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 30, 1995
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:(847) 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 4, 1996 ($52.75 per
share): $3,250,579,100.
As of March 4, 1996, 61,622,353 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
30, 1995 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 1, 1996 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
Premark FEG Corporation, which owns the operating subsidiaries
comprising the Registrant's Food Equipment Group; Wilsonart
International, Inc. ("Wilsonart"); The West Bend Company ("West
Bend"); Florida Tile Industries, Inc. ("Florida Tile"); Hartco
Flooring Company ("Hartco"); Precor Incorporated ("Precor"); and
Dart Industries Inc. ("Dart"), which owns the operating
subsidiaries comprising the Registrant's Tupperware business.
Dart was organized in Delaware in 1928 as a successor to a
business originally established in 1902. In 1988, Wilsonart and
West Bend were organized in Delaware as separate corporations
owned directly by the Registrant, having previously been
operating divisions of Dart acquired in 1966 and 1968,
respectively. In 1995, Wilsonart changed its name from Ralph
Wilson Plastics Company. 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 organized as a Washington corporation in 1981,
and was acquired in 1984.
On November 1, 1995, the Registrant announced a plan for a
pro-rata distribution to the Registrant's shareholders of all the
stock of a Corporation owning the Registrant's Tupperware
business. The new corporation, Tupperware Corporation
("Tupperware"), is a worldwide direct selling consumer products
company engaged in the manufacture and sale of Tupperware brand
products. Tupperware was organized under the laws of the State
of Delaware on February 8, 1996 as part of the corporate
reorganization of the Registrant in which Dart and its
subsidiaries will be transferred to Tupperware. The distribution
of Tupperware stock is expected to occur in June, 1996.
(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 page 51 of the
Annual Report to Shareholders for the year ended December 30,
1995, which is incorporated by reference into this Report by Item
8 hereof.
For certain financial information concerning the
Registrant's Tupperware operation, see Note 2 ("Distribution of
Tupperware to Shareholders") of the Notes to the Consolidated
Financial Statements of Premark International, Inc., appearing on
page 45 of the Annual Report to Shareholders for the year ended
December 30, 1995, 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
continuing business segments: the Food Equipment Group, the
Consumer Products Group, and the Decorative Products Group, as
well as through its Tupperware operation. A discussion of the
four business segments follows.
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 food preparation, cooking,
storage, and cleaning equipment. For the fiscal years 1995,
1994, and 1993, sales by the Group contributed approximately 35
percent, 33 percent, and 33 percent, respectively, of the sales
of the Registrant's businesses, including the Tupperware
operation. Revenues from foreign operations constituted
approximately 43 percent of the Group's 1995 sales.
The Group's 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, Foster, and Ungermann.
Ungermann, a German supplier of refrigerating equipment for the
baking industry with 1995 sales of about $23 million, was
acquired in 1995. The Hobart brand represents about 80% of the
Group's sales.
Food equipment products are sold to the retail food
industry, including supermarket chains, independent grocers,
delicatessens, bakeries, convenience and other food stores, and
to the foodservice industry, including independent restaurants,
fast-food chains, hospitals, correctional facilities, schools,
hotels, resorts, and airlines.
Food equipment products are distributed in more than 100
countries, either through company-owned operations or through
distributors, dealers or licensing arrangements covering many
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.
Major new products introduced by the Group in the United
States in 1995 included a Hobart Quantum scale/printer system,
the Medalist by Hobart line of value-priced mixers and
refrigeration equipment, a Hobart 1812 RS scale/slicer, Vulcan-
Hart thermal kettles, and Vulcan-Hart Euroline ranges. The Group
has announced introduction of a new line of coffee brewers in the
U.S. In Europe, the Group introduced in 1995 its Le Maillon
product which keeps food cool while being transported, and an
expanded Hobart utensil warewasher line.
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, although
costs have increased somewhat. In addition to manufacturing
certain component parts, the Group also purchases many component
parts, such as electrical and electronic components, castings,
hardware, fasteners, and bearings. Certain manufacturers utilize
tooling provided by the Group for such components.
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 nine manufacturing plants in Canada, France, Italy,
the United Kingdom, Germany, and Australia. Most of these plants
are owned. The group is building a warewashing plant in China,
with anticipated startup in 1997.
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
commercial food equipment industry is mature, with growth
primarily a function of new construction and replacement sales to
existing locations, as well as menu and format changes. 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. Another important competitive advantage
is the group's extensive service network throughout North America
and Europe, as well as in major markets in the Far East and Latin
America. Competition is also based on numerous other factors,
including product quality, performance, reliability, labor
savings, price, and energy conservation.
Miscellaneous
The Group had approximately $134 million and $132 million of
backlog orders at the end of 1995 and 1994, respectively, after
restatement of 1994 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 1995
backlog orders will be filled in 1996.
DECORATIVE PRODUCTS GROUP
Principal Products, Markets and Distribution
Wilsonart, Florida Tile and Hartco make up the Decorative
Products Group. The Decorative Products Group contributed 19
percent, 20 percent, and 20 percent of the sales of the
Registrant's businesses, including the Tupperware operation, for
the fiscal years 1995, 1994, and 1993, respectively.
Wilsonart manufactures decorative plastic laminate products
through a production process utilizing heated high pressure
presses. These products, sold principally under the Wilsonart
trademark in more than 700 colors, designs, and finishes, are
used for numerous interior surfacing applications, including
cabinetry, countertops, vanities, store fixtures, and furniture.
Approximately 50 percent of the Wilsonart 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. Wilsonart also manufactures specialty-grade
laminates, including chemical-resistant, wear-resistant, and
fire-retardant types. Among the specialized applications for
Wilsonart laminate are those in laboratory work surfaces, jetways
and naval vessels. In 1995, Wilsonart added 36 new designs to
its standard laminate product line, and announced introduction of
a high-pressure decorative laminate flooring line.
In addition to laminate products, Wilsonart sells a solid
surfacing product which is marketed under the Gibraltar brand.
The Company also produces and/or sells contact adhesives under
the Lokweld trademark, as well as Wilsonart decorative metallic
surfacings, and Wilsonart decorative edge moldings for
countertops and furniture. In 1995, the company began test
marketing a solid surfacing veneer product.
Wilsonart 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. Wilsonart is
seeking to expand its distribution network outside the U.S.
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. A small
portion of Florida Tile's sales are exports. Florida Tile also
imports foreign-produced tile products to supplement its line of
manufactured products.
Hartco manufactures and distributes high-quality,
prefinished and unfinished oak and prefinished 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, laminated two, three and five-ply
oak plank lineal flooring products, and 3/4-inch solid strip
prefinished and unfinished oak flooring, each of which is sold in
a variety of colors and finishes. Hartco's solid strip oak
flooring product was introduced in 1995. Hartco also
manufactures wood moldings, installation adhesives, and a full
line of proprietary floor care products to complement its line of
flooring products. These products are marketed under the Hartco
trademark to a nationwide network of independent wholesale floor
covering distributors, home improvement store chains, and retail
buying groups. A small portion of Hartco's sales are exports.
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 Wilsonart has not
experienced difficulties in obtaining sufficient quantities. The
principal raw materials used in Florida Tile products are clay,
talc, stains, and frit (ground glass), 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.
Wilsonart 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, and
are also purchased under a supply agreement. Wilsonart has 14
regional distribution centers which are geographically dispersed
throughout the United States. Stock items can be delivered
within 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 products are sold in highly competitive markets in
the United States. Wilsonart has approximately 48 percent of the
U.S. market for high pressure decorative laminates. Wilsonart
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 in a fragmented market. The Registrant believes
Florida Tile is the third largest U.S. tile manufacturer, with a
market share substantially less than the largest U.S.
manufacturer. Foreign-manufactured products account for
approximately 55 percent of the U.S. tile market. Important
competitive factors in the tile market include price, style,
quality, breadth of product line, and service. Hartco competes
with a number of other domestic and foreign suppliers of
prefinished wood flooring products. Important competitive
factors include price, fit, appearance, durability, the variety
of finishes and colors, and the complementary molding, adhesive
and floor care products. Wilsonart, Florida Tile, and Hartco
products compete with other types of surfacing and flooring
materials.
Miscellaneous
The Decorative Products Group maintains a continuing program
of product development. Its efforts emphasize product design,
performance, 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.
The group's products are sold for new construction and
remodeling, in both the residential and commercial markets. As a
consequence, the group's sales are affected by the seasonality of
the construction and remodeling industry.
Prices for paper and resin have increased substantially in
the last year. Lumber supplies are also at a premium price
compared with several years ago, although prices have moderated
from the high levels of 1993.
CONSUMER PRODUCTS GROUP
Principal Products, Markets and Distribution
The Consumer Products Group consists of West Bend and
Precor. It contributed 8 percent, 9 percent, and 8 percent of
the sales of the Registrant's business, including the Tupperware
operation, for the fiscal years 1995, 1994, and 1993,
respectively.
West Bend manufactures and sells small electric appliances
such as bread makers, electric skillets, slow cookers, woks, corn
poppers, beverage makers, and electronic timers, primarily under
the West Bend trademark. West Bend also manufactures and sells
high-quality stainless steel cookware. During 1995, West Bend
expanded its bread maker and drip coffeemaker lines. Precor
manufactures physical fitness equipment such as treadmills,
stationary bicycles, and low-impact climbers, all of which are
marketed under the Precor trademark. In 1995, Precor introduced
a new line of household treadmills, its Variable Aerobic Trainer
walking machine for fitness club use, and its Smart Weights hand-
held weights with treadmill remote control.
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.
While Precor products have been primarily for home use, in recent
years Precor has entered the fitness club market.
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 cost of
these raw materials has 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 typically 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 Consumer Products Group is dependent on two
customers for approximately one-third of its revenues.
TUPPERWARE
Principal Products, Markets and Distribution
Tupperware manufactures and markets a broad line of high
quality consumer products for the home and for personal care. In
fiscal years 1995, 1994, and 1993, Tupperware contributed
approximately 38 percent, 38 percent, and 39 percent,
respectively, of the sales of the Registrant's businesses.
The core of the product line continues to be food storage
containers which preserve freshness of food through the well-
known Tupperware seals. The line has expanded into kitchen, home
storage and organizing uses with products such as Modular Mates
and Fridge Stackables stackable storage containers, OneTouch
canisters, and many specialized containers. In recent years,
Tupperware has expanded its offerings in the food preparation and
service areas through the addition of a number of products,
including double colanders, tumblers and mugs, mixing and serving
bowls, serving centers, microwaveable cooking and serving
products, and kitchen utensils. It also has a line of children's
educational toys, serving products, and gifts.
Products sold by Tupperware are produced primarily by
Tupperware in its manufacturing facilities around the world. In
some markets, Tupperware sources certain products from third
parties and/or contracts with local manufacturers to manufacture
its products, utilizing high-quality molds which are supplied
by Tupperware. Promotional items provided at product
demonstrations include items obtained from outside sources.
Tupperware products are sold in the United States and in
more than 100 foreign countries. For the past five years, sales
in foreign countries represented on average 80 percent or more of
total Tupperware revenues. Market penetration varies
significantly throughout the world. "Developing" areas which
have low penetration, such as Latin America, Asia, and Eastern
Europe, provide significant growth potential. Tupperware's
strategy continues to include aggressive expansion into new
markets throughout the world during the balance of the decade.
New markets entered by Tupperware in 1995 included Poland and
several countries in southern Africa. Tupperware intends to
establish operations in 1996 in China, additional Eastern
European countries, and several Middle Eastern countries.
Tupperware is seeking approval to do business in India.
Tupperware's products are distributed worldwide through the
"direct selling" method of distribution, in which products are
sold to consumers outside traditional retail store channels.
Tupperware products are sold directly to distributors or dealers
throughout the world. Distributors are granted the right to
market Tupperware products using the demonstration method and
utilizing the Tupperware trademark. The vast majority of
Tupperware's distributorship system is composed of distributors,
managers, and dealers who are independent contractors and not
employees of Tupperware. In certain limited circumstances, in
order to maintain market penetration, rather than utilizing an
independent distributor, Tupperware owns the distributorship for
a period of time until an independent distributor can be
installed.
Key aspects of Tupperware's strategy are expanding its
business by enlarging the number of distributors, and increasing
the business of existing distributors. Under the Tupperware
system, distributors recruit, train and motivate a large sales
force to cover the distributor's geographic area. Managers are
developed and promoted by distributors to assist the distributor
in recruiting, training, and motivating dealers. Managers also
continue to hold their own demonstrations.
As of December 30, 1995, the Tupperware distribution system
had over 1,670 distributors, 44,000 managers and 790,000 dealers
worldwide. The dealer force continues to increase each year.
Tupperware primarily relies on the "demonstration" method of
sales, which is designed to enable the purchaser to appreciate
through demonstration the features and benefits of Tupperware
products. Demonstrations are held in homes, offices, social
clubs and other locations. In excess of 13 million
demonstrations were held worldwide in 1995. Tupperware products
are also promoted through monthly brochures mailed to persons
invited to attend various types of demonstrations. Sales of
Tupperware products are supported through a program of sales
promotions, sales and training aids and motivational conferences
for the independent sales force. Tupperware supports its sales
force with catalogs, magazine advertising and toll-free telephone
ordering, which helps increase its sales levels with hard-to-
reach customers.
The distribution of products to consumers is the
responsibility of distributors who are required to maintain their
own inventory, warehouse facilities and delivery systems. In
certain markets, Tupperware offers distributors the use of a
delivery system of direct product shipment to dealers or
consumers, which is intended to reduce the distributor's
investment in inventory and enable distributors to be more cost-
efficient.
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. Raw
material costs increased significantly during the year, but began
to decline in the fourth quarter. Research and development of
resins used in Tupperware products are performed by both
Tupperware and its suppliers.
Tupperware owns its principal executive office, located in
Orlando, Florida. Tupperware owns manufacturing plants in twelve
countries, including the United States, and leases an additional
plant outside the United States. Tupperware conducts a
continuing program of new product design and development at its
facilities in Florida, Japan and Belgium. Most of the principal
properties of Tupperware and its subsidiaries are owned, and none
of the owned principal properties is subject to any material
encumbrance.
Competition
There are two primary competitive factors which affect the
Tupperware business: 1) competition with other "direct sales"
companies for sales personnel and demonstration dates, and 2)
competition in the markets for food storage and serving
containers, toys, personal care items, and gifts in general. The
Registrant believes Tupperware holds a significant market share
in each of these markets in many countries. Tupperware's
competitive strategies are to continue to expand its direct
selling distribution system and to provide high quality, high
value products throughout the world.
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, and now own a number of
patents relating to their 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 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 1995, 1994
and 1993, the Registrant, including its Tupperware operation,
spent approximately $44 million, $44 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 $0.2 million through 1997 on
capital expenditures related to environmental facilities. In
1995, the Registrant had approximately $0.6 million of capital
expenditures for environmental facilities, and approximately $3.3
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 24,300 people, about 6,900 of whom are employed by
the Registrant's Tupperware operation. Approximately 18 percent
of the Registrant's 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 and warehouses 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 material to an understanding of
its 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.
For information concerning foreign and domestic operations
and export sales, see Note 7 ("Income Taxes") appearing on pages
46 and 47, and "Segments of Business by Geographical Areas" in
Note 10 ("Segments of the Business") appearing on page 51 of the
Annual Report to Shareholders for the year ended December 30,
1995, which are incorporated by reference into this Report by
Item 8 hereof. For information concerning Registrant's
discontinued Tupperware operation, see Note 2 ("Distribution of
Tupperware to Shareholders") appearing on page 45 of the Annual
Report to shareholders for the year ended December 30, 1995.
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
1, 1996). The Registrant expects that upon the distribution of
Tupperware stock Mr. Batts will resign his position as Chief
Executive Officer and assume the position of Tupperware's
Chairman of the Board and Chief Executive Officer, Mr. Ringler
will become the Registrant's Chief Executive Officer and continue
as President, and Messrs. Goings and Rose will resign their
positions with the Registrant and continue as Tupperware's
President and Chief Operating Officer and Tupperware's Vice
President of Taxes and Government Affairs, respectively. The
Registrant also expects that Ms. Richardson will resign her
position with the Registrant in June, 1996.
Name and Age Positions and Offices Held
and Principal Occupations or
Employment During Past Five
Years
Warren L. Batts (63) Chairman of the Board and
Chief Executive Officer.
James M. Ringler (50) 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 (50) Executive Vice President 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 (55) 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 (57) Corporate Vice President and
President of The West Bend
Company.
James C. Coleman (56) 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 (53) Senior Vice President,
General Counsel and
Secretary.
Lawrence B. Skatoff (56) Senior Vice President and
Chief Financial Officer since
September 1991. Prior
thereto, Mr. Skatoff
served as Vice President-
Finance of Monsanto Company.
L. John Fletcher (52) Vice President and Assistant
General Counsel.
Isabelle C. Goossen (44) Vice President, Financial
Relations since January
1996, after serving as Vice
President, Planning since
June 1994, Director of
Financial Relations since
1992, and prior thereto as
Director in the Planning
Department.
Robert W. Hoaglund (57) Vice President and
Controller since January
1996. Prior thereto Mr.
Hoaglund was Vice President,
Control & Information Systems.
Wendy R. Katz (38) Vice President, Internal
Audit since May 1992. Prior
thereto, Ms. Katz served in
various financial positions
at Tupperware.
William R. Reeb (48) Corporate Vice President
since November 1994, and
President and Chief Operating
Officer of Wilsonart 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 Wilsonart.
Lisa Kearns Richardson (43) Vice President and Treasurer
since April 1994, after
serving as Vice President,
Planning and Analysis since
February 1991. Prior
thereto, Ms. Richardson
served as Assistant
Controller.
James E. Rose, Jr. (53) Vice President, Taxes and
Government Affairs.
Anthony C. Scolaro (47) Vice President, Planning and
Business Development since
January 1996. Mr. Scolaro
was Corporate Development
Vice President at Ecolab,
Inc. from 1994 to 1996, and
was Assistant to the President
at Rykoff-Sexton, Inc. from
1989 to 1994.
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 have pending against
them 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 material adverse effect on the
Registrant's consolidated financial position, results of
operations, or any individual year's cash flow.
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 52 of the Annual Report
to Shareholders for the year ended December 30, 1995 is
incorporated by reference into this Report. The information set
forth in Note 13 ("Shareholders' Rights Plan") on page 53 of the
Annual Report to Shareholders for the year ended December 30,
1995 is incorporated by reference into this Report. As of March
4, 1996, the Registrant had 23,030 shareholders of record.
Item 6. Selected Financial Data
The information set forth under the caption "Selected
Financial Data" on pages 38 and 39 of the Annual Report to
Shareholders for the year ended December 30, 1995 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 33 through 37 of the Annual Report to Shareholders for the
year ended December 30, 1995 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 40 through 53, and on page 54, respectively,
of the Annual Report to Shareholders for the year ended December
30, 1995 are incorporated by reference into this Report:
Consolidated Statements of Operations, Cash Flows and
Shareholders' Equity--Years ended December 30, 1995, December 31,
1994 and December 25, 1993;
Consolidated Balance Sheet--December 30, 1995 and December
31, 1994;
Notes to the Consolidated Financial Statements; and
Report of Independent Accountants dated February 23, 1996.
(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 52 of the Annual Report to
Shareholders for the year ended December 30, 1995 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 2 through 4 of the
Proxy Statement relating to the Annual Meeting of Shareholders to
be held on May 1, 1996 is incorporated by reference into this
Report. The information as to the Executive Officers of the
Registrant is included in Part I hereof under the caption
"Executive Officers of the Registrant" in reliance upon General
Instruction G to Form 10-K and Instruction 3 to Item 401(b) of
Regulation S-K.
Item 11. Executive Compensation
The information set forth under the caption "Compensation of
Directors" on page 17 of the Proxy Statement relating to the
Annual Meeting of Shareholders to be held on May 1, 1996, and the
information on pages 11 through 16 of such Proxy Statement
relating to executive officers' compensation is incorporated by
reference into this Report.
Item 12. Security Ownership of Certain Beneficial Owners and
Management
The information set forth under the captions "Security
Ownership of Certain Beneficial Owners" on page 6 and "Security
Ownership of Management" on page 5 of the Proxy Statement
relating to the Annual Meeting of Shareholders to be held on May
1, 1996 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 40 through 53, and on page 54, respectively, of
the Annual Report to Shareholders for the year ended December 30,
1995 are incorporated by reference into this Report by Item 8
hereof:
Consolidated Statements of Operations, Cash Flows and
Shareholders' Equity--Years ended December 30, 1995, December 31,
1994 and December 25, 1993;
Consolidated Balance Sheet--December 30, 1995 and December
31, 1994;
Notes to the Consolidated Financial Statements; and
Report of Independent Accountants dated February 23, 1996.
(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 33 of this Report; and
Schedule II--Valuation and Qualifying Accounts for the
three years ended December 30, 1995, page 34 of this Report.
All other schedules for which provision is made in the
applicable accounting regulations of the Securities and Exchange
Commission are not required under the related instructions, are
inapplicable, or the information called for therein is included
elsewhere in the financial statements or related notes contained
or incorporated by reference herein.
(a) (3) List of Exhibits: (numbered in accordance with Item 601
of Regulation S-K)
Exhibit
Number Description
* 3.1 Restated Certificate of Incorporation (Exhibit 3A
to the Registrant's Annual Report on Form 10-K for
the year ended December 30, 1991)
3.2 Amended By-Laws
* 4.1 Form of Common Stock Certificate (Exhibit 3 to the
Registrant's Current Report on Form 8-K dated
March 20, 1989)
* 4.2 Rights Agreement dated March 7, 1989 (Exhibit 1 to
the Registrant's Current Report on Form 8-K dated
March 20, 1989)
* 4.3 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)
* 4.4 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)
*10.1 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)
*10.2 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)
*10.3 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)
*10.4 $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)
10.5 Form of Distribution Agreement by and among
Premark International, Inc., Tupperware
Corporation and Dart Industries Inc.
10.6 Form of Tax Sharing Agreement by and between
Premark International, Inc. and Tupperware
Corporation.
COMPENSATORY PLANS OR ARRANGEMENTS [10G-10N]
10.7 Form of Employee Benefits and Compensation
Allocation Agreement by and between Premark
International, Inc. and Tupperware Corporation.
*10.8 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)
*10.9 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)
*10.10 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)
*10.11 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)
*10.12 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)
*10.13 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)
*10.14 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 1995 per share
earnings
13 Pages 30 through 54 of the Annual Report to
Shareholders of the Registrant for the year ended
December 30, 1995
21 Subsidiaries of the Registrant as of March 15,
1996
23 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
24 Powers of Attorney
27 Financial Data Schedule
*Document has heretofore been filed with the Commission and is
incorporated by reference and made a part hereof.
The Registrant agrees to furnish, upon request of the
Commission, a copy of all constituent instruments defining the
rights of holders of long-term debt of the Registrant and its
consolidated subsidiaries.
(b) Reports on Form 8-K
During the quarter ended December 30, 1995 the Registrant
filed a Current Report on Form 8-K dated November 2, 1995
reporting the Registrant's November 1, 1995 announcement of a
plan providing for, among other things, a pro-rata distribution
to Registrant's shareholders of all of the stock of a corporation
owning Registrant's Tupperware business.
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 February 23, 1996 appearing on page 54 of
the 1995 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
February 23, 1996
<PAGE>
<TABLE>
PREMARK INTERNATIONAL, INC.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
For the three years ended December 30, 1995
(In millions)
<CAPTION>
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
- ----------- --------- -------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful
accounts, current and
long term:
Year ended $ 18.2 $ 4.5 - $ (3.4) <F1> $ 20.2
December 0.5 <F2>
30, 1995 0.4 <F3>
Year ended $ 15.2 $ 6.1 - $ (3.8) <F1> $ 18.2
December 0.4 <F2>
31, 1994 0.3 <F3>
Year ended
December $ 16.5 $ 4.6 - $ (5.3) <F1> $ 15.2
25, 1993 (0.6) <F2>
Valuation allowance for deferred tax assets:
Year ended
December
30, 1995 $ 6.9 $ 0.4 - - $ 7.3
Year ended
December
31, 1994 $ 14.1 $ (7.2) - - $ 6.9
Year ended
December
25, 1993 $ 11.4 $ 2.7 - - $ 14.1
<FN>
<F1> Represents write-offs less recoveries
<F2> Foreign currency translation adjustment
<F3> Businesses acquired
</TABLE>
<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 BATTS
Warren L. Batts
Chairman of the Board and
Chief Executive Officer
March 25, 1996
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 and Controller
Robert W. Hoaglund (Principal Accounting Officer)
* Director
William O. Bourke
* Director
Dr. Ruth M. Davis
* Director
Lloyd C. Elam, M.D.
* Director
E.V. Goings
* 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 25, 1996
<PAGE>
EXHIBIT INDEX
Exhibit No. Description Page
11 A statement of computation of 27-28
1995 per share earnings
13 Pages 30 through 54 of the 29-66
Annual Report to Shareholders
of the Registrant for the year
ended December 30, 1995
22 Subsidiaries of the Registrant 67-69
as of March 10, 1995
23 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
24 Powers of Attorney 71-72
27 Financial Data Schedule 73
By-Laws
of
Premark International, Inc.
(As amended February 29, 1996)
ARTICLE I
Stockholders
Section 1. The annual meeting of the stockholders of the
Corporation shall be held on the Wednesday before the first Thursday in
May of each year (or if said day is a legal holiday, then on the next
succeeding day not a holiday) or on such other date, and at such time and
at such place within or without the State of Delaware, as may be fixed by
the Board of Directors, for the purpose of electing directors and for the
transaction of such other business as may properly be brought before the
meeting.
Section 2. (a) Subject to the rights of the holders of any class
or series of stock having a preference over the Common Stock of the
Corporation as to dividends or upon liquidation ("Preferred Stock"), any
action required or permitted to be taken by the stockholders of the
Corporation must be effected at an annual or special meeting of
stockholders of the Corporation and may not be effected by any consent in
writing by such stockholders. Subject to the rights of the holders of any
class or series of Preferred Stock, special meetings of stockholders of
the Corporation may be called only by the Board of Directors pursuant to
a resolution adopted by a majority of the Whole Board (as such term is
defined in Article EIGHTH of the Corporation's Restated Certificate of
Incorporation (the "Certificate of Incorporation")).
(b) Special meetings of the stockholders may be held at such time
and at such place within or without the State of Delaware, as may be
stated in the call.
Section 3. Notice of the time and place of every meeting of
stockholders shall be delivered personally or mailed at least ten days and
not more than sixty days prior thereto to each stockholder of record
entitled to vote at his address as it appears on the records of the
Corporation. Such further notice shall be given as may be required by law.
Business transacted at any special meeting shall be confined to the
purpose or purposes stated in the notice of such special meeting. Meetings
may be held without notice if all stockholders entitled to vote are
present or if notice is waived by those not present.
Section 4. Except as otherwise provided by law or by the
Certificate of Incorporation, the presence, in person or by proxy, of the
holders of record of shares of capital stock of the Corporation entitling
the holders thereof to cast a majority of the votes (after giving effect
to the provisions of Article NINTH of the Certificate of Incorporation)
entitled to be cast by the holders of shares of capital stock of the
Corporation entitled to vote shall constitute a quorum at all meetings of
the stockholders. The chairman of the meeting or the holders of record of
a majority of such shares so present or represented may adjourn the
meeting from time to time, whether or not there is such a quorum. No
notice of the time and place of adjourned meetings need be given except as
required by law.
Section 5. Election of directors at all meetings of the
stockholders at which directors are to be elected shall be by ballot, and,
except as otherwise set forth in any Preferred Stock Designation (as
defined in Article FOURTH of the Certificate of Incorporation) with
respect to the right of the holders of any class or series of Preferred
Stock to elect additional directors under specified circumstances, a
plurality of the votes cast thereat shall elect. Except as otherwise
provided by law, the Certificate of Incorporation, any Preferred Stock
Designation, the By-Laws of the Corporation or resolution adopted by the
Whole Board, all matters other than the election of directors submitted to
the stockholders at any meeting shall be decided by a majority of the
votes cast with respect thereto.
Section 6. (a) At any annual meeting of the stockholders, only such
business shall be conducted as shall have been brought before the meeting
(i) by or at the direction of the Board of Directors or (ii) by any
stockholder of the Corporation who is entitled to vote with respect
thereto and who complies with the notice procedures set forth in this
Section 6(a). For business to be properly brought before an annual meeting
by a stockholder, the stockholder must have given timely notice thereof in
writing to the Secretary of the Corporation. To be timely, a stockholder's
notice must be delivered or mailed to and received at the principal
executive offices of the Corporation not less than 30 days prior to the
date of the annual meeting; provided, however, that in the event that less
than 40 days' notice or prior public disclosure of the date of the meeting
is given or made to stockholders, notice by the stockholder to be timely
must be received not later than the close of business on the 10th day
following the day on which such notice of the date of the annual meeting
was mailed or such public disclosure was made. A stockholder's notice to
the Secretary shall set forth as to each matter such stockholder proposes
to bring before the annual meeting (i) a brief description of the business
desired to be brought before the annual meeting and the reasons for
conducting such business at the annual meeting, (ii) the name and address,
as they appear on the Corporation's books, of the stockholder proposing
such business, (iii) the class and number of shares of the Corporation's
capital stock that are beneficially owned by such stockholder and (iv) any
material interest of such stockholder in such business. Notwithstanding
anything in the By-Laws to the contrary, no business shall be brought
before or conducted at an annual meeting except in accordance with the
provisions of this Section 6(a). The officer of the Corporation or other
person presiding over the annual meeting shall, if the facts so warrant,
determine and declare to the meeting that business was not properly
brought before the meeting in accordance with the provisions of this
Section 6(a) and, if he should so determine, he shall so declare to the
meeting and any such business so determined to be not properly brought
before the meeting shall not be transacted.
At any special meeting of the stockholders, only such business shall
be conducted as shall have been brought before the meeting by or at the
direction of the Board of Directors.
(b) Only persons who are nominated in accordance with the
procedures set forth in these By-Laws shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors
of the Corporation may be made at a meeting of stockholders at which
directors are to be elected only (i) by or at the direction of the Board
of Directors or (ii) by any stockholder of the Corporation entitled to
vote for the election of directors at the meeting who complies with the
notice procedures set forth in this Section 6(b). Such nominations, other
than those made by or at the direction of the Board of Directors, shall be
made by timely notice in writing to the Secretary of the Corporation. To
be timely, a stockholder's notice shall be delivered or mailed to and
received at the principal executive offices of the Corporation not less
than 30 days prior to the date of the meeting; provided, however, that in
the event that less than 40 days' notice or prior disclosure of the date
of the meeting is given or made to stockholders, notice by the stockholder
to be timely must be so received not later than the close of business on
the 10th day following the day on which such notice of the date of the
meeting was mailed or such public disclosure was made. Such stockholder's
notice shall set forth (i) as to each person whom such stockholder
proposes to nominate for election or re-election as a director, all
information relating to such person that is required to be disclosed in
solicitations of proxies for election of directors, or is otherwise
required, in each case pursuant to Regulation 14A under the Securities
Exchange Act of 1934, as amended (including such person's written consent
to being named in the proxy statement as a nominee and to serving as a
director if elected); and (ii) as to the stockholder giving the notice (x)
the name and address, as they appear on the Corporation's books, of such
stockholder and (y) the class and number of shares of the Corporation's
capital stock that are beneficially owned by such stockholder. At the
request of the Board of Directors any person nominated by the Board of
Directors for election as a director shall furnish to the Secretary of the
Corporation that information required to be set forth in a stockholder's
notice of nomination which pertains to the nominee. No person shall be
eligible for election as a director of the Corporation unless nominated in
accordance with the provisions of this Section 6(b). The officer of the
Corporation or other person presiding at the meeting shall, if the facts
so warrant, determine and declare to the meeting that a nomination was not
made in accordance with such provisions and, if he should so determine, he
shall so declare to the meeting and the defective nomination shall be
disregarded.
Section 7. (a) The Board of Directors by resolution shall appoint
one or more inspectors, which inspector or inspectors may include
individuals who serve the Corporation in other capacities, including,
without limitation, as officers, employees, agents or representatives of
the Corporation, to act at a meeting of stockholders and make a written
report thereof. One or more persons may be designated as alternate
inspectors to replace any inspector who fails to act. If any inspectors
or alternates who have been appointed are unable to act at a meeting of
stockholders, the Chairman of the meeting shall appoint one or more
inspectors to act at the meeting. Each inspector, before discharging his
or her duties, shall take and sign an oath faithfully to execute the
duties of inspector with strict impartiality and according to the best of
his or her ability. The inspectors shall have the duties prescribed by
the General Corporation Law of the State of Delaware.
(b) The Chairman of the meeting or the Secretary of the Corporation
shall fix and announce at the meeting the date and time of the opening and
the closing of the polls for each matter upon which the stockholders will
vote at a meeting.
ARTICLE II
Directors
Section 1. (a) Subject to the rights of the holders of any class
or series of Preferred Stock to elect directors under specified
circumstances, the number of directors shall be fixed from time to time
exclusively by the Board of Directors pursuant to a resolution adopted by
a majority of the Whole Board. The directors, other than those who may be
elected by the holders of any class or series of Preferred Stock, shall be
divided, with respect to the time for which they severally hold office,
into three classes, with the term of office of the first class to expire
at the 1987 annual meeting of stockholders, the term of office of the
second class to expire at the 1988 annual meeting of stockholders and the
term of office of the third class to expire at the 1989 annual meeting of
stockholders, with each director to hold office until his or her successor
shall have been duly elected and qualified. At each annual meeting of
stockholders, commencing with the 1987 annual meeting, (i) directors
elected to succeed those directors whose terms then expire shall be
elected for a term of office to expire at the third succeeding annual
meeting of stockholders after their election, with each director to hold
office until his or her successor shall have been duly elected and
qualified and (ii), if authorized by a resolution of the Board of
Directors, directors may be elected to fill any vacancy on the Board of
Directors regardless of how such vacancy shall have been created.
(b) A whole number of directors equal to at least one third of the
Whole Board shall constitute a quorum for the transaction of business, but
if at any meeting of the Board of Directors there shall be less than a
quorum present a majority of those present may adjourn the meeting from
time to time until a quorum shall have been obtained.
(c) Subject to the rights of the holders of any class or series of
Preferred Stock, and unless the Board of Directors otherwise determines,
newly created directorships resulting from any increase in the authorized
number of directors or any vacancies in the Board of Directors resulting
from death, resignation, retirement, disqualification, removal from office
or other cause may be filled only by a majority vote of the directors then
in office, though less than a quorum, and directors so chosen shall hold
office for a term expiring at the annual meeting of stockholders at which
the term of office of the class to which they have been elected expires
and until such director's successor shall have been duly elected and
qualified. No decrease in the number of authorized directors constituting
the Whole Board shall shorten the term of any incumbent director.
(d) Subject to the rights of the holders of any class or series of
Preferred Stock, any director, or the entire Board of Directors, may be
removed from office at any time, but only for cause and only by the
affirmative vote of the holders of at least a majority of the voting power
of all of the then-outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors (the "Voting
Stock") (after giving effect to the provisions of Article NINTH of the
Certificate of Incorporation), voting together as a single class.
Section 2. Meetings of the Board of Directors shall be held at such
place within or without the State of Delaware, as may from time to time be
fixed by, or determined in the manner provided by, resolution of the
Board, or as may be specified in the call of any meeting. Regular
meetings of the Board of Directors shall be held at such times as may from
time to time be fixed by, or determined in the manner provided by,
resolution of the Board, and special meetings may be held at any time upon
the call of the Executive Committee or of the Chairman of the Board of
Directors by oral, telegraphic or written notice, duly served on or sent
or mailed to each director not less than two days before such meeting. A
meeting of the Board may be held without notice immediately after the
annual meeting of stockholders at the same place at which such meeting was
held. Notice need not be given of regular meetings of the Board held at
times and places fixed by resolution of the Board. A meeting may be held
at any time without notice if all the directors are present or if those
not present waive notice of the meeting in writing, either before or after
such meeting.
Section 3. The Board of Directors may, in its discretion, by
resolution passed by a majority of the Whole Board, designate an Executive
Committee to consist of the Chairman of the Board of Directors and such
number of other directors as the Board may from time to time determine
(not less than three), which Committee, to the extent provided in said
resolution, shall have, and may exercise when the Board is not in session,
the powers of the Board in the management of the business and affairs of
the Corporation, except the power to change the membership or to fill
vacancies in the Board or said Committee. The Board shall have the power
at any time to change the membership of said Committee (subject to the
requirement that the Chairman of the Board be a member thereof), to fill
vacancies in it, or to dissolve it. The Executive Committee may make rules
for the conduct of its business and may appoint such committees and
assistants as it shall from time to time deem necessary .
Section 4. The Board of Directors may from time to time, in its
discretion, by resolution passed by a majority of the Whole Board,
designate, and appoint, from the directors, other committees of one or
more persons which shall have and may exercise such lawfully delegable
powers and duties conferred or authorized by the resolutions of
designation and appointment. The Board shall have power at any time to
change the members of any such committee, to fill vacancies, and to
discharge any such committee.
Section 5. Unless the Board shall provide otherwise, the presence
of one-half of the total membership of any committee of the Board shall
constitute a quorum for the transaction of business at any meeting of such
committee and the act of a majority of those present shall be necessary
and sufficient for the taking of any action thereat.
Section 6. The Executive Committee, and any other committee so
designated if the resolution which designates such committee or a
supplemental resolution of the Board shall so provide, may exercise the
power and authority of the Board to declare a dividend, to authorize the
issuance of stock or to adopt a certificate of ownership and merger
pursuant to Section 253 of the Delaware General Corporation Law.
ARTICLE III
Officers
Section 1. The Board of Directors as soon as may be practicable
after the annual meeting of stockholders shall choose a Chairman of the
Board of Directors, a Secretary and a Treasurer and from time to time may
choose such other officers (including, without limitation, a President) as
it may deem proper. The Chairman of the Board of Directors shall be
chosen from the directors.
