EXHIBIT 13
[LOGO]
TUPPERWARE CORPORATION
2000 ANNUAL REPORT
Tupperware Corporation 1
DEAR SHAREHOLDERS,
Strong Results For the Year
I am pleased to report another good year for Tupperware. Once again we succeeded
by building on the fundamental strengths of our Company: our brand, our direct
selling channel, our global beachheads and our cash flow.
In 2000, we achieved strong, double-digit growth in local currency earnings,
excluding re-engineering costs, and a solid gain in sales. Our string of local
currency income increases now has been extended to eight quarters. We continue
on our strategic march toward becoming the world's premier direct selling
company.
We made no changes in direction in 2000. Rather, all of the performance gains
resulted from a sharp focus on capitalizing on our three primary strategic
growth levers: expanding the number of sellers in our system, developing our
integrated direct access channels and adding new products and categories.
More Sales Consultants
We ended 2000, compared with 1999, with a larger sales force in every region. A
highlight was the 10-percent improvement in the United States, our first
year-over-year gain in several years, even in the midst of a full employment
economy. The gain clearly demonstrates how our integrated direct access
strategies are helping to build our core business. At the close of 2000, our
worldwide sales force numbered 1.1 million, up 5 percent from the preceding
year. Importantly, the active sales force was up as well, 2 percent in total.
More Selling Channels - Integrated Direct Access
The development of multiple sales channels has been the key initiative driving
the revitalization of Tupperware over the past couple of years. We are pleased
that our plan is working to accelerate revenue growth by reaching consumers who
are not in contact with a member of our sales force, while at the same time
strengthening our core party plan channel.
The program, which we call "integrated direct access," makes our direct sales
force a vital partner in each of our new platforms: showcases, Internet selling
and television shopping. The essence of this effort has been integrating all of
these channels, initially in the United States and now throughout the world, so
that they work in harmony and build the revenue potential for both the members
of our direct sales force and the Company.
Chairman's Letter
2 Tupperware Corporation
In 2000, we dramatically expanded our major new selling platform - showcases -
adding locations in the United States and in multiple markets within each of our
international regions. Showcases give customers more choice in how they interact
with Tupperware and purchase our products, and they create expanded horizons for
our sales force. Millions of shoppers visit malls throughout the year in the
United States alone, presenting an outstanding opportunity for introduction to
or reconnection with Tupperware.
The showcase channel is fully integrated with our core direct selling channel.
Our distributors operate the showcases using the independent sales force they
have trained. The sales consultants, in turn, make incremental sales and
generate a growing number of party dating and recruiting leads from this new
channel.
In April 2000, we began offering U.S. sales consultants their own personalized
web sites, which provide their customers with the ability to purchase
Tupperware(R) products conveniently and instantly on a 24-hour basis. The
Internet is a revolutionary communication and sales tool, and in the United
States now reaches more than half of all households. The Internet brings
Tupperware(R) products to people who do not have the opportunity or the desire
to attend a Tupperware home party. It also gives customers who are
geographically distant from their consultants or who are just looking to fill in
their collection of Tupperware(R) the opportunity to purchase our products with
great convenience, and gives the Company a younger, more modern, image.
As with our showcase development, our direct sales force is totally integrated
into our Internet strategy. For every sale made over the Internet, sales
consultants earn a commission at a level commensurate with their net earnings
from their party plan sales, and are provided with strong incentives to utilize
the Internet to expand their businesses and streamline their administrative
tasks.
We further enriched our multiple channel strategy last year by doubling the
number of Tupperware television shows to 12 on the Home Shopping Network.
Television has proved a potent vehicle for promoting our products and increasing
brand awareness among consumers. These shows highlight the benefits of attending
and hosting our Tupperware parties, and also portray the attractive
opportunities for viewers to begin direct selling careers with Tupperware.
Our integrated direct access channels accounted for 8 percent of U.S. sales in
2000, up from 4 percent in 1999.
Chairman's Letter
Tupperware Corporation 3
More Products and More Product Categories
We continued to emphasize product innovation in 2000 and again met our goal of
obtaining more than 20 percent of our total revenues from products introduced in
the preceding two years. Our ability to perceive and predict market needs and
rapidly design and introduce new products to meet those needs is a cornerstone
of our long-term growth strategy.
Equally significant, we are creating global branded products in addition to
products tailored for a specific culture or market. For example, our
breakthrough food storage product, FridgeSmart(TM), developed in conjunction
with the University of Florida, was successfully introduced worldwide over the
course of 2000. The same was true of our popular salad spinner and E-Series(TM)
knives. Previously, it took five years or more of phased launches to distribute
a new product across all of our world markets.
We have expanded our categories as well as our products. Tupperware products
outside of our traditional areas of food storage, food preparation and food
serving categories, such as children's, microwave, cookware, kitchen gadgets and
knives, now account for over 20 percent of total revenues. A decade ago these
categories contributed virtually none of our revenues.
BeautiControl Acquisition
We added another leg to our growth strategy with the acquisition in October of
BeautiControl, Inc., a 20-year-old company whose vision is to be the premier
direct seller of cosmetics and skin care products. This acquisition gives us a
new, attractive product category in an industry that we know well. In addition,
BeautiControl's marketing structure is built much like Tupperware's, and its
North American direct sales force, numbering approximately 47,000 at the end of
2000, is one of the best trained in the industry.
BeautiControl represents an ideal strategic expansion for Tupperware. Beauty and
skin care is the largest single category in the direct selling industry. In
Latin America, for example, the overall market for personal care products is
estimated to be $18 billion annually, compared with less than $1 billion for
Tupperware product categories. Plus, most beauty and skin care products in Latin
America are sold through the direct channel. BeautiControl adds not only a new
product category, but also a valuable line of consumable products that must be
replaced as used. Tupperware products, by contrast, are long lasting and seldom
need replacing.
BeautiControl is now profitable in North America, and will continue to be led by
its co-founders, Jinger and Dick Heath. We plan to grow BeautiControl by
increasing its North American sales force and by drawing upon Tupperware's
extensive international direct selling experience and operational capabilities.
We plan to launch the BeautiControl line in Mexico in the second quarter of
2001, and then will move into Brazil. In addition, we foresee excellent future
opportunities in Asia Pacific. We warmly welcome BeautiControl's employees and
independent sales force to the Tupperware family.
Chairman's Letter
4 Tupperware Corporation
Stock Purchase by Tupperware Executives
In October we announced that a group of 33 senior executives would participate
in a voluntary plan to purchase 847,000 shares of the Company's stock.
Executives were given the opportunity to borrow money from the Company for these
purchases, with their loans secured by the stock. These share purchases involve
a substantial financial commitment on the part of the executives. Participation
in the program reflects to a strong degree the management team's confidence in
the Company's future and the value of its stock. This plan enabled our
management team to raise its stock ownership significantly and increase its
incentive for improving Tupperware's performance. In conjunction with this plan,
we repurchased 800,000 shares of our stock in the fourth quarter of 2000 at a
total cost of $14.4 million, or an average price of $18 per share.
In Memoriam
We were saddened by the unexpected and untimely loss of William E. Spears,
senior vice president in charge of worldwide integrated direct access programs.
