2 9.5 7.4
Unrecognized net transition
(asset) obligation (13.3) (15.6) 4.3 4.3
------- ------- ------- -------
Prepaid pension
(liability) asset $ (3.4) $ 1.6 $(22.7) $(17.3)
======= ======= ======= =======
At December 31, 1994 and December 25, 1993, the accumulated
benefit obligations of certain foreign plans exceeded plan assets.
For those plans, the obligations were $47.1 million and $39.8
million for 1994 and 1993, respectively. The fair value of those
plans' assets at the end of 1994 and 1993 was $22.3 million and
$17.9 million, respectively.
There are also several savings, thrift, and profit-sharing plans.
The company's contributions to these plans are based upon various
levels of employee participation. The total cost of these plans
was $17.3 million in 1994, $14.9 million in 1993, and $14.6
million in 1992.
Medical and Life Insurance Benefits
In addition to providing pension benefits, the company provides
certain postretirement health care and life insurance benefits for
selected U.S. and Canadian employees. Most employees and retirees
outside the United States are covered by government health care
programs. Employees may become eligible for these benefits if they
reach normal retirement age while working for the company and
satisfy 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 net periodic postretirement benefit costs were:
(In millions) 1994 1993 1992
------- ------- -------
Service cost $ 3.3 $ 2.9 $ 3.1
Interest on accumulated
postretirement benefit
obligation 10.9 11.8 11.9
Net amortization (0.3) (0.5) -
------- ------- -------
Total $ 13.9 $ 14.2 $ 15.0
======= ======= =======
The projected liabilities, which are not funded, are reconciled to
the amounts recognized in the company's statement of financial
position as follows:
(In millions) 1994 1993
------- -------
Accumulated postretirement
benefit obligation:
Retirees $ 91.6 $ 96.2
Other fully eligible
participants 13.8 18.0
Other active participants 38.9 39.1
------- -------
144.3 153.3
Unrecognized prior service
benefit 9.7 10.0
Unrecognized gain (loss) 5.8 (9.5)
------- -------
Accrued postretirement
benefit cost 159.8 153.8
Less current portion 8.4 9.3
------- -------
Total long-term accrued
postretirement benefit cost $151.4 $144.5
======= =======
The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation was 8.75 percent at
December 31, 1994, and 7.25 percent at December 25, 1993. The
assumed health care cost trend rate is 12.0 percent for the pre-65
plan and 9.0 percent for the post-65 plan for 1994. These rates
are assumed to decrease by one percentage point per year until an
ultimate level of 6.0 percent is reached. The rate is assumed to
remain at that level thereafter. The health care cost trend rate
assumption has a significant effect on the amounts reported. For
example, increasing the assumed health care cost trend rates by
one percentage point in each year would increase the accumulated
postretirement benefit obligation for the medical plan as of
December 31, 1994 by $15.9 million. The effect of a one percentage
point increase on the aggregate of the service and interest cost
components of net periodic postretirement benefit cost for 1994
would be $1.9 million.
The company continues to evaluate ways in which it can improve
management of these benefits and control the costs. Any changes in
the plans or revisions to assumptions that affect the amount of
expected future benefits may have a significant effect on the
amount of the reported obligation and future annual
expense.
Note 9 INCENTIVE COMPENSATION PLANS
In May 1994, the company's stockholders approved the Premark
International, Inc. 1994 Incentive Plan (the Plan). The Plan
replaced the company's previous stock option, performance unit,
restricted stock, and annual incentive plans.
Performance Awards
Under the Plan and previous plans, key employees earned cash
performance awards of approximately $25.0 million in 1994, $24.3
million in 1993, and $27.5 million in 1992. As of December 31,
1994, 458 employees were eligible to receive performance awards.
Stock Awards
The Plan includes awards of stock options and restricted stock to
employees and officers. As of December 31, 1994, the maximum
number of shares that may be granted under the Plan is 2,622,390,
plus up to 2,576,000 additional shares if such shares are
repurchased by the company. Of the total shares available for
award, up to 492,040 may be granted in the form of restricted
stock. As of December 31, 1994, 401 employees participated in the
Plan.
All nonvested outstanding stock options vest three years after
their date of grant, and the vesting periods on outstanding
restricted stock range from one to four years from date of grant.