Section 2. The term of office of all officers shall be until the
next annual election of officers and until their respective successors are
chosen, but any officer may be removed from office at any time by the
affirmative vote of a majority of the members of the Whole Board.
Section 3. All officers chosen by the Board of Directors shall each
have such powers and duties as generally pertain to their respective
offices, subject to the specific provisions of this ARTICLE III. Such
officers shall also have such powers and duties as from time to time may
be conferred by the Board of Directors or by any committee thereof.
Section 4. The Chairman of the Board shall preside at all meetings
of the stockholders and of the Board of Directors. He shall make reports
to the Board of Directors and the stockholders, and shall perform all such
other duties as are properly required of him by the Board of Directors.
The Chief Executive Officer shall have general management and
oversight of the administration and operation of the Corporation's
business and general supervision of its policies and affairs.
The President (if one shall have been chosen by the Board of
Directors) shall act in a general executive capacity and shall assist the
Chairman of the Board of Directors in the administration and operation of
the Corporation's business and in the supervision of its policies and
affairs. During the absence or disability of the Chairman of the Board of
Directors, the President (if one shall have been chosen by the Board of
Directors) shall have and exercise all the powers of the Chairman of the
Board of Directors.
Each meeting of the stockholders and of the Board of Directors shall
be presided over by the Chairman of the Board of Directors or, in his
absence, the President, if one shall have been chosen by the Board of
Directors, or in his absence, by such officer as has been designated by
the Board of Directors or, in his absence, by such officer or other person
as is chosen at the meeting. The Secretary or, in his absence, the
General Counsel of the Corporation or such officer as has been designated
by the Board of Directors or, in his absence, such officer or other person
as is chosen by the person presiding, shall act as secretary of each such
meeting.
ARTICLE IV
Certificates of Stock
The interest of each stockholder of the Corporation shall be
evidenced by certificates for shares of stock in such form as the Board of
Directors may from time to time prescribe, unless it shall be determined
by, or pursuant to, a resolution adopted by the Board of Directors that
the shares representing such interest be uncertificated. The shares of
the stock of the Corporation shall be transferred on the books of the
Corporation by the holder thereof in person or by his attorney, upon
surrender for cancellation of certificates for the same number of shares,
with an assignment and power of transfer endorsed thereon or attached
thereto, duly executed, with such proof of the authenticity of the
signature as the Corporation or its agents may reasonably require.
The certificates of stock shall be signed, countersigned and
registered in such manner as the Board of Directors may by resolution
prescribe, which resolution may permit all or any of the signatures on
such certificates to be in facsimile. In case any officer, transfer agent
or registrar who has signed or whose facsimile signature has been placed
upon a certificate has ceased to be such officer, transfer agent or
registrar before such certificate is issued, it may be issued by the
Corporation with the same effect as if he were such officer, transfer
agent or registrar at the date of issue.
ARTICLE V
Checks, Notes, Etc.
All checks on the Corporation's bank accounts and all drafts, bills
of exchange and promissory notes, and all acceptances, obligations and
other instruments for the payment of money, shall be signed by such person
or persons as shall be thereunto authorized from time to time by the Board
of Directors or by the committee or officer or officers of the Corporation
to whom the Board shall have delegated the power to authorize such
signing; provided, however, that the signature of any person so authorized
on checks and drafts drawn on the Corporation's dividend and special
accounts may be in facsimile if the Board of Directors or the committee or
officer or officers, whichever shall have authorized such person to sign
such checks or drafts, shall have authorized such person to sign in
facsimile; and provided further that in case notes or other instruments
for the payment of money (other than notes, bonds or debentures issued
under a trust instrument of the Corporation) are required to be signed by
two persons, the signature thereon of only one of the persons signing any
such note or other instrument may be in facsimile, and that in the case of
notes, bonds or debentures issued under a trust instrument of the
Corporation and required to be signed by two officers of the Corporation,
the signatures of both such officers may be in facsimile if specifically
authorized and directed by the Board of Directors of the Corporation and
if such notes, bonds or debentures are required to be authenticated by a
corporate trustee which is a party to the trust instrument; and provided
further that in case any person or persons who shall have signed any such
note or other instrument, either manually or in facsimile, shall have
ceased to be a person or persons so authorized to sign any such note or
other instrument, whether because of death or by reason of any other fact
or circumstance, before such note or other instrument shall have been
delivered by the Corporation, such note or other instrument may,
nevertheless, be adopted by the Corporation and be issued and delivered as
though the person or persons who so signed such note or other instrument
had not ceased to be such a person or persons.
ARTICLE VI
Offices
The Corporation may have offices outside of the State of Delaware
at such places as shall be determined from time to time by the directors.
ARTICLE VII
Amendments
These By-Laws may be amended, added to, rescinded or repealed at any
meeting of the Board of Directors or of the stockholders, provided notice
of the proposed change was given in the notice of the meeting and, in the
case of a meeting of the Board of Directors, in a notice given no less
than twenty-four hours prior to the meeting; provided, however, that, in
the case of amendments by stockholders, notwithstanding any other
provisions of these By-Laws or any provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any affirmative vote
of the holders of any particular class or series of the stock required by
law, the Certificate of Incorporation or these By-Laws, the affirmative
vote of the holders of at least 80 percent of the voting power of the then
outstanding Voting Stock, voting together as a single class, shall be
required to alter, amend or repeal any provision of these By-Laws.
ARTICLE VIII
Emergency Provisions
During any emergency resulting from an attack on the United States
or on a locality in which the Corporation conducts its business or
customarily holds meetings of its Board of Directors or its stockholders,
or during any nuclear or atomic disaster, or during the existence of any
catastrophe, or other similar emergency condition, as a result of which a
quorum of the Board of Directors of the Corporation or of the Executive
Committee of the Board of Directors cannot readily be convened for action,
the following provisions shall apply, notwithstanding any other provisions
of the By-Laws of the Corporation:
1. An emergency meeting or meetings of the Board of
Directors or of the surviving members thereof shall be called by
the Chairman of the Board, if available, or, if he is not
available, the Chairman on the Executive Committee, or, if he is
not available, by any other director or directors; any such meeting
to be held at such time and place and upon such notice, if any, as
the person or persons calling the meeting shall deem proper. The
Board may take any action at any such meeting which it deems
necessary and appropriate to meet the emergency.
2. Vacancies in the Board of Directors shall be filled as
soon as practicable in the manner specified in Section l of ARTICLE
II of these By-Laws. In filling vacancies, consideration shall be
given to senior officers of the Corporation.
3. The presence of the smallest number of directors
permitted by law to constitute a quorum, but not less than three,
shall be sufficient for the transaction of business at emergency
meetings of the Board of Directors, except that if there are less
than three surviving directors, the surviving director or
directors, although less than a quorum, may fill vacancies in the
Board.
4. The By-Laws may be amended by the Board of Directors
without notice of the proposed amendment being given in the notice
of the meeting.
5. Without limiting the generality of the foregoing, the
Board of Directors is authorized to make all necessary
determinations of fact regarding the extent and severity of the
emergency and the availability of members of the Board of
Directors; to designate and replace officers, agents and a
chairman, adopt rules of procedures and fill vacancies.
6. The emergency powers provided in this ARTICLE VIII shall
be in addition to any powers provided by law.
EXHIBIT 10.1
FORM
OF
DISTRIBUTION
AGREEMENT
BY AND AMONG
PREMARK INTERNATIONAL, INC.
and
TUPPERWARE CORPORATION
and
DART INDUSTRIES INC.
<PAGE>
DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT (this "Agreement"), dated as of , 1996, by and
among (i) PREMARK INTERNATIONAL, INC., a Delaware corporation ("Premark"),
(ii) TUPPERWARE CORPORATION, a Delaware corporation and, as of the date
hereof, a wholly-owned subsidiary of Premark ("Tupperware") and (iii) DART
INDUSTRIES INC., a Delaware corporation and, as of the date hereof, a wholly-
owned subsidiary, directly or indirectly, of Premark ("Dart").
WHEREAS, the Premark Board (as defined herein) has determined that it is
appropriate and desirable to distribute all outstanding shares of Tupperware
Common Stock (as defined herein) on a pro rata basis to the holders of Premark
Common Stock (as defined herein); and
WHEREAS, Premark, Tupperware and Dart have determined that it is appropriate
and desirable to set forth the principal corporate transactions required to
effect such distribution and certain other agreements that will govern certain
matters relating to such distribution;
NOW, THEREFORE, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties hereby agree as follows:
ARTICLE I
Definitions
-----------
Section 1.01 General. As used in this Agreement, the following terms shall
-------
have the following meanings (such meanings to be equally applicable to both
the singular and plural forms of the terms defined):
AAA: as defined in Section 6.07(b).
---
Action: any action, suit, arbitration, inquiry, proceeding or investigation
------
by or before any court, any governmental or other regulatory or administrative
agency or commission or any arbitration tribunal.
Affiliate: with respect to any Person, a Person that directly, or indirectly
---------
through one or more intermediaries, controls, is controlled by, or is under
common control with, such Person; provided, however, that for purposes of this
Agreement, no member of either Group shall be deemed to be an Affiliate of any
member of the other Group.
Agent: the distribution agent for the stockholders of Premark, as selected
-----
by Premark, to distribute the Tupperware Common Stock in connection with the
Distribution.
Ancillary Agreements: collectively, all of the agreements, instruments,
--------------------
understandings, assignments or other arrangements entered into in connection
with the transactions contemplated hereby, including, without limitation, the
Conveyance and Assumption Instruments, the Employee Benefits and Compensation
Allocation Agreement, the Interim Services Agreement, if any, and the Tax
Sharing Agreement.
By-Laws: Tupperware's by-laws substantially in the form attached hereto as
-------
Annex D.
Cash Dividend: as defined in Section 3.02(a).
-------------
Certificate of Incorporation: Tupperware's certificate of incorporation
----------------------------
substantially in the form attached hereto as Annex E.
Chairman: as defined in Section 6.07(b).
--------
<PAGE>
Claims Administration: (i) the processing of claims made under the Policies,
---------------------
including the reporting of claims to the insurance carrier, management and
defense of claims, and providing for appropriate releases upon settlement of
claims, (ii) in the case of the Tupperware Businesses, the reporting to
Premark of any losses or claims which may cause the per-occurrence deductible
or self-insured retention or limits of any Policy to be exceeded, (iii) the
collection of the proceeds of Policies, and (iv) the reporting to excess
insurance carriers of any losses or claims which may cause the per-occurrence
deductible or self-insured retention or limits of any Policy to be exceeded.
Code: the Internal Revenue Code of 1986, as amended.
----
Commission: the Securities and Exchange Commission.
----------
Convention Center: the convention center building and the underlying and
-----------------
related land located near Orlando, Florida currently owned and operated by Dart.
Convention Center Business: the personal property assets and contracts
--------------------------
related to the business currently conducted by Dart through the use of the
Convention Center.
Conveyance and Assumption Instruments: collectively, the various agreements,
-------------------------------------
instruments and other documents to be entered into to effect the transfer of
assets and the assumption of Liabilities contemplated by the transactions set
forth in Section 3.01 of this Agreement.
Cook: Cook Insurance Company, Ltd., a Bermuda corporation.
----
Cut-off Date: the last fiscal day of the calendar month immediately
------------
preceding the Distribution Date.
Dart-Brazil: Dart do Brasil Industria e Comercio Limitada, a Brazilian
-----------
corporation.
Dart Guarantees: collectively, the guarantees by Dart pursuant to the
---------------
Facilities and Guarantee Agreement of the debt of Kraft set forth on Schedule
1.1.
Daypar: Daypar Participacoes Limitada, a Brazilian corporation.
------
Deerfield: Deerfield Land Corporation, a Delaware corporation.
---------
DIL: Dart Industries Limited, a United Kingdom corporation.
---
DILHC: a new domestic corporation to be organized by Wavebest.
-----
Dispute Resolution Committee: as defined in Section 6.06.
----------------------------
Distribution: the distribution on a pro rata basis to holders of Premark
------------
Common Stock of the shares of Tupperware Common Stock owned by Premark on the
Distribution Date.
Distribution Date: the date determined by the Premark Board on which the
-----------------
Distribution shall be effected.
DKI: Dart & Kraft, Inc., a Delaware corporation (now known as Kraft Foods,
---
Inc.).
DKI Indemnifiable Losses: collectively, any DKI Liability, Newco Liability,
------------------------
Retained Dart Subsidiary Liability or any Indemnifiable Losses described in
Section 5.01 of the DKI Reorganization and Distribution Agreement.
DKI Indemnification: the obligations of DKI and its Affiliates to indemnify,
-------------------
defend and hold harmless, pursuant to Section 5.01 of the DKI Reorganization
and Distribution Agreement and the rights to such indemnification, defense and
holding harmless.
2<PAGE>
DKI Reorganization and Distribution Agreement: the Reorganization and
---------------------------------------------
Distribution Agreement, dated as of September 4, 1986, by and among DKI,
Premark, Dart, HIH, Vulcan-Hart Corporation, DKI Commercial Equipment
Holdings, Inc. and Duracell Inc.
Employee Benefits and Compensation Allocation Agreement: an employee
-------------------------------------------------------
benefits and compensation allocation agreement between Premark and Tupperware
substantially in the form attached hereto as Annex A.
Exchange Act: the Securities Exchange Act of 1934, as amended.
------------
Facilities and Guarantee Agreement: the Facilities and Guarantee Agreement,
----------------------------------
dated as of July 24, 1981, by and among DKI, Dart, and Kraft, Inc., as amended
on April 22, 1982, which was terminated as of September 4, 1986 pursuant to
Section 4.01 thereof.
Foreign Exchange Rate: with respect to any currency other than United States
---------------------
dollars as of any date of determination, the average of the opening bid and
asked rates on such date at which such currency may be exchanged for United
States dollars as quoted by Citibank, N.A.
Form 10: the registration statement on Form 10 filed by Tupperware with the
-------
Commission to effect the registration of the Tupperware Common Stock pursuant
to the Exchange Act.
Former Dart Businesses: has the meaning assigned to such term in the DKI
----------------------
Reorganization and Distribution Agreement. (For informational purposes, the
businesses specified on Schedule I to such agreement are set forth on Schedule
1.2 hereto.)
Former Dart Business Liabilities: has the meaning assigned to such term in
--------------------------------
the DKI Reorganization and Distribution Agreement.
Former Premark Businesses: the businesses set forth on Schedule 1.3 and all
-------------------------
businesses, assets or operations managed or operated by, or operationally
related to, Premark or any of such businesses, which heretofore have been sold
or otherwise disposed of or discontinued, which are not Former Dart
Businesses.
Former Premark Business Liabilities: collectively, all of the Liabilities
-----------------------------------
related to the Former Premark Businesses.
Former Tupperware Businesses: the businesses set forth on Schedule 1.4 and
----------------------------
all businesses, assets or operations managed or operated by, or operationally
related to, Dart or any of such businesses, which heretofore have been sold or
otherwise disposed of or discontinued, which are not Former Dart Businesses.
Former Tupperware Business Liabilities: collectively, all of the Liabilities
--------------------------------------
related to the Former Tupperware Businesses.
Group: the Premark Group or the Tupperware Group.
-----
HIH: Hobart International Holdings, Inc., a Delaware corporation.
---
Hobart Brazil: Hobart do Brasil Limitada, a Brazilian corporation.
-------------
Indemnifiable Loss: has the meaning assigned to such term in the DKI
------------------
Reorganization and Distribution Agreement.
Indemnifying Party: as defined in Section 4.03(a).
------------------
Indemnitee: as defined in Section 4.03(a)
----------
Indemnity Payment: as defined in Section 4.03(a).
-----------------
3<PAGE>
Information: as defined in Section 5.01.
-----------
Information Statement: the information statement to be sent to the holders
---------------------
of Premark Common Stock in connection with the Distribution.
Interim Services Agreement: an interim services agreement between Premark
--------------------------
and Tupperware which, if determined to be required, will be entered into prior
to the Distribution Date pursuant to which Premark and Tupperware will provide
for various service and other relationships following the Distribution Date.
Insurance Amount: as defined in Section 3.06(f).
----------------
IRS: the Internal Revenue Service.
---
Kraft: Kraft Foods, Inc., a Delaware corporation and successor to DKI and
-----
Kraft, Inc., a Delaware corporation and former subsidiary of DKI.
Liabilities: with respect to any Person, any and all debts, liabilities and
-----------
obligations, absolute or contingent, matured or unmatured, liquidated or
unliquidated, accrued or unaccrued, known or unknown, whenever arising (unless
otherwise specified in this Agreement), including, without limitation, all
costs and expenses relating thereto, and including, without limitation, those
debts, liabilities and obligations arising under any law, rule, regulation,
Action, threatened Action, order or consent decree of any governmental entity
or any award of any arbitrator of any kind, and those arising under any
contract, commitment or undertaking.
Losses: any and all losses, Liabilities, claims, damages, obligations,
------
payments, costs and expenses, matured or unmatured, absolute or contingent,
accrued or unaccrued, liquidated or unliquidated, known or unknown, whenever
arising (including, without limitation, the costs and expenses of any and all
Actions, threatened Actions, demands, assessments, judgments, settlements and
compromises relating thereto, and attorneys' fees and any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending
against any such Actions or threatened Actions).
NewCan: a new Canadian corporation to be organized by Dart.
------
No-action Letter: a letter from the staff of the Commission indicating,
----------------
among other things, that the Division of Corporation Finance will not
recommend enforcement action to the Commission if the Tupperware Common Stock
is distributed pursuant to the Distribution without registration under the
Securities Act of 1933, as amended.
Norwest Bank: Norwest Bank Minnesota, N.A., a nationally chartered bank.
------------
NYSE: the New York Stock Exchange, Inc.
----
Person: an individual, a partnership, a joint venture, a corporation, a
------
limited liability company, a trust, an unincorporated organization or a
government or any department or agency thereof.
PFEG: Premark FEG Corporation, a Delaware corporation.
----
PFEG-Brasil: Premark FEG do Brasil Limitada, a Brazilian corporation.
-----------
PFEG LLC: a limited liability company to be formed by Premark and a Premark
--------
Affiliate.
Policies: as defined in Section 3.06(a).
--------
PreCan: Premark Canada Inc., a Canadian corporation.
------
Premark Assets: collectively, all the assets of Premark and the Premark
--------------
Subsidiaries, including, without limitation, the Premark Patents and
Trademarks, other than the Tupperware Assets.
4<PAGE>
Premark Assumed Liabilities: collectively, all Liabilities relating to or
---------------------------
arising in connection with the Premark Assets or the Premark Businesses,
whether arising before, on or after the Distribution Date, which are to be
assumed by Premark or a Premark Subsidiary, as appropriate, pursuant to the
transactions contemplated by Section 3.01, including, without limitation, the
Liabilities set forth on Schedule 1.5.
Premark Board: the Board of Directors of Premark.
-------------
Premark Businesses: the businesses currently conducted by Premark and its
------------------
Subsidiaries other than the Tupperware Businesses.
Premark Common Stock: the Common Stock, par value $1.00 per share, of Premark.
--------------------
Premark Financial: Premark Financial Corporation, a Delaware corporation.
-----------------
Premark Group: Premark and its Affiliates, whether now or hereafter
-------------
existing, other than members of the Tupperware Group.
Premark Guarantees: collectively, (i) the guarantees by Premark set forth on
------------------
Schedule 1.6(a) which were entered into by Premark with respect to the duties
and obligations of Tupperware U.S., as franchisor, under certain franchise
agreements and (ii) the other guarantees set forth on Schedule 1.6(b).
Premark Indemnitees: as defined in Section 4.02.
-------------------
Premark Liabilities: collectively, all of (i) the Liabilities of any member
-------------------
of the Premark Group under this Agreement or any Ancillary Agreement to which
it is or becomes a party, (ii) the Liabilities arising out of or in connection
with the businesses, assets or operations of the Premark Group (other than
such businesses, assets or operations which, pursuant to this Agreement,
shall, after the Distribution Date, be part of the Tupperware Group), as
heretofore, currently, or hereafter conducted, (iii) the Premark Assumed
Liabilities, (iv) the Former Premark Business Liabilities and (v) the
Liabilities retained or assumed by Premark or any Premark Subsidiary pursuant
to the Employee Benefits and Compensation Allocation Agreement.
Premark Patents and Trademarks: collectively, the patents and trademarks set
------------------------------
forth on Schedule 1.7.
Premark Subsidiary: any subsidiary of Premark other than Tupperware or any
------------------
Tupperware Subsidiary.
Premium Administration: with respect to each Policy, the accounting for
----------------------
premiums, retrospectively-rated premiums, defense costs, indemnity payments,
deductibles and retentions as appropriate under the terms and conditions of
each of the Policies.
Record Date: the close of business on the date to be determined by the
-----------
Premark Board, or a committee thereof, as the record date for the Distribution.
Representative: with respect to any Person, any of such Person's directors,
--------------
officers, employees, agents, consultants, advisors, accountants, attorneys and
representatives.
Rights Plan: the rights agreement, to be entered into on or prior to the
-----------
Distribution Date, between Tupperware and Norwest Bank, as rights agent,
substantially in the form filed as an exhibit to the Form 10.
Stero: The Stero Company, a Delaware corporation.
-----
Subsidiary: with respect to any Person, any corporation or other legal
----------
entity of which such Person or any Subsidiaries controls or owns, directly or
indirectly, more than 50% of the stock or other equity interest, or more than
50% of the voting power entitled to vote on the election of members to the
board of directors or similar governing body; provided, however, that for
-------- -------
purposes of this Agreement, (i) Dart and the Subsidiaries of Dart shall be
deemed to be Tupperware Subsidiaries and (ii) neither Dart, Tupperware nor any
Tupperware Subsidiary shall be deemed to be Premark Subsidiaries.
5<PAGE>
Tax: as defined in the Tax Sharing Agreement.
---
Tax Ruling: a private letter ruling issued by the IRS indicating that the
----------
Distribution will qualify as a tax-free distribution for federal income tax
purposes under Section 355 of the Code.
Tax Sharing Agreement: the Tax Sharing Agreement between Premark and
---------------------
Tupperware, substantially in the form attached hereto as Annex C.
Third Party Claim: as defined in Section 4.04(a)(i).
-----------------
Tupperware Assets: collectively, (i) all assets currently owned by Dart and
-----------------
the Subsidiaries of Dart (other than any such assets which pursuant to, or as
a consequence of, this Agreement are to be transferred to, or retitled in the
name of, Premark or a Premark Subsidiary, including, without limitation, the
Premark Patents and Trademarks) and which, as of and after the Distribution
Date are to be owned by the Tupperware Group, and (ii) all assets which are
currently owned by Premark or a Premark Subsidiary and which pursuant to, or
as a consequence of, this Agreement are to be transferred to Tupperware or a
Tupperware Subsidiary, including, without limitation, any assets set forth on
Schedule 1.8 and which, as of and after the Distribution Date are to be owned
by the Tupperware Group.
Tupperware Assumed Liabilities: collectively, all Liabilities relating to or
------------------------------
arising in connection with the Tupperware Assets or the Tupperware Businesses,
whether arising before, on or after the Distribution Date, which are to be
assumed by Tupperware or a Tupperware Subsidiary, as appropriate, pursuant to
the transactions contemplated by Section 3.01, including, without limitation,
the Liabilities set forth on Schedule 1.9.
Tupperware Board: the Board of Directors of Tupperware.
----------------
Tupperware Businesses: the direct selling business (other than the direct
---------------------
selling business conducted by West Bend or any West Bend Subsidiary) and
related manufacturing business conducted, as of the date hereof, by Dart and
its Subsidiaries and by certain divisions of various Premark Subsidiaries
through the use of the Tupperware Assets, and after the Distribution Date to
be conducted by Tupperware and the Tupperware Subsidiaries.
Tupperware Common Stock: collectively, the Common Stock, par value $.01 per
-----------------------
share, of Tupperware and the rights issued pursuant to the Rights Plan.
Tupperware Group: Tupperware and that portion of any corporation or other
----------------
entity, whether now or hereafter existing, which conduct the Tupperware
Businesses.
Tupperware Indemnitees: as defined in Section 4.01.
----------------------
Tupperware Liabilities: collectively, all of (i) the Liabilities of any
----------------------
member of the Tupperware Group under this Agreement or any Ancillary Agreement
to which it is or becomes a party, (ii) the Liabilities arising out of or in
connection with the businesses, assets or operations of the Tupperware Group
(other than such businesses, assets or operations which, pursuant to this
Agreement shall, after the Distribution Date, be part of the Premark Group),
as heretofore, currently, or hereafter conducted, (iii) the Tupperware Assumed
Liabilities, (iv) the Former Tupperware Business Liabilities and (v) the
Liabilities retained or assumed by Tupperware or any Tupperware Subsidiary
pursuant to the Employee Benefits and Compensation Allocation Agreement.
Tupperware Subsidiary: any subsidiary of Tupperware that, as of the
---------------------
Distribution Date, will be a subsidiary of Tupperware, and any other
subsidiary of Tupperware which thereafter may be organized or acquired.
Tupperware U.S.: Tupperware U.S., Inc., a Delaware corporation.
---------------
6<PAGE>
Wavebest: Wavebest Limited, a United Kingdom corporation.
--------
West Bend: The West Bend Company, a Delaware corporation and wholly-owned
---------
Premark Subsidiary.
Wolf: The Wolf Range Company, a Delaware corporation.
----
Wolf LLC: a limited liability company to be formed by PFEG and a Premark
--------
Affiliate.
Section 1.02 Exhibits, etc. References to an "Exhibit" or "Schedule" are,
-------------
unless otherwise specified, to one of the Exhibits or Schedules attached to
this Agreement, and references to "Section" or "Article" are, unless otherwise
specified, to one of the Sections or Articles of this Agreement.
Section 1.03 References to Time. All references in this Agreement to times
------------------
of day shall be to Central time.
ARTICLE II
The Distribution
----------------
Section 2.01 The Distribution. Subject to Section 2.03 hereof and prior to
----------------
the Distribution Date, Premark will deliver to the Agent for the benefit of
holders of record of Premark Common Stock on the Record Date, a single stock
certificate, endorsed by Premark in blank, representing all of the then
outstanding shares of Tupperware Common Stock owned by Premark, and shall
instruct the Agent to distribute on, or as soon as practicable following, the
Distribution Date the appropriate number of such shares of Tupperware Common
Stock to each such holder or designated transferee or transferees of such
holder. The Distribution shall be effective as of 5:00 p.m. Central time, on
the Distribution Date. Tupperware will provide to the Agent all share
certificates and any information required in order to complete the
Distribution on the basis of one share of Tupperware Common Stock for each
share of Premark Common Stock outstanding on the Record Date.
Section 2.02 Cooperation Prior to the Distribution.
-------------------------------------
(a) Premark and Tupperware shall prepare, and Premark shall mail to the
holders of Premark Common Stock on the Record Date, the Information Statement,
which shall set forth appropriate disclosure concerning Tupperware, the
Distribution and other matters. Premark and Tupperware shall prepare, and
Tupperware shall file with the Commission, the Form 10, which includes or
incorporates by reference the Information Statement. Premark and Tupperware
shall use reasonable efforts to cause the Form 10 to become effective under
the Exchange Act as promptly as reasonably practicable.
(b) Premark and Tupperware shall cooperate in preparing, filing with the
Commission and causing to become effective any registration statements or
amendments thereof which are required to reflect the establishment of, or
amendments to, any employee benefit and other plans contemplated by the
Distribution and the Employee Benefits and Compensation Allocation Agreement.
(c) Premark and Tupperware shall take all such action as may be necessary or
appropriate under the securities or blue sky laws of the states or other
political subdivisions of the United States and the securities laws of any
applicable foreign countries or other political subdivision thereof, in
connection with the transactions contemplated by this Agreement.
(d) Premark and Tupperware shall have prepared, and Tupperware shall file
and pursue, an application to permit listing of the Tupperware Common Stock on
the NYSE and any other national securities exchanges selected by Tupperware.
(e) Premark and Tupperware shall each take all such action as may be
necessary or appropriate to cause the conditions set forth in Section 2.03 to
be satisfied and to effect the Distribution on the Distribution Date.
7<PAGE>
Section 2.03 Conditions to the Distribution. The Premark Board shall in its
------------------------------
discretion establish the Record Date and the Distribution Date and all
appropriate procedures in connection with the Distribution, but in no event
shall the Distribution Date occur prior to such time as each of the following
have occurred or have been waived by the Premark Board in its sole discretion:
(i) Premark shall have received the Tax Ruling or an acceptable opinion of tax
counsel indicating that the Distribution will qualify as a tax-free
distribution for federal income tax purposes under Section 355 of the Code and
such Tax Ruling or such acceptable opinion of tax counsel shall be in full
force and effect and shall not have been modified or amended in any respect
adversely affecting the tax consequences set forth therein; (ii) the Premark
Board shall have given final approval of the Distribution; (iii) all material
consents which are required to effect the Distribution shall have been
received; (iv) the Form 10 shall have been declared effective by the
Commission; (v) the Tupperware Board, composed as contemplated by Section
3.03, shall have been duly elected; (vi) the Certificate of Incorporation, the
By-Laws and the Rights Plan shall each have been adopted and be in effect;
(vii) the Tupperware Common Stock shall have been approved for listing upon
notice of issuance on the NYSE and any other exchange selected by Tupperware
pursuant to Section 2.02(d); (viii) the transactions contemplated by Section
3.01 and Section 3.02 shall have been consummated in all material respects;
(ix) Premark and Tupperware shall have entered into each of the Ancillary
Agreements and each such agreement shall be in full force and effect; (x) the
No-action Letter shall have been issued and shall be in full force and effect;
and (xi) no order, injunction or decree issued by any court of competent
jurisdiction or other legal restraint or prohibition preventing consummation
of the Distribution shall be in effect; provided that the satisfaction of such
--------
conditions shall not create any obligation on the part of Premark or any other
party hereto to effect the Distribution or in any way limit Premark's power of
termination set forth in Section 6.10 or alter the consequences of any such
termination from those specified in such Section.
ARTICLE III
TRANSACTIONS RELATING TO THE DISTRIBUTION
-----------------------------------------
Section 3.01 Intercorporate Reorganization.
-----------------------------
(a) Subject to Section 3.08, prior to or on the Distribution Date, Premark
and Tupperware shall undertake to complete all actions necessary, including,
without limitation, the actions specified in Section 3.01(b), to (i) transfer,
or cause to be transferred, to Tupperware or a Tupperware Subsidiary, as
appropriate, effective as of the Cut-off Date, all of the right, title and
interest of Premark or any Premark Subsidiary, as appropriate, in any
Tupperware Assets and have Tupperware or a Tupperware Subsidiary, as
appropriate, assume and agree to pay, perform and discharge in due course each
of the Tupperware Assumed Liabilities, and (ii) transfer, or cause to be
transferred, to Premark or a Premark Subsidiary, as appropriate, effective as
of the Cut-off Date, all the right, title and interest of Tupperware or any
Tupperware Subsidiary, as appropriate, in any Premark Assets and have Premark
or a Premark Subsidiary, as appropriate, assume and agree to pay, perform and
discharge in due course each of the Premark Assumed Liabilities.
(b) Subject to Section 3.08, prior to the Distribution, Premark and
Tupperware each agree to take, or cause to be taken, the following actions in
connection with the Distribution:
(i) domestic transactions:
(A) a plan of complete liquidation of HIH shall be adopted and HIH
shall be merged with and into PFEG;
(B) Wolf LLC shall be formed, a plan of complete liquidation of Wolf
shall be adopted and Wolf shall be merged with and into Wolf LLC;
(C) PFEG LLC shall be formed, PFEG shall transfer to PFEG LLC, (x)
Premark FEG GmbH & Co. KG, a German partnership, and (y) all PFEG's
right, title and interest in the intellectual property owned by PFEG,
and thereafter, a plan of complete liquidation of PFEG shall be adopted
and PFEG shall be merged with and into Premark;
8<PAGE>
(D) a plan of complete liquidation of Stero shall be adopted and
Stero shall be merged with and into Premark;
(E) Premark shall transfer all of its right, title and interest in
the outstanding shares of capital stock of Dart to Tupperware;
(F) as determined to be appropriate, Premark shall either (x)
transfer all of its right, title, and interest in the outstanding
shares of capital stock of Cook to Tupperware, or (y) merge Cook with
and into Tupperware or (z) retain Cook;
(G) as determined to be appropriate, Premark shall either (x)
transfer all of its right, title and interest in the outstanding shares
of capital stock of Deerfield to Tupperware or (y) merge Deerfield with
and into Tupperware;
(H) as determined to be appropriate, (x) Premark Financial shall
transfer to Premark all Premark Assets owned by Premark Financial, the
Premark Financial preferred stock owned by Florida Tile Industries,
Inc. (a Florida corporation and Premark Subsidiary) shall be redeemed
by Premark Financial and Premark shall thereafter transfer to
Tupperware all of its right, title, and interest in the outstanding
shares of capital stock of Premark Financial or (y) Premark Financial
shall transfer or assign, as appropriate, to the Tupperware Group all
Tupperware Assets owned or leased by Premark Financial, the Premark
Financial preferred stock owned by Dart shall be redeemed by Premark
Financial, and the $7,925,000 Promissory Note dated December 18, 1992
from Premark Financial to Deerfield shall be repaid in full;
(I) Dart shall transfer the Convention Center Business to Tupperware;
(J) Dart and Tupperware shall enter into a lease pursuant to which
Tupperware shall lease from Dart the Convention Center;
(K) Dart shall cooperate in the retitling of the Premark Patents and
Trademarks into the name of Premark or a Premark Subsidiary, as
appropriate;
(L) Premark GmbH shall transfer to the appropriate foreign entity in
the Premark Group all of its right, title and interest in the
outstanding shares of capital stock of Premark HII Holdings, Inc., a
Delaware corporation; and
(M) Dart will make or cause to be made appropriate capital
contributions to Tupperware U.S., Tupperware Distributors, Inc., and
Dartco Manufacturing, Inc. or take any other appropriate action in
order to eliminate any excess loss accounts as defined in Treasury
Regulation 1.1502-19;
(ii) Canadian Transactions;
(A) NewCan shall be formed, Dart shall transfer to NewCan all Dart's
right, title and interest in the capital stock of PreCan in exchange
for all of the issued and outstanding shares of common stock of NewCan;
(B) PreCan shall transfer to NewCan all the Tupperware Assets and
Tupperware Businesses owned by PreCan in exchange for (x) all of the
issued and outstanding shares of preferred stock of NewCan and (y) the
assumption by NewCan of certain Liabilities of PreCan;
(C) NewCan shall redeem all shares of its preferred stock owned by
PreCan in exchange for a non-interest-bearing demand promissory note
payable to PreCan;
(D) PreCan shall redeem all shares of its common stock owned by
NewCan in exchange for a non-interest-bearing demand promissory note
payable to NewCan; and
(E) the promissory notes described in subsections 3.01(b)(ii)(C) and
3.01(b)(ii)(D) shall be set-off and cancelled;
9<PAGE>
(iii) Italian transactions:
(A) the parties hereto undertake to reorganize the Italian operations
of Premark and Dart so that, as of the Distribution Date, the Premark
Group shall not have any interest in any Tupperware Businesses or
Tupperware Assets of such operations, and the Tupperware Group shall
not have any interest in the Premark Businesses or Premark Assets of
such operations;
(iv) United Kingdom transactions:
(A) DILHC shall be formed by Wavebest and Wavebest shall transfer to
DILHC all Wavebest's right, title and interest in the capital stock of
DIL;
(B) Wavebest shall distribute to Dart all of the shares of capital
stock of DILHC; and
(C) as determined to be appropriate, Dart shall distribute either to
Premark and HIH, or to Premark alone, all its right, title and interest
in the outstanding shares of capital stock of Wavebest; and
(v) Brazilian Transactions:
(A) Dart-Brazil shall sell to PFEG-Brasil for cash all its right,
title and interest in the capital stock of Daypar;
(B) Hobart Brazil shall be merged into Daypar; and
(C) Daypar shall be merged into PFEG-Brazil.
(c) In connection with the transfers of assets other than capital stock and
the assumptions of Liabilities contemplated by subsection (a) and subsection
(b) of this Section, Premark and Tupperware shall execute or cause to be
executed by the appropriate entities the Conveyance and Assumption Instruments
in such forms as Premark and Tupperware shall reasonably agree, including the
transfer of real property by deed. The transfer of capital stock shall be
effected by means of delivery of stock certificates duly endorsed or
accompanied by duly executed stock powers and notation on the stock records
books of the corporation or other legal entities involved and, to the extent
required by applicable law, by notation on appropriate registries.
(d) Each of the parties hereto understands and agrees that no party hereto
is, in this Agreement or in any other agreement or document contemplated by
this Agreement or otherwise, representing and warranting in any way as to the
value or freedom from encumbrance of, or any other matter concerning, any
assets of such party, it being agreed and understood that all assets are being
transferred "as is, where is."
(e) Prior to the Distribution Date, Premark and Tupperware shall take all
steps necessary to increase the outstanding shares of Tupperware Common Stock
so that immediately prior to the Distribution, Premark will hold a number of
shares of Tupperware Common Stock equal to the total number of shares of
Premark Common Stock outstanding on the Record Date.
Section 3.02 Repayment of Intercompany Indebtedness and Cash Dividend.
--------------------------------------------------------
(a) Dividend Payments. Prior to the Distribution, Dart shall pay a cash
-----------------
dividend (the "Cash Dividend") to Premark in accordance with the terms set
forth on Schedule 3.02(a).
(b) Elimination of Intercompany Accounts as of the Cut-off Date. All
-----------------------------------------------------------
intercompany receivables, payables and loans between Tupperware and the
Tupperware Subsidiaries, on the one hand, and Premark and the Premark
Subsidiaries, on the other hand, shall be accorded the treatment set forth on
Schedule 3.02(b).
(c) Cash Management After the Cut-off Date. Premark and Tupperware shall
--------------------------------------
establish and maintain a separate cash management system with respect to the
Tupperware Businesses in accordance with the terms set forth on Schedule
3.02(c).
