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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the 13 weeks ended March 31, 2001
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the Transition period from to
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Commission file number 1-11657
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TUPPERWARE CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 36-4062333
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
14901 SOUTH ORANGE BLOSSOM TRAIL, ORLANDO, FLORIDA 32837
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (407) 826-5050
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ].
As of May 7, 2001, 57,907,119 shares of the Common Stock, $0.01 par value, of
the Registrant were outstanding.
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TABLE OF CONTENTS
PAGE
NUMBER
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Statements of Income (Unaudited)
for the 13 weeks ended March 31, 2001 and
14 weeks ended April 1, 2000 ........................ 2
Consolidated Balance Sheets (Unaudited) as of
March 31, 2001 and December 30, 2000 ................ 3
Consolidated Statements of Cash Flows (Unaudited)
for the 13 weeks ended March 31, 2001 and
14 weeks ended April 1, 2000 ........................ 5
Notes to Consolidated Financial Statements (Unaudited).. 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS ....... 10
PART II. OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K ....................... 16
SIGNATURES ...................................................... 17
The financial statements of the Registrant included herein have been prepared,
without audit, pursuant to the rules and regulations of the Securities and
Exchange Commission (the Commission). Although certain information normally
included in financial statements prepared in accordance with generally accepted
accounting principles has been condensed or omitted, the Registrant believes
that the disclosures are adequate to make the information presented not
misleading. It is suggested that these consolidated financial statements are
read in conjunction with the financial statements and the notes thereto included
in the Annual Report on Form 10-K of the Registrant for its fiscal year ended
December 30, 2000.
The consolidated financial statements included herein reflect all adjustments,
consisting only of normal recurring items, which, in the opinion of management,
are necessary to present a fair statement of the results for the interim periods
presented.
The results for interim periods are not necessarily indicative of trends or
results to be expected for a full year.
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TUPPERWARE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
13 WEEKS 14 WEEKS
ENDED ENDED
MARCH 31, APRIL 1,
2001 2000
------- -------
(IN MILLIONS, EXCEPT
PER SHARE AMOUNTS)
Net sales ............................................... $ 263.7 $ 273.1
------- -------
Costs and expenses:
Cost of products sold ................................ 88.1 93.8
Delivery, sales and administrative expense ........... 144.5 148.0
Interest expense ..................................... 7.3 6.0
Interest income ...................................... (0.6) (0.4)
Re-engineering charge ................................ 1.0 --
Other expense, net ................................... 0.6 0.9
------- -------
Total costs and expenses .......................... 240.9 248.3
------- -------
Income before income taxes .............................. 22.8 24.8
Provision for income taxes .............................. 4.9 5.6
------- -------
Net income .............................................. $ 17.9 $ 19.2
======= =======
Net income per common share:
Basic ................................................ $ 0.31 $ 0.33
======= =======
Diluted .............................................. $ 0.30 $ 0.33
======= =======
See accompanying Notes to Consolidated Financial Statements (Unaudited).
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TUPPERWARE CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
(UNAUDITED)
MARCH 31, DECEMBER 30,
2001 2000
------ ------
(IN MILLIONS)
Cash and cash equivalents ..................... $ 26.9 $ 32.6
Accounts receivable ........................... 132.5 140.2
Less allowances for doubtful accounts ...... (25.7) (27.7)
------ ------
106.8 112.5
Inventories ................................... 140.7 144.1
Deferred income tax benefits .................. 46.5 47.1
Prepaid expenses and other assets ............. 40.9 36.1
------ ------
Total current assets ....................... 361.8 372.4
------ ------
Deferred income tax benefits .................. 120.7 123.2
Property, plant and equipment ................. 928.2 948.9
Less accumulated depreciation .............. (701.3) (715.8)
------ ------
226.9 233.1
Long-term receivables, net of allowances of
$32.8 million at March 31, 2001 and
$28.4 million at December 30, 2000 .......... 31.1 31.2
Goodwill, net of accumulated amortization of
$0.6 million at March 31, 2001 and
$0.2 million at December 30, 2000 ........... 57.3 57.7
Other assets .................................. 33.8 31.8
------ ------
Total assets ............................... $831.6 $849.4
====== ======
See accompanying Notes to Consolidated Financial Statements (Unaudited).