Bill was a colleague and friend who inspired everyone who had the privilege of
working with him. We will miss his vision and leadership. We offer our deepest
condolences to his family.
Management Change
Robert W. Williams, who has been president of our Asia Pacific business since
1995, has decided to retire as of the end of March 2001. Bob has made tremendous
contributions to our business, for which we are grateful. We wish him the best
in his retirement. Taking over for Bob as president of our Asia Pacific region
is Steven R. Kroos, currently president of Tupperware Japan. Steve has been
successful in running our Japanese business, and before that our operations in
Korea, and we are confident that he will do very well with his new
responsibilities.
New Board Member
In August, we welcomed M. Anne Szostak to the Company's board of directors. Anne
is an executive vice president and corporate director of human resources for
FleetBoston Financial, the nation's seventh largest bank holding company. We
look forward to significant contributions from Anne.
In Conclusion
We believe that we have "cracked the code," creating the template of the future
for direct selling by Tupperware. The convergence of the party plan with
showcases, Internet selling and television shopping, and the new opportunities
from the BeautiControl acquisition will bring increasing value to our
stockholders. On behalf of Tupperware, we thank you for your continuing support.
RICK GOINGS /s/ Rick Goings
CHAIRMAN AND CHIEF EXECUTIVE OFFICER
FEBRUARY 28, 2001
Chairman's Letter
[TUPPERWARE GRAPHIC]
6 Tupperware Corporation
BUSINESS OVERVIEW
Overall Performance
As a result of progress made on a number of our initiatives during the year, net
income in 2000 increased by 9 percent to $99.1 million, or $1.71 per share, up
from $91.3 million, or $1.58 per share in 1999, excluding re-engineering costs.
Weak currencies, especially the euro, again impacted our results significantly,
reducing earnings per share by 25 cents. Excluding the impact of foreign
exchange and re-engineering costs, net income increased 30 percent.
Revenues showed good growth for the year, increasing by 8 percent to $1.1
billion, excluding the negative impact of foreign exchange. Sales of
BeautiControl products contributed to results beginning with its acquisition in
October. A change in the distribution model in some Latin American countries,
under which product is now sold directly to the sales force, also contributed
positively.
Cash flow from operations, after capital expenditures but before re-engineering,
was $53 million for 2000. We have averaged $72 million in annual cash flow each
year for the past five years, a level that supports our dividend and the funding
of business needs.
We continued to be financially strong. Our total debt-to-capital ratio was 76
percent at the end of 2000, after the $56 million of borrowings to fund the
BeautiControl acquisition and the $14 million expended for the share repurchase.
We plan to use the growing cash flow generated by the business to reduce debt,
with the expectation of lowering our debt-to-capital ratio to the 45-percent
range by the end of 2002.
Our 2000 pretax interest coverage was 8 times, equaling our 1999 coverage. This
important measure of financial strength places us in the upper third of Standard
& Poor's 500 companies with similar credit ratings.
We invested $46 million in capital expenditures in our business in 2000,
approximately 40 percent of which was used for new molds to support the
manufacture of new products.
Business Overview
Tupperware Corporation 7
Dividends of $0.88 per share were declared during 2000, unchanged from the
previous year. The dividend yield was 4.3 percent, based on Tupperware's
year-end closing price. The dividend is well protected by our cash flow.
Management's goal is to restore the dividend payout ratio to the targeted
35-percent level through future earnings growth.
We completed the second year of our three-year re-engineering program. We
estimate that the re-engineering initiatives will produce recurring benefits of
$40 to $50 million each year, beginning in 2002. We are well on target toward
meeting this objective and restoring our return on sales to the highly
attractive 19 to 20 percent range last realized in 1996. Return on sales was 16
percent in 2000, before re-engineering costs and the inclusion of BeautiControl,
up from 12 percent just two years ago.
Phase I of the re-engineering program, which involved rationalizing our
manufacturing operations and resizing and realigning some of our regional
offices, was completed in 1999. Phase II of the program, which began in 2000, is
still proceeding. In this phase, we are centralizing our information technology
operations, greatly standardizing our software systems and implementing shared
service centers for appropriate functions and regions. Further, we are
implementing an importer-distributor model in our smaller Latin American markets
- - outside of Mexico and Brazil. Also part of Phase II is the formation of eight
purchasing councils to coordinate our worldwide procurement of several
commodities, ranging from raw materials to printed matter to services. Benefits
of $25 million were realized in 2000, which include $10 million of annual
benefits first realized in 1999. Costs incurred in 2000 totaled $27 million, and
program-to-date costs have been $43 million. Total costs for the program are now
expected to run from $50 to $60 million, as the high end of the spending range
has been trimmed by $15 million from the original forecast made in 1999.
Business Overview
8 Tupperware Corporation
Regional Review - Europe
Europe, which continues to be the most significant regional contributor to
revenues and income, performed well in 2000, achieving increases in sales and
profits in local currency in spite of the dampened consumer-spending environment
caused by the weak euro. By contrast, most other direct selling companies
experienced sales declines, many by double-digit percentages.
The difficulties experienced in 1999 by all direct sellers in Germany as a
result of government-imposed social security regulations on part-time workers
were successfully addressed. We developed a program that provided assistance to
our sales force to help them comply with these regulations, and, as a result,
enjoyed increases in both our sales and the size of our sales force in Germany,
which is our largest European market.
Sales improved in France through the year after a slow start related to terrible
storms there in late December 1999 and January 2000. We grew in the middle-size
markets of Austria and Scandinavia, where we are expanding our opportunities as
a result of more aggressive recruiting of sales consultants. We made nice
progress in the emerging Russian market as well, where we approached
profitability. Late in 2000, we entered Morocco and Egypt, two countries with
expanding middle classes. Based on our success in similar countries in the
region, we are optimistic about the future of these new Tupperware markets.
We continue to strengthen our competitive position each year in Europe and are
encouraged about our longer-term prospects for modest sales growth in this
region with a strong, mid-20-percent return on sales.
Regional Review
Tupperware Corporation 9
Regional Review - Asia Pacific
Strong gains were achieved in 2000 in Asia Pacific, with local currency
operating profit up 35 percent over 1999 on a small gain in sales, the result of
aggressive recruiting in recent years, a steady flow of new product
introductions and the one-time benefit of a use-tax abatement incentive. Asia
Pacific's performance was led by continued improvement in Japan, the second
largest economy in the world, where we grew our sales force through record
recruiting, and where we have profited over the past two years from the
increased efficiency of our restructured manufacturing operation and cost
control. Our price points are higher in Japan than elsewhere in the region, and
we have been successful with a number of new high-end products specifically
designed for this market. We achieved these favorable results in spite of a
Japanese economy that remains extremely sluggish.
A number of other markets in the area also performed well in 2000, including
Korea, where we finished the year with another improvement in the size of the
sales force. The economy of the Philippines, the other of the three large
markets in the region, suffered throughout the year from political upheaval and
the resulting social unrest.
The key emerging markets of Indonesia, India and China, which account for almost
half of the world's population, finished the year with rising sales. Although
all three markets are currently relatively small for Tupperware, they are
growing nicely and we see great potential for the future. Indonesia improved its
profitability, and India and China both became profitable for the first time in
2000.