10<PAGE>
Section 3.03 The Tupperware Board. At the Distribution Date, the Tupperware
--------------------
Board shall consist of, and Tupperware and Premark shall take all actions
which may be required to elect or otherwise appoint as directors of Tupperware
on or prior to the Distribution Date, the persons named on Schedule 3.03.
Section 3.04 Resignations; Transfer of Stock held as Nominee. (a) Premark
-----------------------------------------------
shall cause all of its, and all Premark Group entities', employees and
directors to resign, not later than the Distribution Date, from all boards of
directors or similar governing bodies of Tupperware or any member of the
Tupperware Group on which they serve, and from all positions as officers of
Tupperware or any member of the Tupperware Group in which they serve, except
as otherwise specified on Schedule 3.04. Tupperware shall cause all of its,
and all Tupperware Group entities', employees and directors to resign, not
later than the Distribution Date, from all boards of directors or similar
governing bodies of Premark or any member of the Premark Group on which they
serve, and from all positions as officers of Premark or any member of the
Premark Group in which they serve, except as otherwise specified on Schedule
3.04.
(b) Premark shall cause each of its employees who holds stock, or similar
evidence of ownership, of any Tupperware Group entity as nominee for such
entity pursuant to the laws of the country in which such entity is located to
transfer such stock, or similar evidence of ownership, to the Person so
designated by Tupperware to be such nominee as of and after the Distribution
Date. Tupperware shall cause each of its employees who holds stock, or similar
evidence of ownership, of any Premark Group entity as nominee for such entity
pursuant to the laws of the country in which such entity is located to
transfer such stock, or similar evidence of ownership, to the Person so
designated by Premark to be such nominee as of and after the Distribution
Date.
Section 3.05 Tupperware Certificate of Incorporation and By-Laws; Rights
---------------------------------------------------
Plan. Prior to the Distribution Date, (a) the Tupperware Board shall (i)
approve the Certificate of Incorporation and shall file the same with the
Secretary of State of the State of Delaware and (ii) adopt the By-Laws, and
(b) Premark, as sole stockholder of Tupperware, shall approve such Certificate
of Incorporation. Prior to the Distribution Date, Tupperware shall adopt the
Rights Plan.
Section 3.06 Insurance.
---------
(a) Coverage. Premark and its predecessors have historically provided
--------
various forms of insurance coverage ("Policies") which include Tupperware and
the Tupperware Subsidiaries within the definition of the named insured. Except
for those Policies issued in the name of any Tupperware Subsidiary, coverage
of Tupperware and the Tupperware Subsidiaries shall cease under the Policies
as of the Distribution Date. From and after the Distribution Date, Tupperware
and Tupperware Subsidiaries will be responsible for obtaining and maintaining
insurance coverages in their own right. Premark shall retain the Policies,
together with the rights, benefits and privileges thereunder. It is agreed
that Tupperware and the Tupperware Subsidiaries shall have the right to
present claims under such Policies for insured incidents occurring from the
date said coverage first commenced until the Distribution Date to the extent
that the terms and conditions of any such Policies so allow. It is understood
that any such Policies written on a "claims made" basis rather than
"occurrence" basis may not provide coverage to Tupperware and the Tupperware
Subsidiaries for incidents occurring prior to the Distribution Date but which
are first reported after the Distribution Date.
(b) Administration and Reserves. From and after the Cut-off Date:
---------------------------
(i) Premark shall be responsible for the (A) Premium Administration of
all Policies except the European auto policy, and (B) Claims Administration
with respect to the Premark Liabilities; provided, that the retention of
the Policies by Premark is in no way intended to limit, inhibit or preclude
any right to insurance coverage for any insured claim of a named insured
under the Policies, including but not limited to Tupperware and the
Tupperware Subsidiaries;
(ii) Tupperware or a Tupperware Subsidiary, as appropriate, shall be
responsible for the (A) Premium Administration of the European auto policy
and (B) Claims Administration with respect to the Tupperware Liabilities;
11<PAGE>
(iii) Premark or a Premark Subsidiary, as appropriate, shall be entitled
to reserves or the benefit of reserves held by any insurance carrier, with
respect to Premark Liabilities; and
(iv) Tupperware or a Tupperware Subsidiary, as appropriate, shall be
entitled to reserves, or the benefit of reserves held by any insurance
carrier, with respect to Tupperware Liabilities.
(c) Insurance Premiums. Premark shall pay the premiums, to the extent that
------------------
Tupperware or a Tupperware Subsidiary does not pay premiums with respect to
Tupperware Liabilities (retrospectively-rated or otherwise), as required under
the terms and conditions of the respective Policies, whereupon Tupperware or a
Tupperware Subsidiary, as appropriate, shall upon receipt of a copy of the
retrospective-rating adjustment forthwith reimburse Premark or a Premark
Subsidiary, as appropriate, for that portion of such premiums paid by Premark
as are attributable to the Tupperware Liabilities.
(d) Insurance Proceeds. Proceeds received with respect to claims made under
------------------
the Policies shall be paid to Premark with respect to the Premark Liabilities
and to Tupperware with respect to the Tupperware Liabilities.
(e) Agreement for Waiver of Conflict and Shared Defense. In the event that a
---------------------------------------------------
Policy or Policies provide coverage for both Premark and Tupperware relating
to the same occurrence, Premark and Tupperware agree to jointly defend and to
waive any conflict of interest necessary to the conduct of that joint defense.
Nothing in this subsection (e) shall be construed to limit or otherwise alter
in any way the indemnity obligations of the parties to this Agreement,
including those created by this Agreement, by operation of law or otherwise.
(f) Directors' and Officers' Insurance. Premark shall use its reasonable
----------------------------------
efforts to cause the persons currently serving as officers and/or directors of
Premark who will become effective as of the Distribution Date officers and/or
directors of Tupperware to be covered for a period of three years from the
Distribution Date by the directors' and officers' liability insurance policy
maintained by Premark (provided that Premark may substitute therefor policies
of at least the same coverage and amounts containing terms and conditions
which are not less advantageous than such policy) with respect to matters
covered under the existing policy occurring prior to the Distribution Date
which were committed by such officers and/or directors in their capacity as
such; provided, however, that in no event shall Premark be required to expend
-------- -------
with respect to any year more than 120% of the current annual premium expended
by Premark (the "Insurance Amount") to maintain or procure insurance coverage
pursuant hereto and further provided that if Premark is unable to maintain or
obtain the insurance called for by this subsection 3.06(f), Premark shall use
its reasonable efforts to obtain as much comparable insurance as available for
the Insurance Amount. In the event Premark or any of its successors or assigns
(i) consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or merger,
or (ii) transfers or conveys all or substantially all of its properties and
assets to any Person, then, and in each such case, to the extent necessary,
proper provision shall be made so that the successors and assigns of Premark
assume the obligations set forth in this subsection. The provisions of this
subsection 3.06(f) are intended to be for the benefit of, and shall be
enforceable by, each such officer and director and his or her heirs and
representatives.
Section 3.07 Use of Names.
------------
(a) Use of Tupperware Name. Any existing printed material showing any
----------------------
affiliation or connection of Premark or any of its Subsidiaries with
Tupperware or any Tupperware Subsidiary may be used by Premark and its
Subsidiaries only for a period ending eight months after the Distribution
Date. On and after the Distribution Date, Premark and its Subsidiaries shall
not otherwise represent to third parties that any of them is affiliated with
Tupperware or any Tupperware Subsidiary.
(b) Use of Premark Name. Any existing printed material showing any
-------------------
affiliation or connection of Tupperware or any of its Subsidiaries with
Premark or any Premark Subsidiary may be used by Tupperware and its
Subsidiaries only for a period ending eight months after the Distribution
Date. On and after the Distribution Date, Tupperware and its Subsidiaries
shall not otherwise represent to third parties that any of them is affiliated
with Premark or any Premark Subsidiary.
12<PAGE>
Section 3.08 Transfers Not Effected Prior to the Distribution; Transfers
-----------------------------------------------------------
Deemed Effective as of the Cut-off Date. To the extent that any transfers and
- ---------------------------------------
assumptions contemplated by this Article III shall not have been consummated
prior to the Distribution Date, the parties shall cooperate to effect such
transfers as promptly following the Distribution Date as shall be practicable,
it nonetheless being agreed and understood by all the parties that no party
shall be liable in any manner to any other party for any failure of any of the
transfers contemplated by this Article III to be consummated prior to the
Distribution Date. Subject to the provisions of Section 2.03, nothing herein
shall be deemed to require the transfer of any assets or the assumption of any
Liabilities which by their terms or operation of law cannot be transferred or
assumed; provided, however, that Premark and Tupperware shall, and shall cause
-------- -------
their respective Subsidiaries to, cooperate to seek to obtain any necessary
consents or approvals for the transfer of all assets and Liabilities
contemplated to be transferred pursuant to this Article III. In the event that
any such transfer of assets (other than capital stock of corporations to be
transferred hereunder) or Liabilities has not been consummated, effective as
of and after the Cut-off Date, the party retaining such asset or Liability
shall thereafter hold such asset for the party entitled thereto (at the
expense of the party entitled thereto) and retain such Liability for the
account of the party by whom such Liability is to be assumed, and take such
other action as may be reasonably requested by the party to whom such asset is
to be transferred, or by whom such Liability is to be assumed, as the case may
be, in order to place such party, insofar as reasonably possible, in the same
position as would have existed had such asset or Liability been transferred as
of the Cut-off Date. As and when any such asset or Liability becomes
transferable, such transfer shall be effected forthwith. The parties agree
that, as of the Cut-off Date, each party hereto shall be deemed to have
assumed in accordance with the terms of this Agreement and the Ancillary
Agreements all of the Liabilities, and all duties, obligations and
responsibilities incident thereto, which such party is required to assume
pursuant to the terms hereof and thereof.
Section 3.09 DKI Indemnification. (a) Premark and Tupperware hereby agree
-------------------
that, notwithstanding the provisions of Section 4.01(c), it is their mutual
intention that each Tupperware Indemnitee shall continue after the
Distribution to be a Newco Indemnitee (as defined in the DKI Reorganization
and Distribution Agreement) and to be entitled to the benefit of the DKI
Indemnification. Prior to the Distribution Date, Premark shall use its
reasonable efforts to cause the Tupperware Indemnitees to be entitled to the
benefit of the DKI Indemnification, including efforts to secure the written
agreement of DKI or its successors that Tupperware and its Subsidiaries will
after the Distribution continue to be "Affiliates" for purposes of Section
5.01 of the DKI Reorganization and Distribution Agreement and entitled to
indemnification under such Section 5.01 in accordance with its terms.
(b) After the Distribution Date, Premark and its Affiliates shall use their
respective reasonable efforts to assist the Tupperware Indemnitees in
enforcing the DKI Indemnification with respect to DKI Indemnifiable Losses to
which the Tupperware Indemnitees are or may become subject, including, without
limitation, instituting a lawsuit, action or other proceeding to enforce such
DKI Indemnification (whether to seek to enforce such DKI Indemnification on
behalf of such Tupperware Indemnitee, to seek indemnification with respect to
the Indemnifiable Loss incurred by Premark pursuant to Section 4.01 of this
Agreement or otherwise); provided that such Tupperware Indemnitee shall
reimburse Premark for its reasonable fees and expenses (including, without
limitation, reasonable fees and expenses of Premark's counsel) in connection
with such lawsuit, action or other proceeding (it being understood that if
such lawsuit, action or other proceeding involves matters other than
enforcement of the DKI Indemnification with respect to DKI Indemnifiable
Losses of Tupperware Indemnitees, such reimbursement obligation shall be
limited to such incremental fees and expenses incurred in connection with such
enforcement).
(c) Without limiting the generality of the foregoing, any DKI Indemnifiable
Losses as to which Premark has an enforceable DKI Indemnification shall be
deemed not to have been assumed by any Tupperware Indemnitee in connection
with the Distribution, if and to the extent that such Tupperware Indemnitee
does not have an enforceable DKI Indemnification.
Section 3.10 Premark Guarantees. Tupperware shall use its reasonable efforts
------------------
to cause itself or one of its Affiliates to be substituted in all respects for
Premark in respect of all obligations of Premark under (i) any
13<PAGE>
guarantee related to the franchises set forth on Schedule 1.6(a), effective as
of the date that Tupperware next effects a resigning of any franchise
agreement related to any such franchise, and (ii) each of the guarantees and
comfort letters set forth on Schedule 1.6(b), effective as of the next
maturity date after the date hereof of each of the related agreements with
respect to which such guaranty or comfort letter was issued.
ARTICLE IV
INDEMNIFICATION
Section 4.01 Indemnification by Premark. Except with respect to claims for
--------------------------
proceeds of Policies or other amounts received, which shall be governed by
Section 3.06 and Section 4.03, Premark shall indemnify, defend and hold
harmless Tupperware, each Affiliate of Tupperware and each of their respective
directors, officers and employees and each of the heirs, executors, successors
and assigns of any of the foregoing (the "Tupperware Indemnitees") from and
against each of the following:
(a) The Premark Liabilities and any and all Losses of the Tupperware
Indemnitees arising out of, or due to the failure or alleged failure of
Premark or any of its Affiliates to pay, perform or otherwise discharge in
due course any of the Premark Liabilities.
(b) All Losses of any Tupperware Indemnitee arising (whether before, on
or after the Distribution Date) in connection with the Premark Assets or
the Premark Businesses, whether any such Losses relate to events,
occurrences or circumstances occurring or existing, or whether any such
Losses are asserted, before, on or after the Distribution Date.
(c) In the event that, notwithstanding the provisions of Section 3.09,
any Tupperware Indemnitee cannot enforce the DKI Indemnification with
respect to any DKI Indemnifiable Losses to which such Tupperware Indemnitee
is or may become subject, such DKI Indemnifiable Losses, to the extent and
only to the extent that Premark is able to enforce the DKI Indemnification
with respect to such DKI Indemnifiable Losses.
(d) Fifty percent of any Losses of any Tupperware Indemnitee arising
(whether before, on or after the Distribution Date) in connection with the
Dart Guarantees, whether any such Losses relate to events, occurrences or
circumstances occurring or existing, or whether any such Losses are
asserted, before, on or after the Distribution Date.
(e) All Losses of any Tupperware Indemnitee arising out of or based upon
any untrue statement or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, with
respect to the information set forth in the following parts of any
preliminary or final Form 10 or any amendment thereto: Premark's letter to
its stockholders or under the headings "Certain Special Considerations--
Effects on Premark Common Stock," "Introduction," "The Distribution,"
"Management of Tupperware--Compensation of Executive Officers," and
"Tupperware Corporation Pro Forma Consolidated Financial Information (other
than with respect to information provided by the Tupperware Group)," and
any information under "Summary of Certain Information" derived from
information contained under such headings.
Notwithstanding anything in this Section 4.01 to the contrary, neither Premark
nor any Premark Subsidiary shall have any liability whatsoever to either
Tupperware or any Tupperware Subsidiary in respect of any Tax, except as
otherwise provided in the Tax Sharing Agreement.
Section 4.02 Indemnification by Tupperware. Except with respect to claims
-----------------------------
for proceeds of Policies or other amounts received, which shall be governed by
Section 3.06 and Section 4.03, Tupperware shall indemnify, defend and hold
harmless Premark, each Affiliate of Premark and each of their respective
directors, officers and employees and each of the heirs, executors, successors
and assigns of any of the foregoing (the "Premark Indemnitees") from and
against each of the following:
14<PAGE>
(a) The Tupperware Liabilities and any and all Losses of the Premark
Indemnitees arising out of, or due to the failure or alleged failure of
Tupperware or any of its Affiliates to pay, perform or otherwise discharge
in due course any of the Tupperware Liabilities.
(b) All Losses of any Premark Indemnitee arising (whether before, on or
after the Distribution Date) in connection with the Tupperware Assets or
the Tupperware Businesses, whether any such Losses relate to events,
occurrences or circumstances occurring or existing, or whether any such
Losses are asserted, before, on or after the Distribution Date.
(c) All Losses of any Premark Indemnitee arising out of or based upon any
untrue statement or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, with respect to
all information set forth in any preliminary or final Form 10 or any
amendment thereto, except for information set forth under the headings
specified in Section 4.01(e), with respect to which Premark will indemnify
Tupperware, and except for information set forth under the headings
"Arrangements Between Premark and Tupperware Relating to the Distribution,"
and "Certain Transactions."
Notwithstanding anything in this Section 4.02 to the contrary, neither
Tupperware nor any Tupperware Subsidiary shall have any liability whatsoever
to either Premark or any Premark Subsidiary in respect of any Tax, except as
otherwise provided in the Tax Sharing Agreement.
Section 4.03 Limitations on Indemnification Obligations.
------------------------------------------
(a) The amount which any party (an "Indemnifying Party") is or may be
required to pay to any other party (an "Indemnitee") pursuant to Section 4.01
or Section 4.02 shall be reduced (including, without limitation,
retroactively) by any proceeds of Policies and amounts recovered under the DKI
Indemnification or other amounts actually recovered by or on behalf of such
Indemnitee, in reduction of the related Loss. If an Indemnitee shall have
received the payment (an "Indemnity Payment") required by this Agreement from
an Indemnifying Party in respect of any Loss and shall subsequently actually
receive proceeds of Policies or amounts recovered under the DKI
Indemnification or other amounts in respect of such Loss, then such Indemnitee
shall pay to such Indemnifying Party a sum equal to the amount actually
received (up to but not in excess of the amount of any Indemnity Payment made
hereunder). An insurer who would otherwise be obligated to pay any claim shall
not be relieved of the responsibility with respect thereto, or, solely by
virtue of the indemnification provisions hereof, have any subrogation rights
with respect thereto, it being expressly understood and agreed that no insurer
or any other third party shall be entitled to a "windfall" (i.e., a benefit
they would not be entitled to receive in the absence of the indemnification
provisions) by virtue of the indemnification provisions hereof.
(b) If any Indemnitee realizes a Tax benefit or detriment in one or more Tax
periods by reason of having incurred an Indemnifiable Loss for which such
Indemnitee receives an Indemnity Payment from an Indemnifying Party, then such
Indemnitee shall pay to such Indemnifying Party an amount equal to the Tax
benefit or such Indemnifying Party shall pay to such Indemnitee an additional
amount equal to the Tax detriment (taking into account any Tax detriment
resulting from the receipt of such additional amounts), as the case may be.
The amount of any Tax benefit or any Tax detriment for a Tax period realized
by an Indemnitee by reason of having incurred an Indemnifiable Loss shall be
deemed to equal the product obtained by multiplying (i) the amount of any
deduction or inclusion in income for such period resulting from such
Indemnifiable Loss or the payment thereof, as the case may be, by (ii) the
highest applicable marginal Tax rate for such period (provided, however, that
--------
the amount of any Tax benefit attributable to an amount that is creditable
shall be deemed to equal the amount of such creditable item). Any payment due
under this Section 4.03(b) with respect to a Tax benefit or Tax detriment
realized by an Indemnitee in a Tax period shall be due and payable within 30
days from the time the return for such Tax period is due, without taking into
account any extension of time granted to the party filing such return.
(c) In the event that an Indemnity Payment shall be denominated in a
currency other than United States dollars, the amount of such payment shall be
translated into United States dollars using the Foreign Exchange Rate for such
currency determined in accordance with the following rules:
15<PAGE>
(i) with respect to a Loss arising from payment by a financial
institution under a guarantee, comfort letter, letter of credit,
foreign exchange contract or similar instrument, the Foreign Exchange
Rate for such currency shall be determined as of the date on which such
financial institution shall have been reimbursed;
(ii) with respect to a Loss covered by insurance, the Foreign
Exchange Rate for such currency shall be the Foreign Exchange Rate
employed by the insurance company providing such insurance in settling
such Loss with the Indemnifying Party; and
(iii) with respect to a Loss not covered by clause (i) or (ii) above,
the Foreign Exchange Rate for such currency shall be determined as of
the date that notice of the claim with respect to such Loss shall be
given to the Indemnitee.
Section 4.04 Procedures for Indemnification.
------------------------------
(a) Procedures for Indemnification of Third Party Claims shall be as
follows:
(i) If an Indemnitee shall receive notice or otherwise learn of the
assertion by a Person (including, without limitation, any governmental
entity) who is not a party to this Agreement (or an Affiliate thereof)
or to any Ancillary Agreement of any claim or of the commencement by
any such Person of any Action (a "Third Party Claim") with respect to
which an Indemnifying Party may be obligated to provide indemnification
pursuant to Section 4.01, Section 4.02, or any other Section of this
Agreement, such Indemnitee shall give such Indemnifying Party written
notice thereof promptly after becoming aware of such Third Party Claim;
provided that the failure of any Indemnitee to give notice as provided
--------
in this Section 4.04(a)(i) shall not relieve the related Indemnifying
Party of its obligations under this Article IV, except to the extent
that such Indemnifying Party is prejudiced by such failure to give
notice. Such notice shall describe the Third Party Claim in reasonable
detail and, if ascertainable, shall indicate the amount (estimated if
necessary) of the Loss that has been or may be sustained by such
Indemnitee.
(ii) An Indemnifying Party may elect to defend or to seek to settle
or compromise, at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, any Third Party Claim. Within 30 days
of the receipt of notice from an Indemnitee in accordance with Section
4.04(a)(i) (or sooner, if the nature of such Third Party Claim so
requires), the Indemnifying Party shall notify the Indemnitee of its
election whether the Indemnifying Party will assume responsibility for
defending such Third Party Claim, which election shall specify any
reservations or exceptions. After notice from an Indemnifying Party to
an Indemnitee of its election to assume the defense of a Third Party
Claim, such Indemnifying Party shall not be liable to such Indemnitee
under this Article IV for any legal or other expenses (except expenses
approved in advance by the Indemnifying Party) subsequently incurred by
such Indemnitee in connection with the defense thereof; provided that,
--------
if the defendants in any such claim include both the Indemnifying Party
and one or more Indemnitees and in any Indemnitee's reasonable judgment
a conflict of interest between one or more of such Indemnitees and such
Indemnifying Party exists in respect of such claim or if the
Indemnifying Party shall have assumed responsibility for such claim
with any reservations or exceptions, such Indemnitees shall have the
right to employ separate counsel to represent such Indemnitees and in
that event the reasonable fees and expenses of such separate counsel
(but not more than one separate counsel reasonably satisfactory to the
Indemnifying Party) shall be paid by such Indemnifying Party. If an
Indemnifying Party elects not to assume responsibility for defending a
Third Party Claim, or fails to notify an Indemnitee of its election as
provided in this Section 4.04(a)(ii), such Indemnitee may defend or
(subject to the remainder of this Section 4.04(a)(ii)) seek to
compromise or settle such Third Party Claim. Notwithstanding the
foregoing, neither an Indemnifying Party nor an Indemnitee may settle
or compromise any claim over the objection of the other; provided,
however, that consent to settlement or compromise shall not be
unreasonably withheld. Neither an Indemnifying Party nor an Indemnitee
shall consent to entry of any judgment or enter into any settlement of
any Third Party Claim which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnitee, in
the case of a consent or settlement by an Indemnifying Party, or the
Indemnifying Party, in the case of a consent or settlement by the
Indemnitee, of a written release from all liability in respect to such
Third Party Claim.
16<PAGE>
(iii) If an Indemnifying Party chooses to defend or to seek to
compromise or settle any Third Party Claim, the related Indemnitee
shall make available to such Indemnifying Party any personnel or any
books, records or other documents within its control or which it
otherwise has the ability to make available that are necessary or
appropriate for such defense, settlement or compromise, and shall
otherwise cooperate in the defense, settlement or compromise of such
Third Party Claims, subject to the establishment of appropriate
confidentiality arrangements which are reasonably satisfactory to
Premark and Tupperware.
(iv) Notwithstanding anything else in this Section 4.04 to the
contrary, if an Indemnifying Party notifies the related Indemnitee in
writing of such Indemnifying Party's desire to settle or compromise a
Third Party Claim on the basis set forth in such notice (provided that
such settlement or compromise includes as an unconditional term thereof
the giving by the claimant or plaintiff of a written release of the
Indemnitee from all liability in respect thereof) and the Indemnitee
shall notify the Indemnifying Party in writing that such Indemnitee
declines to accept any such settlement or compromise, such Indemnitee
may continue to contest such Third Party Claim, free of any
participation by such Indemnifying Party, at such Indemnitee's sole
expense. In such event, the obligation of such Indemnifying Party to
such Indemnitee with respect to such Third Party Claim shall be equal
to (i) the costs and expenses of such Indemnitee prior to the date such
Indemnifying Party notifies such Indemnitee of the offer to settle or
compromise (to the extent such costs and expenses are otherwise
indemnifiable hereunder) plus (ii) the lesser of (A) the amount of any
offer of settlement or compromise which such Indemnitee declined to
accept and (B) the actual out-of-pocket amount such Indemnitee is
obligated to pay subsequent to such date as a result of such
Indemnitee's continuing to pursue such Third Party Claim.
(b) Any claim on account of a Loss which does not result from a Third Party
Claim shall be asserted by written notice given by the Indemnitee to the
related Indemnifying Party. Such Indemnifying Party shall have a period of 30
days after the receipt of such notice within which to respond thereto. If such
Indemnifying Party does not respond within such 30-day period, such
Indemnifying Party shall be deemed to have refused to accept responsibility to
make payment. If such Indemnifying Party does not respond within such 30-day
period or rejects such claim in whole or in part, such Indemnitee shall be
free to pursue such remedies as may be available to such party under this
Agreement or under applicable law.
(c) In addition to any adjustments required pursuant to Section 4.03, if the
amount of any Loss shall, at any time subsequent to the payment required by
this Agreement, be reduced by recovery, settlement or otherwise, the amount of
such reduction, less any expenses incurred in connection therewith, shall
promptly be repaid by the Indemnitee to the Indemnifying Party.
(d) In the event of payment by an Indemnifying Party to any Indemnitee in
connection with any Third Party Claim, such Indemnifying Party shall be
subrogated to and shall stand in the place of such Indemnitee as to any events
or circumstances in respect of which such Indemnitee may have any right or
claim relating to such Third Party Claim against any claimant or plaintiff
asserting such Third Party Claim or against any other Person. Such Indemnitee
shall cooperate with such Indemnifying Party in a reasonable manner, and at
the cost and expense of such Indemnifying Party, in prosecuting any subrogated
right or claim.
Section 4.05 Remedies Cumulative. The remedies provided in this Article IV
-------------------
shall be cumulative and shall not preclude assertion by any Indemnitee of any
other rights or the seeking of any and all other remedies against any
Indemnifying Party.
Section 4.06 Survival of Indemnities. The obligations of each of Premark and
-----------------------
Tupperware under this Article IV shall survive the sale or other transfer by
it of any assets or businesses or the assignment by it of any Liabilities,
with respect to any Loss of the other related to such assets, businesses or
Liabilities.
ARTICLE V
ACCESS TO INFORMATION
Section 5.01 Access to Information. From and after the Distribution Date,
---------------------
Premark shall afford to Tupperware and its Representatives reasonable access
(including using reasonable efforts to give access to
17<PAGE>
Persons or firms possessing information) and duplicating rights during normal
business hours to all records, books, contracts, instruments, computer data
and other data and information (collectively, "Information") within Premark's
possession or in the possession of a Premark Subsidiary relating to
Tupperware, any Tupperware Subsidiary, any Tupperware Assets or the Tupperware
Businesses, insofar as such access is reasonably required by Tupperware or any
Tupperware Subsidiary. Similarly, Tupperware shall afford to Premark and its
Representatives reasonable access (including using reasonable efforts to give
access to Persons or firms possessing Information) and duplicating rights
during normal business hours to Information within Tupperware's possession
relating to Premark or any Premark Subsidiary and insofar as such access is
reasonably required by Premark or any Premark Subsidiary. Information may be
requested under this Article V for, without limitation, audit, accounting,
claims, litigation and tax purposes, as well as for purposes of fulfilling
disclosure and reporting obligations and for performing this Agreement and the
transactions contemplated hereby.
Section 5.02 Production of Witnesses. After the Distribution Date, each of
-----------------------
Premark and Tupperware shall, and shall cause their respective Subsidiaries
to, use reasonable efforts to make available to the other party and its
Subsidiaries, upon written request, its directors, officers, employees and
agents as witnesses to the extent that any such Person may reasonably be
required (giving consideration to business demands of such Representatives) in
connection with any legal, administrative or other proceedings in which the
requesting party may from time to time be involved.
Section 5.03 Retention of Records. Except as otherwise required by law or
--------------------
agreed to in writing, each of Premark and Tupperware shall, and shall cause
each of their respective Subsidiaries to, retain for a period of at least
seven years following the Distribution Date, all significant Information
relating to the business of the other and the other's Subsidiaries. In
addition, after the expiration of such seven-year period, such Information
shall not be destroyed or otherwise disposed of at any time, unless, prior to
such destruction or disposal, (a) the party proposing to destroy or otherwise
dispose of such Information shall provide no less than 30 days' prior written
notice to the other, specifying in reasonable detail the Information proposed
to be destroyed or disposed of and (b) if a recipient of such notice shall
request in writing prior to the scheduled date for such destruction or
disposal that any of the Information proposed to be destroyed or disposed of
be delivered to such requesting party, the party proposing the destruction or
disposal shall promptly arrange for the delivery of such of the Information as
was requested at the expense of the party requesting such Information.
Section 5.04 Confidentiality. Each of Premark and Tupperware shall, and
---------------
shall cause each of their respective Subsidiaries and Representatives to,
hold, in strict confidence, all material Information concerning the other in
its possession or furnished by the other or the other's Representatives
pursuant to either this Agreement or any Ancillary Agreement (except to the
extent that such Information has been (a) in the public domain through no
fault of such party or (b) later lawfully acquired from other sources by such
party), and each party shall not release or disclose such Information to any
other Person, except its Representatives, unless compelled to disclose by
judicial or administrative process or, as advised by its counsel, by other
requirements of law.
ARTICLE VI
MISCELLANEOUS
-------------
Section 6.01 Complete Agreement; Construction. This Agreement and the
--------------------------------
Ancillary Agreements, including any schedules and exhibits hereto or thereto,
and other agreements and documents referred to herein, shall constitute the
entire agreement between the parties with respect to the subject matter hereof
and shall supersede all previous negotiations, commitments and writings with
respect to such subject matter. Notwithstanding any other provisions in this
Agreement to the contrary, in the event and to the extent that there shall be
a conflict between the provisions of this Agreement and the provisions of the
Employee Benefits and Compensation Allocation Agreement or the Tax Sharing
Agreement, the provisions of the Employee Benefits and Compensation Allocation
Agreement or the Tax Sharing Agreement, as appropriate, shall control.
18<PAGE>
Section 6.02 Survival of Agreements. Except as otherwise contemplated by
----------------------
this Agreement, all covenants and agreements of the parties contained in this
Agreement shall survive the Distribution Date.
Section 6.03 Expenses. All costs and expenses related to the Distribution
--------
shall be allocated between Premark and Tupperware as set forth on Schedule
6.03.
Section 6.04 Governing Law. This Agreement shall be governed by and
-------------
construed in accordance with the laws of the State of Delaware, without regard
to the principles of conflicts of laws thereof.
Section 6.05 Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be delivered by hand,
mailed by registered or certified mail (return receipt requested), or sent by
cable, telegram, telex or telecopy (confirmed by regular, first-class mail),
to the parties at the following addresses (or at such other addresses for a
party as shall be specified by like notice) and shall be deemed given on the
date on which such notice is received:
if to Premark:
Premark International, Inc.
1717 Deerfield Road
Deerfield, Illinois 60015
Attention: General Counsel
if to Tupperware:
Tupperware Corporation
P.O. Box 2353
Orlando, Florida 32802
Attention: General Counsel
Section 6.06 Dispute Resolution. Premark and Tupperware shall each appoint
------------------
two members from their managerial staffs to serve on a joint committee (the
"Dispute Resolution Committee"). The Dispute Resolution Committee shall meet
at either Premark's or Tupperware's offices, whichever is more appropriate in
light of the issue to be discussed, at such time as either party may demand in
writing, for the purpose of resolving any dispute arising under this Agreement
(other than a dispute arising under this Agreement in connection with Section
3.02 which shall be resolved as provided for on Schedules 3.02(a), 3.02(b) or
3.02(c), as appropriate) or the Ancillary Agreements. If the Dispute
Resolution Committee is unable to resolve any dispute submitted to it by any
party hereto within 30 days after such submission, the Dispute Resolution
Committee shall refer the issue to the Chief Executive Officers of Premark and
Tupperware for resolution. If such officers are unable to resolve such dispute
within fifteen days after referral, such dispute shall be referred to binding
arbitration as provided for in Section 6.07. No such dispute shall be the
subject of arbitration or other formal proceeding between the parties hereto
before being considered by the Dispute Resolution Committee and the Chief
Executive Officers of Premark and Tupperware.
Section 6.07 Binding Arbitration. (a) Any controversy, dispute or claim
-------------------
(whether lying in contract or tort) between or among the parties arising out
of or related to this Agreement (other than a dispute arising under this
Agreement in connection with Section 3.02 which shall be resolved as provided
for on Schedules 3.02(a), 3.02(b) or 3.02(c), as appropriate) or the Ancillary
Agreements shall, after the dispute resolution process set forth in Section
6.06 has been completed, be submitted to arbitration in accordance with this
Section 6.07.
(b) Each such controversy, dispute or claim submitted by a party to
arbitration shall be heard by an arbitration panel composed of three
arbitrators, in accordance with the following provisions. Premark and
Tupperware shall each appoint one arbitrator within fifteen days after the
matter has been submitted to arbitration. If any party fails to appoint its
arbitrator within such fifteen day period, any party may apply to the American
Arbitration Association (the "AAA") to appoint an arbitrator on behalf of the
party that has failed to
19<PAGE>
appoint its arbitrator. The two arbitrators appointed by, or on behalf of, the
parties shall jointly appoint a third arbitrator, who shall chair the
arbitration panel (the "Chairman"). If the arbitrators appointed by, or on
behalf of, the parties do not succeed in appointing a Chairman within fifteen
days after the latter of the two arbitrators appointed by, or on behalf of,
the parties has been appointed, the Chairman shall, at the request of either
party, be appointed by the AAA. If for any reason an arbitrator is unable to
perform his or her function, he or she shall be replaced and a substitute
shall be appointed in the same manner as the arbitrator replaced.
(c) Except as otherwise stated herein, arbitration proceedings shall be
conducted in accordance with the Commercial Arbitration Rules of the AAA. In
any arbitration proceeding hereunder: (i) proceedings shall, unless otherwise
agreed by the parties, be held in Orlando, Florida; (ii) the arbitration panel
shall have no power to award punitive damages and shall be bound by all
statutes of limitation which would otherwise be applicable in a judicial
action brought by a party; and (iii) the decision of a majority of the
arbitrators (or the Chairman if there is no such majority) shall be final and
binding on the parties to this Agreement and shall be enforceable in any court
of competent jurisdiction. The parties hereby waive any rights to appeal or to
review of such decision by any court or tribunal and also waive any objections
to such enforcement. THE PARTIES HEREBY AGREE TO WAIVE ALL RIGHTS TO TRIAL
BY JURY WITH RESPECT TO ANY CONTROVERSY, DISPUTE OR CLAIM SUBMITTED TO
ARBITRATION UNDER THIS AGREEMENT.
(d) Notice preliminary to, in conjunction with, or incident to any
arbitration proceeding may be sent to the parties by registered or certified
mail (return receipt requested) at the address set forth in Section 6.05 and
personal service is hereby waived. The arbitrators shall award recovery of all
costs and fees incurred in connection with the arbitration and the proceeding,
and obtaining any judgment related thereto, of each disputed matter (including
reasonable attorney's fees and expenses and arbitrator's fees and expenses and
court costs, in each case, with respect to such disputed matter) to the party
that substantially prevails in the arbitration proceeding with respect to such
disputed matter.
(e) No provision of this Section 6.07 shall limit the right of any party to
this Agreement to exercise self-help remedies such as set-off, or to obtain
provisional, equitable or ancillary remedies from a court of competent
jurisdiction before, after, or during the pendency of any arbitration or other
proceeding. The exercise of a remedy does not waive the right of either party
to resort to arbitration.
Section 6.08 Amendments. This Agreement may not be modified or amended
----------
except by an agreement in writing signed by the parties.
Section 6.09 Successors and Assigns. The rights under this Agreement may not
----------------------
be assigned and duties may not be delegated by any party without the written
consent of the other parties, which consent shall not be unreasonably
withheld. This Agreement and all of the provisions hereof shall be binding
upon and inure to the benefit of the parties and their respective successors
and permitted assigns.
Section 6.10 Termination. This Agreement may be terminated and the
-----------
Distribution abandoned at any time prior to the Distribution Date by and in
the sole discretion of the Premark Board without the approval of Tupperware or
of Premark's stockholders. In the event of such termination, no party shall
have any liability of any kind to any other party on account of such
termination.
Section 6.11 No Third Party Beneficiaries. Except for the provisions of
----------------------------
Article IV relating to Indemnitees and subsection 3.06(f) relating to
directors and officers, this Agreement is solely for the benefit of the
parties hereto and their respective Affiliates and should not be deemed to
confer upon third parties (including any employee of Premark or Tupperware or
of any Premark or Tupperware Subsidiary) any remedy, claim, reimbursement,
claim of action or other right in excess of those existing without reference
to this Agreement.
Section 6.12 Titles and Headings. Titles and headings to sections herein are
-------------------
inserted for convenience of reference only and are not intended to be part of
or to affect the meaning or interpretation of this Agreement.
20<PAGE>
Section 6.13 Legal Enforceability. Any provision of this Agreement which is
--------------------
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction. Without
prejudice to any rights or remedies otherwise available to any party hereto,
each party hereto acknowledges that damages would be an inadequate remedy for
any breach of the provisions of this Agreement and agrees that the obligations
of the parties hereunder shall be specifically enforceable.
Section 6.14 No Waivers. No failure by any party hereto to take any action
----------
or assert any right hereunder shall be deemed to be a waiver of such right in
the event of the continuation or repetition of the circumstances giving rise
to such right, unless expressly waived in writing by the party against whom
the existence of such waiver is asserted.