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TUPPERWARE CORPORATION
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS' EQUITY
(UNAUDITED)
MARCH 31, DECEMBER 30,
2001 2000
------ ------
(DOLLARS IN MILLIONS
EXCEPT PER SHARE AMOUNTS)
Accounts payable ................................ $ 65.2 $ 88.6
Short-term borrowings and current portion of
long-term debt ............................... 66.3 26.9
Accrued liabilities ............................. 152.8 160.3
------ ------
Total current liabilities .................... 284.3 275.8
Long-term debt .................................. 339.3 358.1
Accrued post-retirement benefit cost ............ 37.4 37.4
Other liabilities ............................... 52.6 54.2
Shareholders' equity:
Preferred stock, $0.01 par value, 200,000,000
shares authorized; none issued ............... -- --
Common stock, $0.01 par value, 600,000,000
shares authorized; 62,367,289 shares issued... 0.6 0.6
Paid-in capital ................................ 21.7 21.7
Subscription receivable ........................ (21.6) (21.2)
Retained earnings .............................. 498.6 493.7
Treasury stock, 4,492,751 shares at
March 31, 2001, and 4,533,151 shares
at December 30, 2000, at cost ................ (124.5) (125.5)
Unearned portion of restricted stock issued
for future service ........................... (0.3) (0.4)
Accumulated other comprehensive income ......... (256.5) (245.0)
------ ------
Total shareholders' equity ................... 118.0 123.9
------ ------
Total liabilities and shareholders' equity ... $831.6 $849.4
====== ======
See accompanying Notes to Consolidated Financial Statements (Unaudited).
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TUPPERWARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
13 WEEKS 14 WEEKS
ENDED ENDED
MARCH 31, APRIL 1,
2001 2000
----- -----
(IN MILLIONS)
OPERATING ACTIVITIES:
Net income .................................................................. $17.9 $19.2
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization ......................................... 12.7 15.4
(Gain) loss on sale of assets ......................................... (0.1) 1.9
Foreign exchange loss, net ............................................ -- 0.1
Changes in assets and liabilities:
Decrease in accounts receivable .......................................... 0.2 7.4
Increase in inventories .................................................. (1.2) (7.6)
Decrease in accounts payable and accrued liabilities ..................... (27.8) (45.2)
Increase (decrease) in income taxes payable .............................. 1.2 (4.5)
Decrease (increase) in net deferred income taxes ......................... 0.6 (2.9)
Other, net ............................................................... (8.8) 1.0
----- -----
Net cash used in operating activities ................................. (5.3) (15.2)
----- -----
INVESTING ACTIVITIES:
Capital expenditures ..................................................... (11.3) (8.4)
----- -----
FINANCING ACTIVITIES:
Dividend payments to shareholders ........................................ (12.8) (12.7)
Proceeds from exercise of stock options .................................. 0.5 --
Net increase in short-term debt .......................................... 24.6 40.2
----- -----
Net cash provided by financing activities .............................. 12.3 27.5
----- -----
Effect of exchange rate changes on cash and cash
equivalents .............................................................. (1.4) --
----- -----
Net (decrease) increase in cash and cash equivalents ................... (5.7) 3.9
Cash and cash equivalents at beginning of year .............................. 32.6 24.4
----- -----
Cash and cash equivalents at end of period .................................. $26.9 $28.3
===== =====
SUPPLEMENTAL DISCLOSURE:
Treasury shares sold for notes receivable ................................... $ 0.6 $ --
===== =====
See accompanying Notes to Consolidated Financial Statements (Unaudited).
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TUPPERWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-Q and therefore do not include
all notes necessary for a fair presentation of financial position, results of
operations and cash flows in conformity with generally accepted accounting
principles. In the opinion of management, the unaudited consolidated financial
statements include all adjustments, consisting only of normal recurring items,
necessary for a fair presentation of financial position and results of
operations. The results of operations of any interim period are not necessarily
indicative of the results that may be expected for a full fiscal year.
The Company's fiscal year ends on the last Saturday of December. The first
quarter included 14 weeks in 2000 compared with 13 weeks in 2001.
In October 2000, the Emerging Issues Task Force issued EITF 00-10, "Accounting
for Shipping and Handling Revenues and Cost" which requires fees billed to
customers associated with shipping and handling to be classified as revenue.