Regional Review
10 Tupperware Corporation
Regional Review - Latin America
Latin America showed substantial improvement in 2000, reflecting continuing
strong growth in our lead market in the region, Mexico, and the positive impact
on sales of a new distribution model in Brazil. By improving distributor
profitability through centralized order processing and distribution, we have
succeeded in re-focusing distributors' efforts on the key sales drivers of
recruiting, training and motivating their sales forces.
As a result of these factors, the region achieved a double-digit increase in
local currency sales, before the positive impact of the new distribution model,
and a profit increase over 1999 of more than 20 percent, excluding
re-engineering costs. In January 2001, we announced our decision to move to an
importer-distributor model for all of the region's markets, except for Mexico
and Brazil. We expect this change to significantly improve the profitability in
these smaller markets by removing company overhead and stimulating the
entrepreneurial spirit of the importer distributors.
Regional Review - United States
Nowhere has the revitalization of Tupperware taken hold more strongly than in
our home market, which benefited from a larger, more productive sales force, and
the successful expansion of distribution channels as a result of our integrated
direct access strategy. We achieved a double-digit sales increase and a tripling
of operating profit, along with an outstanding 10-percent year-end 2000 sales
force size advantage. This was the first such year-over-year sales force
increase since 1995. The increase was achieved in the midst of the worst
recruiting environment in a generation, as a result of an extremely strong
economy and a low unemployment rate.
Another initiative under way is a new business model for our sales force. This
model includes an Internet ordering capability for our sales force's party plan
orders. We believe using this capability will reduce costs for the sales force
and us, and will free up the sales force's time, allowing them to devote more
effort to productive selling activities.
Regional Review
Integrated Direct Access... TUPPERWARE - ANYWHERE, ANYTIME.
[CIRCLE GRAPHIC CONTAINING:]
INTERNET
SHOWCASES
CORE DIRECT SELLING
TELEVISION
SHOPPING
ALLIANCES
Tupperware Corporation 13
Showcases, the Internet and Home Shopping Network television blossomed in the
past year as new Tupperware sales channels, making our products accessible to a
vastly larger audience and helping build our core party plan business.
Integrated direct access has been one of the most successful new initiatives in
Tupperware's history. It has launched dramatic new income opportunities for our
sales force and brought new and former participants into the party plan
business, and helped us to retain people in our sales force by creating new
party dating and consultant recruitment opportunities.
Designing new sales channels that do not weaken traditional channels has been a
challenge for many companies. Tupperware, however, has met that challenge with
great success. We have developed a multiple channel network of showcase,
e-commerce and television that actually enhances our existing sales force rather
than competes with it.
The use of multiple channels not only allows us to reach new customers and
accelerate our revenue growth, but also to strengthen and lift the performance
of our direct sales force, which participates financially in sales from every
channel.
Integrated Direct Access
14 Tupperware Corporation
The showcase program began on a test basis in 1998. Its overwhelmingly positive
reception by consumers and our distributors led us to expand the program during
the holiday season to more than 250 malls across the United States in 1999, and
more than 450 malls in 2000. Over 90 percent of our U.S. distributors
participated in showcases in 2000.
Showcases were opened as well in more than a dozen countries in Europe, Latin
America and Asia Pacific in 2000, based on the U.S. model. Our goal over the
next 3 to 5 years is to open, along with our sales force partners, 1,000
year-round showcases in the United States, and year-round and seasonal showcases
in as many of our international markets as local laws and culture permit.
The Internet is our second major new integrated direct access channel. We
launched our e-commerce program in the United States in August 1999, with a
complete redesign of our web site, Tupperware.com, and our first offering of
products for sale via the Internet. The content of the site was designed to
support our direct sales force and promote our brand, which it has done very
effectively.
Integrated Direct Access
Tupperware Corporation 15
We began with an immediate advantage enjoyed by very few e-commerce companies.
We already had in place a sophisticated and efficient order fulfillment system.
This system, developed to serve our direct sales force, was easily modified to
fulfill Internet orders and continues to function very efficiently, delivering
most orders in 2 to 3 days from receipt.
We have been successful in driving traffic to our web site, and last year
enhanced its attractiveness by offering personalized web sites to all of our
U.S. sales force. This initiative creates sales force sites that sit on top of,
and act as a gateway to, Tupperware.com. These sites allow for personalization
and the ability of customers to buy Tupperware(R) products through the web for
the credit of their sales consultant, further harmonizing our Internet strategy
with the interests of our sales force partners. In fact, the sales force is now
earning commissions for orders placed through Tupperware.com as well.
Integrated Direct Access
16 Tupperware Corporation
We have created additional incentives for our sales people and their customers
to embrace this initiative. More than 10,000 members of the U.S. sales force now
have their own web sites. We look forward to an increasing percentage of our
80,000-plus U.S. sales people operating their Tupperware-sponsored personal
sites.
Finally, we expanded our Home Shopping Network commitment to 12 one-hour shows
in 2000, double the number in 1999. Our own sales consultants demonstrate
Tupperware(R) products on these shows, providing valuable exposure to our brand,
our products, the party plan and the Tupperware consultant earnings opportunity.
Integrated Direct Access
Expanding the Marketplace...OUR 40-YEAR GLOBAL TRADITION.
[GRAPHIC WITH NAMES OF COUNTRIES]
Tupperware Corporation 19
Consumers can purchase Tupperware(R) products in more than 100 countries
representing every type of economy in the world. We continue to enter new
markets and succeed across a broad cultural spectrum. Our opportunities for
expansion are unlimited.
We have sold Tupperware(R) products in international markets for more than 40
years. Some Tupperware(R) products are tailored for consumers in highly
developed countries, others for consumers in emerging economies and still others
for consumers worldwide. For example, high price-point air and water purifiers
succeed in Japan, as does low price-point melamine tableware in the Philippines.
Our Rock `N Serve(TM) microwave products are popular in all of our geographic
regions, while the OvenWorks(TM) high-end products, which can go from microwave
to conventional oven then to refrigerator and freezer, are enthusiastically
received by consumers in the United States and Europe.
In the latter part of the 1990s and in 2000, we developed a presence in a number
of new markets throughout the world, including China, the Czech Republic, India,
Indonesia, Poland, the Slovak Republic, Slovenia, Turkey and Russia.
Expanding the Marketplace
20 Tupperware Corporation
We re-entered the market in Mainland China two years ago through a combination
of storefronts and other channels, and are continuing to add sales personnel and
increase sales. China, with its large population, strong family tradition and
relatively undeveloped retail infrastructure, is a country with obvious
long-term potential for Tupperware.
In India, the country with the second largest population in the world, we
reached profitability in 2000, only four years after our market entry. We opened
a manufacturing plant there in the spring of 2000 to meet our growing needs in
that important country.
Our solid position throughout the world is built on the strength of our more
than 1 million sales consultants and the global strength of our brands. In
addition, quality products that meet the different cultural and lifestyle needs
of consumers throughout the world support our growing market power. Our
international strength is built also on the basic social need of all people to
interact with and learn from their fellow human beings, a key underpinning of
the entire direct selling industry.
Expanding the Marketplace
Growing the Product Line...CREATING FOR CONSUMER NEEDS.