Section 6.15 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 6.16 Performance. Each party hereto shall cause to be performed, and
-----------
hereby guarantees the performance of, all actions, agreements and obligations
set forth herein to be performed by any Subsidiary or Affiliate of such party.
21<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
PREMARK INTERNATIONAL, INC.
By: _________________________________
Name:
Title:
TUPPERWARE CORPORATION
By: _________________________________
Name:
Title:
DART INDUSTRIES INC.
By: _________________________________
Name:
Title:
22<PAGE>
SCHEDULE 3.02(a) DIVIDEND PAYMENT
(a) Within 15 business days after the Cut-off Date, Premark shall prepare
and cause Price Waterhouse LLP ("PW") to perform agreed-upon procedures (at
Premark's sole expense) on the Statement of Management Net Assets (the
"Statement") of the Premark Businesses as of the Cut-off Date which shall be
prepared in accordance with generally accepted accounting principles, as set
forth in the Premark Corporate Accounting Manual, and on a basis consistent
with the methods and practices employed in the preparation and presentation of
the Premark historical consolidated financial statements.
(b) Within said 15 days, Premark shall deliver to Tupperware and Dart a copy
of the Statement together with PW's signed report thereon. Not later than the
fifth business day after Tupperware's and Dart's receipt of the Statement,
Dart shall pay a cash dividend to Premark based upon the Statement, in an
amount such that the Net Debt (as defined below) of the Premark Businesses as
of the Cut-off Date is $50 million; provided, however, that such dividend
payment shall be reduced by the amount, if any, by which Premark's Management
Net Assets (as defined below) exceeds $895 million. It is expressly understood
that the dividend shall be paid notwithstanding the fact that Tupperware may
dispute the Statement pursuant to subparagraph (c) below.
(c) Not later than five business days after receipt of the Statement,
Tupperware may notify Premark that it disputes any item or amount reflected in
the Statement, based solely upon the application of the accounting principles,
methods and practices described in paragraph (a) of this Schedule 3.02(a),
specifying in reasonable detail, the points of disagreement and the amount
thereof. Premark and Tupperware shall use their best efforts to resolve any
disputes as promptly as possible, but in no event later than 60 days after the
Cut-off Date. If this effort fails, Arthur Andersen & Co. shall forthwith be
engaged as an arbitrator (the "Arbitrator") to resolve (based solely on
presentations by Premark, PW, and Tupperware and not by independent review or
audit) all points of disagreement with respect to the Statement. All
determinations made by the Arbitrator shall be final, conclusive and binding
with respect to the Statement. The fees and expenses of the Arbitrator shall
be allocated to Tupperware and Premark by the Arbitrator based on Arbitrator's
judgment of the relative merits of the issues.
(d) For purposes of this Schedule 3.02(a), "Net Debt" means consolidated
short-term borrowings, current portions of long-term debt, and long-term debt,
less total cash and cash equivalents of Premark (including Tupperware).
Management Net Assets consists of management assets less management
liabilities (as described in Section 401 of the Premark Corporate Accounting
Manual) of the Premark Businesses.
(e) Any reduction in the dividend determined by the Arbitrator shall be paid
by Premark to Dart not later than five business days after the receipt of such
determination from the Arbitrator together with a copy of the Statement as
determined by the Arbitrator, together with interest, at a per annum rate of
interest equal to the prime rate than in effect at Citibank, N.A., computed
from the date of payment of the dividend through the date immediately
preceding the date of repayment.
(f) In the event that either party to this Agreement believes that any
extraordinary or unusual event has adversely affected Net Debt as of the Cut-
off Date, such party may notify the other parties to this Agreement and the
Chairman of Premark of such event, together with appropriate detail, not later
than 15 days after the Cut-off Date. Within 5 business days of receipt of such
notice, the Chairman of Premark shall evaluate the impact of such event(s) on
the Net Debt as of the Cut-off Date, determine the adjustment to be made to
the cash dividend, if any, and notify the parties. In the event that such
determination affects the amount of the cash dividend in paragraph (b) above,
either Premark shall repay Dart any amount determined to be an overpayment of
the cash dividend or Dart shall pay Premark any amount determined to be an
underpayment of the cash dividend, as the case may be, as a consequence of the
impact of the extraordinary or unusual event. Any such payment shall include
interest at a per annum rate of interest equal to the prime rate then in
effect at Citibank, N.A., computed from the date of payment of the dividend
through the date immediately preceding the date of payment of any amount
contemplated by this paragraph (f).
(g) Tupperware shall fund 65% of the amount necessary to pay the dividend
declared upon the common stock of Premark on May 1, 1996.
FORM OF
TAX SHARING AGREEMENT
BY AND BETWEEN
PREMARK INTERNATIONAL, INC.
AND
TUPPERWARE CORPORATION
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I................................................................... -3-
DEFINITIONS................................................................. -3-
"1995 Fiscal Year"........................................................ -3-
"1995 Tupperware Estimated Tax Benefit"................................... -3-
"1996 Fiscal Year"........................................................ -3-
"AAA"..................................................................... -3-
"Affiliate"............................................................... -3-
"Carryover" and "Carryback"............................................... -3-
"Chairman"................................................................ -3-
"Code".................................................................... -4-
"Compromising Party"...................................................... -4-
"Cutoff Date"............................................................. -4-
"Deemed Tax Reduction".................................................... -4-
"Dispute Resolution Committee"............................................ -4-
"Distribution"............................................................ -4-
"Distribution Agreement".................................................. -4-
"Distribution Date"....................................................... -4-
"DKI"..................................................................... -4-
"DKI Liability"........................................................... -4-
"DKI Refund".............................................................. -4-
"Foreign Taxes"........................................................... -4-
"Granting Party".......................................................... -4-
"Group"................................................................... -5-
"Indemnification Payment"................................................. -5-
"Indemnified Party"....................................................... -5-
"Indemnifying Party"...................................................... -5-
"Joint Contest"........................................................... -5-
"Kraft Agreement"......................................................... -5-
"Law"..................................................................... -5-
"Liable Party"............................................................ -5-
"Non-Compromising Party".................................................. -5-
"Non-Proposing Party"..................................................... -5-
"Participating Party"..................................................... -5-
"Person".................................................................. -5-
"Pre-Distribution Period"................................................. -6-
"Preparing Party"......................................................... -6-
"Prime Rate".............................................................. -6-
"Post-Distribution Period"................................................ -6-
"Premark"................................................................. -6-
"Premark Group"........................................................... -6-
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
"Premark Tax Reduction".................................................. -6-
"Proposing Party"........................................................ -6-
"Restructuring Taxes".................................................... -6-
"Return"................................................................. -7-
"Ruling"................................................................. -7-
"Ruling Request"......................................................... -7-
"Separate Contest"....................................................... -7-
"Service"................................................................ -7-
"State Taxes"............................................................ -7-
"Stereo Business"........................................................ -7-
"Straddle Period"........................................................ -8-
"Taxes".................................................................. -8-
"Tax Adjustment"......................................................... -8-
"Tax Authority".......................................................... -8-
"Tax Benefit"............................................................ -8-
"Tax Contest"............................................................ -9-
"Tax Period"............................................................. -9-
"Tax Records"............................................................ -9-
"Transaction Steps"...................................................... -9-
"Tupperware"............................................................. -9-
"Tupperware 1995 Esimated Tax"........................................... -9-
"Tupperware 1995 Final Tax".............................................. -9-
"Tupperware 1995 Final Tax Benefit"...................................... -9-
"Tupperware Carryback"................................................... -10-
"Tupperware Group"....................................................... -10-
"United States Federal Taxes"............................................ -10-
ARTICLE II................................................................. -10-
ALLOCATION OF TAX LIABILITIES.............................................. -10-
2.01 United States Federal Tax Liabilities............................... -10-
2.02 State Tax Liabilities............................................... -12-
2.03 Foreign Tax Liabilities............................................. -15-
2.04 Restructuring Taxes................................................. -17-
2.05 Liability Arising from Prior Tax Sharing Agreement.................. -18-
ARTICLE III................................................................ -20-
PREPARATION AND FILING OF TAX RETURNS...................................... -20-
3.01 General............................................................. -20-
3.02 Joint Returns....................................................... -20-
3.03 Method of Pro Ration For Straddle Periods........................... -22-
3.04 Tax Accounting Practices............................................ -22-
3.05 Right to Review Returns............................................. -23-
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
ARTICLE IV................................................................ -23-
TAX REFUNDS, CARRYOVERS AND CARRYBACKS.................................... -23-
4.01 Refunds............................................................ -23-
4.02 Carryovers and Carrybacks.......................................... -25-
ARTICLE V................................................................. -26-
TAX PAYMENTS.............................................................. -26-
5.01 Payment of Consolidated Federal Income Tax for Pre-Distribution Pe-
riods.................................................................. -26-
5.02 Payment of State and Foreign Taxes for Which Premark has Filing Re-
sponsibility........................................................... -28-
5.03 Payment of State and Foreign Taxes for Which Tupperware has Filing
Responsibility......................................................... -28-
5.04 State Tax Returns for 1986 through 1990............................ -28-
5.05 Indemnification Payments........................................... -29-
ARTICLE VI................................................................ -30-
TAX RECORDS: COOPERATION.................................................. -30-
6.01 Tax Records........................................................ -30-
6.02 Cooperation........................................................ -31-
ARTICLE VII............................................................... -31-
TAX AUDITS AND APPEALS.................................................... -31-
7.01 Notice............................................................. -31-
7.02 Control of Audits and Appeals...................................... -32-
7.03 Consent to Settlements in Joint Contests........................... -33-
7.04 Expenses........................................................... -34-
ARTICLE VIII.............................................................. -34-
DISPUTE RESOLUTION........................................................ -34-
8.01 Good-Faith Negotiation............................................. -34-
8.02 Binding Arbitration................................................ -35-
ARTICLE IX................................................................ -37-
MISCELLANEOUS MATTERS..................................................... -37-
9.01 No Inconsistent Actions............................................ -37-
9.02 Amendment and Waiver............................................... -39-
9.03 Tax Allocation Agreements.......................................... -39-
</TABLE>
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<PAGE>
<TABLE>
<S> <C>
9.04 Entire Agreement; Inconsistent Provisions........................... -40-
9.05 Affiliate Obligations............................................... -40-
9.06 Further Action...................................................... -40-
9.07 Time for Notice..................................................... -40-
9.08 Notices............................................................. -40-
9.09 Remedies............................................................ -41-
9.10 Successors and Assigns.............................................. -41-
9.11 Severability........................................................ -42-
9.12 Counterparts........................................................ -42-
9.13 Descriptive Headings................................................ -42-
9.14 No Third-Party Beneficiaries........................................ -42-
9.15 Construction........................................................ -42-
9.16 Form of Payments and Late Payments.................................. -42-
9.17 Treatment of Payments............................................... -43-
9.18 Governing Law....................................................... -43-
9.19 Confidentiality..................................................... -43-
</TABLE>
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<PAGE>
TAX SHARING AGREEMENT
---------------------
THIS TAX SHARING AGREEMENT ("Agreement") is made and entered into as of
__________, 1996, by and between Premark International Inc., a Delaware
corporation ("Premark") and Tupperware Corporation, a Delaware corporation
("Tupperware"), on behalf of themselves and their respective Affiliates (as
defined below).
RECITALS
--------
WHEREAS, the Premark Board has determined that it is appropriate and
desirable to distribute all outstanding shares of Tupperware common stock on a
pro rata basis to the holders of the Premark common stock (the "Distribution")
- --- ----
in a transaction that will qualify as a tax-free distribution for federal
income tax purposes under Section 355 of the Code (as defined below); and
WHEREAS, Tupperware and its Affiliates will accordingly cease to be members
of the affiliated group (within the meaning of Section 1504(a) of the Code) of
which Premark is the common parent, effective as of the Distribution Date; and
WHEREAS, Premark and Tupperware have set forth the principal corporate
transactions required to effect such Distribution in the Distribution
Agreement between Premark and Tupperware dated as of the date hereof, and to
which this Agreement is attached as an exhibit (the "Distribution Agreement");
and
WHEREAS, Premark and Tupperware desire to provide for and agree upon the
allocation of liabilities for Taxes with respect to the parties prior to,
arising out of, and subsequent to the Distribution; and
WHEREAS, the parties hereto also desire to provide for: (1) the preparation
and filing of Tax Returns along with the payment of Taxes shown due and
payable thereon, (2) the retention and maintenance of relevant records
necessary to prepare and file appropriate Tax Returns, as well as the
provision for appropriate access to those records by the parties to this
Agreement, (3) the conduct of audits, examinations and proceedings by
appropriate governmental entities which could result in a redetermination of
Taxes of the parties to this Agreement, (4) the treatment of refunds of Taxes
and Carryovers and Carrybacks of the parties, (5) the cooperation of all
parties with one another in order to fulfill their duties and responsibilities
under this Agreement and under the Code and other applicable Law, and (6) any
other matters related to Taxes.
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises, covenants and conditions hereinafter contained, the parties hereto
agree as follows:
ARTICLE I
---------
DEFINITIONS
-----------
As used in this Agreement, (including the recitals hereof), the following
terms shall have the following meanings:
"1995 Fiscal Year" has the meaning set forth in Section 5.01 below.
"1995 Tupperware Estimated Tax Benefit" has the meaning set forth in
Section 5.01(a) below.
"1996 Fiscal Year" has the meaning set forth in Section 5.01 below.
"AAA" has the meaning set forth in Section 8.02(b) below.
"Affiliate" means any Person that directly or indirectly controls, is
under the control of, or is under common control with, the Person in
question. "Control" of a Person means the possession, directly or
indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through ownership or voting
securities, by contract or otherwise. Except as otherwise provided herein,
the term "Affiliate" shall refer to Affiliates of a Person determined
immediately after the Distribution Date.
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<PAGE>
"Carryover" and "Carryback" mean any net operating loss, net capital
loss, excess tax credit, or other similar Tax item which may or must be
carried forward or back, respectively, from one Tax Period to another under
the Code or other applicable Laws.
"Chairman" has the meaning set forth in Section 8.02(b) below.
"Code" means the U. S. Internal Revenue Code of 1986, as amended, or any
successor law.
"Compromising Party" has the meaning set forth in Section 7.03(b) below.
"Cutoff Date" has the meaning set forth in Section 3.03 below.
"Deemed Tax Reduction" has the meaning set forth in Section 4.02(c)
below.
"Dispute Resolution Committee" has the meaning set forth in Section 8.01
below.
"Distribution" has the meaning set forth in the Recitals above.
"Distribution Agreement" has the meaning set forth in the Recitals above.
"Distribution Date" means the effective date of the Distribution as set
forth in the Distribution Agreement.
"DKI" has the meaning set forth in Section 2.05(a) below.
"DKI Liability" has the meaning set forth in Section 2.05(c) below.
"DKI Refund" has the meaning set forth in Section 2.05(c) below.
"Foreign Taxes" means any Taxes imposed or collected by any foreign
government, and the term "Foreign Tax" means any one of the foregoing
Foreign Taxes.
"Granting Party" has the meaning set forth in Section 7.02(b)(1) below.
"Group" means each of the Premark Group and the Tupperware Group whenever
no distinction is otherwise required between them.
"Indemnification Payment" means a payment subject to Section 5.05 below.
"Indemnified Party" has the meaning set forth in Section 5.05 below.
"Indemnifying Party" has the meaning set forth in Section 5.05 below.
"Joint Contest" means any Tax Contest seeking a redetermination of Taxes
which involves or could involve one or more members of both the Premark
Group and the Tupperware Group.
"Kraft Agreement" has the meaning set forth in Section 2.05(a) below.
"Law" means the law of any governmental entity or political subdivision
thereof, other than the Code, relating to any Tax.
"Liable Party" has the meaning set forth in Section 2.01(c)(3) below.
"Non-Compromising Party" has the meaning set forth in Section 7.03(b)
below.
"Non-Proposing Party" has the meaning set forth in Section 9.01 below.
"Participating Party" has the meaning set forth in Section 7.02(b)(1)
below.
"Person" means any individual and any partnership, joint venture,
corporation, limited liability company, trust, unincorporated organization
or other business entity formed or operating under United States or foreign
law.
"Pre-Distribution Period" means any Tax Period ending on or before the
Distribution Date, and, in the case of any Tax Period that begins before
and ends after the Distribution Date, the portion of such Tax Period ending
on the Distribution Date.
"Preparing Party" has the meaning set forth in Section 3.04 below.
"Prime Rate" means the prime interest rate published in the Wall Street
Journal from time to time.
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<PAGE>
"Post-Distribution Period" means any Tax Period beginning after the
Distribution Date, and in the case of any Tax Period that begins before and
ends after the Distribution Date, the portion of such Tax Period ending
after the Distribution Date.
"Premark" has the meaning set forth in the Recitals above.
"Premark Group" means Premark and its Affiliates.
"Premark Tax Reduction" has the meaning set forth in Section 4.02(b)
below.
"Proposing Party" has the meaning set forth in Section 9.01 below.
"Restructuring Taxes" means any Taxes incurred by or imposed on (or
deemed to be incurred or imposed on) either Premark or Tupperware (or their
respective Affiliates) resulting from any of the Transaction Steps
(including, without limitation, any United States federal income Taxes
attributable to the recognition of intercompany gains or any other deferred
Taxes that must be taken into account as a result of any of the Transaction
Steps). For purposes of the preceding sentence, with respect to any
intercompany gain or other item of income realized or taken into account as
the result of any of the Transaction Steps, such item of gain or income
shall be deemed to result in Restructuring Taxes equal to the product
obtained by multiplying (i) the amount of such item of gain or income by
(ii) the highest applicable marginal Tax rate under the Code or other
applicable Law.
"Return" means any report of Taxes due, any information return with
respect to Taxes, or any other similar report, statement, declaration, or
document required to be filed under the Code or other Laws, any claims for
refund of Taxes paid, and any amendments or supplements to any of the
foregoing.
"Ruling" means the private letter ruling issued by the Service in reply
to the Ruling Request (and, in the event Premark and Tupperware join in
requesting an amendment or supplement thereto, such amendment or
supplemental ruling).
"Ruling Request" means the private letter ruling request filed by the
parties with the Service on December 15, 1995 (as modified or supplemented
by any materials submitted to the Service), seeking rulings that, inter
alia, the Distribution will qualify for federal income tax purposes as a
tax-free distribution under Section 355 of the Code.
"Separate Contest" means a Tax Contest which involves (i) only Premark
and members of the Premark Group, or (ii) only Tupperware and members of
the Tupperware Group.
"Service" means the United States Internal Revenue Service and any
successor department, agency or organization of the United States.
"State Taxes" means all Taxes imposed or collected by any state or local
government in the United States (including possessions and territories of
the United States), and the term "State Tax" means any one of the foregoing
State Taxes.
"Stero Business" has the meaning set forth in Section 9.01(b) below.
"Straddle Period" means (i) any Tax Period that begins before and ends
after the Distribution Date, (ii) any Short Period that ends on the
Distribution Date and (iii) any Short Period that begins on the first day
following the Distribution Date. The term "Short Period" means any Tax
Period which is based on an accounting period which is shorter than the
normal accounting period used for determining such Tax (e.g., in the case
of the United States federal income Tax, any Tax Period of less than one
year).
"Taxes" means all federal, state, territorial, local, foreign and other
net income, gross income, gross receipts, sales, use, value added, ad
valorem, transfer, franchise, profits, license, lease, service, service
use, withholding, payroll, employment, unemployment insurance, workers
compensation, social security, excise, severance, stamp, business license,
occupation, premium, property, environmental, windfall profits, customs,
duties, alternative minimum, estimated or other taxes, fees, premiums,
assessments or charges or any kind whatever imposed or collected by any
governmental entity or political subdivision thereof, which any member of
the Premark Group or the Tupperware Group is required to pay, collect or
withhold, together with any interest and any penalties, additions to Tax or
additional amounts with respect thereto, and the term "Tax" means any one
of the foregoing Taxes.
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<PAGE>
"Tax Adjustment" has the meaning provided in Section 2.01(c) below.
"Tax Authority" means, with respect to any Tax, the governmental entity
or political subdivision thereof that imposes such Tax and the agency (if
any) charged with the determination or collection of such Taxes for such
entity or subdivision.
"Tax Benefit" means any refund, credit Carryover, Carryback or other
reduction in otherwise required Tax payments. Such term does not include a
decrease in any Tax in one Tax Period that results from a Tax Adjustment in
another Tax Period, such as an increase in a deduction for depreciation
that results from a determination that, in a previous Tax Period, an
expenditure is capitalized and not deducted, or an item of gain is
recognized.
"Tax Contest" means an audit, review, examination, or any other
administrative or judicial proceeding (including without limitation any
determination with respect to a claim for refund) with the purpose or
effect of redetermining Taxes of any member of either the Premark Group or
the Tupperware Group for
(1) any Pre-Distribution Period,
(2) any Straddle Period, or
(3) any Post-Distribution Period, if such proceeding could result in
any Tax Adjustment or Tax Benefit for any Pre-Distribution Period
or Straddle Period (without regard to whether such matter was
initiated by an appropriate Tax Authority or in response to a
claim for a refund of Taxes).
"Tax Period" means, with respect to any Tax, the period for which the Tax
is reported as provided under the Code or other applicable Laws,
"Tax Records" has the meaning set forth in Section 6.01(a) below.
"Transaction Steps" means the transaction steps as set forth in Articles
II and III of the Distribution Agreement.
"Tupperware" has the meaning set forth in the Recitals above.
"Tupperware 1995 Estimated Tax" has the meaning set forth in Section
5.01(a) below.
"Tupperware 1995 Final Tax" has the meaning set forth in Section 5.01(a)
below.
"Tupperware 1995 Final Tax Benefit" has the meaning set forth in Section
5.01(a) below.
"Tupperware Carryback" has the meaning set forth in Section 4.02(a)
below.
"Tupperware Group" means Tupperware and its Affiliates; provided,
however, that for any Pre-Distribution Period, Dart Italia SpA and Dart
Industries Canada Limited shall be treated as included in the Tupperware
Group.
"United States Federal Taxes" means all Taxes imposed or collected by the
United States Federal Government, and the term "United States Federal Tax"
means any one of the foregoing United States Federal Taxes.
Any capitalized term not otherwise defined in this Agreement shall have
the meaning ascribed to it in the Distribution Agreement.
ARTICLE II
----------
ALLOCATION OF TAX LIABILITIES
-----------------------------
2.01 United States Federal Tax Liabilities.
-------------------------------------
(a) Subject to Sections 2.04 and 2.05, Premark and its Affiliates shall
be liable for, and shall indemnify and hold Tupperware and the Tupperware
Group harmless from:
(1) any United States Federal Taxes for any Pre-Distribution Period
imposed on Premark, Tupperware or their respective Affiliates, but only to
the extent such Taxes arise from the income, profits, or transactions of,
or are otherwise attributable to, Premark or any member of the Premark
Group; and
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<PAGE>
(2) all United States Federal Taxes imposed on, or with respect to,
Premark and its Affiliates for any Post-Distribution Period.
(b) Subject to Sections 2.04 and 2.05, Tupperware and its Affiliates
shall be liable for, and shall indemnify and hold Premark and the Premark
Group harmless from:
(1) any United States Federal Taxes for any Pre-Distribution Period
imposed on Premark, Tupperware or their respective Affiliates, but only to
the extent such Taxes arise from the income, profits, or transactions of,
or are otherwise attributable to, Tupperware or any member of the
Tupperware Group; and
(2) all United States Federal Taxes imposed on, or with respect to,
Tupperware and its Affiliates for any Post-Distribution Period.
(c) For purposes of this Section 2.01, if, as a result of any Tax
Contest, there is any redetermination of United States Federal Taxes on a
consolidated basis for any Pre-Distribution Period, the determination of
whether additional United States Federal Taxes imposed on Premark or
Tupperware (or their respective Affiliates) for any Pre-Distribution Period
shall be deemed to arise from the income, profits or transactions of, or
are otherwise attributable to, Premark or Tupperware (or their respective
Affiliates), shall be made pursuant to the following principles:
(1) Each party shall compute the difference between (A) the recomputed
consolidated federal tax liability for each Pre-Distribution Period
affected, taking into account solely those adjustments which relate to or
arise out of the income, profits or activities of such party or its
Affiliates, and (B) the consolidated federal tax liability of the
consolidated group for such Tax Period based on the Tax Return as
originally filed (the difference between (A) and (B) shall be referred to
herein as a party's "Tax Adjustment").
(2) If each party's Tax Adjustment for the Tax Period is greater than
or equal to zero, each party shall then be liable for that portion of
additional Taxes equal to the amount obtained by multiplying the additional
Taxes by a percentage equal to such party's Tax Adjustment divided by the
aggregate Tax Adjustment of the parties.
(3) If one party's Tax Adjustment for the Tax Period is greater than
zero (the "Liable Party") and the other party's Tax Adjustment for the Tax
Period is less than zero (the "Other Party"), the Liable Party shall be
responsible for all of the additional Taxes owed for such Tax Period. In
addition, the Liable Party shall make an Indemnification Payment to the
Other Party equal to the Other Party's Tax Adjustment for such Tax Period
(for this purpose, the Tax Adjustment of the Other Party shall be deemed to
be positive); provided, however, that such Indemnification Payment shall
not exceed the amount by which the Liable Party's Tax Adjustment exceeds
the additional Taxes for the Tax Period. Further, the Other Party shall be
entitled to any refund received in respect of such Tax Period.
(4) If each party's Tax Adjustment for the Tax Period is less than or
equal to zero, each party shall be entitled to that portion of any refund
received in respect of such Tax Period equal to the amount obtained by
multiplying the amount of the refund by a percentage equal to such party's
Tax Adjustment divided by the aggregate Tax Adjustment of the parties.
2.02 State Tax Liabilities. Subject to sections 2.04 and 2.05, each party's
---------------------
liability for State Taxes shall be determined under this Section 2.02.
(a) Premark and its Affiliates shall be liable for, and shall indemnify
and hold Tupperware and the Tupperware Group harmless from, the following
State Taxes:
(1) in the case of any Pre-Distribution Period: (A) any State Taxes
imposed with respect to a separate Tax Return filed by Premark or any member
of the Premark Group for such Tax Period, and (B) with respect to any joint,
combined, consolidated or unitary Tax Return filed for such Tax Period, any
State Taxes for
-5-
<PAGE>
such Tax Period, whether imposed on Premark or Tupperware (or their respective
Affiliates), but only to the extent such Taxes arise from the income, profits,
or transactions of, or are otherwise attributable to, Premark or any member of
the Premark Group; and
(2) any State Taxes imposed on, or with respect to, Premark or any
member of the Premark Group for any Post-Distribution Period.
(b) Tupperware and its Affiliates shall be liable for, and shall indemnify
and hold Premark and the Premark Group harmless from, the following State
Taxes:
(l) in the case of any Pre-Distribution Period: (A) any State Taxes
imposed with respect to a separate Tax Return filed by Tupperware or any
member of the Tupperware Group for such Tax Period, and (B) with respect any
joint, combined, consolidated or unitary Tax Return filed for such Tax Period,
any State Taxes for such Tax Period, whether imposed on Premark or Tupperware
(or their respective Affiliates), but only to the extent such Taxes arise from
the income, profits, or transactions of, or are otherwise attributable to,
Tupperware or any member of the Tupperware Group; and
(2) any State Taxes imposed on, or with respect to, Tupperware or any
member of the Tupperware Group for any Post-Distribution Period.
(c) For purposes of Section 2.02(a)(1)(B) and 2.02(b)(1)(B) hereof, the
determination of whether additional State Taxes for any Pre-Distribution
Period shall be deemed to arise from the income, profits or transactions of,
or to otherwise be attributable to, a party, shall be made pursuant to the
following principles:
(1) Each party shall compute the difference between (A) the recomputed
net taxable income (computed in accordance with the rules applied by the state
in question) for each Pre-Distribution Period affected, and (B) the net
taxable income of its Group for such Tax Period based on the State Tax Return
as originally filed (the difference between (A) and (B) shall be referred to
herein as a party's "State Tax Adjustment").
(2) If each party's State Tax Adjustment for the Tax Period is greater
than or equal to zero, each party shall then be liable for that portion of
additional Taxes equal to the amount obtained by multiplying the additional
State Taxes by a percentage equal to such party's State Tax Adjustment divided
by the aggregate State Tax Adjustment of the parties.
(3) If one party's State Tax Adjustment for the Tax Period is greater
than zero and the other party's State Tax Adjustment for the Tax Period is
less than zero, the liable party shall be responsible for all of the
additional Taxes owed for such Tax Period (provided, however, that such party
shall not be liable for making any payment to the other party in respect of
such other party's negative State Tax Adjustment). In addition, the other
party shall be entitled to any refund received in respect of such Tax Period.
(4) If each party's State Tax Adjustment for the Tax Period is less than
or equal to zero, each party shall be entitled to that portion of any refund
received in respect of such Tax Period equal to the amount obtained by
multiplying the amount of the refund by a percentage equal to such party's
State Tax Adjustment divided by the aggregate State Tax Adjustment of the
parties.
(d) For purposes of determining liability for State Taxes under this
Section 2.02, for any Pre-Distribution Period during which the assets and
business of Wilsonart International, Inc. or the West Bend Company constituted
a division of Dart Industries Inc., Wilsonart International, Inc. and The West
Bend Company shall be treated as separate entities included within the Premark
Group.
(e) Notwithstanding anything to the contrary above, with respect to any
State franchise Tax that is due and payable after the Cutoff Date, the party
legally responsible for filing the Return on which such Tax is reported shall
be liable for, and shall indemnify and hold the other party harmless from,
such Tax.
(f) Notwithstanding anything to the contrary above, with respect to any
joint, combined, consolidated or unitary State Tax Return for any Pre-
Distribution Period, if Premark or Tupperware (or any of their respective
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<PAGE>
Affiliates) is required to file an amended Return (or Returns) on a separate
company basis, each Person filing such a separate Return shall be liable for,
and shall hold the other parties to this Agreement harmless from, any Taxes
owed with respect to such separate Return (or Returns).
2.03 Foreign Tax Liabilities.
-----------------------
(a) Subject to Sections 2.04 and 2.05, each party's liability for Foreign
Taxes shall be determined under this Section 2.03(a).
(1) Premark and its Affiliates shall be liable for, and shall indemnify
and hold Tupperware and the Tupperware Group harmless from, the following
Foreign Taxes:
(A) in the case of any Pre-Distribution Period: (i) any Foreign Taxes
imposed with respect to a separate Tax Return filed by Premark or any member
of the Premark Group for such Tax Period, and (ii) with respect to any joint,
combined, consolidated or unitary Tax Return filed for such Tax Period, any
Foreign Taxes for such Tax Period imposed on Premark or Tupperware (or their
respective Affiliates) but only to the extent such Taxes arise from the
income, profits, or transactions of, or are otherwise attributable to, Premark
or any member of the Premark Group; and
(B) any Foreign Taxes imposed on, or with respect to, Premark or any
member of the Premark Group for any Post-Distribution Period.
(2) Tupperware and its Affiliates shall be liable for, and shall
indemnify and hold Premark and the Premark Group harmless from, the following
Foreign Taxes:
(A) in the case of any Pre-Distribution Period: (i) any Foreign Taxes
imposed with respect to a separate Tax Return filed by Tupperware or any
member of the Tupperware Group for such Tax Period, and (ii) with respect to
any joint, combined, consolidated or unitary Tax Return filed for such Tax
Period, any Foreign Taxes for such Tax Period imposed on Premark or Tupperware
(or their respective Affiliates) but only to the extent such Taxes arise from
the income, profits, or transactions of, or are otherwise attributable to,
Tupperware or any member of the Tupperware Group; and
(B) any Foreign Taxes imposed on, or with respect to Tupperware or any
member of the Tupperware Group for any Post-Distribution Period.
(3) For purposes of Section 2.03(a)(1)(A)(ii) and 2.03(a)(2)(A)(ii)
hereof, the determination of whether additional Foreign Taxes for any Pre-
Distribution Period shall be deemed to arise from the income, profits or
transactions of, or to otherwise be attributable to, a party, shall be made in
the same manner as provided in Section 2.01(c) hereof.
(b) The parties hereby agree that (i) the distribution by Wavebest
Limited, a U.K. corporation, of the stock of DILHC (as such corporation is
defined in the Distribution Agreement) to Dart Industries Inc., and (ii) the
distribution by Dart Industries Inc. of Wavebest Limited to Premark, pursuant
to the Transaction Steps, shall be reported for United States federal income
Tax purposes in accordance with the principles of Temp. Reg. Section 7.367(b)-
10(d). For this purpose, the fair market value of Wavebest Limited, DILHC,
Dart Industries Inc. and their subsidiaries shall be determined based on the
historic earnings of each such company.
2.04 Restructuring Taxes.
-------------------
(a) Except as otherwise provided below in Sections 2.04(b) and 2.04(c), in
the case of any Restructuring Taxes, Premark and its Affiliates shall be
liable for, and shall indemnify and hold Tupperware and the Tupperware Group
harmless from, 45% of such Tax and Tupperware and its Affiliates shall be
liable for, and shall indemnify and hold Premark and the Premark Group
harmless from, 55% of such Tax (provided, however, that in the case of any
deemed Restructuring Tax computed in accordance with the last sentence of the
definition of Restructuring Tax in Article I hereof, the party responsible for
filing the Tax Return to which such Restructuring Tax relates shall notify the
other party in writing of the amount of such Restructuring Tax, and the other
party shall pay to the party filing such Return such other party's share of
the deemed Restructuring Tax within 30 days of the due date of the Return to
which such Restructuring Tax relates (without regard to any extension
thereof)).
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<PAGE>
(b) Notwithstanding anything to the contrary in Section 2.04, Premark and
its Affiliates shall be liable for, and shall indemnify and hold Tupperware
and the Tupperware Group harmless from, any Tax resulting from recognition of
the DLC Deferred Gain by reason of one or more of the transactions described
in the Transaction Steps; provided, however, that if the amount of the DLC
Deferred Gain is increased as the result of any Tax Contest, any additional
Tax resulting from such increase shall be treated as a Restructuring Tax and
shall be governed by Section 2.04(a) hereof. For purposes of this Section
2.04(b), the term "DLC Deferred Gain" shall refer to the intercompany gain
realized (and deferred for federal income tax purposes) in connection with the
transfer by Dart Industries Inc. of certain real property located in Osceola
and Orange County Florida to Premark in 1988.
(c) Notwithstanding the above, in the event that either party (or any
Affiliate or employee, officer or director of such party) takes any action
inconsistent with, or fails to take any action required by, the Ruling Request
or the Ruling (or in accordance with the Transaction Steps), then such party
shall be liable for, and shall indemnify and hold the other party and its
Group harmless from, 100% of the Restructuring Taxes resulting from such
action or failure to act.
2.05 Liability Arising from Prior Tax Sharing Agreement.
--------------------------------------------------
(a) With respect to any liability imposed on or incurred by Premark under
the Tax Sharing Agreement by and between Dart & Kraft, Inc., a Delaware
corporation ("DKI") and Premark, dated September 4, 1986 (the "Kraft
Agreement"), Tupperware and its Affiliates shall indemnify and hold Premark
and the Premark Group harmless from any liability arising from the income,
profits, or transactions of, or otherwise attributable to, Tupperware or any
member of the Tupperware Group. Notwithstanding the above, Premark shall be
liable to Kraft for all interest owing under the Kraft Agreement, in
accordance with the terms thereof, and Tupperware shall not be liable to
indemnify Premark for any such interest. For purposes of this Section 2.05,
the determination of whether any liability imposed on or incurred by Premark
arose from the income, profits or transactions of, or was otherwise
attributable to, Tupperware or any member of the Tupperware Group shall be
made in the same manner as provided in Section 2.01(c) hereof. In addition,
for purposes of determining Tupperware's liability under this Section 2.05,
Wilsonart International, Inc., and The West Bend Company shall be treated as
included within the Premark Group, and any liability otherwise attributable to
Dart Industries Inc. shall be apportioned between Tupperware and Premark in
the same manner as provided in Section 2.02(d).
(b) Premark and Tupperware hereby agree that it is their mutual intention
that Premark, as a signatory to the Kraft Agreement, shall have primarily
responsibility, subject to any limitations contained in this Section 2.05, for
any dealings or negotiations with DKI with respect to the Kraft Agreement;
including, without limitation, the payment to DKI of any amounts owing under
the Kraft Agreement (including any interest thereon) as well as the receipt of
any amounts payable by DKI (including any interest thereon) under the Kraft
Agreement. Notwithstanding the foregoing, the parties hereby agree that
Tupperware shall have the right to participate fully in any negotiations or
other dealings which could affect Tupperware's liability (or entitlement to
payment) under the Kraft Agreement. Premark hereby agrees that, with respect
to any issue which involves or could involve Tupperware's liability to Premark
under this Section 2.05, Premark shall not have the right to settle such issue
without the prior consent of Tupperware (which consent shall not be
unreasonably withheld); provided, however, that if Premark desires to settle
such issue on specified terms and Tupperware refuses to consent to settlement
on such terms, Tupperware shall indemnify Premark from and against any outcome
less favorable than the settlement which Premark was willing to accept. With
respect to any matter arising under the Kraft Agreement, each of Tupperware
and Premark hereby agrees that it shall not participate in the negotiation,
settlement or other resolution of such matter in a manner discriminating
against the other party's interests under the Kraft Agreement.
(c) Premark and Tupperware hereby agree that any payment owed by DKI to
Premark under the Kraft Agreement resulting from the carryback of net
operating losses from Tax Period(s) ending December 27, 1986,
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<PAGE>
including any interest owed thereon (the "DKI Refund") shall be applied
against the aggregate amount, if any, owed by Premark and Tupperware to DKI
under the Kraft Agreement, excluding any interest owed thereon (the "DKI
Liability") as follows:
(i) The DKI Liability shall first be reduced (without regard to the
extent to which such liability is attributable to items relating to Premark or
Tupperware) by the amount of the DKI Refund; and
(ii) Any remaining DKI Liability (or excess DKI Refund) shall then be
allocated to each of Premark and Tupperware in proportion to each party's
respective share of the DKI Liability (applying the principles of Section
2.05(a) hereof).