Accordingly, the Company has reclassified the revenue related to the shipping
and handling fees billed to customers from delivery expense to net sales for the
2000 period presented.
NOTE 2: INVENTORIES
Inventories, by component, are summarized as follows (in millions):
MARCH 31, DECEMBER 30,
2001 2000
------- -------
Finished goods ...................................... $ 67.5 $ 70.4
Work in process ..................................... 26.2 25.5
Raw materials and supplies .......................... 47.0 48.2
------- -------
Total inventories ................................ $ 140.7 $ 144.1
======= =======
NOTE 3: NET INCOME PER COMMON SHARE
Basic per share information is calculated by dividing net income by the weighted
average number of shares outstanding. Diluted per share information is
calculated by also considering the impact of potential common stock on both net
income and the weighted average number of shares outstanding. The weighted
average number of shares used in the basic earnings per share computations was
57.8 million and 57.6 million for the 13 weeks ended March 31,
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NOTE 3: NET INCOME PER COMMON SHARE (CONT'D)
2001 and the 14 weeks ended April 1, 2000, respectively. The only difference in
the computation of basic and diluted earnings per share was the inclusion of 1.1
million and 0.2 million of shares of potential common stock for the 2001 and
2000 periods presented, respectively. Options to purchase 2.3 million and 5.7
million shares of common stock in the first quarter of 2001 and 2000,
respectively, were outstanding but not included in the computation of diluted
earnings per share because the options' exercise prices were greater than the
average market price of the common shares during the respective period and,
therefore, would have been anti-dilutive if included. The Company's potential
common stock consists of employee and director stock options and restricted
stock.
NOTE 4: OTHER COMPREHENSIVE INCOME
In addition to net income, comprehensive income includes certain amounts
recorded directly in equity. The components of comprehensive income, net of
related income tax effects, for the 13 weeks ended March 31, 2001 and 14 weeks
ended April 1, 2000, were as follows (in millions):
13 WEEKS 14 WEEKS
ENDED ENDED
MARCH 31, APRIL 1,
2001 2000
----- -----
Net income $17.9 $19.2
Foreign currency translation adjustments (13.0) (4.8)
Net equity hedge gain net of tax provisions of
$1.0 million in first quarter 2001 and
$1.4 million in first quarter 2000 1.5 2.2
----- -----
Comprehensive income $ 6.4 $16.6
===== =====
Accumulated other comprehensive income is comprised of foreign currency
translation adjustments and hedge activity as disclosed in Note 7, Accounting
for Derivative Instruments and Hedging Activities.
NOTE 5: RE-ENGINEERING PROGRAM
In 1999, the Company announced a three-year re-engineering program designed to
improve operating profit return on sales through improved organizational
alignment, a higher gross margin percentage and reduced operating expenses.
In conjunction with implementing this program, the Company recorded in first
quarter 2001 a pretax re-engineering charge of $1.0 million. The charge related
to severance payments to approximately 100 employees whose positions were
eliminated in connection with Latin America's implementation of the importer
model, which commenced in fourth quarter 2000. The Company also incurred $0.6
million and $2.5 million in the first quarter 2001 and 2000, respectively,
related to the internal and external consulting costs associated with designing
and executing the re-engineering projects, which were included in delivery,
sales and administrative expense. The total after tax cost was $1.3 million and
$1.9 million for the 2001 and 2000 periods presented, respectively.
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NOTE 5: RE-ENGINEERING PROGRAM (CONT'D)
The liability balance as of March 31, 2001 and December 30, 2000 was as follows
(in millions):
2001 2000
------- -------
Beginning balance $ 2.3 $ 0.9
Provision 1.0 12.5
Cash expenditures:
Severance (0.4) (3.0)
Other (0.7) (0.5)
Non-cash write downs -- (7.7)
------- -------
Ending balance $ 2.2 $ 2.3
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NOTE 6: SEGMENT INFORMATION
The Company manufactures and distributes products primarily through independent
direct sales forces: (1) plastic food storage and serving containers, microwave
cookware and educational toys marketed under the Tupperware brand worldwide, and
organized into four geographic segments, and (2) premium cosmetics and skin care
products marketed under the BeautiControl brand in North America.