[CIRCLE GRAPHIC CONTAINING:]
HOME
ORGANIZATION
BEAUTY
KNIVES &
CUTLERY
COOKWARE
AIR/WATER
PURIFICATION
TABLE SERVICE
AND
DECORATION
NEW CHILDREN'S
LINES
CORE
FOOD STORAGE,
PREPARATION
AND SERVING
Tupperware Corporation 23
We added the exciting new product categories of premium beauty and skin care
last year through the acquisition of BeautiControl, opening new opportunities
for leveraging Tupperware's direct selling channel and international market
strength. We also introduced many new Tupperware products in 2000, again meeting
the goal of obtaining 20 percent of sales from new products introduced in the
past two years.
Our new product strategy is first of all to support and extend our core product
lines of food storage, food preparation and food serving, and then to expand
into new categories that complement these core product lines. Examples of such
new categories opened by Tupperware in recent years include cookware, home
organization and environment, candles and accessories, bath organization,
cutlery and knives, and table service and decoration. Expansion into these
categories has broadened our growth horizons substantially, none more so than
Beauticontrol, which brings us consumable cosmetics and skin care lines.
Growing the Product Line
Tupperware Corporation 24
Beauticontrol's line of high quality skin care products and cosmetics are
formulated for different skin colors and types and matched to a client's needs
with the assistance of Beauticontrol's exclusive "Skin Sensors" analysis system.
This system enables Beauticontrol's sales consultants to recommend a customized
skin care regimen for each client.
People have become more aware of the need to treat sun-damaged skin, protect
their skin from environmental elements and keep their skin clean and free of
harmful toxins. Beauticontrol's research institute has developed a number of
advanced products to address these issues of beauty and health.
One of Beauticontrol's best-selling skin care products is the Regeneration(R)
Gold Line. This treatment utilizes alpha hydroxy acids and tissue stimulation
compounds to help firm, tighten and smooth skin and minimize lines and wrinkles.
Beauticontrol holds one of only two patents in the world on an alpha hydroxy
skin care product.
Growing the Product Line
Tupperware Corporation 25
We expanded our core lines as well in 2000, including product extensions for the
revolutionary Fridgesmart(TM) food storage systems that double the life of fresh
produce in a refrigerator. The Fridgesmart(TM) line, developed in conjunction
with the University of Florida, is now being sold very successfully throughout
the world.
Solving consumer problems is an important part of Tupperware's value, and the
drip-less straw seal introduced in 2000 is a prime example. This seal enables
children and adults to transport beverages from one location to another without
spills. Several new, beautiful and cleverly designed food preparation products
help with kitchen tasks, including our new egg slicer, horizontal peeler, whisk,
zester, silicone spatulas and "On The Dot" timer. All incorporate exceptional
Tupperware quality throughout. The peeler, for example, is incredibly sharp and
fitted to the hand for perfect control.
Growing the Product Line
26 Tupperware Corporation
A wide range of the storage, preparation, microwave, cooking, serving and home
decoration products that were introduced during the year are shown in the
following product showcase. One relatively new and very successful category
among this group is our children's line, which in 2000 added a "Mini
Expressions" toy set, Tupperware baby bottle, divided feeding bowl, toddler's
meal set, "Winnie the Pooh"(*) canteen and "Toy Story 2"(*) line of products. As
the latter two examples illustrate, we have been successful in licensing names
and images that are popular with children for use in our products, including
characters licensed from the Walt Disney Company, as well as Pokemon(R),
Barbie(R) and Barney(R) characters.
Growing the Product Line
[GRAPHIC SHOWING STRIPED BARS]
Product Showcase
A Tupperware party started every two seconds somewhere in the world in 2000. Our
parties were attended by 100 million people, who were attracted by the color,
quality of materials, design and utility of our products. Whether they came to
us through parties, showcases, the Internet or television, consumers were
treated to a dazzling array of new Tupperware and BeautiControl products in
2000, some of which are shown on the following pages.
[PICTURE OF IMPRESSIONS PITCHER]
TUPPERWARE(R) IMPRESSIONS PITCHER
[PICTURE OF FRIDGESMART COLLECTION]
[PICTURE OF FRIDGESMART COLLECTION]
FRIDGESMART(TM) COLLECTION
[GRAPHIC OF LEGACY RICE SERVER]
[PICTURE OF LEGACY RICE SERVER]
LEGACY RICE SERVER
[PICTURE OF CARVING FORK AND CHEESE KNIFE]
[PICTURE OF CARVING FORK AND CHEESE KNIFE]
E-SERIES(TM) CARVING FORK AND CHEESE KNIFE
[PICTURE OF SPICE LINE]
[PICTURE OF SPICE LINE]
PREMIUM SPICE LINE
[PICTURE OF BAKING ESSENTIALS LINE]
[PICTURE OF BAKING ESSENTIALS LINE]
BAKING ESSENTIALS LINE
[PICTURE OF CAKE SERVER]
[PICTURE OF CAKE SERVER]
TUPPERWARE(R) EXPRESSIONS CAKE SERVER
[PICTURE OF ICING BALL]
ICING BALL
[PICTURE OF KEEP 'N HEAT CONTAINER]
KEEP `N HEAT(TM) CONTAINER
[PICTURE OF SALT & PEPPER SHAKER]
[PICTURE OF SALT & PEPPER SHAKER]
TUPPERWARE(R) EXPRESSIONS SALT AND PEPPER SHAKERS
[PICTURE OF PRESSURE COOKER]
PERFECT KITCHEN(TM) PRESSURE COOKER
[PICTURE OF TIMER]
ON THE DOT TIMER
[PICTURE OF LOTION]
SKINLOGICS(R) CLEANSING LOTION
[PICTURE OF GOLD EYE REPAIR]
REGENERATION(R) GOLD EYE REPAIR
[PICTURE OF NAILOGICS(R) NAIL COLOR]
[PICTURE OF NAILOGICS(R) NAIL COLOR]
NAILOGICS(R) NAIL COLOR
[PICTURE OF FREEZESMART CONTAINER]
[PICTURE OF FREEZESMART CONTAINER]
FREEZESMART(TM) WITH DATING DIAL
[PICTURE OF REFRIGERATOR CONTAINER]
[PICTURE OF REFRIGERATOR CONTAINER]
FORGET-ME-NOT(TM) REFRIGERATOR CONTAINERS
[PICTURE OF SPIN 'N SAVE]
SPIN `N SAVE(TM) SALAD SPINNER
Tupperware Corporation 57
FINANCIAL TABLE OF CONTENTS
SELECTED FINANCIAL DATA 58
MANAGEMENT'S DISCUSSION AND ANALYSIS 62
CONSOLIDATED STATEMENTS OF INCOME 76
CONSOLIDATED BALANCE SHEETS 77
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY 78
CONSOLIDATED STATEMENTS OF CASH FLOWS 80
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 81
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS 101
REPORT OF MANAGEMENT 102
OFFICERS AND BOARD OF DIRECTORS 103
CORPORATE INFORMATION 104
58 Tupperware Corporation
SELECTED FINANCIAL DATA
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 2000 1999
- -----------------------------------------------------------------------------------------------------
OPERATING RESULTS
Net sales: (a)
Europe $ 424.1 $ 489.1
Asia Pacific 242.0 242.3
Latin America 193.0 154.2
United States 201.8 178.2
BeautiControl (b) 12.2 --
- -----------------------------------------------------------------------------------------------------
Total net sales $ 1,073.1 $ 1,063.8
=====================================================================================================
Operating profit (loss):
Europe $ 94.1 $ 110.7
Asia Pacific 44.8 35.0
Latin America 8.0 (c) 12.0
United States 15.6 4.7
BeautiControl (b) 0.1 --
- -----------------------------------------------------------------------------------------------------
Total operating profit (loss) 162.6 162.4
- -----------------------------------------------------------------------------------------------------
Unallocated expenses (27.9)(c) (23.1)(c)
Costs associated with becoming an independent company -- --
Re-engineering and impairment charge (12.5)(c) (15.1)(c)
Interest (expense) income, net (21.1) (20.9)
- -----------------------------------------------------------------------------------------------------
Income (loss) before income taxes and cumulative effect of
accounting changes 101.1 (c) 103.3 (c)
- -----------------------------------------------------------------------------------------------------
Provision for income taxes 26.2 24.3
- -----------------------------------------------------------------------------------------------------
Income (loss) before cumulative effect of accounting changes $ 74.9 (c) $ 79.0 (c)
=====================================================================================================
Net income (pre-1997 pro forma) $ 74.9 (c) $ 79.0 (c)
=====================================================================================================
Earnings per common share (pre-1997 pro forma):(f)
Basic $ 1.30 (c) $ 1.37 (c)
=====================================================================================================
Diluted $ 1.29 (c) $ 1.37 (c)
=====================================================================================================
a. In October 2000, the Emerging Issues Task Force issued EITF 00-10,
"Accounting for Shipping and Handling Revenues and Costs", which requires
fees billed to customers associated with shipping and handling to be
classified as revenue. Accordingly, Tupperware Corporation (Tupperware, the
Company) has reclassified the revenue related to shipping and handling fees
billed to customers from delivery expense to net sales for all periods
presented.