All stock options issued to employees and officers under the Plan
and previous plans have had exercise prices equal to the fair
market value of the shares on the date of grant. Consequently, the
company has not recorded any compensation expense associated with
these stock options. All stock options issued under the Plan to
employees and officers have a term of 10 years. Options
outstanding at December 31, 1994, will expire during the period
from December 26, 1996, through October 31, 2004. As of December
31, 1994, options to purchase 2,327,132 shares were exercisable.
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.
Recognized compensation expense associated with restricted stock
grants was $0.7 million, $0.6 million, and $1.1 million in 1994,
1993, and 1992, respectively.
In May 1993, the company's stockholders approved a Director Stock
Plan (Director Plan) under which 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 31, 1994, were 600,000 and 545,312, respectively. As of
December 31, 1994, options to purchase 54,000 shares were
exercisable.
Stock option and restricted stock activity in 1994 and 1993 for
the Plan, Director Plan, and previous plans, is summarized below:
Average
Shares subject option price
Stock Options to option per share
-------------- ------------
Balance at December 26, 1992 6,995,282 $12.76
Options granted 731,400 37.22
Options canceled (167,200) 16.24
Options exercised (1,549,462) 10.60
---------- ------
Balance at December 25, 1993 6,010,020 16.20
Options granted 713,050 44.04
Options canceled (37,900) 29.18
Options exercised (1,745,888) 11.21
---------- ------
Balance at December 31, 1994 4,939,282 $21.88
========== ======
Shares
available
Restricted Stock Outstanding for issuance
----------- ------------
Balance at December 26, 1992 298,834 147,740
Shares awarded 2,400 (2,400)
Shares forfeited (40,700) 40,700
Shares released (71,734) -
-------- --------
Balance at December 25, 1993 188,800 186,040
Shares forfeited (6,000) 6,000
Shares released (128,068) -
Increase in shares available
due to adoption of 1994
plan - 300,000
-------- --------
Balance at December 31, 1994 54,732 492,040
======== ========
Note 10 SEGMENTS OF THE BUSINESS
The company has the following business segments: Tupperware--
plastic food storage and serving containers, microwave cookware,
and educational toys; Food Equipment Group--commercial food
equipment for the foodservice and food retail industries; and
Consumer and Decorative Products--home appliances,
direct-to-the-home cookware, physical fitness equipment,
decorative laminates, ceramic tile, and prefinished hardwood
flooring.
Segments of Business by Classes of Products
(In millions) 1994 1993 1992
--------- --------- ---------
Net sales
Tupperware $1,332.5 $1,229.7 $1,112.3
Food Equipment Group 1,135.5 1,009.9 1,054.3
Consumer and
Decorative Products 982.8 857.7 779.4
--------- --------- ---------
Total net sales $3,450.8 $3,097.3 $2,946.0
========= ========= =========
Segment profit (loss)
Tupperware<F1> $ 199.8 $ 171.0 $ (25.3)
Food Equipment Group 80.6 51.3 49.6
Consumer and
Decorative Products 75.9 56.2 55.9
--------- --------- ---------
Total segment profit 356.3 278.5 80.2
Unallocated expenses (27.2) (22.7) (19.7)
Interest expense, net (18.1) (26.1) (26.6)
--------- --------- ---------
Income before income taxes
and cumulative effect of
accounting changes $ 311.0 $ 229.7 $ 33.9
========= ========= =========
Identifiable assets
Tupperware $ 761.6 $ 711.7 $ 619.7
Food Equipment Group 645.3 583.5 571.8
Consumer and
Decorative Products 776.6 646.5 624.5
Corporate 174.4 175.3 142.8
--------- --------- ---------
Total identifiable assets $2,357.9 $2,117.0 $1,958.8
========= ========= =========
Depreciation and amortization
Tupperware $ 55.1 $ 42.5 $ 49.9
Food Equipment Group 28.7 25.0 27.3
Consumer and
Decorative Products 43.7 41.1 38.5
Corporate 2.0 3.3 2.3
--------- --------- ---------
Total depreciation
and amortization $ 129.5 $ 111.9 $ 118.0
========= ========= =========
Capital expenditures
Tupperware $ 77.4 $ 85.4 $ 79.7
Food Equipment Group 30.5 22.4 26.0
Consumer and
Decorative Products 38.5 36.4 30.3
Corporate 1.8 1.9 0.7
--------- --------- ---------
Total capital expenditures $ 148.2 $ 146.1 $ 136.7
========= ========= =========
<F1> Includes a $136.7 million charge primarily to restructure
Tupperware U.S. in 1992, and a $13.2 million reversal of a
portion of that charge in 1994.