13 WEEKS 14 WEEKS
ENDED ENDED
MARCH 31, APRIL 1,
2001 2000
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Net sales:
Europe $ 106.9 $ 132.5
Asia Pacific 47.2 56.2
Latin America 45.1 44.1
United States 48.6 40.3
BeautiControl 15.9 --
------- -------
Total net sales $ 263.7 $ 273.1
======= =======
Operating profit (loss):
Europe $ 26.0 $ 34.8
Asia Pacific 4.3 4.3
Latin America 3.5 2.4
United States 2.1 (3.2)
BeautiControl 0.4 --
------- -------
Total operating profit 36.3 38.3
Unallocated expenses (5.8) (7.9)
Re-engineering charge (1.0) --
Interest expense, net (6.7) (5.6)
------- -------
Income before income taxes $ 22.8 $ 24.8
======= =======
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NOTE 7: ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
Effective January 1, 2001, the Company adopted Statement of Financial Accounting
Standards (SFAS133), "Accounting for Derivative Instruments and Hedging
Activities," as amended. This statement establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, and for hedging activities. SFAS 133 requires that
an entity recognize all derivative instruments in the balance sheet at fair
value. Changes in the fair value of derivatives that are not designated as
hedges must be adjusted to fair value through income. If the derivative is
designated as a hedge, depending on the nature of the underlying exposure,
changes in fair value are either offset against the change in fair value of the
hedged item or recognized in other comprehensive income until the hedged item is
recognized in earnings. The ineffective portion of a derivative's change in fair
value is immediately recognized in earnings. The adoption of SFAS 133 had no
significant impact on the accounting treatment and financial results related to
the hedging programs the Company had undertaken, and did not result in a
cumulative effect adjustment.
The Company markets its products in over 100 countries and is exposed to
fluctuations in foreign currency exchange rates on the earnings, cash flows and
financial position of its international operations. Although this currency risk
is partially mitigated by the natural hedge arising from the Company's local
manufacturing in many markets, a strengthening U.S. dollar generally has a
negative impact on the Company. In response to this fact, the Company uses
financial instruments to hedge its exposure and manage the foreign exchange
impact to the financial statements. At its inception, the derivative financial
instrument is designated as either a fair value hedge, cash flow hedge or net
equity hedge.
Fair value hedges are entered into with financial instruments such as forward
contracts with the objective of controlling exposure to certain foreign exchange
risks primarily associated with accounts receivable, accounts payable and
non-permanent intercompany transactions. In assessing hedge effectiveness, the
Company excludes forward points. The hedging relationships the Company entered
into have been highly effective, and the ineffective net gain recognized in
other expense for the three month period ended March 31, 2000 was immaterial.
The Company also uses derivative financial instruments to hedge foreign currency
exposures resulting from firm purchase commitments or anticipated transactions,
and classifies these as cash flow hedges. The Company generally enters into cash
flow hedge contracts for periods ranging from three to six months. The effective
portion of the gain or loss on the hedging instrument is recorded in other
comprehensive income, and is reclassified into earnings as the transactions
being hedged are recorded. The ineffective portion of the gain or loss on the
hedging instrument is recorded in other expense. As of March 31, 2001, and for
the three-month period, the amounts recorded in other comprehensive income and
other expense was not material.
In addition to fair value and cash flow hedges, the Company uses financial
instruments such as forward contracts to hedge a portion of its net equity
investment in international operations, and classifies these as net equity
hedges. For the three-month period ending March 31, 2001,
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the Company recorded a net gain of $1.5 million in other comprehensive income.
Due to the permanent nature of the investment, the Company does not anticipate
reclassifying any portion of this amount to the income statement in the next
twelve months.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following is a discussion of the results of operations for the 13 weeks
ended March 31, 2001 compared with the 14 weeks ended April 1, 2000, and changes
in financial condition during the 13 weeks ended March 31, 2001. The Company's
fiscal year ends on the last Saturday of each calendar year, and therefore the
first quarter of 2000 included 14 weeks, whereas the first quarter of 2001
included 13 weeks.
In October 2000, the Emerging Issues Task Force issued EITF 00-10, "Accounting
for Shipping and Handling Revenues and Cost" which requires fees billed to
customers associated with shipping and handling to be classified as revenue.
Accordingly, the Company has reclassified the revenue related to the shipping
and handling fees billed to customers from delivery expense to net sales for the
2000 period presented and restated net sales and percent of sales information
where appropriate in the following tables and discussion.