b. In October 2000, the Company purchased all of the outstanding shares of
BeautiControl, Inc. (BeautiControl), and its results of operations have
been included since the date of acquisition.
c. In 1999, the Company announced a three-year re-engineering program. The
re-engineering and impairment charge line provides for severance and other
exit costs. In addition, unallocated expenses include $7.9 million and $1.0
million for internal and external consulting costs incurred in connection
with the program in 2000 and 1999, respectively. Also in 2000, $6.3 million
was recorded as a reduction to Latin America's operating profit related to
the write-down of inventory and receivables associated with adopting an
importing distributor model for certain countries. Total after-tax impact
of these costs was $24.2 million and $12.3 million in 2000 and 1999,
respectively. See Note 3 to the financial statements.
Tupperware Corporation 59
1998 1997 1996 1995 1994 1993 1992
- ---------------------------------------------------------------------------------------------------------
$ 518.7 $ 546.6 $ 581.7 $ 595.1 $ 540.1 $ 505.1 $ 490.7
211.5 279.0 338.0 355.1 329.3 286.9 268.3
186.8 247.2 268.5 200.6 176.4 154.4 138.7
186.9 176.7 200.5 227.0 247.5 245.8 225.9
-- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------
$1,103.9 $1,249.5 $1,388.7 $1,377.8 $1,293.3 $1,192.2 $1,123.6
=========================================================================================================
$ 123.9 $ 144.6 $ 153.0 $ 156.8 $ 125.0 $ 110.3 $ 92.4
20.2 37.2 61.0 59.4 46.3 40.3 32.9
(16.4) (5.7)(d) 43.3 19.4 15.7 15.7 5.9
4.0 (29.5)(d) 10.4 10.3 16.0 12.5 (139.6)
-- -- -- -- -- -- --
- ---------------------------------------------------------------------------------------------------------
131.7 146.6 267.7 245.9 203.0 178.8 (8.4)(e)
- ---------------------------------------------------------------------------------------------------------
(17.5) (18.0)(d) (16.1) (22.9) (12.0) (17.8) (24.1)
-- -- (9.1) -- -- -- --
-- -- -- -- -- -- --
(22.7) (17.8) (8.0) 1.9 0.2 (12.6) (9.3)
- ---------------------------------------------------------------------------------------------------------
91.5 110.8 (d) 234.5 224.9 191.2 148.4 (41.8)(e)
22.4 28.8 59.8 53.5 42.0 30.5 1.9
- ---------------------------------------------------------------------------------------------------------
$ 69.1 $ 82.0 (d) $ 174.7 $ 171.4 $ 149.2 $ 117.9 $ (43.7)(e)
=========================================================================================================
$ 69.1 $ 82.0 (d) $ 170.4 $ 161.1
========================================================
$ 1.19 $ 1.34 (d) $ 2.75 $ 2.60
========================================================
$ 1.18 $ 1.32 (d) $ 2.71 $ 2.57
========================================================
d. Includes a $42.4 million pretax charge ($31.3 million after tax): $22.2
million in Latin America, primarily for bad debts in Brazil; $16.0 million
in the United States, primarily for inventory obsolescence; and $4.2
million in unallocated expenses, primarily for corporate downsizing.
e. Includes a $136.7 million pretax charge ($111.4 million after tax)
primarily related to consolidation of manufacturing capacity and
restructuring the U.S. distribution system.
f. In May 1996, the Company became an independent company through the
distribution by Premark International, Inc. (Premark) to its shareholders
of the equity of the Company (the Distribution). The Distribution was
effected through a 1-for-1 distribution of stock. Pro forma net income is
based on historical net income adjusted for pro forma interest expense
related to the increase in borrowings incurred in connection with the
Distribution. Information is not applicable prior to 1995.
60 Tupperware Corporation
SELECTED FINANCIAL DATA (CONTINUED)
(DOLLARS IN MILLIONS, EXCEPT PER SHARE AMOUNTS) 2000 1999
- --------------------------------------------------------------------------------------------
PROFITABILITY RATIOS
Operating profit as a percent of sales:
Europe 22.2% 22.6%
Asia Pacific 18.5 14.4
Latin America 4.1 7.8
United States 7.8 2.6
BeautiControl (b) 1.1 --
Total operating profit 15.2 15.3
Return on average equity (g,h) 52.6 60.5
Return on average invested capital (g,h) 17.8 19.5
FINANCIAL CONDITION
Working capital $ 96.6 $ 61.3
Property, plant and equipment, net 233.1 242.9
Total assets 849.4 796.1
Short-term borrowings and current portion of long-term debt 26.9 43.9
Long-term debt 358.1 248.5
Shareholders' equity 123.9 145.3
Current ratio 1.35 1.20
Long-term debt-to-equity (g) 289.0% 171.0%
Total debt-to-capital (g) 75.6% 66.8%
OTHER DATA
Net cash provided by operating activities $ 86.1 $ 113.0
Capital expenditures 46.3 40.9
Depreciation 52.1 55.6
COMMON STOCK DATA (g)
Dividends declared per share $ 0.88 $ 0.88
Dividend payout ratio (j) 68.2% 64.2%
Average common shares outstanding (thousands):
Basic 57,692 57,519
Diluted 57,974 57,870
Year-end book value per share $ 2.14 $ 2.52
Year-end price/earnings ratio 15.8 12.3
Year-end market/book ratio 9.5 6.7
Year-end shareholders (thousands) 12.7 14.1
g. Due to the change in the Company's capital structure in connection with the
Distribution, this information is not applicable or not meaningful for the
omitted periods.
h. Returns on average equity and invested capital are calculated using net
income (pre-1997 pro forma net income) and the monthly balances of equity
and invested capital beginning at the date of the Distribution. Invested
capital equals equity plus debt.
i. Includes $105.0 million of the $150.0 million of 8.375 percent notes that
were called at par on February 1, 1994.