Segments of Business by Geographical Areas
(In millions) 1994 1993 1992
-------- -------- --------
Net sales
United States $1,897.5 $1,693.3 $1,569.7
Europe 938.7 882.4 908.7
Asia Pacific 378.3 311.7 278.2
Latin America 157.0 131.3 111.9
Canada 79.3 78.6 77.5
-------- -------- --------
Total net sales $3,450.8 $3,097.3 $2,946.0
======== ======== ========
Segment profit (loss)
United States $ 150.7 $ 106.1 $ (53.9)
Europe 138.6 115.4 107.1
Asia Pacific 48.5 38.5 19.3
Latin America 17.0 14.0 9.3
Canada 1.5 4.5 (1.6)
-------- -------- --------
Total segment profit $ 356.3 $ 278.5 $ 80.2
======== ======== ========
Identifiable assets
United States $1,334.0 $1,175.6 $1,077.3
Europe 505.2 462.7 455.4
Asia Pacific 220.8 196.0 191.6
Latin America 91.2 79.4 61.5
Canada 32.3 28.0 30.2
Corporate 174.4 175.3 142.8
-------- -------- --------
Total identifiable assets $2,357.9 $2,117.0 $1,958.8
======== ======== ========
Sales to a single customer did not exceed 10 percent of total
sales. Export sales were insignificant. In the Consumer and
Decorative Products segment, the only class of products that
accounted for more than 10 percent of consolidated sales was
decorative laminates with sales of approximately $427 million in
1994, $388 million in 1993, and $364 million in 1992.
Unallocated expenses are corporate expenses and other items not
related to the operations of the segments. Corporate assets
consist of cash and assets maintained for general corporate
purposes. As of December 31, 1994, the company's net investment in
international operations was $480.0 million.
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 for which the company estimates its range of
possible exposure as $21 million to $45 million as of December 31,
1994. The company anticipates that any necessary expenditures
would be made over the next 10 years. As of December 31, 1994, the
company had accruals of $25.4 million for these matters. The
company has not recorded any significant claims against third
parties associated with these accruals.
As of December 31, 1994, the company had an accrual of $104.5
million recorded for the costs of adhesive claims against its
Ralph Wilson Plastics subsidiary. In the fourth quarter of 1994,
the company reached agreement with certain of its insurance
carriers with respect to reimbursement for a substantial portion
of such claims. Through the end of 1994, $34.3 million had been
received. Accordingly, the company has recorded assets of $66.8
million, which represent the future amounts expected to be
reimbursed by the insurers.
None of the company's contingencies is expected to have a material
adverse effect on its financial position, results of operations,
or any individual year's cash flow.
Note 12 QUARTERLY SUMMARY (UNAUDITED)
Following is a summary of the unaudited interim results of
operations, the dividends declared per share of common stock, and
the price range of the common stock composite for each quarter in
the years ended December 31, 1994, and December 25, 1993.
(In millions, except First Second Third Fourth
per share amounts) quarter quarter quarter quarter
------- ------- ------- -------
Year ended December 31, 1994
Net sales $801.6 $831.3 $824.3 $993.6
Cost of products sold 411.6 428.6 436.7 511.7
Net income 37.8 56.9 40.9 89.9
Net income per share 0.56 0.86 0.62 1.35
Dividends declared
per share 0.14 0.20 0.20 0.20
Composite stock price range:
High 44 1/8 40 5/16 46 5/8 48
Low 35 1/8 33 9/16 36 3/4 40
Close 36 37 5/8 42 1/4 44 3/4
Year ended December 25, 1993
Net sales $706.1 $763.2 $744.8 $883.2
Cost of products sold 365.5 388.5 395.3 454.9
Net income 24.0 41.0 32.9 74.6
Net income per share 0.36 0.61 0.49 1.11
Dividends declared
per share 0.125 0.14 0.14 0.14
Composite stock price range:
High 24 1/2 29 1/2 32 13/16 41 7/8
Low 19 1/8 22 5/8 27 1/4 30 1/2
Close 23 1/8 27 1/8 31 5/8 40 1/8
Note 13 SHAREHOLDERS' RIGHTS PLAN
In 1989, the company adopted a shareholders' rights plan with a
duration of 10 years, under which shareholders received a dividend
of a right to purchase one-half of a share of common stock for
each right owned. The rights are exercisable if 20 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 30 percent of
the company's shares are acquired, a right entitles the holder to
buy shares of the company equal 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 15 percent.