NET SALES
Net sales for the first quarter ended March 31, 2001 were $263.7 million, a
decrease of $9.4 million, or 3 percent, from $273.1 million in 2000. Excluding
the $20.6 million negative impact of foreign exchange, net sales increased 4
percent over 2000. The first quarter of 2000 did not include sales of
BeautiControl since it was acquired in October 2000. Excluding the impact of
foreign exchange and BeautiControl sales from the first quarter 2001, sales
declined 2 percent compared with 2000. Significant improvement in the United
States and an increase in Latin America, was offset by declines in Europe and
Asia Pacific. The extra week in the first quarter of 2000 had a negative impact
on the sales comparison of approximately 2 percentage points.
RE-ENGINEERING COSTS
In 1999, the Company announced a three-year re-engineering program designed to
improve operating profit return on sales through improved organizational
alignment, a higher gross margin percentage and reduced operating expenses.
Included in first quarter 2001 results was a re-engineering charge of $1.0
million for severance costs associated with Latin America's implementation of an
importer model. Also included in delivery, sales and administrative expense were
costs of $0.6 million and $2.5 million in the first quarter of 2001 and 2000,
respectively, for internal and external consulting costs associated with
designing and executing the re-engineering projects. Total after tax costs were
$1.3 million (or $0.03 per share) in 2001 and $1.9 million (or $0.04 per share)
in 2000.
The re-engineering project is designed to increase operating profit return on
sales by improving organizational alignment, increasing the gross margin
percentage and reducing operating expenses. Re-engineering costs incurred to
date total $43.9 million. The annual benefit of the actions when they are fully
implemented is expected to be approximately $40
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million to $50 million. Total one-time costs to be incurred through 2001 in
implementing the program are projected to be between $50 million and $60
million, mainly for severance, plant closure costs and other costs.
COSTS AND EXPENSES
The cost of products sold as a percentage of sales was 33.4 percent and 34.3
percent for the first quarter of 2001 and 2000, respectively. All areas reported
improved margins primarily due to the sale of a greater proportion of
high-margin products and continued savings from re-engineering actions.
BeautiControl branded products have higher average gross margins than Tupperware
branded products, and that also contributed to the comparative improvement.
Delivery, sales and administrative expense increased slightly as a percentage of
sales to 54.8 percent for the first quarter of 2001, compared with 54.2 percent
in 2000, primarily due to the impact of BeautiControl on the comparison. A
decrease in distribution expense and lower re-engineering consulting costs in
the Tupperware business were offset by an increase from the inclusion of
BeautiControl. BeautiControl's 2001 expenses as a percentage of sales were
greater than for the Tupperware business in 2000. Also contributing to the
increase was goodwill amortization as a result of the acquisition. Excluding the
BeautiControl results, the comparative expenses declined slightly as a
percentage of sales.
NET INTEREST EXPENSE
For the first quarter of 2001, net interest expense increased $1.1 million over
2000 due to higher borrowing levels from the acquisition of BeautiControl and
the repurchase of common shares in the fourth quarter of 2000.
TAX RATE
The effective tax rate for the first quarter of 2001 was 21.5 percent compared
with 22.5 percent in 2000. The effective tax rates are below the U.S. statutory
rate, reflecting the availability of excess foreign tax credits along with low
foreign effective tax rates.
NET INCOME
Net income for the quarter decreased 7 percent to $17.9 million, or $0.30 per
share, compared with $19.2 million, or $0.33 per share, in 2000. Foreign
exchange had a negative impact on net income of $3.4 million, or $0.06 per
share. Excluding the re-engineering costs for both periods and the negative
impact of foreign exchange, net income increased by 8 percent for the first
quarter. In local currency, the increase was driven by improvements in all areas
except Europe, due to improved gross margins and cost controls.
International operations generated 76 percent and 85 percent of sales, and 93
percent and all of the operating profit for the first quarter 2001 and 2000,
respectively.