Tupperware Corporation 61
1998 1997 1996 1995 1994 1993 1992
- -----------------------------------------------------------------------------------------------
23.9% 26.5% 26.3% 26.3% 23.1% 21.8% 18.8%
9.5 13.3 18.0 16.7 14.1 14.1 12.3
nm nm 16.1 9.7 8.9 10.2 4.3
2.1 nm 5.2 4.5 6.5 5.1 nm
-- -- -- -- -- -- --
11.9 11.7 19.3 17.8 15.7 15.0 nm
47.5 30.5 65.0
17.6 17.1 32.6
$ 95.5 $ 103.3 $ 156.2 $ 88.1 $ 72.9 $ (49.6) $ (11.3)
271.0 293.0 331.0 317.7 310.2 277.2 250.8
823.4 847.2 978.5 944.0 882.6 785.1 661.1
18.7 -- 25.3 83.8 58.3 139.9(i) 19.3
300.1 236.7 215.3 0.4 0.5 45.6 153.3
135.8 214.2 305.5 415.6 395.1 163.3 68.2
1.33 1.34 1.43 1.20 1.18 0.90 0.97
221.0% 110.5% 70.5%
70.1% 52.5% 44.1%
$ 118.1 $ 161.8 $ 150.5 $ 179.2 $ 142.7 $ 150.3 $ 152.0
46.2 67.5 96.0 69.3 72.9 85.6 80.0
64.0 66.1 65.3 61.3 55.7 44.7 50.1
$ 0.88 $ 0.88 $ 0.44(j)
74.6% 66.7% 32.5%
58,235 61,334 62,016
58,736 61,827 62,806
$ 2.36 $ 3.51 $ 4.90
13.6 20.7 20.1
6.8 7.8 11.1
15.6 20.5 21.6
j. The Company initiated regular quarterly dividends of $0.22 per share
beginning in the third quarter of 1996. The dividend payout ratio is
dividends declared per share divided by diluted earnings per share. 1996
assumes four quarterly dividend declarations.
nm - Not meaningful.
62 Tupperware Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is a discussion of the results of operations for 2000 compared
with 1999 and 1999 compared with 1998, and changes in financial condition during
2000. The Company's fiscal year ends on the last Saturday of December. Fiscal
2000 consisted of 53 weeks compared with 52 weeks in 1999. This information
should be read in conjunction with the consolidated financial information
provided on pages 76 to 102 of this Annual Report.
In October 2000, the Emerging Issues Task Force issued EITF 00-10, "Accounting
for Shipping and Handling Revenues and Costs", 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 all
periods presented and restated sales and percent of sales information where
appropriate in the following tables and discussion.
In December 1999, the Securities and Exchange Commission (SEC) issued Staff
Accounting Bulletin (SAB) No. 101, "Revenue Recognition in Financial
Statements", which provided guidance related to revenue recognition based on
interpretations and practices followed by the SEC. SAB No. 101 was effective for
the Company's fourth quarter 2000. The Company is in compliance with the
provisions of SAB No. 101, and adoption of the provisions did not have an impact
on the consolidated financial statements.
RESULTS OF OPERATIONS
NET SALES AND NET INCOME. Net sales in 2000 were $1,073.1 million, an increase
of $9.3 million, or 1 percent, from $1,063.8 million in 1999. Excluding a $72.8
million negative impact of foreign exchange, net sales increased 8 percent over
1999. In local currency, all areas reported improved sales. Included in 2000 are
the results of BeautiControl, Inc. (BeautiControl), since the acquisition in
October 2000. Also impacting sales is a modification in the distribution model
for three countries in Latin America. In these countries, sales are now made
directly to the sales force with distributors compensated through commission
payments. This model results in sales being recorded at an amount that includes
the margin that previously was realized by the distributors, although there is
no impact on operating profit. Excluding the impact of this new model, the
BeautiControl sales and the impact of foreign exchange, net sales increased 5
percent over 1999.
In 2000, net income decreased 5 percent to $74.9 million from $79.0 million in
1999. Included in the 2000 results were $26.7 million ($24.2 million after tax)
of re-engineering and impairment costs related to the three-year program
announced in 1999. The re-engineering and impairment charge of $12.5 million, in
addition to $6.3 million of operating expense, provides for severance and other
exit costs primarily related to the decision to begin operating the Latin
America businesses, other than Mexico and Brazil, under an importing distributor
model. This change is expected to improve the Company and distributor value
chains while retaining a structure for growth. In addition, $7.9 million was
incurred for internal and external consulting costs to design and execute the
re-engineering actions. Foreign exchange had a $14.2 million negative impact on
the comparison. Excluding re-engineering and impairment costs in both years and
the impact of foreign exchange, net income increased 30 percent, with
improvements coming from all areas.
Net sales in 1999 of $1,063.8 million were 4 percent lower than 1998 net sales,
reflecting decreases from operations in all areas except Asia Pacific, which had
a significant improvement. Excluding the $19.7 million negative foreign exchange
impact, 1999 sales decreased 2 percent.
In 1999, net income increased 14 percent to $79.0 million from $69.1 million in
1998. Included in the 1999 results were $16.1 million ($12.3 million after tax)
of re-engineering costs. The re-engineering
Tupperware Corporation 63
and impairment charge of $15.1 million provided for severance and other exit
costs associated with the decision to close manufacturing plants in Spain and
Argentina, and to restructure manufacturing operations in Japan and the
headquarters for Europe and Asia Pacific. The additional $1.0 million expense
incurred was for internal and external consulting costs to design and execute
the re-engineering actions. Excluding the re-engineering costs, net income
increased to $91.3 million, or 32 percent. All areas except Europe reported
improved earnings. The decline in Europe was primarily due to higher expenses
related to addressing a change in German social security legislation and higher
promotion expense incurred to stimulate sales growth. Foreign exchange did not
have an impact on net income.
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 $42.9 million. The annual benefit of the actions when they are fully
implemented is expected to be approximately $40 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.
In 2000, unallocated corporate expenses increased to $27.9 million from $23.1
million in 1999. The increase was due to the inclusion of more internal and
external consulting costs for the re-engineering program. In 1999,unallocated
corporate expenses increased to $23.1 million from $17.5 million in 1998. The
increase was primarily due to accrual for bonuses, which were not incurred in
1998, higher expenses for integrated direct access programs and the inclusion of
the costs for the re-engineering program.
In 2000, 80 percent of sales and 90 percent of the Company's operating profit
was generated by international operations. In 1999, 83 percent of sales and 97
percent of the operating profit was generated by international operations.
COSTS AND EXPENSES. The cost of products sold in relation to sales was 33.3
percent, 34.3 percent and 36.8 percent, in 2000, 1999 and 1998, respectively.