ARTICLE III
-----------
PREPARATION AND FILING OF TAX RETURNS
-------------------------------------
3.01 General. Except as otherwise provided in this Article III, Tax Returns
-------
shall be prepared and filed by the Person liable for the Tax reported on such
Tax Return, or otherwise obligated to file such Return, under the Code or
other applicable Laws. Without limiting the foregoing, the party responsible
for filing such a Return shall also be responsible for filing and/or
responding to any revenue agent request or any other formal or informal
request for information or otherwise relating to such Return by the Service or
any other applicable Tax Authority. The parties shall render assistance and
cooperate with one another in accordance with Section 6.02 hereof with respect
to the preparation and filing of Tax Returns.
3.02 Joint Returns.
-------------
(a) Any Tax Returns for United States Federal Taxes imposed for any Pre-
Distribution Period which reflect Taxes for which one or more members of both
the Premark Group and the Tupperware Group have liability under Article II
hereof (including, without limitation, Premark's consolidated federal income
Tax Return for the Tax Period in which the Distribution occurs) shall be
prepared by and filed by Premark. In furtherance of, and not by limitation of,
the cooperation and assistance required by Section 6.02, Tupperware shall, in
connection with any Tax Return for United States federal income Taxes for any
Pre-Distribution Period filed after the Distribution Date for which Premark
has filing responsibility under this Agreement and which reflects income or
transactions attributable to the Tupperware Group and for which the Tupperware
Group has liability under Article II hereof, provide Premark with (i) a true
and correct consolidated federal income Tax Return for Tupperware and its
Affiliates for the Tax Period, together with all accompanying workpapers and
other computations of the consolidated federal income Tax liability of
Tupperware and its Affiliates, (ii) true and correct separate federal income
Tax Returns for Tupperware and each of its Affiliates, together with all
accompanying workpapers and other computations of separate federal income Tax
liability for Tupperware and each of its Affiliates; and (iii) a true and
correct reconciliation of book income to federal taxable income for Tupperware
and each of its Affiliates. Tupperware and each of its Affiliates shall
certify, under penalties of perjury, that any and all information provided
pursuant to this Section 3.02(a) is true, accurate and complete. With respect
to the Tax Period ending on December 30, 1995, Tupperware hereby agrees to
provide Premark with all such Returns, workpapers and computations on or
before July 15, 1996. With respect to the Tax Period ending on December 28,
1996, Tupperware hereby agrees to provide Premark with all such Returns,
workpapers and computations on or before, June 30, 1997. If Tupperware fails
to provide any information required by this Section 3.02 within the time frame
specified herein, Premark may file the applicable Returns based on the
information available at the time such Returns are due and Tupperware shall be
liable for, and shall indemnify Premark and its Affiliates from, all Taxes or
other costs imposed on or with respect to Premark or Tupperware (and their
respective Affiliates) as a result of Tupperware's failure to provide such
information. In addition, with respect to any information required to be
provided by Tupperware or its Affiliates pursuant to this Section 3.02, (1)
Premark shall utilize such information in the preparation of the appropriate
Returns, as provided by Tupperware or its Affiliates, except to the extent (a)
Tupperware provides its prior written consent to any change in such
information, or (b) Premark determines in good faith that such information is
inaccurate or incomplete in
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<PAGE>
a material respect, and (2) Tupperware and its Affiliates agree to indemnify
and hold Premark and its Affiliates harmless from and against any cost, fine,
penalty or other expense of any kind attributable to the misconduct or
negligence of Tupperware or its Affiliates in supplying Premark with
inaccurate or incomplete information.
(b) Any Tax Returns for State Taxes for any Pre-Distribution Period which
reflect Taxes for which one or more members of the Premark Group and the
Tupperware Group have liability under Article II hereof, shall be prepared and
filed by Premark (except as otherwise provided on Schedule I attached hereto).
The final five sentences of Section 3.02(a) hereof shall apply mutatis
-------
mutandis to all State Tax Returns for any Pre-Distribution Period that Premark
- --------
must prepare and/or file under this Agreement that is measured by income and
that includes any income or transactions attributable to Tupperware or any
member of the Tupperware Group.
(c) Any Tax Returns for Foreign Taxes for any Pre-Distribution Period
which reflect Taxes for which one or more members of both the Premark Group
and the Tupperware Group have liability under Article II hereof, shall be
prepared and filed by Premark (except as otherwise provided on Schedule I
attached hereto). The final five sentences of Section 3.02(a) hereof shall
apply mutatis mutandis to all Foreign Tax Returns measured by income filed for
------- --------
any Pre-Distribution Period that includes any income or transactions
attributable to Tupperware or any member of the Tupperware Group for which
Premark has filing responsibility.
3.03 Method of Pro Ration For Straddle Periods. In the case of any Straddle
-----------------------------------------
Period relating to Premark, Tupperware or their respective Affiliates, unless
the books of such Person are closed on the Distribution Date, Taxes shall be
apportioned for purposes of Article II, between Pre-Distribution and Post-
Distribution Periods, as follows: First, Taxes for Tax Periods or portions
thereof ending on the last day of the calendar month preceding the
Distribution Date (such date is hereinafter referred to as the "Cutoff Date")
shall be based on actual events and activities through the Cutoff Date and in
accordance with past accounting practices. Second, Taxes for the Tax Period
from the Cutoff Date through the Distribution Date shall be computed by
prorating the activities of the calendar month which includes the Distribution
Date on a daily pro rata basis. Notwithstanding the foregoing provisions of
--- ----
this Section 3.03, (i) depreciation, amortization and depletion for any
Straddle Period shall be apportioned on a daily pro rata basis and (ii)
--- ----
extraordinary items not arising in the ordinary course of business shall be
apportioned to the Tax Period in which the event giving rise to such item
occurs.
3.04 Tax Accounting Practices. Any Straddle Period Returns prepared by one
------------------------
or more members of the Premark Group, or one or more members of the Tupperware
Group, as the case may be (the "Preparing Party"), shall be prepared in
accordance with past Tax accounting practices used with respect to the Returns
in question (unless such past practices are no longer permissible under the
Code or other applicable Laws), and to the extent any items are not covered by
past practices (or in the event such past practices are no longer permissible
under the Code or other applicable Laws), in accordance with reasonable Tax
accounting practices selected by the Preparing Party (except that accounting
elections and determinations shall be made, where reasonably possible, in a
manner that minimizes the net Tax incurred by the other party and its
Affiliates). In the event the Preparing Party files Tax Returns for Straddle
Periods inconsistently with such past Tax accounting practices, then,
notwithstanding any provision of this Agreement to the contrary, in addition
to any other remedies available, the other party and its Affiliates shall only
be responsible for the amount of Taxes they would owe if such Tax Returns had
been filed consistently with such past Tax accounting practices.
3.05 Right to Review Returns. Upon the request of either party, the other
-----------------------
party shall make available for inspection and copying all Tax Returns (and
related workpapers) with respect to Taxes to the extent that (i) such Return
relates to Taxes for which the requesting party may be liable under this
Agreement, (ii) such Return relates to Taxes for which the requesting party
may have a claim for Tax Benefits hereunder, or (iii) the requesting party
reasonably determines that it must inspect such Return to confirm compliance
with the terms of this Agreement. Premark and Tupperware shall attempt in good
faith to resolve any issues arising out of the review of such Returns.
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<PAGE>
ARTICLE IV
TAX REFUNDS, CARRYOVERS AND CARRYBACKS
4.01 Refunds.
-------
(a) In the case of any separate Tax Return filed by Premark, Tupperware
or their respective Affiliates for a Pre-Distribution Period, the Person
that filed such Tax Return shall be entitled to any refund of Taxes with
respect to such Return.
(b) Subject to Section 4.02, any refund of Taxes with respect to a
joint, combined, consolidated or unitary Tax Return for any Pre-
Distribution Period shall be allocated between the Premark Group and the
Tupperware Group in accordance with the principles in Sections 2.01(c) or
2.02(c) as applicable; provided, however:
(1) Premark and its Affiliates shall be entitled to any refund of
United States federal income Taxes attributable to the carryback of United
States foreign tax credits arising out of the 1995 sale/leaseback
transaction between Dart Industries Belgium N.V. and Premark Gmbh entered
into on ______, 1995 (the "Belgium Transaction"); and
(2) Tupperware shall be entitled to any refund of [statutory
reference to Belgium, France and German value added Taxes] paid in
connection with the Belgium Transaction; and
(3) Premark shall be entitled to the return or refund of any amounts
deposited with (including any cash bond delivered to) the United States
Government (or any agency thereof) in connection with the payment of United
States federal Taxes, together with any interest payable thereon; and
(c) Notwithstanding anything to the contrary above, with respect to any
refund or credit for overpayment of any estimated taxes for any Tax Period
ending in 1995 or 1996, the Person that filed the Tax Return to which the
refund or credit for overpayment relates shall be entitled to the refund or
credit for overpayment.
(d) If any amounts become payable under this Section 4.01, the Person
obligated to make such payment shall notify the Person entitled to receive
such payment within 30 days after receipt of the refund or credit for
overpayment and shall remit the amount of the refund to such Person within
30 days after such receipt.
4.02 Carryovers and Carrybacks.
-------------------------
(a) In the event Tupperware or any other member of the Tupperware Group
desires to carry back a loss or other Tax attribute arising after the
Distribution Date (excluding, however, any Carryback described in Section
4.01(b)(1)) (the "Tupperware Carryback") to a Pre-Distribution Period,
Tupperware shall notify Premark in writing of its intent to carry back such
item (and to forego any election to waive such Carryback). Such notification
shall include a certification by an appropriate officer of Tupperware setting
forth Tupperware's belief, based on a thorough examination of the facts and
law relating to the tax treatment of such item, that the tax treatment of such
item is supported by "substantial authority" within the meaning of Section
6662 of the Code (and the Treasury Regulations promulgated thereunder).
Promptly upon its receipt of such notification, Premark shall notify
Tupperware, in writing, as to whether Premark believes that the filing of the
Tupperware Carryback will result in any Deemed Tax Reduction under Section
4.02(c) and if so, Premark shall provide information to Tupperware pertaining
to the amount of such Deemed Tax Reduction and the computation thereof.
Premark shall cooperate with Tupperware in connection with the filing and
processing of any Tupperware Carryback and shall provide Tupperware with
copies of all correspondence in connection therewith.
(b) Subject to Section 4.02(c), if, pursuant to the terms of Section
4.02(a) hereof, Tupperware elects to carry back a loss or other Tax attribute
to a Pre-Distribution Period, Premark shall be obligated to make a payment to
Tupperware equal to the amount by which the Taxes imposed on the Premark Group
for such Pre-Distribution Period have been reduced as a result of utilization
of the Tupperware Carryback (the "Premark Tax Reduction").
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<PAGE>
(c) For purposes of computing the amount of the Premark Tax Reduction, if,
in the absence of the Tupperware Carryback, losses or other Tax attributes of
Premark or its Affiliates would have resulted in a reduction of Taxes of the
Premark Group for such Period (the "Deemed Tax Reduction"), the amount of the
Premark Tax Reduction shall be reduced by the amount of the Deemed Tax
Reduction. In the event any losses or other Tax attributes of Premark which
are taken into account in computing a Deemed Tax Reduction are subsequently
utilized by the Premark Group to reduce Taxes in a future Tax Period, Premark
shall be obligated to pay to Tupperware the amount of such subsequent Tax
reduction (provided that the aggregate amount of payments to Tupperware with
respect to any Tupperware Carryback shall not exceed the Premark Tax Reduction
computed without regard to the first sentence of this Section 4.02(c)).
(d) If Premark is required to make a payment to Tupperware with respect to
any Tupperware Carryback under this Section 4.02(b), Premark shall have the
option, in its sole and absolute discretion, of (i) making such payment within
30 days of receiving the Tax refund attributable to such Tupperware Carryback,
or (ii) making such payment not later than 30 days of the date on which the
statutory period (under the Code of other applicable law) for examining the
Return on which such Tupperware Carryback was claimed has expired (provided,
such payment shall bear interest at the Prime Rate for the period commencing
30 days from the date of receipt of such refund and ending on the date of such
payment).
ARTICLE V
---------
TAX PAYMENTS
------------
5.01 Payment of Consolidated Federal Income Tax for Pre-Distribution
---------------------------------------------------------------
Periods. Premark shall pay all Taxes due (or shall receive all refunds) in
- -------
connection with the filing of Premark's consolidated federal income Tax Return
for (i) the Tax Period ending on December 30, 1995 (the "1995 Fiscal Year"),
and (ii) the Tax Period ending on December 28, 1996 (the "1996 Fiscal Year").
Premark and Tupperware shall make payments to one another in respect of the
consolidated federal income Tax liability shown on such Tax Returns as
determined and at the times set forth in paragraphs (a) and (b) below as
applicable:
(a) If the consolidated federal income Tax Return for the 1995 Fiscal Year
has not been filed on the Distribution Date, immediately before the
Distribution, the parties shall compute the amount of Tupperware's share of
the consolidated federal income Tax liability for such Tax Period (the
"Tupperware 1995 Estimated Tax") (or the amount of the net tax benefit
realized by Premark as a result of utilization of Tupperware's losses or
credits for such Tax Period) (the "1995 Tupperware Estimated Tax Benefit"),
determined as if the Tupperware Group were a separate group of companies
filing a consolidated federal income Tax Return (but taking into account
Premark's ability to utilize any net losses or credits of Tupperware for such
Tax Period).
In addition, immediately prior to the due date for filing Premark's
consolidated federal income Tax Return for the 1995 Fiscal Year (taking into
account any extension of time for filing that Premark requests and is
granted), the parties shall compute, applying the principles set forth in the
first sentence of this paragraph (a) of this Section 5.01 and based on the
information contained in the federal consolidated income Tax Return for the
1995 Fiscal Year, Tupperware's share of the consolidated federal income Tax
liability for the 1995 Fiscal Year (the "Tupperware 1995 Final Tax") (or the
amount of the net tax benefit realized by Premark as a result of Tupperware's
losses or credits for such Tax Period) (the "Tupperware 1995 Final Tax
Benefit"). If either (1) the Tupperware 1995 Final Tax exceeds the Tupperware
1995 Estimated Tax, and/or (2) the Tupperware 1995 Estimated Tax Benefit
exceeds the Tupperware 1995 Final Tax Benefit, Tupperware shall pay such
excess to
- --------
1 Note, this provision assumes that the Tax Return for the fiscal year ended
in 1995 will not have been filed and Taxes will not have been paid prior to
the Distribution Date. If the return is filed and the Taxes are paid prior to
the Distribution Date, the reference to the 1995 Fiscal Year should be
removed.
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<PAGE>
Premark immediately prior to the due date for filing Premark's consolidated
federal income Tax Return for the 1995 Fiscal Year. Conversely, if either (1)
the Tupperware 1995 Estimated Tax exceeds the Tupperware 1995 Final Tax and/or
(2) the Tupperware 1995 Final Tax Benefit exceeds the Tupperware 1995
Estimated Tax Benefit, Premark shall pay such excess to Tupperware immediately
prior to the due date for filing Premark's consolidated federal income Tax
Return for the 1995 Fiscal Year.
(b) With respect to the consolidated federal income Tax Return for the
1996 Fiscal Year, immediately before the Distribution, and immediately before
Premark's consolidated federal income Tax Return for the 1996 Fiscal Year is
due (taking into account any extension of time for filing that Premark
requests and is granted), Tupperware shall make payments to Premark (or
Premark shall make payments to Tupperware) of amounts which shall, in each
case, be determined with the principles applied mutatis mutandis, set forth in
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Section 5.01(a) of the Agreement.
5.02 Payment of State and Foreign Taxes for Which Premark has Filing
---------------------------------------------------------------
Responsibility. Premark shall pay to the appropriate Tax Authority all State
- --------------
and Foreign Taxes for Tax Returns with respect to which Premark (or another
member of the Premark Group) has filing responsibility pursuant to Article III
of this Agreement. Immediately prior to the Distribution and immediately
before such Return is due (taking into account any extension of time for
filing that Premark requests and is granted), or immediately after receipt of
any refund, Tupperware shall make payments to Premark (or Premark shall make
payments to Tupperware) of amounts which shall, in each case, be determined in
accordance with the principles, applied mutatis mutandis, set forth in Section
5.01 of the Agreement.
5.03 Payment of State and Foreign Taxes for Which Tupperware has Filing
------------------------------------------------------------------
Responsibility. Tupperware shall pay to the appropriate Tax Authority all
- --------------
State and Foreign Taxes for Tax Returns with respect to which Tupperware (or
another member of the Tupperware Group) has filing responsibility pursuant to
Article III of this Agreement. Immediately prior to the Distribution and
immediately before the time such Return is due (taking into account any
extension of time for filing that Tupperware requests and is granted), or
immediately after receipt of any refund, Premark shall make payments to
Tupperware (or Tupperware shall make payments to Premark) of amounts which
shall, in each case, be determined in accordance with the principles, applied
mutatis mutandis, set forth in Section 5.01 of the Agreement.
5.04 State Tax Returns for 1986 through 1990. Without in any manner limiting
---------------------------------------
Sections 5.02 and 5.03 hereof, the parties hereby agree that, with respect to
any amended State Tax Return filed to reflect final audit adjustments to the
consolidated federal income Tax Return of the Premark Group for the Periods
ending December 1986, 1987, 1988, 1989 and 1990, Premark and Tupperware shall
each be liable for, and shall pay, the portion of any additional Tax liability
reflected on such amended return attributable to such party (applying the
principles of Section 2.02(c) hereof).
5.05 Indemnification Payments.
------------------------
(a) Upon payment of any Taxes with respect to which a party is entitled to
receive indemnification hereunder, such party (the "Indemnified Party") shall
send the other party (the "Indemnifying Party") an invoice accompanied by
evidence of payment and a statement detailing the Taxes paid and describing in
reasonable detail the particulars relating thereto. The Indemnifying Party (or
such one or more members of the Indemnifying Party's Group as it shall
nominate) shall remit payment for Taxes for which the Indemnifying Party is
liable for indemnification hereunder to the Indemnified Party (or such one or
more members of the Indemnified Party's Group as it shall nominate) within 30
days of receipt of such invoice, evidence of payment and statement, or at any
earlier time identified by the Indemnifying Party.
(b) If any Indemnified Party realizes a Tax Benefit or a Tax detriment in
one or more Tax Periods by reason of having incurred any Tax for which such
Indemnified Party receives indemnification hereunder, then such Indemnified
Party shall pay to such Indemnifying Party an amount equal to the Tax Benefit
or such Indemnifying Party shall pay to such Indemnified Party an additional
amount equal to the Tax detriment (taking
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<PAGE>
into account any Tax detriment resulting from the receipt of such additional
amounts), as the case may be. The amount of any Tax Benefit or any Tax
detriment for a Tax Period realized by an Indemnified Party by reason of
having incurred a Tax for which such Indemnified Party received
indemnification hereunder shall be deemed to equal the product obtained by
multiplying (i) the amount of any deduction or inclusion in income for such
period resulting from such Tax or the payment thereof, as the case may be, by
(ii) the highest applicable marginal Tax rate for such Period. Any payment due
under this Section 5.05(b) with respect to a Tax benefit or Tax detriment
realized by an Indemnified Party in a Tax Period shall be due and payable
within 30 days from the time the Return for such Tax Period is due, without
taking into account any extension of time granted to the party filing such
Return.
ARTICLE VI
TAX RECORDS: COOPERATION
6.01 Tax Records.
-----------
(a) Premark and Tupperware (and their respective Affiliates) shall keep in
their possession all Tax Records relating to Taxes for which the other party
may have liability under this Agreement, until the expiration of any
applicable statute of limitations and as otherwise required by law.
Notwithstanding the foregoing, Tupperware shall retain all Tax Records
relating to Pre-Distribution Periods until such time as Premark shall consent
to the disposition of such Tax Records, which consent shall not be
unreasonably withheld. For purposes of this Article VI, "Tax Records" shall
include, inter alia, journal vouchers, cash vouchers, general ledgers,
----------
material contracts and authorizations for expenditures (AFEs).
(b) Premark and Tupperware (and their respective Affiliates) shall make
available to each other for inspection and copying during normal business
hours all Tax Records in their possession, to the extent such Tax Records are
reasonably required by the other party in connection with the preparation of
Tax Returns, audits, litigation or the resolution of items under this
Agreement.
(c) Notwithstanding anything in this Agreement to the contrary, if either
party fails to comply with the requirements of this Section 6.01, the party
failing so to comply shall be liable for, and shall hold the other party
harmless from, any Taxes (including without limitation, penalties for failure
to comply with the record retention requirements of the Code) and other costs
resulting from such party's failure to comply.
6.02 Cooperation. Premark and Tupperware shall each provide the other with
-----------
such assistance as may reasonably be requested in connection with the
preparation of any Tax Return, audit or other examination by any Tax Authority
or judicial or administrative proceedings relating to liability for any Taxes.
ARTICLE VII
-----------
TAX AUDITS AND APPEALS
----------------------
7.01 Notice. Premark and Tupperware shall provide prompt notice to the other
------
party of any pending or threatened Tax Contest that it becomes aware of
relating to Taxes for Tax Periods for which it is indemnified by, or is to
indemnify, the other party hereunder. Such notice shall contain factual
information (to the extent known) describing any asserted Tax liability in
reasonable detail and shall be accompanied by copies of any notice or other
document received from any Tax Authority in respect of any such matter. If any
party has knowledge of an asserted Tax liability with respect to a matter for
which it is to be indemnified hereunder and such party fails to give the
indemnifying party notice of such asserted Tax liability within 30 days after
it has received written notice thereof, then, unless such failure has no
material adverse effect upon the indemnifying party's ability to participate
in the Tax Contest, the indemnifying party shall have no obligation to
indemnify the indemnified party for any Taxes arising out of such asserted Tax
liability.
-14-
<PAGE>
7.02 Control of Audits and Appeals.
-----------------------------
(a) Separate Contests. Any Separate Contest shall be controlled solely by
-----------------
the party involved in the Tax Contest.
(b) Joint Contests.
--------------
(1) With respect to any Joint Contest, the party that filed the Return
shall control the proceeding. The personnel and outside advisers (including
counsel) of the party not controlling the proceeding may shall participate,
at the expense of such party, in the proceeding to the extent such
proceeding relates to items or adjustments for which such party may incur
indemnity liability under this Agreement. Such participation shall include:
(i) participation in all conferences, meetings or proceedings with any Tax
Authority, the subject matter of which includes an item for which such
party has indemnity liability hereunder; (ii) participation in all
appearances before any court, the subject matter of which includes an item
for which such party has indemnity liability hereunder; (iii) with respect
to matters described in the preceding clauses (i) and (ii), participation
in the submission and determination of content of documentation, protests,
memoranda of fact and law and briefs, the conduct of oral arguments or
presentations, the selection of witnesses and the negotiation of
stipulations of fact in such matters. Such participation may be reflected
by the grant of appropriate powers of attorney. The party granting such
power of attorney (the "Granting Party") shall have the right to revoke the
power of attorney if the Granting Party reasonably determines that the
other party's (the "Participating Party") actions or failure to act, in the
proceeding has resulted, or can be reasonably expected to result, in the
hindrance or delay of any resolution or settlement of the proceeding. In
the event the Participating Party fails to timely and fully participate in
any proceeding to the extent to which such proceeding relates to items or
adjustments for which the Participating Party has indemnity liability under
this Agreement, the Participating Party shall be liable for, in addition to
all Taxes for which the Participating Party shall be liable under this
Agreement, any and all costs imposed on, or incurred by, the Granting Party
as a result of the Participating Party's failure to participate. The
revocation of any power of attorney under this Section 7.02 shall in no way
limit the Participating Party's indemnity liability under this Agreement.
(2) Each of the parties hereto agrees to cooperate in seeking an
agreement with the Service or any other Tax authority under which such
authority would conduct separate audits of Premark and Tupperware with
respect to returns including both parties. To the extent permitted by such
an Agreement, each party would control its separate audits in accordance
with the terms thereof, and the procedures provided in the remainder of
this Section 7.02(b) and in Section 7.03 hereof shall not apply.
7.03 Consent to Settlements in Joint Contests.
----------------------------------------
(a) With respect to any Joint Contest, neither party shall have the right
to accept or enter into the settlement of any Tax liability, or compromise any
Tax claim to the extent such liability or claim relates to an item for which
the other party has indemnity liability hereunder, without the prior written
consent of the other party (which consent shall not be unreasonably withheld).
(b) In the case of any Joint Contest, either party (the "Compromising
Party"), without the consent or permission of the other party (the "Non-
Compromising Party"), may, if permitted by the appropriate agency or tribunal,
accept or enter into the settlement of any Tax liability to the extent such
liability relates solely to items for which such party has indemnity liability
hereunder. In the event the Non-Compromising Party's refusal to settle its
portion of the contest prevents the Compromising Party from reaching a
settlement as to its portion of the contest, the Non-Compromising Party shall
indemnify the Compromising Party from and against any outcome less favorable
than the settlement which the Compromising Party was willing to accept. With
respect to any Joint Contest, each of Tupperware and Premark hereby agrees
that it shall not participate in the negotiation, settlement or other
resolution of any item at issue in such Joint Contest in a manner
discriminating against the other party's interests in such contest.
-15-
<PAGE>
(c) Notwithstanding anything to the contrary in the foregoing, in the
event the judgment of the United States Tax Court or other court of competent
jurisdiction results in an adverse determination with respect to the liability
of either party hereunder, such party shall have the right (at its own
expense) to appeal such adverse determination; provided, however, that the
second sentence of Section 7.03(b) shall apply for purposes of determining the
liability of any non-appealing party hereunder.
7.04 Expenses.
--------
(a) With respect to any Separate Contest, the party involved in such
contest shall bear all expenses related thereto.
(b) With respect to any Joint Contest, except as otherwise provided
herein, the parties shall share any and all costs and expenses incurred in
connection with such contest (including without limitation attorneys' fees)
based on each party's potential liability with respect to such contest as
agreed to by the parties at the outset of such contest.
ARTICLE VIII
------------
DISPUTE RESOLUTION
------------------
8.01 Good-Faith Negotiation.
----------------------
In the event of any dispute or disagreement relating to this Agreement or
the transactions contemplated by this Agreement, Premark and Tupperware shall
each appoint two members from their respective management staffs to serve on a
joint committee (the "Dispute Resolution Committee"). The Dispute Resolution
Committee shall meet at either Premark or Tupperware's offices, whichever is
more appropriate in view of the issues under consideration, at such reasonable
time as either party may notify the other in writing, for the purpose of
resolving any dispute arising under this Agreement. No dispute arising under
this Agreement shall be the subject of arbitration or other formal proceedings
between the parties hereto unless and until such dispute has been considered
by the Dispute Resolution Committee. If the Dispute Resolution Committee is
unable to resolve any dispute submitted to it by any party hereto within
thirty (30) days of such submission, the Dispute Resolution Committee shall
refer the issue to the Chief Executive Officers of Premark and Tupperware for
their resolution. If such officers are unable to resolve such dispute within
fifteen (15) days after referral, any member of the Dispute Resolution
Committee may refer such dispute to binding arbitration as provided in Section
8.02 hereof. No such dispute shall be subject to arbitration or other formal
proceedings between the parties hereto before being considered by the Dispute
Resolution Committee and the Chief Executive Officers of Premark and
Tupperware.
8.02 Binding Arbitration.
-------------------
(a) Any controversy, dispute or claim (whether in contract or tort)
between the parties arising out of or related to this Agreement or the
transactions contemplated hereby, shall, after the dispute resolution process
set forth in Section 8.02 has been completed, at the request of any party, be
submitted to arbitration in accordance with this Section 8.02 by notifying the
other party to the dispute of its decision to arbitrate such controversy,
dispute or claim.
(b) Each controversy, dispute or claim submitted by a party to arbitration
shall be heard by an arbitration panel composed of three arbitrators, in
accordance with the following provisions. Premark and Tupperware shall each
appoint one arbitrator (who shall not be an employee, officer or director,
professional consultant (including without limitation outside attorney or
accountant) or otherwise related to the appointing party) within fifteen (15)
days after the matter has been submitted to arbitration. If any party fails to
appoint its arbitrator within such fifteen (15) day period, any party may
apply to the American Arbitration Association (the "AAA") to appoint an
arbitrator on behalf of the party that has failed to appoint its arbitrator.
The two arbitrators appointed by, or on behalf of, the parties shall jointly
appoint a third arbitrator who shall chair the
-16-
<PAGE>
arbitration panel (the "Chairman"). If the arbitrators appointed by, or on
behalf of, the parties do not succeed in appointing a Chairman within fifteen
(15) days of the latter of the two arbitrators appointed by, or on behalf of,
the parties has been appointed, the Chairman shall, at the request of either
party, be appointed by the AAA. If for any reason an arbitrator is unable to
perform his or her function, he or she shall be replaced and a substitute
shall be appointed in the same manner as the arbitrator replaced.
(c) Except as otherwise provided herein, arbitration proceedings shall be
conducted in accordance with the Commercial Arbitration Rules of the AAA. In
any arbitration proceeding hereunder: (i) proceedings shall, unless otherwise
agreed by the parties, be held in Orlando, Florida; (ii) the arbitration panel
shall have no power to award punitive damages and shall be bound by all
statutes of limitation which would otherwise be applicable in a judicial
action brought by a party; and (iii) the decision of a majority of the
arbitrators (or the Chairman if there is no such majority) shall be final and
binding on the parties to this Agreement and shall be enforceable in any court
of competent jurisdiction. The parties hereby waive any rights to appeal or to
review of such decision by any court or tribunal and also waive any objections
to such enforcement. THE PARTIES HEREBY AGREE TO WAIVE ALL RIGHTS TO TRIAL BY
JURY WITH RESPECT TO ANY CONTROVERSY, DISPUTE OR CLAIM SUBMITTED TO
ARBITRATION UNDER THIS AGREEMENT.
(d) Notice preliminary to, in conjunction with, or incident to any
arbitration proceeding may be sent to the parties by registered or certified
mail (return receipt requested) at the address set forth in Section 9.08
hereof and personal service is hereby waived. The arbitrators shall award
recovery of all costs and fees incurred in connection with the arbitration and
the proceeding, and obtaining any judgment related thereto, of each disputed
matter (including reasonable attorney's fees and expenses and arbitrator's
fees and expenses and court costs) in each case, with respect to such disputed
matter, to the party that substantially prevails in the arbitration proceeding
with respect to such disputed matter.
(e) No provision of this Section 8.02 shall limit the right of any party
to this Agreement to exercise self-help remedies such as set-off, or obtaining
provisional, equitable or ancillary remedies from a court of competent
jurisdiction before, after or during the pendency of any arbitration or other
proceeding. The exercise of a remedy does not waive the right of either party
to resort to arbitration.
ARTICLE IX
----------
MISCELLANEOUS MATTERS
---------------------
9.01 No Inconsistent Actions. Neither Premark nor Tupperware (nor their
-----------------------
respective Affiliates) shall take any action inconsistent with, nor fail to
take any action required by, either the Distribution Agreement, the Ruling
Request or the Ruling, unless such party acting has obtained the prior consent
of the other party. Except as otherwise provided in Section 9.01(b) hereof,
either party (the "Non-Proposing Party") will grant its consent to action
proposed by the other party (the "Proposing Party") if the Proposing Party
either (1) obtains a ruling with respect to the proposed action from the
Service or other applicable Tax Authority that is reasonably satisfactory, in
form and substance, to the Non-Proposing Party and its tax counsel (except
that the Proposing Party shall not submit any ruling request for the purpose
of complying with the Section 9.01, if the Non-Proposing Party reasonably
determines that filing such request might adversely affect the Non-Proposing
Party), or (2) obtains an opinion from tax counsel reasonably satisfactory to
the Non-Proposing Party (both as to choice of counsel and the opinion given).
Without limiting the generality of the foregoing:
(a) Conditions to Ruling. Each of the parties hereto represents that
--------------------
neither it (nor any of its Affiliates) has any plan or intention to take any
action which is inconsistent with any factual statements, representations or
other similar conditions contained in the Ruling Request or in the Ruling.
-17-
<PAGE>
(b) Continuity of Business Enterprise. Tupperware hereby represents that
---------------------------------
it has no plan or intent to reduce, eliminate or otherwise discontinue the
Convention Center Business (as such term is defined in the Ruling Request).
Tupperware will not take any action which might result in a contraction or
elimination of the Convention Center Business within the three year Tax Period
beginning on the Distribution Date without the prior written consent of
Premark. Premark hereby represents that is has no plan or intent to reduce,
eliminate or otherwise discontinue the manufacturing business of The Stero
Company, a Delaware corporation, as described in the Ruling Request (the
"Stero Business"). Premark will not take any action which might result in the
contraction or elimination of the Stero Business within the three year Tax
Period beginning on the Distribution Date without the prior written consent of
Tupperware. Notwithstanding the foregoing, Tupperware or Premark may take any
action described in this Section 9.01(b), provided that such party obtains a
ruling with respect to the proposed action from the Service that is reasonably
satisfactory in form and substance to the other party and its tax counsel.
(c) Supplement or Amendment to Ruling.
---------------------------------
(1) Neither of the parties shall (A) file any request for a
supplement or amendment to the Ruling, or (B) arrange any "pre-
submission" or similar conference of file any memorandum or other
material relating to any such supplement or amendment, unless the party
filing such materials (the "Filing Party") shall have provided to the
other party (the "Other Party"), no later than 10 days in advance of
such filing, or conference, (a) a complete copy of all material to be
filed or submitted, and (b) the opportunity to join in such filing or
conference, at its own expense.
(2) Regardless of whether the Other Party joins in any filing or
conference or other proceeding referred to in paragraph (1) to this
Section 9.01(c), the Filing Party shall:
(A) inform the Other Party promptly regarding any telephone and
in-person conferences with Service personnel regarding such filing
or conference, and
(B) provide to the Other Party copies of (i) all filings or other
correspondence submitted to the Service in connection with such
filing or conference, and (ii) all correspondence from the Service
(including without limitation any supplemental or amendment to the
Ruling), promptly upon receipt.
9.02 Amendment and Waiver. This Agreement shall not be amended or modified
--------------------
in any manner whatsoever without the written consent of each of the parties
hereto. No failure by any party to insist upon the strict performance of any
covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute waiver of
any such breach or any other covenant, duty, agreement or condition.
9.03 Tax Allocation Agreements. Immediately prior to the Distribution,
-------------------------
Premark shall cause any and all tax allocation, tax sharing and similar
agreements or arrangements existing between Premark (including its Affiliates)
and Tupperware (including its Affiliates) to be terminated with respect to the
Tupperware Group, as of an effective date agreed to by the parties prior to
the Distribution Date, and shall cause any amounts due under such agreements
or arrangements to be settled in the manner agreed to by the parties prior to
the Distribution Date. Upon such termination and settlement, no further
payments made by one party to the other with respect to such agreements or
arrangements shall be made, and all other rights and obligations resulting
from such agreements or arrangements between the parties shall cease as of
such time.
9.04 Entire Agreement; Inconsistent Provisions. The parties agree that this
-----------------------------------------
Agreement constitutes the entire Agreement between them in respect of the
subject matter of this Agreement, and that, in the event of a conflict or
other inconsistency between any provision or term of this Agreement and any
provision or term of the Distribution Agreement, then insofar as such matter
relates to Taxes, this Agreement shall prevail; provided, further, in the
event of any conflict or other inconsistency between any provision or term of
this Agreement and any provision or term of the Employee Benefits and
Compensation Allocation Agreement, the Employee Benefits and Compensation
Allocation Agreement shall prevail.
-18-
<PAGE>
9.05 Affiliate Obligations. To the extent that the provisions of this
---------------------
Agreement pertain to an Affiliate of Premark or Tupperware, Premark and
Tupperware hereby respectively agree that they will cause such Affiliate to
carry out the terms of this Agreement.
9.06 Further Action. The parties shall execute and deliver all documents,
--------------
provide all information, and take or refrain from taking any action as may be
necessary or appropriate to achieve the purposes of this Agreement. Without
limiting the preceding sentence, and subject to Section 7.02(b) hereof, each
party and its Affiliates shall provide the other party and its Affiliates with
such powers of attorney or other authorizing documentation as is reasonably
necessary to empower then to execute and file Tax Returns, refunds and
equivalent claims for Taxes for which they are responsible hereunder, and
contest, settle and resolve any Tax Contests that they control under Article
VII hereof.
9.07 Time for Notice. Notice of any indemnification claim under this
---------------
Agreement must be received by the party against whom such claim is made no
later than six months from the date on which the Taxes to which such claim
relates have been paid.
9.08 Notices. All notices, demands or other communications to be given or
-------
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when delivered personally to the
recipient or when sent to the recipient by telecopy (receipt confirmed), one
business day after the date when sent to the recipient by reputable express
courier service (charges prepaid) or two business days after the date when
mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid. Such notices, demands and other communications
will be sent to the parties at their addresses indicated below:
If to Premark: Premark International, Inc. 1717 Deerfield Road
Deerfield, Illinois 60015 Attention: Vice President,
Taxes
If to Tupperware: Tupperware Corporation P. O. Box 2353 Orlando, Florida
32802 Attention: Vice President, Taxes
Or to such other address or to the attention of such other Person as the
recipient party has specified by prior written notice to the sending party.
9.09 Remedies. Any party having any rights under any provision of this
--------
Agreement will have all rights and remedies set forth in this Agreement and
all rights and remedies which such party may have been granted at any time
under any other agreement or contract and all of the rights which such party
may have under any law. Any such party will be entitled to enforce such rights
specifically, without posting a bond or other security, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law.
9.10 Successors and Assigns. No party hereto may assign or delegate any of
----------------------
such party's rights or obligations under or in connection with this Agreement
without the written consent of the other parties hereto. All covenants and
agreements contained in this Agreement by or on behalf of any of the parties
hereto will be binding upon and enforceable against the respective successors
and assigns of such party and will be enforceable by and will inure to the
benefit of the respective successors and permitted assigns of such party.