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REGIONAL RESULTS (DOLLARS IN MILLIONS)
EUROPE
- -------------------------------------------------------------------------------------------
Negative
foreign Percent
Decrease Restated exchange of total
2001 2000 Dollar Percent decrease impact 2001 2000
-------- -------- ------- ------- -------- ------- -- ----
Net sales $ 106.9 $ 132.5 $ (25.6) (19)% (12)% $ (11.5) 41% 49%
Operating
profit 26.0 34.8 (8.8) (25) (17) (3.4) 71 91
- -------------------------------------------------------------------------------------------
The sales decrease in Europe was attributable to lower volume in Germany and, to
a lesser extent, lower volume in the Nordics. Impacting the comparison was the
extra week in the first quarter 2000 and the weaker euro, which caused a decline
in consumer spending. The area increased promotional spending, which resulted in
a late quarter increase in sales force activity over the prior year. The
decrease in operating profit primarily reflected the lower sales level along
with higher promotional and operating expenses offset by a slight increase in
gross margins.
ASIA PACIFIC
- -------------------------------------------------------------------------------------------
Negative
Restated foreign Percent
Decrease increase exchange of total
2001 2000 Dollar Percent (decrease) impact 2001 2000
-------- -------- ------- ------- -------- ------- ---- ----
Net sales $ 47.2 $ 56.2 $ (9.0) (16)% (5)% $ (6.5) 18% 20%
Operating
profit 4.3 4.3 -- (1) 26 (0.9) 12 11
- -------------------------------------------------------------------------------------------
Results in Japan were the main driver of the sales decline in the area, and were
partially offset by improvement in Malaysia/Singapore and Indonesia. In Japan,
the extra week in the first quarter of 2000, as well as timing of promotional
activities in the first quarter of 2001, impacted the comparative results. The
increase in Malaysia/Singapore was driven by higher sales force activity due to
successful promotional programs. The impact of foreign exchange on the
comparison reflected the weakening of the Japanese yen, Korean won and
Philippine peso.
Operating profit remained flat for the quarter, despite the lower sales volumes,
due to higher gross margins from lower costs and lower operating expenses.
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REGIONAL RESULTS (DOLLARS IN MILLIONS) (CONTINUED)
LATIN AMERICA
- -------------------------------------------------------------------------------------------
Negative
foreign Percent
Increase Restated exchange of total
2001 2000 Dollar Percent increase impact 2001 2000
-------- -------- ------- ------- -------- ------- ---- ----
Net sales $ 45.1 $ 44.1 $ 1.0 2% 9% $ (2.6) 17% 16%
Operating
profit 3.5 2.4 1.1 49 63 (0.2) 10 6
- -------------------------------------------------------------------------------------------
Mexico drove the sales improvement on higher volumes due to an increase in total
salesforce and activity levels. The negative foreign exchange impact reflected
weakening of the Brazilian real and Mexican peso.
In the fourth quarter of 2000, the Company made the decision to begin operating
the smaller Latin America businesses under an importing distributor model. The
benefit of this change is expected to improve the Company and distributor value
chains while retaining a structure for growth. The operating profit improvement
was due to the higher sales volumes in Mexico, as well as the lower costs as a
result of the importer model. In addition, commencing in 2000, the Company
incurred higher costs in Brazil to implement a model to ship directly to
consultants rather than through its distributors.
UNITED STATES
- --------------------------------------------------------------------------------
Percent
Increase of total
2001 2000 Dollar Percent 2001 2000
---- ---- ------ ------- ---- ----
Net sales $ 48.6 $ 40.3 $ 8.3 21% 18% 15%
Operating
profit (loss) 2.1 (3.2) 5.3 + 6 nm
- --------------------------------------------------------------------------------
nm - Not meaningful.
+ Increase of more than 100 percent.
The 21-percent sales increase for the quarter was from higher core party sales
and the integrated direct access (IDA) initiatives, which are a convergence of
the core party plan business with showcases, the Internet, promotional
business-to-business sales and television sales. The IDA initiatives contributed
approximately 70% of the sales increase and represented 15 percent of total
sales, of which approximately two thirds was from business-to-business sales.
The business-to-business sales are to partners who pack their products in
Tupperware containers, along with "bounce back" offers to promote hosting and
attending Tupperware parties, and sell the combined package at retail stores.
Sales from the business-to-business channel are based on reaching agreements
with business partners and their product needs, and the first quarter 2001 sales
are not necessarily indicative of future trends.
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Despite difficulty in recruiting and motivating consultants in a full employment
environment, the total sales force grew 32 percent and the active sales force 19
percent over first quarter 2000, reflecting the success of these distribution
channels in building the party plan business.