All areas reported improved margins in 2000 primarily due to the sale of a
greater proportion of high-margin products and lower manufacturing costs. The
lower manufacturing costs were a result of the savings generated from the
re-engineering efforts, and were partially offset by higher raw material prices
and a weaker euro. All areas reported improved margins in 1999, also primarily
due to the sale of a greater proportion of high-margin products, and lower
manufacturing costs. Europe's cost of products sold improved only slightly due
to lower sales volumes in Germany. Delivery, sales and administrative expense as
a percentage of sales was 53.9 percent, 52.3 percent and 52.8 percent, in 2000,
1999 and 1998, respectively. The increase in cost in 2000 was due to higher
operating expenses from the implementation of the new distribution center model
in Latin America, as well as higher internal and external consulting costs for
re-engineering. The decrease in the 1999 expenses compared with 1998 as a
percent of sales was due to lower operating expenses partially offset by higher
promotion expense.
TAX RATE. The effective tax rate for 2000, 1999 and 1998, was 25.9 percent, 23.5
percent and 24.5 percent, respectively. The 2000 rate increase reflects the
impact from the re-engineering and impairment costs. Excluding the impact of
re-engineering and impairment costs for which no tax benefit was recognized, the
effective tax rate was 22.5 percent. The 2000 and 1999 effective rate decreases
were the result of the benefit of much lower foreign effective rates only
partially offset in 1999 by the absence of a reduction in a valuation allowance
against federal deferred tax assets.
NET INTEREST. The Company had $21.1 million of net interest expense in 2000,
compared with $20.9 million in 1999 and $22.7 million in 1998. The 2000 increase
resulted from higher borrowing levels due to the acquisition of BeautiControl
and the repurchase of common shares in the fourth quarter. The 2000 increase was
partially offset by lower interest rates from carrying a higher proportion of
debt offshore, and also from shifting the offshore debt to lower cost countries
with lower interest rates, which also accounted for the decrease in 1999
compared with 1998.
64 Tupperware Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
REGIONAL RESULTS 2000 VS. 1999
(Dollars in millions) 2000 1999
- ----------------------------------------------------------------------
Net sales:
Europe $ 424.1 $ 489.1
Asia Pacific 242.0 242.3
Latin America 193.0 154.2
United States 201.8 178.2
BeautiControl 12.2 --
- ----------------------------------------------------------------------
Total net sales $1,073.1 $1,063.8
======================================================================
Operating profit:
Europe $ 94.1 $ 110.7
Asia Pacific 44.8 35.0
Latin America 8.0(b) 12.0
United States 15.6 4.7
BeautiControl 0.1 --
- ----------------------------------------------------------------------
Total operating profit $ 162.6 $ 162.4
======================================================================
a. 2000 actual compared with 1999 translated at 2000 exchange rates.
b. Includes $6.3 million of costs associated with the write-down of inventory
and receivables related to adopting an importing distributor model for
certain countries.
nm - Not meaningful.
na - Not applicable.
Tupperware Corporation 65
INCREASE NEGATIVE
(DECREASE) RESTATED(A) FOREIGN PERCENT OF TOTAL
- ---------------------- INCREASE EXCHANGE ------------------
DOLLAR PERCENT (DECREASE) IMPACT 2000 1999
- -----------------------------------------------------------------------------
$(65.0) (13)% 1% $(68.2) 39% 46%
(0.3) -- 1 (2.9) 23 23
38.8 25 27 (1.7) 18 14
23.6 13 13 na 19 17
12.2 na na na 1 na
- -----------------------------------------------------------------------------
$ 9.3 1% 8% $(72.8) 100% 100%
=============================================================================
$(16.6) (15)% 1% $(17.3) 58% 68%
9.8 28 35 (1.7) 27 22
(4.0) (33) (32) (0.2) 5 7
10.9 nm nm na 10 3
0.1 na na na -- na
- -----------------------------------------------------------------------------
$ 0.2 --% 14% $(19.2) 100% 100%
=============================================================================
66 Tupperware Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
EUROPE
Excluding the impact of weaker currencies, the sales increase for 2000 was due
to increases in Germany and Scandinavia, driven by larger sales forces and
improved productivity. Also contributing to the sales increase was growth in the
emerging Russian market. These increases were partially offset by declines in
Switzerland, Belgium and Greece due to smaller active sales forces. In 1999,
Germany, the region's largest market, experienced a decline in sales due to the
impact of legislation that imposes a tax on certain part-time workers. The
Company held meetings in 1999 with the German sales force to explain the impact
of the new legislation, as well as to offer financial assistance in addressing
this issue to members of the sales force who remain with the Company for a
specified period. As a result of these actions, and effective recruiting
programs, Germany's sales were $184.8 million in 2000, an increase of 3 percent
in local currency. In 1999, restated for the negative foreign exchange impact of
$30.3 million, sales were $178.9 million. The Company does not expect the
legislation to impact Germany's 2001 results. The German market also accounts
for a substantial portion of Europe's operating profit. In local currency,
operating profit improved slightly over 1999 due to improvements in Germany and
Scandinavia, partially offset by declines in Switzerland, Spain and the United
Kingdom. The increase was the result of the higher sales levels, as well as a
slightly higher gross margin percentage, partially offset by higher operating
expenses.
ASIA PACIFIC
Japan was the main contributor to the sales increase in 2000, in addition to
improvements in Australia, Thailand and the new market of India. These increases
were driven by promotional programs, as well as larger, more productive sales
forces. Offsetting these improvements was a decline in the Philippines, due to
the economic and political situation that continued throughout 2000. The
significant improvement in operating profit was driven by higher gross margins,
primarily due to an increase in Japan, as well as the focus on cost reductions.
Also contributing to the area's increase was a benefit of a use tax incentive of
$4.7 million, which resulted from a change in legal structure. A weaker
Philippine peso and Australian dollar were primarily responsible for the
negative impact of foreign exchange on sales and operating profit comparisons.
Tupperware Corporation 67
LATIN AMERICA
Beginning in the first quarter of 2000, the distribution model for Brazil,
Argentina and Venezuela was modified. In these markets, sales are now made
directly to the sales force with distributors compensated through commission
payments. Although there is no impact on operating profit, this model results in
sales being recorded at an amount that includes the margin that previously was
realized by the distributors. This change increases distributor profitability
and enables them to focus less on administrative tasks and more on recruiting,
training and motivating their sales forces. Excluding the impact of the change
in the distribution center model and foreign exchange, net sales increased 14
percent due to increases in Mexico and Brazil. Mexico's increase was due to
strong promotional programs and higher sales force productivity. In Brazil, the
number of distributors has significantly increased, leading to a larger sales
force and increased sales. The impact of foreign exchange on the sales
comparison reflected the weakening of Central American currencies.
In the fourth quarter of 2000, the Company decided to begin operating the Latin
America businesses, other than Mexico and Brazil, under an importing distributor
model. This change is expected to improve the Company and distributor value
chains while retaining a structure for growth. The decrease in operating profit
in 2000 is due to a $6.3 million charge for the related write-down of inventory
and accounts receivable, operating expenses in Brazil incurred to implement the
new distribution center model and a decline in Argentina due to lower sales
volumes and higher costs.