9.11 Severability. Whenever possible, each provision of this Agreement will
------------
be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
-19-
<PAGE>
9.12 Counterparts. This Agreement may be executed simultaneously in two or
------------
more counterparts, any one of which need not contain the signatures of more
than one party, but all such counterparts taken together will constitute one
and the same Agreement.
9.13 Descriptive Headings. The descriptive headings of this Agreement are
--------------------
inserted for convenience only and do not constitute a part of this Agreement.
9.14 No Third-Party Beneficiaries. This Agreement will not confer any rights
----------------------------
or remedies upon any Person other than the parties hereto and their respective
successors and permitted assigns.
9.15 Construction. The language used in this Agreement will be deemed to be
------------
the language mutually chosen by the parties to express their mutual intent and
no rule of strict construction will be applied against any party. The use of
the word "including" in this Agreement means "including without limitation"
and is intended by the parties to be by way of example rather than limitation.
9.16 Form of Payments and Late Payments. Any payments owed by one party to
----------------------------------
another under this Agreement shall be made in the currency in which the Tax to
which such payment relates is assessed by the Tax Authority, and shall be paid
in immediately available funds and in such other manner as the party to whom
such payment is owed may reasonably request. Any payments required by this
Agreement that are not made when due shall bear interest at the Prime Rate
plus six percent from the due date of the payment to the date paid.
9.17 Treatment of Payments. The parties agree that, in the absence of any
---------------------
change in law or fact, any Indemnification Payments made under this agreement
shall be reported for tax purposes by the payor and the recipient as capital
contributions or dividends, as appropriate, relating back to the Tax Period
beginning before the Distribution Date.
9.18 Governing Law. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY AND
-------------
INTERPRETATION OF THIS AGREEMENT WILL BE GOVERNED BY THE INTERNAL LAW, AND NOT
THE LAW OF CONFLICTS, OF THE STATE OF DELAWARE.
9.19 Confidentiality. If, pursuant to the terms of this Agreement, either
---------------
Premark or Tupperware (or any of their respective Affiliates) is required to
provide or disclose any information to the other party to this Agreement (or
any Affiliate of such other party), the Person receiving such information
shall hold and keep such information confidential, and shall not disclose such
information (except as otherwise required by Law) without the prior written
consent of the Person from whom such information was received.
IN WITNESS WHEREOF, the Agreement has been duly executed as of the day and
year first above written.
PREMARK INTERNATIONAL, INC.
By
-----------------------------------
Name:
--------------------------------
Title:
---------------------------------
TUPPERWARE CORPORATION
By
-----------------------------------
Name:
Title:
---------------------------------
-20-
<PAGE>
SCHEDULE 1
----------
PREPARATION AND FILING OF TAX RETURNS
This schedule lists the Tax Returns that Premark will file which includes
members of both the Premark Group and the Tupperware Group. The returns will
include members of the Tupperware Group for a full year in 1995, and through
the distribution date for 1996.
1995
- ----
<TABLE>
<CAPTION>
TAX DUE
PERIOD DESCRIPTION DATE
------ ----------- --------
<C> <S> <C>
1995 U.S. Corporation Income Tax Return 09/16/96
1995 Alaska Corporation Net Income Tax Return 10/15/96
1995 Arkansas Corporation Income Tax Return 09/16/96
1995 California Corporation Income Tax Return 10/15/96
1995 Colorado Corporation Income Tax Return 10/15/96
1995 Connecticut Corporation Business Tax Return 09/30/96
1995 Florida Corporation Income Tax Return 09/30/96
1995 Idaho Corporation Income Tax Return 10/15/96
1995 Illinois Corporation Income And Replacement Tax Return 10/15/96
1995 Kansas Corporation Income Tax Return 10/15/96
1995 Maine Corporation Income Tax Return 09/16/96
1995 Minnesota Corporation Franchise Tax Return 10/15/96
1995 Montana Corporation Income Tax Return 11/15/96
1995 Nebraska Corporation lncome Tax Return 10/15/96
1995 New Hampshire Business Tax Return For Corporations 10/15/96
1995 Ohio Corporation Franchise Tax Return 10/15/96
1995 Oregon Corporation Income Tax Return 10/15/96
1995 Multnomah Corporation Income Tax Return 10/15/96
1995 North Dakota Corporation Income Tax Return 09/16/96
1995 South Carolina Corporation Income Tax Return 09/16/96
1995 Utah Corporation Income Tax Return 10/15/96
1995 Virginia Corporation Income Tax Return 10/15/96
1996
----
1996 U.S. Corporation Income Tax Return 09/16/97
1996 Alaska Corporation Net Income Tax Return 10/15/97
1996 Arkansas Corporation Income Tax Return 09/15/97
1996 California Corporation Income Tax Return 10/15/97
1996 Colorado Corporation Income Tax Return 10/15/97
1996 Connecticut Corporation Business Tax Return 09/30/97
1996 Florida Corporation Income Tax Return 09/30/97
1996 Idaho Corporation Income Tax Return 10/15/97
1996 Illinois Corporation Income And Replacement Tax Return 10/15/97
1996 Kansas Corporation Income Tax Return 10/15/97
1996 Maine Corporation Income Tax Return 09/15/97
1996 Minnesota Corporation Franchise Tax Return 10/15/97
1996 Montana Corporation Income Tax Return 11/15/97
1996 Nebraska Corporation Income Tax Return 10/15/97
1996 New Hampshire Business Tax Return For Corporations 10/15/97
1996 Ohio Corporation Franchise Tax Return 10/15/97
1996 Oregon Corporation Income Tax Return 10/15/97
1996 Multnomah Corporation Income Tax Return 10/15/97
1996 North Dakota Corporation Income Tax Return 09/15/97
1996 South Carolina Corporation Income Tax Return 09/15/97
1996 Utah Corporation Income Tax Return 10/15/97
1996 Virginia Corporation Income Tax Return 10/15/97
</TABLE>
FORM
OF
EMPLOYEE BENEFITS AND COMPENSATION
ALLOCATION AGREEMENT
Employee Benefits and Compensation Allocation Agreement, dated as of
_________, 1996, by and between Premark International, Inc., a Delaware
corporation ("Premark"), and Tupperware Corporation, a Delaware corporation
and, as of the date hereof, a wholly-owned subsidiary of Premark
("Tupperware").
Whereas, the Premark Board has determined that it is appropriate and
desirable to distribute all outstanding shares of Tupperware Common Stock (as
defined herein) on a pro rata basis to the holders of Premark Common Stock
(the "Distribution"); and
Whereas, Premark and Tupperware are entering into a Distribution Agreement
of even date herewith (the "Distribution Agreement"), which, among other
things, sets forth the principal corporate transactions required to effect the
Distribution and sets forth other agreements that will govern certain other
matters following the Distribution; and
Whereas, in connection with the Distribution, Premark and Tupperware desire
to provide for the allocation of assets and liabilities and other matters
relating to employee benefit plans and compensation arrangements.
Now, Therefore, in consideration of the mutual agreements, provisions and
covenants contained in this Agreement, the parties hereby agree as follows:
ARTICLE I
Definitions
-----------
Section 1.01 General. Any capitalized terms that are used in this Agreement
-------
but not defined herein (other than the names of Premark employee benefit
plans) shall have the meanings set forth in the Distribution Agreement, and as
used herein, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms of the
terms defined):
Audit Liability: defined in Section 2.12(a).
---------------
Base Retirement Plan Assumption Date: defined in Section 2.01(a).
------------------------------------
Canadian Assumption Date: defined in Section 2.07(a).
------------------------
Cash Incentive Plans: defined in Section 2.05(a).
--------------------
Common Non-Employee Director: defined in Section 2.04(c)(i).
----------------------------
Enrolled Actuary: an enrolled actuary or other party making actuarial or
----------------
similar determinations pursuant to this Agreement with respect to assets or
liabilities relating to a particular employee benefit plan selected by Premark
with the approval of Tupperware, which approval shall not be unreasonably
withheld.
Former Dart Business Employee: any employee or former employee of a Former
-----------------------------
Dart Business who is a retired participant or deferred vested participant in
the Premark Base Retirement Plan, the Premark Retirement Savings Plan, the
Premark Retiree Medical Program and/or the Premark Retiree Life Program, and
who is not a Premark Employee, a Premark Former Employee, a Tupperware
Employee or Tupperware Former Employee.
PreCan: Premark Canada Inc., a Canadian corporation.
------
<PAGE>
Pre-Distribution Group: Premark and its present and former subsidiaries, and
----------------------
their respective present and former affiliates (including without limitation
Tupperware and its subsidiaries).
Premark Base Retirement Plan: the Premark International, Inc. Base
----------------------------
Retirement Plan.
Premark Director Option: an option to purchase from Premark shares of
-----------------------
Premark Common Stock granted to a non-employee director of Premark pursuant to
the Premark International, Inc. Director Stock Plan.
Premark Employee: any individual who is employed by Premark or any of its
----------------
subsidiaries immediately before the Cut-off Date and who is not a Tupperware
Employee.
Premark Former Employee: any individual who was, at any time before the Cut-
-----------------------
off Date, employed by any member of the Pre-Distribution Group, who is not a
Premark Employee or a Tupperware Employee, and whose most recent active
employment with any such member was with a Premark Business or a Former
Premark Business.
Premark Option: an option to purchase shares of Premark Common Stock granted
--------------
pursuant to the Premark Stock Plan.
Premark Phantom SAR: a right granted under the Premark Stock Plan to receive
-------------------
from Premark a payment in cash in an amount based upon the excess of the fair
market value per share of Premark Common Stock on the date of the exercise
over a specified exercise price per share.
Premark Ratio: the amount obtained by dividing the average of the daily high
-------------
and low trading prices on the New York Stock Exchange for the Premark Common
Stock on each of the five trading days prior to the ex-dividend date for the
Distribution by the average of the daily high and low trading prices on the
New York Stock Exchange for the Premark Common Stock on each of the five
trading days beginning with the ex-dividend date for the Distribution.
Premark Restricted Stock: restricted shares of Premark Common Stock granted
------------------------
pursuant to the Premark Stock Plan.
Premark Retiree Life Program: the Premark International, Inc. Group Benefits
----------------------------
Plan Retiree Life Program.
Premark Retiree Medical Program: the Premark International, Inc. Group
-------------------------------
Benefits Plan Retiree Medical Program.
Premark Retirement Savings Plan: the Premark International, Inc. Retirement
-------------------------------
Savings Plan.
Premark Stock Plan: the Premark International, Inc. 1994 Incentive Plan and
------------------
its predecessors.
Premark Supplemental Plan: the Premark International, Inc. Supplemental Plan.
-------------------------
Premark Welfare Plan: a Welfare Plan sponsored by Premark or a Premark
Subsidiary.
--------------------
Qualified Plan: an "employee pension benefit plan" as defined in Section
--------------
3(2) of ERISA which constitutes or is intended in good faith to constitute a
qualified plan under Section 401(a) of the Code.
Ratio: the amount obtained by dividing the average of the daily high and low
-----
trading prices on the New York Stock Exchange for the Premark Common Stock on
each of the five trading days prior to the ex-dividend date for the
Distribution by the average of the daily high and low trading prices on the
New York Stock Exchange for the Tupperware Common Stock on each of the five
trading days beginning with the ex-dividend date for the Distribution.
Retirement Savings Plan Assumption Plan: defined in Section 2.02(a).
---------------------------------------
2
<PAGE>
Transition Period: defined in Section 2.02(a).
-----------------
Tupperware Base Retirement Plan: a Qualified Plan of Tupperware established
pursuant to Section 2.01.
Tupperware Canadian Retirement Plan: a Registered Pension Plan of Tupperware
-----------------------------------
established pursuant to Section 2.07.
Tupperware Director Option: an option to purchase from Tupperware shares of
--------------------------
Tupperware Common Stock provided to a Common Non-Employee Director or a
Tupperware Non-Employee Director pursuant to Section 2.04(c).
Tupperware Employee: any individual who, immediately before the Cut-off
-------------------
Date, was employed by Premark or any of its subsidiaries (including Tupperware
and the Tupperware Subsidiaries) and who, on or immediately after the Cut-off
Date, or otherwise in connection with the Distribution, is employed by
Tupperware or a Tupperware Subsidiary.
Tupperware Former Employee: any individual who was, at any time before the
--------------------------
Cut-off Date, employed by any member of the Pre-Distribution Group, who is not
a Premark Employee or a Tupperware Employee, and whose most recent active
employment with any such member was with a Tupperware Business or a Former
Tupperware Business.
Tupperware Non-Employee Director: defined in Section 2.04(c)(i).
--------------------------------
Tupperware Option: an option to purchase from Tupperware shares of
-----------------
Tupperware Common Stock provided to a Tupperware Participant pursuant to
Section 2.04(a).
Tupperware Participants: Tupperware Employees, Tupperware Former Employees,
-----------------------
and their respective beneficiaries and dependents.
Tupperware Phantom SAR: a right to receive from Tupperware payment in cash
----------------------
in an amount based upon the excess of the fair market value per share of
Tupperware Common Stock on the date of exercise over a specified exercise
price per share, provided to a Tupperware Participant pursuant to Section
2.04(a).
Tupperware Qualified Plan: a Qualified Plan sponsored by Tupperware or a
-------------------------
Tupperware Subsidiary.
Tupperware Restricted Stock: restricted shares of Tupperware Common Stock
---------------------------
provided to Tupperware Participants pursuant to Section 2.04(b).
Tupperware Retirement Savings Plan: a Qualified Plan of Tupperware
----------------------------------
established pursuant to Section 2.02.
Tupperware Supplemental Plan: defined in Section 2.05(b).
----------------------------
Tupperware Welfare Plan: a Welfare Plan sponsored by Tupperware or a
-----------------------
Tupperware Subsidiary.
Unified Plan: the Premark Canada Inc. Unified Pension Plan.
------------
Welfare Plan: an "employee welfare benefit plan" as defined in Section 3(1)
------------
of ERISA (whether or not such plan is subject to ERISA).
Section 1.02 Schedules, Etc. Reference to a "Schedule" are, unless otherwise
---------------
specified, to one of the Schedules attached to this Agreement, and references
to a "Section" are, unless otherwise specified, to one of the Sections of this
Agreement.
3<PAGE>
ARTICLE II
Employee Benefits
-----------------
Section 2.01 Base Retirement Plans. (a) As soon as practicable after the
---------------------
date hereof and effective as of a date (the "Base Retirement Plan Assumption
Date") on or before the Cut-off Date, Tupperware shall establish the
Tupperware Base Retirement Plan and a related trust to assume liabilities of
and receive the transfer of assets from the Premark Base Retirement Plan
provided for in this Section 2.01. As of the Base Retirement Plan Assumption
Date, the Tupperware Participants shall cease to be participants in the
Premark Base Retirement Plan and shall become participants (to the extent they
are eligible) in the Tupperware Base Retirement Plan.
(b) Premark shall direct the trustee of the trust funding the Premark Base
Retirement Plan to transfer to the trustee of the trust funding the Tupperware
Base Retirement Plan, in cash, securities, other property or a combination
thereof, as agreed by Premark and Tupperware, an amount equal to (X) less (Y),
----
as adjusted by (Z); where (X) equals that portion of such assets of the
Premark Base Retirement Plan which represents the minimum amount of assets
necessary to satisfy the requirements of Section 414(l) of the Code and
Section 4044 of ERISA; where (Y) equals the aggregate payments made from the
trust relating to the Premark Base Retirement Plan in respect of such
participants who are Tupperware Participants from the Base Retirement Plan
Assumption Date through the date the transfer occurs; and where (Z) equals the
amount of the net earnings or losses, as the case may be, from the Base
Retirement Plan Assumption Date through the date the transfer occurs, on the
average of the daily balances of the foregoing and based upon the actual rate
of return earned by the Premark Base Retirement Plan during such period. All
of the foregoing calculations shall be determined by the Enrolled Actuary.
(c) Tupperware and Premark shall, in connection with the transfer described
in this Section 2.01, cooperate in making any and all appropriate filings
required under the Code or ERISA, and the regulations thereunder and any
applicable securities laws, implementing all appropriate communications with
participants, transferring appropriate records, and taking all such other
actions as may be necessary and appropriate to implement the provisions of
this Section 2.01 and to cause such transfer to take place as soon as
practicable after the Base Retirement Plan Assumption Date; provided, however,
that such transfer shall not take place until as soon as practicable after the
receipt of an opinion of Tupperware's counsel satisfactory to Premark's
counsel to the effect that the Tupperware Base Retirement Plan is in form
qualified under Section 401(a) of the Code and the related trust is in form
exempt under Section 501(a) of the Code. Premark agrees to provide to
Tupperware's counsel such information in the possession of Premark or any
Premark Subsidiary as may be reasonably requested by Tupperware's counsel in
connection with the issuance of such opinion. Premark agrees, during the
period ending with the date of the transfer of assets to the Tupperware Base
Retirement Plan, to cause distributions in respect of participants who are
Tupperware Participants to be made in the ordinary course from the trust
funding the Premark Base Retirement Plan in accordance with applicable law and
pursuant to plan provisions.
(d) Except as specifically set forth in this Section 2.01 and Section 2.12,
upon the completion of the transfer of assets provided for herein, effective
as of the Base Retirement Plan Assumption Date, Tupperware, the Tupperware
Subsidiaries and the Tupperware Base Retirement Plan shall assume, and shall
be solely responsible for, all Liabilities of the Pre-Distribution Group to or
with respect to Tupperware Participants under the Premark Base Retirement
Plan. Tupperware, the Tupperware Subsidiaries and the Tupperware Base
Retirement Plan shall be solely responsible for all Liabilities arising out of
or relating to the Tupperware Base Retirement Plan.
Section 2.02 The Retirement Savings Plans. (a) As soon as practicable after
----------------------------
the date hereof and effective as of a date (the "Retirement Savings Plan
Assumption Date") on or before the Cut-off Date, Tupperware shall establish
the Tupperware Retirement Savings Plan and a related trust to assume
liabilities of and receive the transfer of assets from the Premark Retirement
Savings Plan provided for in this Section 2.02. During the period (if any)
from the Retirement Savings Plan Assumption Date until such transfer of assets
takes place (the "Transition Period"), Tupperware shall cause contributions by
or in respect of Tupperware Participants to the Tupperware Retirement Savings
Plan to be held by the trustee of the Tupperware Retirement
4<PAGE>
Savings Plan in a short term investment fund. During the Transition Period (if
any), distributions in respect of Tupperware Participants shall be made from
the Premark Retirement Savings Plan in accordance with applicable law and
pursuant to plan provisions and Tupperware Participants shall otherwise be
treated as terminated participants under such plan, except that they shall not
be treated as having terminated employment for purposes of entitlement to
distributions or the repayment of outstanding loans solely as a result of
becoming Tupperware Participants. As of the end of the Transition Period or,
if there is no Transition Period, as of the Retirement Savings Plan Assumption
Date, Tupperware Participants shall cease to be participants in the Premark
Retirement Savings Plan and shall, to the extent they are eligible, become
participants in the Tupperware Retirement Savings Plan.
(b) As soon as practicable after the Retirement Savings Plan Assumption
Date, Premark and Tupperware shall take all actions as may be necessary or
appropriate in order to effect the transfer to the Tupperware Retirement
Savings Plan and the related trust of the respective account balances as of
the date of transfer of the participants in the Premark Retirement Savings
Plan who are Tupperware Participants. Such transfer shall be made in cash,
securities, other property or a combination thereof, as agreed by Premark and
Tupperware, but shall be effected, where practicable, in kind, so as to
preserve each such participant's investment election as in effect on the date
of such transfer.
(c) Tupperware and Premark shall cooperate in making all appropriate filings
required under the Code or ERISA, and the regulations thereunder and any
applicable securities laws, implementing all appropriate communications with
participants, transferring appropriate records, and taking all such other
actions as may be necessary and appropriate to implement the provisions of
this Section 2.02 and to cause the transfer of assets pursuant to Section
2.02(b) to take place as soon as practicable after the Retirement Savings Plan
Assumption Date; provided, however, that such transfer shall not take place
until as soon as practicable after the receipt of an opinion of Tupperware's
counsel satisfactory to Premark's counsel to the effect that the Tupperware
Retirement Savings Plan is in form qualified under Section 401(a) of the Code
and the related trust is in form exempt under Section 501(a) of the Code.
(d) Except as specifically set forth in this Section 2.02 and Section 2.12,
upon the completion of the transfer provided for herein, effective as of the
Retirement Savings Plan Assumption Date, Tupperware, the Tupperware
Subsidiaries and the Tupperware Retirement Savings Plan shall assume or
retain, as the case may be, and shall be solely responsible for, all
Liabilities of the Pre-Distribution Group to or with respect to Tupperware
Participants under the Premark Retirement Savings Plan. Tupperware, the
Tupperware Subsidiaries and the Tupperware Retirement Savings Plan shall be
solely responsible for all Liabilities arising out of or relating to the
Tupperware Retirement Savings Plan.
Section 2.03 Welfare Plans. Tupperware shall take, and shall cause the
-------------
Tupperware Subsidiaries to take, all actions necessary or appropriate to
establish, on or before the Cut-off Date, Tupperware Welfare Plans to provide
each Tupperware Participant with benefits substantially similar to the
benefits provided to him or her under the Premark Welfare Plans. From and
after the Cut-off Date, except as specifically set forth in Section 2.12,
Tupperware and the Tupperware Subsidiaries shall assume or retain, as the case
may be, and shall be solely responsible for, all Liabilities of the Pre-
Distribution Group in connection with claims by or in respect of Tupperware
Participants for benefits under the Premark Welfare Plans and the Tupperware
Welfare Plans, whether incurred before, on or after the Cut-off Date. Premark
agrees to provide Tupperware or its designated representative with such
information (in the possession of Premark or a Premark Subsidiary and not
already in the possession of Tupperware or a Tupperware Subsidiary) as may be
reasonably requested by Tupperware in order to carry out the requirements of
this Section 2.03.
Section 2.04 Stock Plans. (a) Premark and Tupperware shall take all action
-----------
necessary or appropriate (including obtaining the consent of the holders of
Premark Options and Premark Phantom SARs, if required) so that each Premark
Option and Premark Phantom SAR held by a Tupperware Participant that is
outstanding as of the Distribution Date shall be replaced with a Tupperware
Option or a Tupperware Phantom SAR, as the case
5<PAGE>
may be, with respect to a number of shares of Tupperware Common Stock equal to
the number of shares subject to such Premark Option or Premark Phantom SAR, as
the case may be, immediately before such replacement, times the Ratio, and
then, if any resultant fractional share of Tupperware Common Stock exists,
rounded [up] [down] to the nearest whole share, and with a per-share exercise
price equal to the per-share exercise price of such Premark Option or Premark
Phantom SAR, as the case may be, immediately before such replacement, divided
by the Ratio. Such Tupperware Option or Tupperware Phantom SAR, as the case
may be, shall otherwise have the same terms and conditions as the
corresponding Premark Option or Premark Phantom SAR, as the case may be,
except that references to Premark shall be changed to refer to Tupperware.
(b) Premark and Tupperware shall take all action necessary (including
obtaining the consent of the holders of Premark Restricted Stock, if
necessary) so that each award of Premark Restricted Stock held by a Tupperware
Participant (including any Tupperware Common Stock issued in the Distribution
with respect thereto) that is outstanding as of the Distribution Date is
converted into an award of a number of shares of Tupperware Restricted Stock
such that the sum of such number and the number of shares of Tupperware Common
Stock issued in the Distribution with respect to such Premark Restricted Stock
equals the number of shares of Premark Restricted Stock comprising such award
immediately before the Distribution Date, times the Ratio, and then, if any
resultant fractional share of Tupperware Common Stock exists, rounded [up]
[down] to the nearest whole share. Such converted award shall be subject to
the same schedule with respect to the lapse of restrictions and the same risks
of forfeiture as the corresponding Premark Restricted Stock immediately before
such conversion, and shall otherwise have the same terms and conditions as the
corresponding Premark Restricted Stock, except that references to Premark
shall be changed to references to Tupperware.
(c) (i) Premark and Tupperware shall take all action necessary or
appropriate (including obtaining the consent of the holders of Premark
Director Options, if required) so that each Premark Director Option held by an
individual who is a non-employee member of the Board of Directors of both
Tupperware and Premark (a "Common Non-Employee Director") and each Premark
Director Option held by an individual who is a non-employee member of the
Board of Directors of Tupperware but is not a member of the Board of Directors
of Premark (a "Tupperware Non-Employee Director") that is outstanding as of
the Distribution Date shall be replaced as set forth below.
(ii) Each such Premark Director Option held by a Common Non-Employee
Director shall be replaced with (i) a Tupperware Director Option and (ii) a
new Premark Director Option, in each case as more fully described below. Such
Tupperware Director Option shall constitute an option to purchase a number of
shares of Tupperware Common Stock equal to one-half the number of shares
subject to such Premark Director Option immediately before such replacement,
times the Ratio, and then, if any resultant fractional share of Tupperware
Common Stock exists, rounded [up] [down] to the nearest whole share, and with
a per-share exercise price equal to the per-share exercise price of such
Premark Director Option immediately before such replacement, divided by the
Ratio. Such Tupperware Director Option shall otherwise have the same terms and
conditions as the Premark Director Option it replaces in part, except that
references to Premark shall be changed to refer to Tupperware. Such new
Premark Director Option shall constitute an option to purchase a number of
shares of Premark Common Stock equal to one-half the number of shares subject
to such Premark Director Option immediately before such replacement, times the
Premark Ratio, and then, if any resultant fractional share of Premark Common
Stock exists, rounded [up] [down] to the nearest whole share, and with a per-
share exercise price equal to the per-share exercise price of such Premark
Director Option immediately before such replacement, divided by the Premark
Ratio.
(iii) Each such Premark Director Option held by a Tupperware Non-Employee
Director shall be replaced with a Tupperware Director Option to purchase a
number of shares of Tupperware Common Stock equal to the number of shares
subject to such Premark Director Option immediately before such replacement,
times the Ratio, and then, if any resultant fractional share of Tupperware
Common Stock exists, rounded [up] [down] to the nearest whole share, and with
a per-share exercise price of such Premark Director Option immediately before
such replacement, divided by the Ratio. Such Tupperware Director Option shall
otherwise have the same terms and conditions as the Premark Director Option it
replaces, except that references to Premark shall be changed to refer to
Tupperware.
6<PAGE>
(d) Effective as of the Distribution Date, except as specifically set forth
in Section 2.12, Tupperware and the Tupperware Subsidiaries shall assume and
be solely responsible for (i) all Liabilities of the Pre-Distribution Group to
or with respect to Tupperware Participants arising out of or relating to
Premark Options, Premark Phantom SARs and Premark Restricted Stock that are
outstanding as of the Distribution Date, and (ii) all Liabilities of the Pre-
Distribution Group to or with respect to Common Non-Employee Directors and
Tupperware Non-Employee Directors arising out of or relating to Premark
Director Options to the extent they are to be replaced by Tupperware Director
Options pursuant to Section 2.04(c). Tupperware and the Tupperware
Subsidiaries shall be solely responsible for all Liabilities arising out of or
relating to Tupperware Options, Tupperware Stock Units, Tupperware Restricted
Stock and Tupperware Director Options.
Section 2.05 Nonqualified Plans and Programs. (a) Effective as of the Cut-
-------------------------------
off Date, Tupperware and the Tupperware Subsidiaries shall assume and be
solely responsible for all Liabilities of the Pre-Distribution Group to or
relating to Tupperware Participants under all annual and long-term cash
incentive compensation plans of Premark, the Premark Subsidiaries, Tupperware
and the Tupperware Subsidiaries (the "Cash Incentive Plans"). Tupperware and
Premark shall cooperate in taking all actions necessary or appropriate to
adjust the performance goals and other terms and conditions of awards under
the Cash Incentive Plans for performance periods that begin before and end
after the Cut-Off Date as appropriate to reflect the Distribution, including,
but not limited to, amending any Cash Incentive Plan or grant thereunder and
obtaining any necessary consents of affected participants.
(b) Effective as of the Cut-off Date: (i) Tupperware and the Tupperware
Subsidiaries shall establish a plan (the "Tupperware Supplemental Plan")
substantially similar to the Premark Supplemental Plan to provide supplemental
retirement benefits to certain management and highly compensated employees;
(ii) Premark shall amend the Premark Supplemental Plan, if necessary, so that
no Tupperware Employee who is a participant therein shall be deemed to have
terminated employment as a result of the Distribution or as a result of
becoming a Tupperware Employee in connection with the Distribution; and (iii)
Tupperware and the Tupperware Subsidiaries shall assume and be solely
responsible for all Liabilities of the Pre-Distribution Group to or relating
to Tupperware Participants under the Premark Supplemental Plan. All deferral
elections and beneficiary designations made by Tupperware Participants under
the Premark Supplemental Plan shall remain in effect with respect to the
Tupperware Supplemental Plan from and after the Cut-off Date, until changed in
accordance with the Tupperware Supplemental Plan. Tupperware and Premark shall
cooperate in taking all actions necessary or appropriate to accomplish the
foregoing and to ensure that as of the Cut-off Date, Premark and the Premark
Subsidiaries cease to have any Liabilities to or relating to the Tupperware
Participants under the Premark Supplemental Plan, including, but not limited
to, amending the Premark Supplemental Plan or any grant thereunder and
obtaining any necessary consents of affected participants.
Section 2.06 Severance Pay. (a) Tupperware and Premark agree that
-------------
individuals who, in connection with the Distribution, cease to be Premark
Employees and become Tupperware Employees shall not be deemed to have
experienced a termination or severance of employment from Premark and its
subsidiaries for purposes of any policy, plan, program or agreement of Premark
or any of its subsidiaries that provides for the payment of severance, salary
continuation or similar benefits.
(b) Tupperware and the Tupperware Subsidiaries shall assume and be solely
responsible for all Liabilities of the Pre-Distribution Group in connection
with claims made by or on behalf of Tupperware Employees in respect of
severance pay, salary continuation and similar obligations relating to the
termination or alleged termination of any such person's employment on or after
the Cut-off Date.
Section 2.07 Canadian Unified Pension Plan. (a) As soon as practicable after
-----------------------------
the date hereof and effective as of January 1, 1996 (the "Canadian Assumption
Date"), Premark shall cause PreCan to establish the Tupperware Canadian
Retirement Plan and a related trust to assume liabilities of and receive the
transfer of assets from the Unified Plan provided for in this Section 2.07. As
of the Canadian Assumption Date, the Tupperware Employees shall cease to be
participants in the Unified Plan and shall become participants (to the extent
they are
7<PAGE>
eligible) in the Tupperware Canadian Retirement Plan. As soon as practicable
after Tupperware has established a Tupperware Subsidiary that is a Canadian
corporation, Premark shall cause PreCan to transfer sponsorship of the
Tupperware Canadian Retirement Plan to such Tupperware Subsidiary, and
Tupperware shall cause such Tupperware Subsidiary to accept such sponsorship.
(b) Premark shall direct, or shall cause PreCan to direct, the trustee of
the trust funding the Unified Plan to transfer to the trustee of the trust
funding the Tupperware Canadian Retirement Plan, all of the assets
attributable to accounts of Tupperware Participants under the Unified Plan
[treatment of surplus to be determined].
(c) Tupperware and Premark shall cooperate, and Premark shall cause PreCan
to cooperate, in connection with the transfers described in this Section 2.07,
in making any and all appropriate filings required under the Pension Benefits
Act (Ontario) and the Income Tax Act (Canada), the regulations thereunder and
any other applicable legislation, implementing all appropriate communications
with participants, transferring appropriate records, and taking all such other
actions as may be necessary and appropriate to implement the provisions of
this Section 2.07 and to cause such transfers to take place as soon as
practicable after the Canadian Assumption Date; provided, however, that such
transfers shall not take place until receipt of approval from the appropriate
government pension supervisory authorities. PreCan agrees, during the period
ending with the date of the transfer of assets to the Tupperware Canadian
Retirement Plan, to cause distributions in respect of participants who are
Tupperware Participants to be made in the ordinary course from the Tupperware
accounts within the trust funding the Unified Plan in accordance with
applicable law and pursuant to plan provisions.
(d) Except as specifically set forth in this Section 2.07 and in Section
2.12, upon the completion of the transfer of assets provided for herein,
effective as of the Canadian Assumption Date, Tupperware, the Tupperware
Subsidiaries and the Tupperware Canadian Retirement Plan shall assume, and
shall be solely responsible for, all Liabilities of the Pre-Distribution Group
to or with respect to Tupperware Participants under the Unified Plan.
Tupperware, the Tupperware Subsidiaries and the Tupperware Canadian Retirement
Plan shall be solely responsible for all Liabilities arising out of or
relating to the Tupperware Canadian Retirement Plan.
Section 2.08 Employment Agreements. (a) As of the Cut-off Date, Tupperware
---------------------
and the Tupperware Subsidiaries shall assume and be solely responsible for all
Liabilities of Premark and its Subsidiaries pursuant to the employment
agreement(s) listed on Schedule A hereto.
(b) Effective as of the Distribution Date, Tupperware shall enter into
change-of-control employment agreements substantially in the form attached
hereto as Exhibit A with each of the individuals listed on Schedule B hereto.
Section 2.09 Other Liabilities and Obligations. As of the Cut-off Date,
---------------------------------
except as otherwise agreed by the parties hereto, Tupperware and the
Tupperware Subsidiaries shall assume and be solely responsible for all
Liabilities of the Pre-Distribution Group not otherwise provided for in this
Agreement to or relating to Tupperware Participants arising out of or relating
to employment by any of Premark, the Premark Subsidiaries, Tupperware or the
Tupperware Subsidiaries, or any predecessors thereof, including without
limitation the Former Tupperware Businesses.
Section 2.10 Recognition of Premark Employment Service, etc. The Tupperware
----------------------------------------------
Qualified Plans, the Tupperware Welfare Plans, and all other employee benefit
plans, programs and policies of Tupperware shall recognize service before the
Distribution with the Pre-Distribution Group as service with Tupperware and
the Tupperware Subsidiaries. Each Tupperware Welfare Plan shall provide
benefits to Tupperware Participants without interruption or change solely as a
result of the transition from the corresponding Premark Welfare Plans, and
without limiting the generality of the foregoing: (i) shall, to the extent
applicable, recognize all amounts applied to deductibles, out-of-pocket
maximums and lifetime maximum benefits with respect to Tupperware Participants
under the corresponding Premark Welfare Plan for the plan year that includes
the Cut-off Date and for prior periods (if applicable); (ii) shall, to the
extent applicable, not impose any limitations on coverage of pre-existing
conditions of Tupperware Participants except to the extent such limitations
applied to such
8<PAGE>
Tupperware Participants under the corresponding Premark Welfare Plan
immediately before such Tupperware Welfare Plan became effective; and (iii)
shall not impose any other conditions (such as proof of good health, evidence
of insurability or a requirement of a physical examination) upon the
participation by Tupperware Participants who were participating in the
corresponding Premark Welfare Plan immediately before such Tupperware Welfare
Plan became effective.
Section 2.11 Special Provisions. (a) Notwithstanding any other provision of
------------------
this Agreement, the Chairman of Premark shall not be treated as a Premark
Employee or a Tupperware Employee for purposes of this Agreement, no provision
of this Agreement shall apply to him, and all Liabilities relating to or
arising out of his employment with Premark or Tupperware shall be dealt with
as specifically determined by the Board of Directors of Premark before the
Cut-off Date.
(b) Premark and the Premark Subsidiaries shall retain all Liabilities of the
Pre-Distribution Group to or relating to the Former Dart Business Employees
and their beneficiaries and dependents under the Premark Base Retirement Plan,
the Premark Retirement Savings Plan, the Premark Retiree Medical Program and
the Premark Retiree Life Program.
Section 2.12 (a) Plan Audits. If any audit, examination or similar
-----------
proceeding with respect to any Premark Qualified Plan or Premark Welfare Plan
or the Unified Plan by the Internal Revenue Service, the U.S. Department of
Labor, any government pension supervisory authority of Canada or Ontario, or
any other governmental authority, or any litigation arising out of such an
audit, examination or similar proceeding, that pertains (in whole or in part)
to a period before the Cut-off Date results in the imposition of any
Liability, then the portion of such Liability that pertains to a period before
the Cut-off Date (an "Audit Liability") shall be allocated between Tupperware
and Premark as set forth in this Section 2.12; provided, that the term "Audit
--------
Liability" shall not include any portion of such a Liability that results from
the loss of any compensation deduction or any related interest or penalties
(which shall be governed by the Tax Sharing Agreement).
(b) To the extent that an Audit Liability takes the form of a payment to any
Tupperware Participant or of a benefit under a plan or a contribution to a
trust or other funding vehicle relating to a plan, or interest on such a
payment or contribution, there shall be allocated to Tupperware the portion of
such Audit Liability that is attributable to Tupperware Participants.
(c) Any Audit Liability that takes the form of a penalty, fine or other
liability imposed as a result of the manner in which a plan was administered
(including without limitation as a result of the failure to make a required
filing or participant communication) and that is not described in Section
2.12(b) above shall be allocated to Tupperware if Tupperware or a Tupperware
Subsidiary was responsible for such administration; to Premark if Premark or a
Premark Subsidiary, other than Tupperware or a Tupperware Subsidiary, was
responsible for such administration; and equally between Tupperware and
Premark if the responsibility for such administration was shared or cannot be
clearly determined.
(d) If an Audit Liability arises, the allocation of which is not addressed
in Section 2.12(b) or (c), or if there arises any other dispute concerning the
allocation of Audit Liabilities, such allocation or dispute shall be subject
to the dispute resolution and arbitration provisions of the Distribution
Agreement.
Section 2.13 Indemnification. All Liabilities retained or assumed by or
---------------
allocated to Tupperware or any Tupperware Subsidiary pursuant to this
Agreement shall be deemed to be Tupperware Liabilities, as defined in the
Distribution Agreement, and all Liabilities retained or assumed by or
allocated to Premark or any Premark Subsidiary pursuant to this Agreement
shall be deemed to be Premark Liabilities, as defined in the Distribution
Agreement and, in each case, shall be subject to the indemnification
provisions set forth in Article IV thereof.