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Premark
International, Inc.:
In our opinion, the accompanying consolidated balance sheet and
the related consolidated statements of operations, of cash flows
and of shareholders' equity present fairly, in all material
respects, the financial position of Premark International, Inc.
and its subsidiaries at December 31, 1994 and December 25, 1993,
and the results of their operations and their cash flows for each
of the three years in the period ended December 31, 1994, in
conformity with generally accepted accounting principles. These
financial statements are the responsibility of Premark
International, Inc.'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.
As discussed in Note 1 to the financial statements, Premark
International, Inc. changed its method of accounting for
postretirement benefits other than pensions and income taxes in
1992 to reflect the requirements of SFAS No. 106, "Employers
Accounting for Postretirement Benefits other than Pensions," and
SFAS No. 109, "Accounting for Income Taxes."
Price Waterhouse LLP
Chicago, Illinois
January 31, 1995
<PAGE>
REPORT OF MANAGEMENT
The management of Premark 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 estimates
and judgments, as appropriate. Price Waterhouse 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 assurances 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 control systems based on the fact that the cost of such
systems should not exceed the benefits derived. Management
believes 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 Committee of the Board of Directors is composed entirely
of outside directors. The Committee meets periodically and
independently with management, the internal auditors, and Price
Waterhouse LLP to discuss the company's internal accounting
controls, auditing, and financial reporting matters. Both the
internal auditors and Price Waterhouse LLP have unrestricted
access to the Audit 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 businesses of the company accordingly.
Warren L. Batts Lawrence B. Skatoff
Chairman of the Board Senior Vice President
and Chief Executive Officer and Chief Financial Officer
EXHIBIT 22
Premark International, Inc.
Active Subsidiaries as of
March 10, 1995
The following active subsidiaries are wholly-owned by the
Registrant or another subsidiary of the Registrant, except
in the case of certain subsidiaries as to which the percentage
ownership of voting is stated in parentheses.
Premark Real Estate Holdings, Inc.
Premark Export Sales, Ltd.
Premark Services, Inc.
Deerfield Land Corporation
Hartco Flooring Company
Premark Financial Corporation
Florida Tile Industries, Inc.
Premark FT Holdings, Inc.
Dart Industries Inc.
Premark Far East, Inc.
Dart Far East Sdn. Bhd.
Dart Argentina S.A.
Tupperware Venezolana, S.A.
Dart de Venezuela, C.A.
Dart do Brasil Industria e Comercio Ltda.
Adota Artigos Domesticos Ltda.
Dart Europe S.A.
Dart Hellas S.A.I.
Dart Iberica S.A.
Dart Industries Belgium N.V.
Premark GmbH
Tupperware del Ecuador Tupperware Cia. Ltda.
Dart Industries G.m.b.H.
Dart Industries Hong Kong Limited
Dart Nederland Properties B.V.
Dart Industries Nederland B.V.
Dart Industries (New Zealand) Limited
Dart Industries (Proprietary) Limited
Premark Italia SpA
Dart (Philippines), Inc.
Premark Realty Corporation
Dart, S.A. de C.V.
Tupperware - Dart (Suisse) SA
Dartco Manufacturing Inc.
Dartluso-Industria Lusitana de Artigos Domesticos, Lda.
Premiere Products, Inc.
Exportadora Lerma, S.A. de C.V.
Premark Resources N.V.
Premiere Manufacturing, Inc.
Premiere Korea Ltd.
Tupperware U.S., Inc.
Tupperware Distributors, Inc.
Japan Tupperware Co., Ltd.
Tupperware Australia Pty. Ltd.
Tupperware Kft.
Orlando Sociedad Comercializadora Limitoda
Importadora Y Distribuidora Importupp Limitada
Tupperware Iberica S.A.
Tupperware (Portugal) Artigos Domesticos, Lda.
Tupperware Singapore Pte. Ltd.
Tupperware (Thailand) Limited
Tupperware Uruguay S.A.
Dart Executive Pension Fund Limited
Dart Pension Fund Limited
Tupperware Home Parties Corporation
Wavebest Limited
Dart Industries Limited
Miracle Maid Limited
Precor Products Limited
The Hobart Manufacturing Company, Limited
Hobart Equipment Leasing Limited
Premark Scandinavia A/S
The Premark International Foundation
Ralph Wilson Plastics Company
Premark RWP Holdings, Inc.