The significant increase in operating profit was primarily driven by the
increase in sales volume and the related increase in gross profits. Gross margin
percentages increased slightly over 2000, and operating expenses decreased as a
percent of sales.
BEAUTICONTROL
- --------------------------------------------------------------------------------
Percent
Increase of total
2001 2000 Dollar Percent 2001 2000
---- ---- ------ ------- ---- ----
Net sales $ 15.9 na na na 6% na
Operating
profit 0.4 na na na 1 na
- --------------------------------------------------------------------------------
na - Not applicable - BeautiControl acquired in October, 2000.
In 2000, the Company completed the acquisition of BeautiControl, a party plan
direct seller that markets premium cosmetics and skin care products through a
highly trained independent sales force. On a pro forma basis, comparing the
first quarter 2001 with the same 2000 period, sales increased slightly and
profit was down due to the charge for goodwill amortization. Planned investment
in training and promotional programs also had a negative impact on first quarter
results. In 2001, the Company will focus on enhancing the North American beauty
business and starting operations in Latin America. By late second quarter of
2001, the Company expects to launch operations in Mexico.
FINANCIAL CONDITION
Liquidity and Capital Resources. Working capital decreased to $77.5 million as
of March 31, 2001, compared with $96.6 million as of the end of 2000. This
decrease was primarily driven by higher short-term borrowings and current
portion of long-term debt and lower accounts receivable and cash balances,
partially offset by lower accounts payable and accrued liabilities. The lower
accounts payable and accrued liabilities balances reflect a seasonal reduction
and timing of payments. The lower net receivables balance was the due to the
impact of foreign exchange. With regard to the level of short-term borrowings,
the Company classifies a portion of its outstanding borrowings that are due
within one year by their terms as non-current due to its ability and intent that
they be outstanding throughout the succeeding twelve months. Based on the timing
of the Company's cash inflows during the year, as well as the overall level of
short-term borrowings at the end of each period, a higher amount was classified
as current at the end of the first quarter of 2001 than at the end of 2000.
As of March 31, 2001, the Company had $92.4 million available under its
unsecured multicurrency credit facility, which expires in 2002. The
multicurrency credit facility along with $218.9 million of other foreign
uncommitted lines of credit, and cash generated by operating
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activities, are expected to be adequate to finance any additional working
capital needs and capital expenditures.
Operating Activities. Net cash used in operating activities for the first
quarter of 2001 was $5.3 million, compared with $15.2 million in the 2000
period. The difference between the periods was primarily due to a lower decrease
in accounts payable and accrued liabilities, partially offset by a lower
decrease in accounts receivable.
Investing Activities. The $11.3 million and $8.4 million of cash used in
investing activities for the three-month periods of 2001 and 2000, respectively,
was for capital expenditures, primarily for new molds.
MARKET RISK
One of the Company's market risks is its exposure to the impact of interest rate
changes. The Company has elected to manage this risk through the maturity
structure of its borrowings. Under its present policy, the Company has set a
target of having approximately half of its borrowings with extended terms.
A significant portion of the Company's sales and profits comes from its
international operations. Although these operations are geographically
dispersed, which partially mitigates the risks associated with operating in
particular countries, the Company is subject to the usual risks associated with
international operations. These risks include local political and economic
environments, and relations between foreign and U.S. governments.
FORWARD-LOOKING STATEMENTS
Statements contained in this report that are not based on historical facts are
forward-looking statements. Risks and uncertainties may cause actual results to
differ materially from those projected in forward-looking statements. The risks
and uncertainties include successful recruitment, retention and activity levels
of the Company's independent sales force, success of new products and
promotional programs, economic and market conditions generally and foreign
exchange risk in particular, disruptions with the integrated direct access
strategies, integration of BeautiControl and other risks detailed in the
Company's report on Form 8-K dated April 10, 2001, as filed with the Securities
and Exchange Commission.
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PART II
OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
During the quarter, the Registrant did not file any current
reports on Form 8-K.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned thereunto duly authorized.
TUPPERWARE CORPORATION
By: /s/ Pradeep Mathur
----------------------------------------
Senior Vice President,
and Chief Financial Officer
By: /s/ Judy B. Curry
----------------------------------------
Vice President and Controller
Orlando, Florida
May 14, 2001
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