9<PAGE>
ARTICLE III
Miscellaneous
-------------
Section 3.01 Guarantee of Subsidiaries' Obligations. Each of the parties
--------------------------------------
hereto shall cause to be performed, and hereby guarantees the performance and
payment of, all actions, agreements, obligations and liabilities set forth
herein to be performed or paid by any subsidiary of such party which is
contemplated by the Distribution Agreement to be a subsidiary of such party on
or after the Distribution Date.
Section 3.02 Failure of Premark and Tupperware To Agree on Certain
-----------------------------------------------------
Determinations. (a) In any case in which Tupperware or Premark shall disagree
- --------------
with the determination of an amount which this Agreement requires to be made
by the Enrolled Actuary, each such disagreeing party shall have the right
within 30 days after receipt of notice of such determination to engage at its
own expense, an enrolled actuary to make the determination of such amount. If
the amount determined by such actuaries should differ, such amount shall be
determined by another enrolled actuary selected by agreement between or among
the Enrolled Actuary and the enrolled actuary or enrolled actuaries.
(b) Any other dispute concerning the matters addressed by this Agreement
shall, except as specifically provided in Section 2.12, be subject to the
dispute resolution and arbitration provisions of the Distribution Agreement.
Section 3.03 Sharing of Information. Each of Premark and Tupperware shall,
----------------------
and shall cause each of their respective Subsidiaries to, provide to the other
all such information in its possession as the other may reasonably request to
enable it to administer its employee benefit plans and programs, and to
determine the scope of, and fulfill, its obligations under this Agreement.
Such information shall, to the extent reasonably practicable, be provided in
the format and at the times and places requested, but in no event shall the
party providing such information be obligated to incur any direct expense not
reimbursed by the party making such request, nor to make such information
available outside its normal business hours and premises. The right of the
parties to receive information hereunder shall, without limiting the
generality of the foregoing, extend to any and all reports, and the data
underlying such reports, prepared by the Enrolled Actuary in making any
determination under this Agreement or by any third party engaged pursuant to
Section 2.12.
Section 3.04 Governing Law. Subject to applicable federal law, this
-------------
Agreement shall be governed by and construed in accordance with the laws of
the State of Delaware, without regard to the principles of conflicts of laws
thereof.
Section 3.05 Notices. All notices, requests, claims, demands and other
-------
communications hereunder shall be in writing and shall be delivered by hand,
mailed by registered or certified mail (return receipt requested), or sent by
cable, telegram, telex or telecopy (confirmed by regular, first-class mail),
to the parties at the following addresses (or at such other addresses for a
party as shall be specified by like notice) and shall be deemed given on the
date on which such notice is received:
if to Premark:
Premark International, Inc.
1717 Deerfield Road
Deerfield, Illinois 60015
Attention: General Counsel
if to Tupperware:
Tupperware Corporation
14901 South Orange Blossom Trail
P.O. Box 2353
Orlando, Florida 32802
Attention: General Counsel
10<PAGE>
Section 3.06 Amendments. This Agreement may not be modified or amended
----------
except by an agreement in writing signed by the parties.
Section 3.07 Successors and Assigns. This Agreement and all of the
----------------------
provisions hereof shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns.
Section 3.08 Termination. This Agreement shall be terminated in the event
-----------
that the Distribution Agreement is terminated and the Distribution abandoned
prior to the Distribution Date. In the event of such termination, neither
party shall have any liability of any kind to the other party.
Section 3.09 Rights to Amend or Terminate Plans; No Third Party
--------------------------------------------------
Beneficiaries. No provision of this Agreement shall be construed (a) to limit
- -------------
the right of Premark, any Premark Subsidiary, Tupperware or any Tupperware
Subsidiary to amend any plan or terminate any plan, or (b) to create any right
or entitlement whatsoever in any employee or beneficiary including, without
limitation, a right to continued employment or to any benefit under a plan or
any other benefit or compensation. This Agreement is solely for the benefit of
the parties hereto and their respective subsidiaries and should not be deemed
to confer upon third parties any remedy, claim, liability, reimbursement,
claim of action or other right in excess of those existing without reference
to this Agreement.
Section 3.10 Titles and Headings. Titles and headings to sections herein are
-------------------
inserted for the convenience of reference only and are not intended to be a
part of or to affect the meaning or interpretation of this Agreement.
Section 3.11 Legal Enforceability. Any provision of this Agreement which is
--------------------
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.
In Witness Whereof, the parties have caused this Agreement to be duly
executed as of the day and year first above written.
Premark International, Inc.
By: _________________________________
Name:
Title:
Tupperware Corporation
By: _________________________________
Name:
Title:
11<PAGE>
SCHEDULE A
EMPLOYMENT AGREEMENTS
TO BE ASSUMED BY
TUPPERWARE
Letter Agreement dated November 9, 1992 between Everett V. Goings and Premark
International, Inc. (signed by James M. Ringler)
<PAGE>
SCHEDULE B
INDIVIDUALS TO HAVE
CHANGE OF CONTROL
EMPLOYMENT AGREEMENTS
WITH TUPPERWARE
Warren L. Batts
E. V. Goings
Luis G. Campos
Christian E. Skroeder
Paul B. Van Sickle
Robert W. Williams
Carol A. Kiryluk
Thomas M. Roehlk
David T. Halversen
James E. Rose, Jr.
Mark H. Bobek
Brian R. Biggin
Christine J. Hanneman
Gaylin Olson
Hans Joachim Schwenzer
Jose R. Timmerman
<PAGE>
EXHIBIT A
FORM OF CHANGE OF CONTROL
EMPLOYMENT AGREEMENT
EXHIBIT 11
PREMARK INTERNATIONAL, INC.
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
1995 1994 1993
(Dollars in millions, shares in thousands) -------- -------- --------
Earnings
Income from continuing operations $ 78.9 $ 70.8 $ 50.5
Income from discontinued operations 177.0 154.7 122.0
-------- -------- --------
Income from operations 255.9 225.5 172.5
Costs to effect the
business discontinuance (18.3) - -
-------- -------- --------
Net income $ 237.6 $ 225.5 $ 172.5
======== ======== ========
PRIMARY METHOD
Shares
Cumulative average outstanding shares 61,526 63,637 63,684
Common equivalent shares 2,304 2,891 3,359
-------- -------- --------
Weighted average number of common
shares and common equivalent
shares outstanding 63,830 66,528 67,043
======== ======== ========
Primary earnings per share:
Income from continuing operations $ 1.24 $ 1.06 $ 0.75
Income from discontinued operations 2.77 2.33 1.82
-------- -------- --------
Income from operations 4.01 3.39 2.57
Costs to effect the
business discontinuance (0.29) - -
-------- -------- --------
Net income $ 3.72 $ 3.39 $ 2.57
======== ======== ========
FULLY DILUTED METHOD
Shares
Cumulative average outstanding shares 61,526 63,637 63,684
Common equivalent shares 2,331 2,928 3,544
-------- -------- --------
Weighted average number of common
shares and common equivalent
shares outstanding 63,857 66,565 67,228
======== ======== ========
Fully diluted earnings per share:
Income from continuing operations $ 1.24 $ 1.06 $ 0.75
Income from discontinued operations 2.77 2.33 1.82
-------- -------- --------
Income from operations $ 4.01 $ 3.39 $ 2.57
Costs to effect the
business discontinuance (0.29) - -
-------- -------- --------
Net income $ 3.72 $ 3.39 $ 2.57
======== ======== ========
EXHIBIT 13
FINANCIAL REVIEW
On November 1, 1995, the company's board of directors authorized management to
proceed with a plan to establish Tupperware as an independent company through a
stock distribution to Premark's shareholders (the Distribution). The
Distribution is subject to final approval by the board of directors; the
favorable outcome of a ruling requested from the Internal Revenue Service as to
the qualification of the Distribution as a tax-free event or the receipt of an
acceptable opinion from outside legal counsel as to the non-taxability of the
event; and the effectiveness of a registration statement filed with the
Securities and Exchange Commission. The Distribution is expected to be
effected by the end of the second quarter of 1996. Tupperware has been
reported as a discontinued operation in these financial statements. The
information contained in this financial review should be read in conjunction
with the consolidated financial information on pages 40 to 53 of this Annual
Report.
RESULTS OF OPERATIONS
Overall
Net Income
Net income rose 5 percent in 1995 to $237.6 million, or $3.72 per share, from
$225.5 million, or $3.39 per share, in 1994. Included in 1995's net income is
an $18.3 million after-tax charge for the costs to effect the Distribution.
Excluding this charge, net income would have risen by 14 percent to $255.9
million, or $4.01 per share. Net income in 1994 was 31 percent higher than
1993 net income of $172.5 million.
Continuing Operations
The Food Equipment, Decorative Products and Consumer Products groups comprise
continuing operations.
Net Sales and Income from Operations
Sales from continuing operations increased by 5 percent to $2.2 billion in 1995
from $2.1 billion in 1994, mostly due to increases in the Food Equipment
Group's domestic operations and the inclusion of international acquisitions.
In 1994, sales increased by 13 percent over 1993, as all businesses reported
strong improvement, led by a robust Food Equipment Group. Income from
continuing operations rose 12 percent to $78.9 million in 1995, from $70.8
million in 1994, led by strong domestic Food Equipment Group operations and the
absence of the 1994 adhesive provision at Wilsonart. In 1994, income from
continuing operations rose by 40 percent to $70.8 million from $50.5 million in
1993. All businesses had double digit percentage point gains except Florida
Tile, which had a loss. In 1995 and 1994, respectively, 25 percent and 22
percent of net sales, and in both 1995 and 1994, 13 percent of segment profit,
were generated outside of the United States.
Costs and Expenses
The cost of products sold in relation to sales was 64.2 percent, 64.6 percent
and 65.3 percent in 1995, 1994 and 1993, respectively. Delivery, sales and
administrative expense as a percentage of sales was 29.3 percent, 29.2 percent
and 30.0 percent in 1995, 1994 and 1993, respectively.
Tax Rate
The effective tax rates for continuing operations for 1995, 1994 and 1993 were
34.4 percent, 36.1 percent and 32.1 percent, respectively. The 1995 decrease
reflects a change in the estimate of the cost of repatriating foreign earnings
to the United States. The higher rate in 1994 compared with 1993 resulted from
a smaller reduction in domestic valuation allowances and the absence of the
impact of the 1993 change in the U.S. federal statutory rate. These factors
more than offset the impact of lower foreign income taxes, which resulted from
the ability to recognize previously reserved tax assets.
Net Interest Expense
Interest expense, net of interest income, was $24.6 million in 1995, $18.2
million in 1994 and $13.5 million in 1993. Net interest expense of continuing
operations reflects interest accrued and earned on all of Premark's borrowings
and invested cash, excluding amounts that are owed or held by Tupperware,
respectively. The increase in 1995 net interest expense compared with 1994
reflects both increased average borrowings and a higher average interest rate.
The higher net interest expense for 1994 compared with 1993 is the result of
substantially higher short-term borrowings in 1994.
As more fully described in the "Financial Condition" section of this Financial
Review, Dart Industries, Inc. (Dart), a subsidiary of Tupperware, will pay a
significant dividend to Premark immediately prior to the Distribution, which
will be used to substantially reduce Premark's outstanding debt.
Segments
Food Equipment Group
Sales and Segment Profit 1995 vs. 1994
The Food Equipment Group's 1995 sales of $1.2 billion were 9 percent higher
than 1994 sales of $1.1 billion. The increase reflects the favorable impact of
foreign exchange, the inclusion of international acquisitions and slightly
higher domestic sales. Segment profit rose 14 percent to $91.9 million in 1995
from $80.6 million in 1994, primarily due to improved North American results.
For 1995 and 1994, respectively, the Food Equipment Group accounted for 56
percent and 54 percent of sales, and 55 percent and 52 percent of segment
profit from continuing operations.
Regional Results
Sales in the United States rose by 3 percent in 1995 to $710.8 million
reflecting both increased equipment sales and service revenues as a result of a
slightly higher volume and nominal price increases. Segment profit increased
15 percent to $71.1 million in 1995 from $61.8 million in 1994 as a result of
the higher sales.
European sales rose by $73.0 million in 1995 to $442.2 million, a 20-percent
improvement from 1994. A significant portion of the increase was from the
impact of favorable foreign exchange and the acquisition in 1995 of Ungermann,
the leading German supplier of refrigeration equipment for the baking industry.
Excluding these factors, the 1995 sales increase was 5 percent, led by
improvements in France and the United Kingdom. Segment profit decreased by 2
percent to $15.5 million from $15.8 million in 1994, as the effect of improved
volume was more than offset by higher manufacturing costs and start-up costs
for Ungermann. Markets in this region improved early in the year, but softened
in the second half.
Sales by the Group's other international operations were $84.8 million, an
increase of 8 percent from $78.5 million in 1994. Inclusion of Australia,
which was acquired during 1994, higher volume and improved pricing in Canada,
and an acquisition in Brazil more than offset a foreign exchange-related
decrease in Mexico. Segment profit increased by 78 percent to $5.3 million
from $3.0 million in 1994, due to the improved pricing in Canada and the
absence of 1994's start-up costs associated with the acquisition of
distributorships in Japan and Australia.
1994 vs. 1993
Sales by the Food Equipment Group increased by 12 percent in 1994 to $1.1
billion from $1.0 billion in 1993. The increase reflected very strong U.S.
sales, a good improvement in Europe and the acquisition of the Japanese and
Australian distributorships. Segment profit rose 57 percent to $80.6 million
from $51.3 million in 1993 as a result of the higher volume, which was only
partially offset by the costs associated with the new international operations.
Decorative Products Group
Sales and Segment Profit 1995 vs. 1994
The Decorative Products Group's 1995 sales of $686.6 million were slightly
below 1994 sales of $690.0 million. Segment profit was $50.4 million in 1995, a
38-percent improvement from $36.5 million in 1994, due to the absence of
Wilsonart's 1994 provision for adhesive claims. For 1995 and 1994,
respectively, the Decorative Products Group accounted for 31 percent and 32
percent of sales, and 30 percent and 23 percent of segment profit from
continuing operations.
Wilsonart sales in 1995 were even with 1994, reflecting slightly higher sales
prices offset by lower volume. Wilsonart's market share rose in 1995, but
industry-wide sales softened in the second half in conjunction with lower
housing starts. Wilsonart had a strong increase in segment profit primarily
due to the absence of the $18.0 million provision for adhesive claims in 1994
as well as higher sales prices. These factors more than offset the impact of
the lower volume and higher raw material costs, marketing expenses associated
with new product development and introductions, and international sales
efforts.
Florida Tile's sales declined slightly in 1995 on lower volume. The unit
earned a segment profit in 1995 versus a loss in 1994. The prior year included
costs for new computer systems and accruals made for environmental issues.
Production costs in 1995 declined due to improved production technology and a
change in product mix. Hartco's 1995 sales were also slightly below its 1994
sales, and its segment profit declined significantly, both as a result of lower
volume.
1994 vs. 1993
The Decorative Products Group had 1994 sales of $690.0 million, a 12-percent
increase from $618.3 million in 1993. Wilsonart and Florida Tile had strong
improvements in sales compared with 1993, and Hartco had a substantial
increase.
Segment profit increased by 9 percent to $36.5 million in 1994 from $33.4
million in 1993 as a result of the higher sales and lower manufacturing costs,
which were only partially offset by higher operating costs.
Consumer Products Group
Sales and Segment Profit 1995 vs. 1994
Sales of the Consumer Products Group in 1995 were $289.0 million compared with
$292.8 million in 1994. Segment profit in 1995 decreased by 36 percent to
$25.3 million from $39.4 million in 1994 due to an $8 million first quarter
charge for a bread maker recall by West Bend and lower sales volume at Precor,
especially in the first quarter. For 1995 and 1994, respectively, the Consumer
Products Group accounted for 13 percent and 14 percent of sales, and 15 percent
and 25 percent of segment profit from continuing operations.
West Bend had a slight sales increase in 1995 compared with 1994. Housewares
had volume improvement in bread makers that was largely offset by decreases in
most other product lines. Direct-to-the-home cookware sales increased
modestly. Segment profit decreased significantly due to the provision for the
bread maker recall and higher raw material costs, which more than offset the
benefit of higher volume. Management does not expect any significant ongoing
impact as a result of the bread maker recall. Precor had a double digit
percentage point decrease in sales in 1995 compared with 1994. The decline
reflects lower volume from weak industry conditions, although the year-to-year
sales comparison improved in the fourth quarter. The unit's segment profit
declined substantially as a result of the lower volume.
1994 vs. 1993
Consumer Products Group sales of $292.8 million in 1994 were $53.4 million, or
22 percent, higher than 1993 sales of $239.4 million. West Bend's sales were
significantly higher than in 1993 on the strength of higher bread maker sales.
Precor had a good improvement in sales in 1994 over 1993 from higher treadmill
sales. Segment profit increased by 73 percent to $39.4 million in 1994 from
$22.8 million in 1993, as a result of the higher sales volume and an improved
cost structure at Precor.
Discontinued Operations
Net Sales and Income from Operations
Tupperware's sales in 1995 of $1.4 billion were 7 percent higher than 1994
sales of $1.3 billion due to improvement in its international operations and
the benefit of favorable foreign exchange, which more than offset a decline in
the United States. In 1994, sales increased by 9 percent over 1993 sales of
$1.2 billion, led by Asia Pacific and Europe, Africa and the Middle East.
Tupperware's income from operations increased by 14 percent to $177.0 million
in 1995, compared with $154.7 million in 1994, also on the strength of
international operations and the benefit of favorable foreign exchange.
Partially offsetting these factors was lower profit in the United States.
Income from operations in 1994 improved by 27 percent from $122.0 million in
1993 as a result of the higher sales, along with lower cost of products and
lower interest expense. In 1995 and 1994, respectively, 85 percent and 82
percent of Tupperware's sales and 97 percent and 93 percent of its segment
profit were from operations outside of the United States.
Costs and Expenses
The cost of products sold in relation to sales was 35.4 percent, 36.2 percent
and 37.5 percent in 1995, 1994 and 1993, respectively. 1995's improvement was
the result of reduced manufacturing costs along with selected price increases,
which outweighed significant increases in raw material costs. The 1994
decrease resulted from manufacturing efficiencies in Asia Pacific and Latin
America. Delivery, sales and administrative expense as a percentage of sales
was 47.5 percent in 1995, and 48.2 percent in both 1994 and 1993. The ratio
improved in 1995 compared with 1994 due to the higher 1995 sales while costs
were contained.
Tax Rate
The effective tax rates for 1995, 1994 and 1993, were 24.4 percent, 22.7
percent and 21.4 percent, respectively. The 1995 increase reflects the absence
of the 1994 reduction of valuation allowances against certain deferred tax
assets, partially offset by the effect of the favorable resolution of certain
tax contingencies. The higher effective rate in 1994 compared with 1993
reflects a lower realization of foreign tax benefits.
Net Interest
In 1995 and 1994, Tupperware had net interest income of $1.7 million and $0.1
million, respectively. In 1993, it had net interest expense of $12.6 million.
As a subsidiary of Premark, Tupperware's income only reflects interest on legal
obligations owed or on amounts held by Tupperware. As more fully described in
the "Financial Condition" section of this Financial Review, Dart will pay a
special dividend to Premark immediately prior to the Distribution, which will
substantially increase the debt of Tupperware.
Regional Results
1995 vs. 1994
Europe, Africa and the Middle East
Sales increased by 10 percent in 1995 to $595.1 million from $540.1 million in
1994, due to the favorable impact of foreign exchange. Segment profit
increased by 25 percent, led by the impact of foreign exchange, as well as
higher profit in Germany, a smaller loss in the United Kingdom and lower area
administrative costs. Excluding foreign exchange, 1995 sales were even with
1994, and segment profit increased by 12 percent as the result of modest gross
margin improvement and lower operating expenses as a percentage of sales. In
1995 and 1994, respectively, the region accounted for 44 percent and 42 percent
of Tupperware's sales.
The United Kingdom and Spain reported the most significant sales declines, but
operating efficiencies in both countries resulted in profit improvement. 1995
sales in Germany, which accounts for a substantial portion of sales and segment
profit in the region, were even with 1994. Germany's segment profit, however,
increased due to improved margins. Combined 1995 sales of the other countries
in the region exceeded 1994 sales.
The Americas
Sales in the Americas totaled $408.2 million in 1995, an increase of 1 percent
over 1994 sales of $403.9 million. Substantial increases in Brazil and
Venezuela were partially offset by large decreases in Mexico, due to the
devaluation of the peso, and in the United States. Segment profit decreased by
6 percent, as lower results in the United States more that offset improvement
in Latin America. Excluding the impact of foreign exchange, sales and profits
increased by 12 percent and 36 percent, respectively, in 1995 compared with
1994. The region accounted for 30 percent and 32 percent of Tupperware's sales
in 1995 and 1994, respectively.
U.S. sales in 1995 were $207.6 million, a 9-percent decrease from $227.5
million in 1994, due to lower volume. Segment profit decreased by 36 percent
to $10.3 million from $16.0 million in 1994, primarily reflecting the lower
sales volume. The number of consultants grew by 4 percent, and the average
active sales force grew by 2 percent, but there was a large decrease in the
productivity of the sales force. Latin America's sales increased by 15 percent
in 1995 to $175.2 million compared with 1994's $151.9 million, and segment
profit increased by 18 percent. In Latin America, a net of 69 new distributors
were added in 1995. The total number of consultants more than doubled, and the
average active sales force grew by 68 percent. Brazil and Venezuela led the
improvements in sales and profit, and Mexico's sales increased significantly in
local currency terms. Despite a weaker Mexican peso, the improvement in Latin
America, particularly in Brazil, was attributable to relatively stable economic
conditions, a focus on recruiting and distributor expansion, streamlining of
operations and simplified promotional programs.
Asia Pacific
Sales in Asia Pacific were $355.1 million in 1995, an 8-percent improvement
compared with 1994 sales of $329.3 million. The increase was the result of
favorable foreign exchange, along with operational improvements in the
Philippines, Korea and some of the region's smaller markets. Offsetting these
increases was a decline in Japan due to lower sales in the beginning of the
year after the Kobe earthquake. Segment profit increased by 28 percent in
1995, due to a significant increase in Korea and improvement in Australia,
along with favorable foreign exchange. The region accounted for 26 percent of
Tupperware's sales in both 1995 and 1994.
The sales increase in the Philippines was the result of a substantial increase
in the average active sales force, while the Korean increase reflects a strong
improvement in sales force productivity. The segment profit improvement in
Korea was from the higher volume, along with improved margins. Australia's
profit rose primarily due to lower promotional costs.
1994 vs. 1993
Sales rose by 9 percent in 1994 to $1.3 billion from $1.2 billion in 1993, led
by Asia Pacific and Europe, Africa, and the Middle East. 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. The
worldwide active sales force increased by 15 percent.
FINANCIAL CONDITION
Liquidity and Capital Resources
Under the Distribution Agreement between Premark, Tupperware and Dart,
immediately prior to the Distribution, Dart will pay a special dividend to
Premark. The amount of the special dividend is dependent upon Premark's
financial position immediately prior to the Distribution. Based on Premark's
financial position as of December 30, 1995, the dividend would have been
calculated to be $184.9 million on that date.
The total debt-to-capital ratio, including debt of discontinued operations, at
the end of 1995 was 25.1 percent compared with 17.5 percent at the end of 1994.
As of December 30, 1995, the company had unused lines of credit of $660.5
million, of which $184.0 million were foreign lines for Tupperware. Of the
$476.5 million of lines of credit for continuing operations, $250 million was
under an unsecured revolving credit facility, which expires in May 1999. Prior
to the Distribution, Premark expects to enter into a new credit agreement that
along with continuing uncommitted lines of credit and other borrowing sources,
is expected to be adequate to fund operating and investing requirements.
Working capital of continuing operations was $276.6 million at the end of 1995,
compared with $281.1 million and $301.2 million at the end of 1994 and 1993,
respectively. The current ratio was 1.5-to-1 at the end of 1995 and 1994, and
1.8-to-1 at the end of 1993. The major differences in the components of
working capital in 1995 versus 1994 were higher accounts receivable,
inventories and deferred income tax benefits, which were more than offset by
significantly higher short-term borrowings. The higher accounts receivable
were primarily at the Food Equipment Group, reflecting higher sales levels.
The increase in short-term borrowings reflects the significant amount of share
repurchases during the year. The primary components of the decrease in working
capital in 1994 compared with 1993 were higher accruals including adhesive
claims, partially offset by higher inventory levels to support higher sales.
Operating Activities
Cash provided by operating activities was $53.4 million in 1995, compared with
$184.0 million in 1994 and $144.5 million in 1993. The 1995 decrease was the
result of the timing of payments for raw materials and sourced product along
with payments made in connection with a tax planning transaction, partially
offset by lower incremental investments in accounts receivable and inventories
compared with 1994. The increase in 1994 compared with 1993 reflects a shift
in the timing of income tax payments and the receipt of amounts due from
insurers in connection with Wilsonart's adhesive claims. These factors were
partially offset by higher levels of accounts receivable and inventories,
particularly at the Food Equipment Group and West Bend.
Investing Activities
For 1995, 1994 and 1993, respectively, capital expenditures amounted to $85.7
million, $69.5 million and $60.5 million. The increase in expenditures in 1995
compared with 1994 primarily reflects additions by the Food Equipment Group,
Wilsonart and Florida Tile. The most significant factor in the 1994 increase
over 1993 was expenditures by the Food Equipment Group. Capital expenditures
are expected to be approximately $100 million in 1996.
Dividends
In 1995, dividends declared per common share were $1.01, up from 74 cents in
1994 and 54 1/2 cents in 1993. Quarterly dividends increased to 27 cents and
20 cents in the second quarters of 1995 and 1994, respectively.
Share Repurchases
In August 1995, the company announced the authorization by its board of
directors of the repurchase of 6 million of its shares of common stock, with
volume and timing to depend on market conditions. Under this plan, through
December 30, 1995, and March 4, 1996, respectively, the company had repurchased
496,000 shares and 588,000 shares at an average cost of $51 in both periods.
The company expects to continue to make modest share repurchases through the
date of the Distribution. Subsequently, both Premark and Tupperware will
evaluate whether to implement share repurchase programs.
The company's previous stock repurchase plan was announced in May 1993 and was
completed on March 14, 1995. Under the plan, the company repurchased a total
of 6 million of its shares of common stock at an average cost of $41 per share.
Of the total shares repurchased, 3,396,600 shares were repurchased during the
first quarter of 1995 at an average cost of $42 per share.
NEW ACCOUNTING STANDARD
In October 1995, the Financial Accounting Standards Board adopted Statement of
Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation," which governs the accounting for stock-based compensation plans,
including employee stock options. The statement allows companies the choice of
adopting a new fair value based method of accounting for such plans that
includes expensing related compensation cost in the income statement, or
continuing to apply the method currently specified under existing accounting
guidelines under which generally no compensation expense is recorded. If
companies elect to follow existing guidelines, the new rule requires that the
notes to the financial statements include pro forma effects on net income and
earnings per share as if the fair value based method were being used. The
company intends to continue to measure compensation expense under the
preexisting guidelines. Adoption of this new standard will be required for the
company's 1996 financial statements.
IMPACT OF INFLATION
Inflation as measured by the Consumer Price Index has continued at a low level
in the United States. Nevertheless, the company experienced substantial cost
increases for many of its raw materials during 1995, although there was some
moderation of this trend toward the end of the year. A portion of these
increased costs was absorbed through increased operating and production
efficiency and price increases by certain of the company's operating units. A
portion remained unrecovered, resulting in lower margins in certain units.
<PAGE>
<TABLE>
SELECTED FINANCIAL DATA
<CAPTION>
(Dollars in millions,
except per share 1995 1994 1993 1992 1991 1990 1989 1988 1987
amounts) --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Operating results
Net sales:
Food Equipment Group $1,237.8 $1,135.5 $1,009.9 $1,054.3 $1,010.4 $ 999.0 $ 931.8 $ 874.0 $ 808.9
Decorative Products
Group 686.6 690.0 618.3 573.1 522.6 499.6 430.1 352.8 309.7
Consumer Products
Group 289.0 292.8 239.4 206.3 206.4 203.6 204.8 203.0 179.6
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net sales from
continuing
operations 2,213.4 2,118.3 1,867.6 1,833.7 1,739.4 1,702.2 1,566.7 1,429.8 1,298.2
Tupperware 1,360.2 1,276.2 1,175.2 1,106.1 1,103.4 1,036.5 968.1 921.2 856.8
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total net sales $3,573.6 $3,394.5 $3,042.8 $2,939.8 $2,842.8 $2,738.7 $2,534.8 $2,351.0 $2,155.0
========= ========= ========= ========= ========= ========= ========= ========= =========
Segment profit (loss):
Food Equipment Group $ 91.9 $ 80.6 $ 51.3 $ 49.6 $ 41.1 $ 26.9 $ 21.8 $ 57.8 $ 53.3
Decorative Products
Group 50.4 36.5 33.4 35.0 38.3 46.9 42.1 42.3 37.1
Consumer Products
Group 25.3 39.4 22.8 20.9 22.6 19.2 17.3 15.8 13.6
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Segment profit
from
continuing
operations 167.6 156.5 107.5 105.5 102.0 93.0 81.2 115.9 104.0
Tupperware 234.5 199.8 171.0 (25.3) 121.2 64.9 104.2 115.7 65.2
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Total
segment profit $ 402.1 $ 356.3 $ 278.5 $ 80.2 $ 223.2 $ 157.9 $ 185.4 $ 231.6 $ 169.2
========= ========= ========= ========= ========= ========= ========= ========= =========
Income from continuing
operations $ 78.9 $ 70.8 $ 50.5 $ 44.6 $ 38.1 $ 19.4 $ 31.5 $ 47.8 $ 50.0
Income (loss) from
discontinued
operations 158.7 154.7 122.0 (40.0) 64.2 32.6 46.9 73.4 21.5
Cumulative effect of
accounting changes - - - (83.9) - - - (15.9) -
--------- --------- --------- --------- --------- --------- --------- --------- ---------
Net income (loss) $ 237.6 $ 225.5 $ 172.5 $ (79.3) $ 102.3 $ 52.0 $ 78.4 $ 105.3 $ 71.5
========= ========= ========= ========= ========= ========= ========= ========= =========
Per common and common
equivalent share:
Income from
continuing
operations $ 1.24 $ 1.06 $ 0.75 $ 0.68 $ 0.60 $ 0.31 $ 0.45 $ 0.69 $ 0.73
Income (loss) from
discontinued
operations 2.48 2.33 1.82 (0.61) 1.02 0.51 0.67 1.06 0.31
Net income (loss) 3.72 3.39 2.57 (1.20) 1.62 0.82 1.12 1.52 1.04
========= ========= ========= ========= ========= ========= ========= ========= =========
Profitability ratios
As a percent of sales:
Food Equipment Group
segment profit 7.4% 7.1% 5.1% 4.7% 4.1% 2.7% 2.3% 6.6% 6.6%
Decorative Products
Group segment
profit 7.3 5.3 5.4 6.1 7.3 9.4 9.8 12.0 12.0
Consumer Products Group
segment profit 8.8 13.5 9.5 10.1 11.0 9.4 8.5 7.8 7.6
Total segment profit <F1> 7.6 7.4 5.8 5.8 5.9 5.5 5.2 8.1 8.0
Income from continuing
operations 3.6 3.3 2.7 2.4 2.2 1.1 2.0 3.3 3.9
Return on average equity 24.0 25.3 22.7 (10.3) 12.8 6.7 10.1 14.9 11.5
Return on average
invested capital <F2> 22.8 23.0 19.3 (5.6) 11.2 6.4 9.0 12.6 9.5
_____________
<FN>
<F1> Of continuing operations.
<F2> Net income plus after-tax long-term interest expense divided by average long-term debt and equity, of both continuing and
discontinued operations.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Dollars in millions,
except per share 1995 1994 1993 1992 1991 1990 1989 1988 1987
amounts) --------- --------- --------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Financial condition
Continuing operations:
Working capital $ 276.6 $ 281.1 $ 301.2 $ 262.2 $ 171.6 $ 253.2 $ 280.2 $ 254.4 $ 299.2
Property, plant
and equipment, net 424.7 401.6 394.4 403.8 409.8 425.6 280.8 275.4 253.3
Total assets <F1> 1,961.3 1,870.4 1,497.6 1,365.9 1,512.8 1,560.6 1,348.6 1,261.5 1,161.5
Short-term borrowings
and current portion
of long-term debt 133.0 25.3 3.4 5.3 102.4 33.4 45.6 69.6 5.6
Long-term debt 121.7 121.9 122.3 120.9 122.2 322.2 95.4 85.3 81.7
Discontinued operations:
Working capital 87.7 72.4 (49.4) (11.2) 85.2 114.3 160.2 175.6 178.0
Property, plant
and equipment, net 317.7 310.2 277.1 250.8 292.0 294.3 228.7 218.6 210.9
Total assets 943.6 882.1 785.1 661.1 741.4 746.1 679.4 659.5 659.5
Short-term borrowings
and current portion
of long-term debt 83.8 58.3 140.0 19.3 19.0 40.5 31.7 19.3 47.4
Long-term debt 0.4 0.4 45.7 153.3 156.3 173.7 158.7 152.6 154.0
Overall:
Shareholders' equity 1,008.8 972.3 811.9 710.3 836.4 757.9 800.6 754.4 663.1
Current ratio 1.4 1.4 1.3 1.3 1.3 1.6 1.7 1.8 1.9
Long-term
debt-to-equity 12.1% 12.6% 20.7% 38.6% 33.3% 65.4% 31.7% 31.5% 35.5%
Total debt-to-capital 25.1% 17.5% 27.7% 29.6% 32.4% 42.9% 29.3% 30.2% 30.3%
Other data
Continuing operations:
Net cash provided by
operating
activities $ 53.4 $ 184.0 $ 144.5 $ 39.1 $ 157.2 $ 115.0 $ 99.2 $ 45.7 $ 114.1
Capital expenditures 85.7 69.5 60.5 56.7 46.7 78.6 49.8 49.3 37.8
Depreciation and
amortization 71.4 73.8 67.2 68.1 69.4 62.0 53.0 42.5 40.3
Advertising 42.4 39.4 31.2 28.4 27.2 25.2 23.6 25.1 22.5
Research and
development 38.1 35.1 31.2 31.3 26.5 27.5 25.4 22.4 18.4
Number of employees
(thousands) 17.4 16.6 15.9 16.2 15.8 16.8 15.3 15.4 13.9
Discontinued operations:
Net cash provided by
operating activities 183.8 148.7 110.0 200.7 166.1 106.7 32.2 87.1 68.0
Capital expenditures 69.3 78.7 85.6 80.0 49.9 104.6 53.6 54.8 49.4
Depreciation 61.3 55.7 44.7 49.9 45.9 39.2 31.3 33.5 30.2
Advertising 8.7 8.5 11.3 14.6 10.2 7.7 5.2 4.9 9.9
Research and
development 6.3 8.9 9.8 10.0 4.7 3.9 3.3 2.1 7.0
Number of employees
(thousands) 6.9 7.3 8.0 8.0 8.2 8.6 9.4 8.6 8.9
Common stock data
Dividends declared
per share $ 1.01 $ 0.74 $ 0.545 $ 0.48 $ 0.42 $ 0.42 $ 0.39 $ 0.265 $ 0.145
Dividend payout
ratio <F2> 29.8% 28.8% + 29.5% 51.2% 37.5% 25.7% 25.5% +
Average common and
common equivalent
shares outstanding
(thousands) 63,830 66,528 67,043 65,828 63,022 63,649 70,156 69,442 68,627
Year-end book value
per share $ 16.50 $ 15.22 $ 12.72 $ 11.17 $ 13.43 $ 12.34 $ 11.76 $ 11.14 $ 9.84
Year-end
price/earnings ratio 13.61 13.20 15.58 (17.43) 12.50 10.59 13.73 10.40 10.76
Year-end
market/book ratio 3.07 2.94 3.15 1.88 1.51 0.70 1.31 1.41 1.14
Year-end shareholders
(thousands) 23.3 25.3 26.9 29.0 31.3 33.7 36.3 39.3 43.5
_____________
<FN>
<F1> Includes net assets of discontinued operations.
<F2> Dividends declared per share divided by prior year earnings per share of both continuing and discontinued operations.