The West Bend Company
Premark WB Holdings, Inc.
Precor Incorporated
West Bend de Mexico, S.A. de C.V.
Wilsonart International, Inc.
Premark FEG Corporation
Hobart Corporation
Premark FEG Beteiligungsgesellschaft MbH
The Stero Company
Hobart International Holdings, Inc.
Premark Canada Inc.
Hobart Dayton Mexicana, S.A. de C.V.
Maquilas y Componentes Industriales, S.A. de C.V.
PMI Food Equipment Group France S.A.
Inox Equipment S.A.
Equipment Technique Service S.A.R.L.
Premark FEG GmbH & Co. KG
Hobart GmbH
Erwin Ungermann GmbH
Foster Refrigerator (U.K.) Limited
Foster Refrigerator France S.A.
PMI Technical Food Equipment Group Holland B.V.
Foster Refrigerator U.K. Management Services
Foster Refrigerator S.E. Asia (Pty.) Ltd.
Foster Scandia Danmark A/S
Foster Scandia Gronland ApS
Foster Scandia Group Sverige AB
Foster Scandia Group Norge AS
Foster Refrigerator G.m.b.H.
Hobart Sales & Service, Inc.
SC Bourgeois (35%)
Hobart Korea Co. Ltd.
PMI Food Equipment Group Europe S.A.
The Wolf Range Company
Premark HII Holdings, Inc.
Hobart International, Inc.
PMI Food Equipment (Hong Kong) Limited
Hobart (Japan) K.K.
PMI Food Equipment Group Belgium, N.V.
Compagnie Hobart S.A.
PMI Food Equipment Group Holland B.V.
Hobart (Swiss) A.G.
Hospital Services Systemes S.A.
Nutri-Pack S.A.
Adamatic, A Corporation
Cook Insurance Co., Ltd.
All Subsidiaries listed above are included in the
consolidated financial statements of the Registrant as
consolidated subsidiaries, except for subsidiaries owned 50% or
less.
Exhibit 24
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the
Registration Statement on Form S-8 (No. 33-53561), the
Registration Statement on Form S-8 (No. 33-51021) and the
Prospectus constituting part of the Registration Statement on Form
S-3 (No. 33-35137) of Premark International, Inc. of our report
dated January 31, 1995 appearing on page 46 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 22 of this Form 10-K.
Price Waterhouse LLP
Chicago, Illinois
March 20, 1995
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned
director of Premark International, Inc., a Delaware corporation,
(the "Corporation"), hereby constitutes and appoints John M.
Costigan, L. John Fletcher and Thomas M. Roehlk, and each of
them, 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 31, 1994, 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, and each of them, 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, and each of them,
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 1st day of March, 1995.
William O. Bourke
Ruth M. Davis
Lloyd C. Elam
Clifford J. Grum
Joseph E. Luecke
Bob Marbut
John B. McKinnon
David R. Parker
Robert M. Price
Janice D. Stoney
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED
FROM PREMARK INTERNATIONAL, INC.'S 1994 FINANCIAL STATEMENTS AS
INCORPORATED BY REFERENCE INTO ITS ANNUAL REPORT ON FORM 10-K AND
IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-START> DEC-26-1993
<PERIOD-END> DEC-31-1994
<CASH> 120,800
<SECURITIES> 0
<RECEIVABLES> 509,100
<ALLOWANCES> 43,500
<INVENTORY> 512,500
<CURRENT-ASSETS> 1,274,100
<PP&E> 1,753,200
<DEPRECIATION> 1,041,400
<TOTAL-ASSETS> 2,357,900
<CURRENT-LIABILITIES> 920,600
<BONDS> 122,300
<COMMON> 69,000
0
0
<OTHER-SE> 903,300
<TOTAL-LIABILITY-AND-EQUITY> 2,357,900
<SALES> 3,450,800
<TOTAL-REVENUES> 3,450,800
<CGS> 1,788,600
<TOTAL-COSTS> 1,788,600
<OTHER-EXPENSES> 2,000
<LOSS-PROVISION> 12,200
<INTEREST-EXPENSE> 23,800
<INCOME-PRETAX> 311,000
<INCOME-TAX> 85,500
<INCOME-CONTINUING> 225,500
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 225,500
<EPS-PRIMARY> 3.39
<EPS-DILUTED> 0
</TABLE>