</TABLE>
<PAGE>
<TABLE>
Consolidated Statement of Income
<CAPTION>
(In millions, except per share amounts) Dec. 30, Dec. 31, Dec. 25,
Year ended 1995 1994 1993
--------- --------- ---------
<S> <C> <C> <C>
Net sales $2,213.4 $2,118.3 $1,867.6
--------- --------- ---------
Costs and expenses
Cost of products sold 1,420.9 1,368.1 1,219.3
Delivery, sales and administrative expense 648.0 617.6 559.9
Interest expense 26.6 20.1 15.4
Interest income (2.0) (1.9) (1.9)
Other expense, net (0.4) 3.6 0.5
--------- --------- ---------
Total costs and expenses 2,093.1 2,007.5 1,793.2
--------- --------- ---------
Income before income taxes 120.3 110.8 74.4
Provision for income taxes 41.4 40.0 23.9
--------- --------- ---------
Income from continuing operations 78.9 70.8 50.5
--------- --------- ---------
Discontinued operations:
Income from operations (net of tax provision of
$57.1, $45.5 and $33.3 in 1995, 1994 and
1993, respectively) 177.0 154.7 122.0
Costs to effect the business discontinuance
(net of $4.3 tax benefit) (18.3) - -
--------- --------- ---------
Net income $ 237.6 $ 225.5 $ 172.5
========= ========= =========
Income (loss) per common and common equivalent share:
Continuing operations $ 1.24 $ 1.06 $ 0.75
Discontinued operations:
Income from operations 2.77 2.33 1.82
Costs to effect the business discontinuance (0.29) - -
--------- --------- ---------
Net income per common and common equivalent share $ 3.72 $ 3.39 $ 2.57
========= ========= =========
See Notes to the Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
Consolidated Statement of Cash Flows
<CAPTION>
Dec. 30, Dec. 31, Dec. 25,
(In millions) Year ended 1995 1994 1993
--------- --------- ---------
<S> <S> <S> <S>
Cash flows from operating activities
Net income $ 237.6 $ 225.5 $ 172.5
Adjustments to reconcile net income to net cash provided by
operating activities from continuing operations:
Income from discontinued operations (158.7) (154.7) (122.0)
Depreciation and amortization 71.4 73.8 67.2
Changes in assets and liabilities of continuing operations,
excluding effects of acquisitions:
Increase in accounts and notes receivable (14.9) (40.4) (11.8)
Increase in inventory (11.9) (51.7) (4.6)
(Increase) decrease in net deferred income taxes (20.3) (17.2) 0.5
(Decrease) increase in accounts payable and accruals (43.9) 49.7 25.9
Increase (decrease) in income taxes payable 0.7 38.6 (3.4)
Other (6.6) 60.4 20.2
--------- --------- ---------
Net cash provided by operating activities
from continuing operations 53.4 184.0 144.5
--------- --------- ---------
Cash flows from investing activities
Capital expenditures (85.7) (69.5) (60.5)
Other (7.9) (11.9) 7.2
--------- --------- ---------
Net cash used in investing activities
from continuing operations (93.6) (81.4) (53.3)
--------- --------- ---------
Cash flows from financing activities
Repayment of long-term debt (0.7) (0.8) (2.7)
Net increase in short-term debt 103.7 21.2 0.5
Proceeds from long-term debt - - 2.6
Payment of dividends (58.0) (43.3) (33.8)
Proceeds from exercise of stock options 14.5 16.9 12.9
Purchase of treasury stock (169.7) (59.4) (36.3)
--------- --------- ---------
Net cash used in financing activities
from continuing operations (110.2) (65.4) (56.8)
--------- --------- ---------
Effect of exchange rate changes on cash and cash equivalents 0.8 0.5 (1.1)
Cash provided by (used in) discontinued operations 150.9 (70.9) 9.4
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 1.3 (33.2) 42.7
Cash and cash equivalents at beginning of year 18.5 51.7 9.0
--------- --------- ---------
Cash and cash equivalents at end of year $ 19.8 $ 18.5 $ 51.7
========= ========= =========
See Notes to the Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
Consolidated Balance Sheet
<CAPTION>
Dec. 30, Dec. 31,
(Dollars in millions, except per share amounts) 1995 1994
--------- ---------
<S> <C> <C>
Assets
Cash and cash equivalents $ 19.8 $ 18.5
Accounts and notes receivable, less allowances of $19.7 in 1995 and $17.6 in 1994 377.8 354.1
Inventories 347.6 328.4
Recoverable income taxes 12.3 -
Deferred income tax benefits 77.2 60.0
Prepaid expenses 45.0 40.3
--------- ---------
Total current assets 879.7 801.3
--------- ---------
Property, plant and equipment, net 424.7 401.6
Intangibles, less accumulated amortization of $84.9 in 1995 and $78.4 in 1994 168.7 174.3
Other assets 73.0 98.6
Net assets of discontinued operations 415.2 394.6
--------- ---------
Total assets $1,961.3 $1,870.4
========= =========
Liabilities and shareholders' equity
Accounts payable $ 104.4 $ 119.3
Short-term borrowings and current portion of long-term debt 133.0 25.3
Accrued liabilities 365.7 375.6
--------- ---------
Total current liabilities 603.1 520.2
--------- ---------
Long-term debt 121.7 121.9
Accrued postretirement benefit cost 120.1 115.6
Other liabilities 107.6 140.4
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 69.0 69.0
Capital surplus 590.3 571.7
Retained earnings 735.7 579.8
Treasury stock, 7,857,080 shares at December 30, 1995,
and 5,105,347 shares at December 31, 1994, at cost (258.0) (125.6)
Unearned portion of restricted stock issued for future service (1.0) (0.3)
Cumulative foreign currency adjustments (127.2) (122.3)
--------- ---------
Total shareholders' equity 1,008.8 972.3
--------- ---------
Total liabilities and shareholders' equity $1,961.3 $1,870.4
========= =========
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 stock stock surplus earnings stock adjustments
------- --------- ------- -------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
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)
Net income 237.6
Cash dividends declared (61.8)
Purchase of treasury stock (3.9) (167.3)
Treasury stock issued for
incentive plans and
related tax benefits 1.1 18.6 (19.9) 34.9
Translation adjustments (4.9)
------- --------- ------- -------- --------- --------- ------------
December 30, 1995 69.0 (7.9) $ 69.0 $ 590.3 $ 735.7 $(258.0) $(127.2)
======= ========= ======= ======== ========= ========= ------------
See Notes to the Consolidated Financial Statements.
</TABLE>
<PAGE>
NOTES TO THE 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 included 52 weeks in 1995 and 1993 and 53 weeks in
1994.
Prior years' financial statements have been restated to reflect Tupperware as a
discontinued operation. See Note 2. All amounts included in the Notes to the
Consolidated Financial Statements pertain to continuing operations except where
otherwise noted.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions.
These estimates and assumptions affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements, as well as the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
Cash and Cash Equivalents
The company considers all highly liquid investments with a maturity of three
months or less when purchased to be cash equivalents.
Inventories
Inventories are valued at the lower of cost or market. Inventory cost includes
cost of raw material, labor and overhead. Approximately 70 percent of
inventories, including substantially all domestic inventories, are valued on
the last-in, first-out (LIFO) cost method. The first-in, first-out (FIFO) cost
method is generally used for the remaining inventories. If inventories valued
on the LIFO method had been valued using the FIFO method, they would have been
$46.2 million higher at the end of 1995 and $38.4 million higher at the end of
1994.
Property and Depreciation
Properties are stated at cost. Depreciation is determined on a straight-line
basis over estimated useful lives. Generally, the estimated useful lives are
10 to 45 years for buildings and improvements and 3 to 20 years for machinery
and equipment. Upon the sale or retirement of property, plant and equipment, a
gain or loss is recognized. If the carrying value of an asset, including
associated intangibles, exceeds the sum of estimated undiscounted future cash
flows, then an impairment loss is recognized for the difference between
estimated fair value and carrying value. Expenditures for maintenance and
repairs are charged to expense.
Intangibles
The excess of cost over the fair value of net assets of businesses acquired
($156.5 million in 1995 and $157.6 million in 1994) and other intangibles are
being amortized on a straight-line basis over periods ranging up to 40 years.
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
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. In determining the
amount of any valuation allowance required to offset deferred tax assets an
assessment is made, which includes anticipating future income in determining
the likelihood of realizing deferred tax assets.
Income (Loss) Per Share
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.
Derivative Financial Instruments
Derivative financial instruments, primarily forward exchange contracts with
maturities of less than one year, are periodically used by the company to
offset the effects of exchange rate changes on net investments in foreign
subsidiaries, firm purchase commitments and certain intercompany loan
transactions. The company does not hold or issue financial instruments for
trading purposes, nor does the company expect to incur any losses as a result
of counterparty defaults.
Gains and losses on contracts designated as hedges of net investments in a
foreign subsidiary or intercompany transactions of a long-term nature are
accrued as exchange rates change, and are recognized in shareholders' equity as
foreign currency translation adjustments. Gains and losses on contracts
designated as hedges of intercompany transactions that are not of a long-term
nature are accrued as exchange rates change and are recognized in income.
Gains and losses on contracts designated as hedges of identifiable foreign
currency firm commitments are deferred and included in the measurement of the
related foreign currency transaction.
Fair Value of Financial Instruments
The carrying amounts of cash and cash equivalents, accounts and notes
receivable, accounts payable, short-term borrowings and outstanding forward
exchange contracts approximated their fair values at December 30, 1995, and
December 31, 1994, because of the short maturity of those instruments or their
insignificance. The fair value of long-term debt is determined based on the
borrowing rates available to the company for long-term debt with similar terms
and average maturities.
Foreign Currency Translation
Results of operations for foreign subsidiaries are translated into U.S. dollars
using the average exchange rates during the year. The assets and liabilities
of those subsidiaries, other than those of operations in highly inflationary
countries, are translated into U.S. dollars using the exchange rates at the
balance sheet date. The related translation adjustments are recorded in a
separate component of shareholders' equity, "Cumulative foreign currency
adjustments." Foreign currency transaction gains and losses, as well as
translation of financial statements of subsidiaries in highly inflationary
countries, are included in income, but were not significant.
Note 2 DISTRIBUTION OF TUPPERWARE TO SHAREHOLDERS
On November 1, 1995, the company's board of directors authorized management to
proceed with a plan to establish Tupperware as an independent company through a
distribution to Premark's shareholders (the Distribution). The Distribution is
subject to final approval by the board of directors; the favorable outcome of a
ruling requested from the Internal Revenue Service as to the qualification of
the Distribution as a tax-free event or the receipt of an acceptable opinion
from outside legal counsel as to the non-taxability of the event; and the
effectiveness of a registration statement filed with the Securities and
Exchange Commission. The Distribution is expected to be effected by the end of
the second quarter of 1996. Net sales of Tupperware were $1.4 billion, $1.3
billion and $1.2 billion in 1995, 1994 and 1993, respectively. As of December
30, 1995 and December 31, 1994, respectively, Tupperware had $87.7 and $72.4
million of net current assets.
As a result of the planned Distribution, the Company recorded a fourth quarter
pretax charge of $22.6 million ($18.3 million after tax, or 29 cents per share)
for costs to effect the business discontinuance. Included in that amount are
$5.5 million of relocation and severance expenses, $6.0 million of professional
and advisory fees, $5.0 million of registration fees and financing expenses,
and $6.1 million of computer systems and facilities expenses.
Note 3 INVENTORIES
(In millions) 1995 1994
-------- --------
Finished goods $ 169.8 $ 175.0
Work in process 37.9 27.5
Raw materials and supplies 139.9 125.9
-------- --------
Total inventories $ 347.6 $ 328.4
======== ========
Note 4 PROPERTY, PLANT AND EQUIPMENT
(In millions) 1995 1994
-------- --------
Land $ 26.6 $ 25.5
Buildings and improvements 249.1 238.2
Machinery and equipment 629.9 587.0
Construction in progress 33.4 21.4
-------- --------
Total property, plant and equipment 939.0 872.1
Less accumulated depreciation 514.3 470.5
-------- --------
Property, plant and equipment, net $ 424.7 $ 401.6
======== ========
Note 5 ACCRUED LIABILITIES
(In millions) 1995 1994
-------- --------
Warranties and maintenance
service agreements $ 98.9 $ 93.5
Compensation and employee benefits 89.7 96.2
Insurance 39.1 43.3
Other 138.0 142.6
-------- --------
Total accrued liabilities $ 365.7 $ 375.6
======== ========
Note 6 FINANCING ARRANGEMENTS
Short-term Borrowings
(Dollars in millions) 1995 1994 1993
------- ------- -------
Total short-term borrowings
at year-end $132.3 $ 24.6 $ 2.9
Weighted average interest
rate at year-end 6.1% 6.5% 10.0%
Average borrowings
during the year $166.4 $112.2 $ 5.6
Weighted average interest
rate for the year 6.2% 4.7% 9.5%
Maximum borrowings
during the year $211.5 $190.3 $ 16.1
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, $77.5 million was in the form of U.S. commercial paper.
The remaining portion of short-term borrowings was from several banks.
Long-term Debt
(In millions) 1995 1994
------ ------
10 1/2% notes due 2000 $100.0 $100.0
5.95% - 6.5% industrial revenue
bonds due 1996-2009 17.8 17.8
Other 4.6 4.8
------ ------
122.4 122.6
Less current portion 0.7 0.7
------ ------
Total long-term debt $121.7 $121.9
====== ======
Interest paid in 1995, 1994 and 1993 was $24.0 million, $18.8 million and $14.0
million, respectively.
The fair value of the 10 1/2% notes at the end of 1995 and 1994 was $118.1
million and $108.8 million, respectively. The fair value of the remaining
long-term debt approximates its book value.
The company had unused lines of credit amounting to $476.5 million at December
30, 1995, including $250.0 million under an unsecured revolving credit
facility, which supports the company's commercial paper borrowing capability
and expires in May 1999. Total principal payments due on long-term debt in the
five years subsequent to December 30, 1995, are $118.0 million, including the
$100 million of 10 1/2% notes due in 2000.
Operating Leases
Rental expense for operating leases (reduced by sublease income of
approximately $0.3 million in 1995, $0.4 million in 1994 and $0.2 million in
1993) totaled $34.5 million in 1995, $32.5 million in 1994 and $34.0 million in
1993. Approximate minimum rental commitments under noncancelable operating
leases in effect at December 30, 1995, were: 1996 -- $24.1 million; 1997 --
$18.1 million; 1998 -- $13.9 million; 1999 -- $8.1 million; 2000 -- $5.7
million; after 2000 -- $16.7 million.
Other Financial Instruments
At December 30, 1995, the company had forward exchange contracts maturing
between January 18 and March 14, 1996, to sell $104.9 million in foreign
currencies at fixed rates on the value dates. The larger components of these
positions were contracts to sell $36.7 million of French francs, $23.1 million
of German marks and $15.2 million of British pounds sterling. At December 30,
1995, the net accrued gain on forward exchange contracts was $1.3 million, and
at December 31, 1994, the net accrued loss on forward exchange contracts was
$1.3 million.
Note 7 INCOME TAXES
For income tax purposes, the domestic and foreign components of income before
income taxes, including discontinued operations, were as follows:
(In millions) 1995 1994 1993
------- ------- -------
Domestic $205.4 $206.5 $164.4
Foreign 126.4 104.5 65.3
------- ------- -------
Total $331.8 $311.0 $229.7
======= ======= =======
The provision for income taxes, including discontinued operations, was as
follows:
(In millions) 1995 1994 1993
------- ------- -------
Current
Federal $ (1.4) $ 53.4 $ 26.7
Foreign 94.0 59.2 43.7
State 6.8 9.5 5.0
------- ------- -------
99.4 122.1 75.4
------- ------- -------
Deferred
Federal 31.0 (21.4) (12.1)
Foreign (36.9) (11.3) (5.2)
State 0.7 (3.9) (0.9)
------- ------- -------
(5.2) (36.6) (18.2)
------- ------- -------
Total $ 94.2 $ 85.5 $ 57.2
======= ======= =======
For continuing operations, the differences between the provision for income
taxes and income taxes computed using the U.S. federal statutory rate were as
follows:
(In millions) 1995 1994 1993
------- ------- -------
Amount computed using
statutory rate $ 42.1 $ 38.8 $ 26.0
Increase (reduction) in
taxes resulting from:
Change in valuation
allowance for
federal deferred
tax assets - (3.6) (4.8)
Foreign income taxes (1.7) (2.2) 1.0
Repatriation of
foreign earnings (3.1) 0.6 (1.1)
Effect of U.S. statutory
rate increase on net
deferred tax asset - - (1.2)
State taxes 3.2 3.4 1.5
Other 0.9 3.0 2.5
------- ------- -------
Total $ 41.4 $ 40.0 $ 23.9
======= ======= =======
For discontinued operations, the primary factors that caused the effective tax
rates to be significantly lower than the statutory rate were: foreign tax
benefits realized in 1995, 1994 and 1993; the favorable resolution of certain
tax contingencies in 1995; and reductions in the valuation allowance for
federal deferred tax assets in 1994 and 1993. The effective tax rate on the
costs to effect the business discontinuance was higher than the statutory rate
due to the nondeductibility of certain amounts.
In 1995 and 1994, respectively, the company recognized $18.6 million and $23.9
million of benefits for deductions associated with the exercise of employee
stock options including amounts related to certain Tupperware employees. 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) 1995 1994
-------- --------
Depreciation $ (48.5) $ (47.7)
Undistributed earnings
of subsidiaries - (3.5)
Other (1.3) (3.6)
-------- --------
Gross deferred tax liabilities (49.8) (54.8)
-------- --------
Postretirement benefits 49.1 47.0
Employee benefits accruals 22.5 22.6
Tax carryforwards 15.5 8.3
Adhesive claims 13.8 14.7
Self-insurance reserves 12.5 13.2
Costs to effect the business
discontinuance 6.8 -
Environmental reserves 6.0 6.5
Computer leasing transactions 3.4 8.1
Other accruals 25.8 22.0
-------- --------
Gross deferred tax assets 155.4 142.4
-------- --------
Valuation allowance (7.3) (6.9)
-------- --------
Net deferred tax assets $ 98.3 $ 80.7
======== ========
At December 30, 1995, the company had foreign net operating loss carryforwards
of $10.5 million. It also had $5.0 million of foreign tax credit carryforwards
available to offset certain future U.S. federal income tax obligations. Of the
total, $11.3 million of carryforwards expire at various dates from 1996 to
2005, and the remainder have unlimited lives. During 1995, the company
recognized net benefits of $3.3 million related to foreign net operating loss
carryforwards. Repatriation of foreign earnings would not result in a
significant incremental cost to the company.
The company paid income taxes in 1995, 1994 and 1993, of $118.8 million, $70.8
million and $48.9 million, respectively, a portion of which was owed as a
result of income generated by Tupperware.
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) 1995 1994 1993
------- ------- -------
Return on plan assets:
Actual (gain) loss $(55.9) $ 4.3 $(29.2)
Deferred gain (loss) 33.6 (25.8) 8.5
------- ------- -------
Net gain recognized (22.3) (21.5) (20.7)
Service cost of benefits
earned during the year 7.9 9.7 7.6
Interest cost of benefits
earned in prior years 19.7 18.5 17.7
Net amortization (1.5) (1.4) (1.6)
------- ------- -------
Net pension expense $ 3.8 $ 5.3 $ 3.0
======= ======= =======
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 6.5 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 -- 7.25 percent at December 30, 1995, and 8.75 percent at
December 31, 1994; foreign plans -- various rates from 7.0 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 5.0 percent to
7.0 percent. Substantially all of the domestic employees of Tupperware
participate in the company's Base Retirement Plan. As part of the
Distribution, assets of this plan will be allocated between the company's plan
and a newly formed Tupperware plan in accordance with ERISA rules. Management
believes that its allocation method used for purposes of the following
disclosure is not significantly different from the ERISA method.
The funded status of the plans related to the company's continuing operations
was as follows:
U.S. plans Foreign plans
-------------- --------------
(In millions) 1995 1994 1995 1994
----- ----- ----- -----
Actuarial present value of
benefit obligations:
Vested benefits $225.1 $169.5 $ 21.4 $ 20.4
Nonvested benefits 5.7 5.5 0.2 0.5
------- ------- ------- -------
Accumulated benefit
obligation 230.8 175.0 21.6 20.9
Effect of projected future
salary increases 33.5 28.7 4.0 3.9
------- ------- ------- -------
Projected benefit
obligation 264.3 203.7 25.6 24.8
Plan assets at fair value -
primarily equity securities
and corporate and
government bonds 257.9 218.7 21.9 21.7
------- ------- ------- -------
Plan assets (less than)
in excess of projected
benefit obligation (6.4) 15.0 (3.7) (3.1)
Unrecognized prior
service cost 2.8 2.7 1.9 1.9
Unrecognized net loss (gain) 11.0 (6.4) 0.5 0.7
Unrecognized net transition
(asset) obligation (10.5) (12.7) 0.2 0.2
------- ------- ------- -------
Accrued pension cost $ (3.1) $ (1.4) $ (1.1) $ (0.3)
======= ======= ======= =======
At December 30, 1995, and December 31, 1994, the accumulated benefit
obligations of certain foreign plans exceeded plan assets. For those plans,
the obligations were $69.2 million and $4.4 million for 1995 and 1994,
respectively, and the fair value of their assets at the end of 1995 and 1994
was $56.8 million and $1.0 million, respectively.
The company also has several savings, thrift and profit-sharing plans. Its
contributions to these plans are based upon various levels of employee
participation. The total cost of these plans was $11.7 million in 1995, $13.4
million in 1994 and $11.5 million in 1993.
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 certain years of service requirements. The medical plans
are contributory, with retiree contributions adjusted annually, and contain
other cost-sharing features such as deductibles and coinsurance. The U.S.
medical plans include an allowance for Medicare for post-65 retirees.
The net postretirement benefit costs were:
(In millions) 1995 1994 1993
------- ------- -------
Service cost $ 2.5 $ 2.9 $ 2.5
Interest on accumulated
postretirement benefit
obligation 9.0 7.9 8.5
Net amortization (0.7) (0.3) (0.5)
------- ------- -------
Net postretirement
benefit cost $ 10.8 $ 10.5 $ 10.5
======= ======= =======
The projected liabilities, which are not funded, are reconciled to the amounts
recognized in the company's balance sheet as follows:
(In millions) 1995 1994
------- -------
Accumulated postretirement
benefit obligation:
Retirees $ 51.3 $ 58.1
Other fully eligible
participants 18.8 12.9
Other active participants 47.8 35.4
------- -------
117.9 106.4
Unrecognized prior service
benefit 5.7 7.3
Unrecognized gain 2.6 8.3
------- -------
Accrued postretirement
benefit cost 126.2 122.0
Less current portion 6.1 6.4
------- -------
Total long-term accrued
postretirement benefit cost $120.1 $115.6
======= =======
The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7.25 percent at December 30, 1995, and
8.75 percent at December 31, 1994. The assumed health care cost trend rate is
11.0 percent for the pre-65 plan and 8.0 percent for the post-65 plan for 1995.
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 30, 1995, by $13.0 million. The effect of a one percentage point
increase on the aggregate of the service and interest cost components of net
postretirement benefit cost for 1995 would be $1.5 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 shareholders 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 $11.9 million in 1995, $16.0 million in 1994 and $12.2
million in 1993. As of December 30, 1995, 240 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 30, 1995, the maximum number of shares that may be
granted under the Plan is 4,630,529, plus up to 4,683,400 additional shares if
such shares are repurchased by the company. Of the total shares available for
award, up to 447,329 may be granted in the form of restricted stock. As of
December 30, 1995, 391 employees participated in the Plan, including certain
employees of Tupperware.
All nonvested outstanding stock options vest three years after their date of
grant, and the vesting periods on outstanding restricted stock range from two
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 30, 1995, will expire
during the period from December 26, 1996, through October 30, 2005. As of
December 30, 1995, options to purchase 2,358,600 shares were exercisable. When
the Distribution is completed, it is expected that the outstanding options to
purchase Premark common stock, which are held by Premark officers and
employees, will continue to be solely for the purchase of Premark common stock,
and that options that are held by Tupperware officers and employees will be
converted to options to purchase solely Tupperware common stock. The number of
shares under option and their exercise prices will be set in a manner that will
maintain in the aggregate the excess of market value over exercise price of the
existing options immediately prior to the Distribution. As of December 30,
1995, 1,620,550 of the outstanding shares under option were held by Tupperware
employees, of which 812,367 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. Compensation expense associated with
restricted stock grants was not significant.
In May 1993, the company's shareholders 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 30, 1995, were 600,000 and
517,192, respectively. As of December 30, 1995, options to purchase 74,000
shares were exercisable. It is expected that options outstanding under the
Director Plan will be treated in the same manner as the employee stock options
when the Distribution is completed.
Stock option and restricted stock activity in 1995 and 1994 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 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
Options granted 660,050 46.16
Options canceled (108,900) 33.32
Options exercised (1,129,582) 12.90
----------- ------
Balance at December 30, 1995 4,360,850 $27.59
=========== ======
Shares
Shares available
Restricted Stock Outstanding for issuance
----------- ------------
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
Shares awarded 34,711 (44,711)
Shares released (45,665) -
-------- --------
Balance at December 30, 1995 43,778 447,329
======== ========
Note 10 SEGMENTS OF THE BUSINESS
The company has the following business segments: the Food Equipment Group--
commercial food equipment for the foodservice and food retail industries; the
Decorative Products Group--decorative laminates, ceramic tile and hardwood
flooring; and the Consumer Products Group--home appliances, direct-to-the-home
cookware and physical fitness equipment.
(In millions) 1995 1994 1993
--------- --------- ---------
Net sales
Food Equipment Group:
United States $ 710.8 $ 687.8 $ 610.3
Europe 442.2 369.2 344.0
Other International 84.8 78.5 55.6
--------- --------- ---------
Total Food Equipment Group 1,237.8 1,135.5 1,009.9
Decorative Products Group 686.6 690.0 618.3
Consumer Products Group 289.0 292.8 239.4
--------- --------- ---------
Total net sales $2,213.4 $2,118.3 $1,867.6
========= ========= =========
Segment profit
Food Equipment Group:
United States $ 71.1 $ 61.8 $ 40.7
Europe 15.5 15.8 7.6
Other International 5.3 3.0 3.0
--------- --------- ---------
Total Food Equipment Group 91.9 80.6 51.3
Decorative Products Group 50.4 36.5 33.4
Consumer Products Group 25.3 39.4 22.8
--------- --------- ---------
Total segment profit 167.6 156.5 107.5
Unallocated expenses (22.7) (27.5) (19.6)
Interest expense, net (24.6) (18.2) (13.5)
--------- --------- ---------
Income from continuing
operations before
income taxes $ 120.3 $ 110.8 $ 74.4
========= ========= =========
Identifiable assets
Food Equipment Group:
United States $ 390.8 $ 378.6 $ 351.8
Europe 246.1 218.7 202.6
Other International 49.8 48.0 29.1
--------- --------- ---------
Total Food Equipment Group 686.7 645.3 583.5
Decorative Products Group 624.5 633.8 532.6
Consumer Products Group 139.0 142.8 113.9
Corporate 95.9 53.9 102.4
--------- --------- ---------
Total identifiable assets $1,546.1 $1,475.8 $1,332.4
========= ========= =========
Depreciation and amortization
Food Equipment Group:
United States $ 16.9 $ 19.7 $ 16.1
Europe 8.5 7.6 8.1
Other International 1.0 1.4 0.8
--------- --------- ---------
Total Food Equipment Group 26.4 28.7 25.0
Decorative Products Group 37.4 38.5 36.1
Consumer Products Group 5.3 5.2 5.0
Corporate 2.3 1.4 1.1
--------- --------- ---------
Total depreciation and
amortization $ 71.4 $ 73.8 $ 67.2
========= ========= =========
Capital expenditures
Food Equipment Group:
United States $ 26.9 $ 23.2 $ 14.1
Europe 6.5 6.6 7.8
Other International 2.3 0.7 0.5
--------- --------- ---------
Total Food Equipment Group 35.7 30.5 22.4
Decorative Products Group 40.9 31.6 30.3
Consumer Products Group 8.6 6.9 6.1
Corporate 0.5 0.5 1.7
--------- --------- ---------
Total capital expenditures $ 85.7 $ 69.5 $ 60.5
========= ========= =========
The operations of the Decorative Products and Consumer Products groups are
predominantly in the United States. Sales to a single customer did not exceed
10 percent of total sales. Export sales were $124.6 million, $117.0 million
and $113.7 million in 1995, 1994 and 1993, respectively. In the Decorative
Products Group, the only class of products that accounted for more than 10
percent of consolidated sales was decorative laminates with sales of
approximately $426 million in 1995, $427 million in 1994 and $388 million in
1993.
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 30, 1995, the
company's net investment in international operations was $239.4 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 to be $14 million to $37
million as of December 30, 1995. The company anticipates that any necessary
expenditures would be made over the next 10 years. As of December 30, 1995,
the company had accruals of $18.0 million for these matters. The company has
not recorded any significant claims against third parties associated with these
accruals.
As of December 30, 1995, the company had an accrual of $66.7 million recorded
for the estimated costs of adhesive claims against its Wilsonart subsidiary.
Also recorded were assets totaling $31.2 million representing future amounts
expected to be reimbursed by its insurer for these claims.
As of December 30, 1995, the company guaranteed indebtedness of Tupperware's
foreign subsidiaries under available lines of credit aggregating $266.4
million. As of that date, $82.4 million of debt was outstanding under these
lines and is included in "Net assets of discontinued operations" on the
Consolidated Balance Sheet. It is not practical to estimate the fair value of
these guarantees; however, the company does not expect to incur losses as a
result of these guarantees. The guarantees are expected to expire in 1996.
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 30, 1995, and December 31, 1994.
(In millions, except First Second Third Fourth
per share amounts) quarter quarter quarter quarter
------- ------- ------- -------
Year ended December 30, 1995
Net sales $519.6 $539.0 $556.3 $598.5
Cost of products sold 333.1 342.5 353.0 392.3
Income from continuing
operations 14.2 17.1 26.0 21.6
Net income 46.5 67.1 46.8 77.2
Per common and common
equivalent share:
Income from continuing
operations 0.22 0.27 0.41 0.34
Net income 0.71 1.06 0.74 1.22
Dividends declared
per share 0.20 0.27 0.27 0.27
Composite stock price range:
High 46 3/4 53 1/2 54 3/4 52 1/2
Low 38 1/2 44 50 3/4 44 1/8
Close 44 1/8 51 7/8 50 7/8 50 5/8
Year ended December 31, 1994
Net sales $489.7 $500.4 $532.6 $595.6
Cost of products sold 319.0 321.0 341.7 386.4
Income from continuing
operations 11.1 14.4 22.1 23.2
Net income 37.8 56.9 40.9 89.9
Per common and common
equivalent share:
Income from continuing
operations 0.16 0.22 0.33 0.35
Net income 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
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 in value to twice the exercise price of each
right. Upon acquisition of the company by a third party, a holder could
receive the right to purchase stock in the acquirer. The foregoing percentage
thresholds may be reduced to not less than 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 income, 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 30, 1995 and December 31,
1994, and the results of their operations and their cash flows for each of the
three years in the period ended December 30, 1995, 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.
Price Waterhouse LLP
Chicago, Illinois
February 23, 1996
<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 that the company's
systems provide the appropriate balance of costs and benefits. The company
also maintains an internal auditing function that evaluates and reports on the
adequacy and effectiveness of internal accounting controls, policies and
procedures.
The Audit and Corporate Responsibility Committee of the Board of Directors is
composed entirely of outside directors. The Committee meets periodically and
independently with management, the internal auditors and Price Waterhouse LLP
to discuss the company's internal accounting controls, auditing and financial
reporting matters. The internal auditors and Price Waterhouse LLP have
unrestricted access to the Audit and Corporate Responsibility Committee.
Management recognizes its responsibility for conducting the company's affairs
in a manner that is responsive to the interests of its shareholders and its
employees. This responsibility is characterized in the Code of Conduct, which
provides that the company will fully comply with laws, rules and regulations of
every country in which it operates and will observe the rules of ethical
business conduct. Employees of the company are expected and directed to manage
the 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 21
Premark International, Inc.
Active Subsidiaries as of
March 15, 1996
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. Delaware
Premark Export Sales, Ltd. Barbados
Premark Services, Inc. Delaware
Deerfield Land Corporation Delaware
Hartco Flooring Company Tennessee
Premark Financial Corporation Delaware
Florida Tile Industries, Inc. Florida
Premark FT Holdings, Inc. Delaware
Dart Industries Inc. Delaware
Premark Far East, Inc. Delaware
Dart Far East Sdn. Bhd. Malaysia
Dart Argentina S.A. Argentina
Dart de Venezuela, C.A. Venezuela
Dart do Brasil Industria e Comercio Ltda. Brazil
Adota Artigos Domesticos Ltda. Brazil
Dart Europe S.A. France
Dart Hellas S.A.I. Greece
Dart Iberica S.A. Spain
Dart Industries Belgium N.V. Belgium
Premark GmbH Germany
Tupperware del Ecuador Tupperware Cia. Ltda. Ecuador
Dart Industries G.m.b.H. Austria
Dart Industries Hong Kong Limited Hong Kong
Dart Nederland Properties B.V. Netherlands
Dart Industries Nederland B.V. Netherlands
Dart Industries (New Zealand) Limited New Zealand
Dart Industries (Proprietary) Limited South Africa
Premark Italia SpA Italy
Dart (Philippines), Inc. Philippines
Premark Realty Corporation Delaware
Dart, S.A. de C.V. Mexico
Tupperware - Dart (Suisse) SA Switzerland
Dartco Manufacturing Inc. Delaware
Dartluso-Industria Lusitana de Artigos
Domesticos, Lda. Portugal
Premiere Products, Inc. Delaware
Exportadora Lerma, S.A. de C.V. Mexico
Premark Resources N.V. Belgium
Premiere Manufacturing, Inc. Delaware
Premiere Korea Ltd. Korea
Tupperware U.S., Inc. Delaware
Tupperware Distributors, Inc. Delaware
Japan Tupperware Co., Ltd. Japan
Tupperware Australia Pty. Ltd. Australia
Orlando Sociedad Comercializadora Limitoda Chile
Importadora Y Distribuidora Importupp Limitada Chile
Tupperware Iberica S.A. Spain
Tupperware (Portugal) Artigos Domesticos, Lda. Portugal
Tupperware Singapore Pte. Ltd. Singapore
Tupperware (Thailand) Limited Thailand
Tupperware Uruguay S.A. Uruguay
Dart Executive Pension Fund Limited United Kingdom
Dart Pension Fund Limited United Kingdom
Tupperware Home Parties Corporation Delaware
Wavebest Limited United Kingdom
Dart Industries Limited United Kingdom
Miracle Maid Limited United Kingdom
Precor Products Limited United Kingdom
The Hobart Manufacturing Company, Limited United Kingdom
Hobart Equipment Leasing Limited United Kingdom
The Premark International Foundation California
Premark RWP Holdings, Inc. Delaware
The West Bend Company Delaware
Premark WB Holdings, Inc. Delaware
Precor Incorporated Delaware
West Bend de Mexico, S.A. de C.V. Mexico
Wilsonart International, Inc. Delaware
Premark FEG Corporation Delaware
Hobart Corporation Delaware
Premark FEG Beteiligungsgesellschaft MbH Germany
The Stero Company Delaware
Hobart International Holdings, Inc. Delaware
Premark Canada Inc. Canada
Hobart Dayton Mexicana, S.A. de C.V. Mexico
Maquilas y Componentes Industriales, S.A. de C.V. Mexico
PMI Food Equipment Group France S.A. France
Inox Equipment S.A. France
Equipment Technique Service S.A.R.L. France
Premark FEG GmbH & Co. KG Germany
Hobart GmbH Germany
Erwin Ungermann GmbH Germany
Foster Refrigerator (U.K.) Limited United Kingdom
Foster Refrigerator France S.A. France
PMI Technical Food Equipment Group Holland B.V. Netherlands
Foster Refrigerator U.K. Management Services United Kingdom
Foster Refrigerator S.E. Asia (Pty.) Ltd. Australia
Hobart Foster, Norge A/S Norway
Hobart Foster, Danmark A/S Denmark
Hobart Foster, Sverige AB Sweden
Food Equipment Group Norge A/S Norway
Foster Refrigerator G.m.b.H. Germany
Hobart Sales & Service, Inc. Ohio
SC Bourgeois (35%) France
Hobart Korea Co. Ltd. Korea
PMI Food Equipment Group Europe S.A. France
The Wolf Range Company Delaware
Premark HII Holdings, Inc. Ohio
Hobart International, Inc. Delaware
PMI Food Equipment (Hong Kong) Limited Hong Kong
Hobart (Japan) K.K. Japan
Hobart Foster Belgium, N.V. Belgium
Compagnie Hobart S.A. France
Hobart Foster Holland B.V. Holland
Hobart (Swiss) A.G. Switzerland
Hopital Services Systemes S.A. France
Adamatic, A Corporation New Jersey
Cook Insurance Co., Ltd. Bermuda
Precor Sportgerate GmbH Germany
Tupperware Factors, Inc. Delaware
FTI Factors, Inc. Delaware
Wilsonart International Holdings, Inc. Delaware
Tupperware Czech Republic spol. s r.o. Czech Republic
Tupperware Polska Sp.zo.o Poland
Hobart do Brasil Ltda. Brazil
Daypar Participacoes Ltda. Brazil
Tupperware China, Inc. Delaware
Servicios Especializados de Arrendamiento en
Latinomerica S.A. de C.O. Mexico
PMI Food Equipment Group (Malaysia), Inc. Delaware
Tupperware Commercial Ltd. Hungary
The Tupperware Company Limited United Kingdom
Hobart Food Equipment Pty. Ltd. Australia
Hobart Food Equipment (Tianjin) Co., Ltd. People's
Republic of China
The Hobart Manufacturing Company, Limited United Kingdom
The Hobart Manufacturing Company Pty. Ltd. Australia
Tupperware Corporation Delaware
Dart Staff Superannuation Fund Pty. Ltd. Australia
Premark Scandanavia A/S Denmark
All Subsidiaries listed above are included in the
consolidated financial statements of the Registrant as
consolidated subsidiaries, except for subsidiaries owned 50 percent or less.
Exhibit 23
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 February 23, 1996
appearing on page 54 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 33 of this Form 10-K.
Price Waterhouse LLP
Chicago, Illinois
March 25, 1996
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 30, 1995, 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, 1996.
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 1995 FINANCIAL STATEMENTS AS FILED IN ITS ANNUAL REPORT ON
FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-30-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> DEC-30-1995
<CASH> 19,800
<SECURITIES> 0
<RECEIVABLES> 397,500
<ALLOWANCES> 19,700
<INVENTORY> 347,600
<CURRENT-ASSETS> 879,700
<PP&E> 939,000
<DEPRECIATION> 514,300
<TOTAL-ASSETS> 1,961,300
<CURRENT-LIABILITIES> 603,100
<BONDS> 121,700
0
0
<COMMON> 69,000
<OTHER-SE> 939,800
<TOTAL-LIABILITY-AND-EQUITY> 1,961,300
<SALES> 2,213,400
<TOTAL-REVENUES> 2,213,400
<CGS> 1,420,900
<TOTAL-COSTS> 1,420,900
<OTHER-EXPENSES> (400)
<LOSS-PROVISION> 4,500
<INTEREST-EXPENSE> 26,600
<INCOME-PRETAX> 120,300
<INCOME-TAX> 41,400
<INCOME-CONTINUING> 78,900
<DISCONTINUED> 158,700
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 237,600
<EPS-PRIMARY> 3.72
<EPS-DILUTED> 0
</TABLE>