UNITED STATES
The 13-percent sales increase for the year was attributable to a more productive
sales force and the integrated direct access (IDA) initiatives, which are a
convergence of the core party plan business with showcases, the Internet and
television sales. The IDA initiatives directly contributed approximately 35
percent of the sales increase, and represented 8 percent of total sales. Despite
difficulty in recruiting and motivating consultants in a full employment
environment, the total sales force grew 10 percent over 1999, reflecting the
success of recruiting initiatives and benefits of the IDA channels. Operating
profit more than tripled in 2000 primarily driven by the increase in sales
volume and the related increase in gross profits. The gross margin percentage
increased slightly over 1999, and operating expenses decreased as a percent of
sales.
BEAUTICONTROL
In October 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 all of
October through December 2000 with the same 1999 period, sales were 10 percent
higher and profit was up substantially. Subsequent to the acquisition, the
Company announced the closure of BeautiControl's Taiwan and Hong Kong
subsidiaries and discontinued its Eventus nutritional supplement product line.
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.
68 Tupperware Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
REGIONAL RESULTS 1999 VS. 1998
(DOLLARS IN MILLIONS) 1999 1998
- ------------------------------------------------------------------------
Net sales:
Europe $ 489.1 $ 518.7
Asia Pacific 242.3 211.5
Latin America 154.2 186.8
United States 178.2 186.9
- ------------------------------------------------------------------------
Total net sales $1,063.8 $1,103.9
========================================================================
Operating profit (loss):
Europe $ 110.7 $ 123.9
Asia Pacific 35.0 20.2
Latin America 12.0 (16.4)
United States 4.7 4.0
- ------------------------------------------------------------------------
Total operating profit (loss) $ 162.4 $ 131.7
========================================================================
a. 1999 actual compared with 1998 translated at 1999 exchange rates.
nm - Not meaningful.
na - Not applicable
EUROPE
The sales decline in Europe was primarily due to lower volume in Germany, which
was driven by the impact of new social security tax legislation. The United
Kingdom and Scandinavia also had lower sales volumes. Offsetting these declines
was a significant sales increase in France in addition to improvement in Italy.
The German market had a sequential sales improvement, comparing fourth quarter
1999 with fourth quarter 1998, due primarily to recruiting programs that had a
positive impact on the sales force trends. Germany had sales of $209.2 million
in 1999 compared with $241.2 million in 1998. Foreign exchange had a $9.4
million negative impact on the comparison. The decrease in the area's operating
profit primarily reflected the lower sales level along with higher operating
expense partially offset by a slightly higher gross margin percentage. Operating
expenses in Germany increased in 1999 due to the reimbursement of a portion of
the social security tax, as well as higher promotion expenses incurred to
stimulate sales growth.
ASIA PACIFIC
Asia Pacific led the areas with a 4-percent increase in sales and a 49-percent
increase in operating profit, excluding the favorable impact of exchange rates.
The sales increase was primarily due to improvements in Korea, Australia,
Indonesia, the Philippines and India, and was driven by the economic recovery in
Korea in addition to an increase in the total sales force as a result of
successful recruiting programs. Partially offsetting this improvement was a
decline in Japan. Difficulties in the local economy and a less active sales
force contributed to the decline in Japan, although there was improvement in the
fourth quarter. The improvement in area's operating profit was due to the focus
on cost reduction measures and higher sales volumes, in addition to smaller
losses in China and India. Currencies throughout the region strengthened in
comparison with the U.S. dollar.
Tupperware Corporation 69
POSITIVE
INCREASE (NEGATIVE)
DECREASE RESTATED(A) FOREIGN PERCENT OF TOTAL
- -------------------- INCREASE EXCHANGE -----------------
DOLLAR PERCENT (DECREASE) IMPACT 1999 1998
- -------------------------------------------------------------------------
$(29.6) (6)% (1)% $(23.9) 46% 47%
30.8 15 4 20.8 23 19
(32.6) (18) (9) (16.6) 14 17
(8.7) (5) (5) na 17 17
- -------------------------------------------------------------------------
$(40.1) (4)% (2)% $(19.7) 100% 100%
=========================================================================
$(13.2) (11)% (7)% $ (5.2) 68% 94%
14.8 73 49 3.3 22 15
28.4 nm nm 1.7 7 nm
0.7 17 17 na 3 3
- -------------------------------------------------------------------------
$ 30.7 23% 23% $ (0.2) 100% nm
=========================================================================
LATIN AMERICA
In local currency, Latin American sales decreased 9 percent as declines in
Venezuela, Argentina and Brazil offset improved performance in Mexico. These
declines were due to a smaller sales force resulting mainly from the decision to
significantly reduce the number of distributors in those markets in order to
enhance the opportunity for profitability of those remaining. The improvement in
Mexico was primarily due to price increases. Operating profits improved
significantly to $12.0 million profit versus a $16.4 million operating loss. The
increase was due to cost reductions, a higher gross margin percentage and lower
promotion expenses. The impact of foreign exchange on the sales comparisons
reflected weakness in the Brazilian real and the Mexican peso.
UNITED STATES
The 5-percent sales decrease for the year was primarily the result of a smaller
sales force reflecting the difficulty of recruiting and motivating consultants
in a full employment environment. This factor was somewhat mitigated by further
improvements in sales force productivity and by sales through the integrated
direct access channels. In the fourth quarter, IDA, mainly showcases, accounted
for 7 percent of U.S. sales. Higher operating profit is primarily being driven
by improved gross margin percentages, reflecting a more favorable mix of sales
and a modest price increase. A decrease in operating expenses partially offset
by an increase in promotional spending associated with additional recruiting
programs also contributed to the operating profit increase.
70 Tupperware Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES. Working capital increased to $96.6 million as
of December 30, 2000 compared with $61.3 million as of December 25, 1999 and
$95.5 million as of December 26, 1998. The current ratio was 1.4 to 1 at the end
of 2000 compared with 1.2 to 1 at the end of 1999 and 1.3 to 1 at the end of
1998. In 2000, working capital increased from a higher level of net inventories
and cash, as well as lower accrued liabilities and current portion of long-term
debt. The increase in inventory has a seasonal component, and reflects higher
sales levels and a modest increase in raw material inventory in light of
increasing prices. The level of short-term borrowings reflects the Company's
classification of 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
remain 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 1999 than at the end of 2000.
In 1999, working capital decreased from a lower level of net inventories
reflecting the Company's reduction initiatives, partially offset by an increase
in accounts receivable, primarily reflecting higher December 1999 sales in
Europe compared with December 1998, and a higher current portion of long-term
debt.
The Company has a $300.0 million unsecured multicurrency credit facility that
expires on August 8, 2002, and $280.0 million of foreign uncommitted lines of
credit. As of December 30, 2000, the Company had $129.9 million available under
the multicurrency credit facility and $204.0 million available under the foreign
lines of credit. The multicurrency credit facility, the foreign uncommitted
lines of credit and cash generated by operating activities are expected to be
adequate to finance working capital needs and capital expenditures. The total
debt-to-capital ratio at the end of 2000 was 75.6 percent compared with 66.8
percent at the end of 1999. The increase in debt primarily reflects the
borrowings in the fourth quarter of 2000 associated with the acquisition of
BeautiControl, the increase in working capital and the common stock repurchase.
Tupperware Corporation 71
OPERATING ACTIVITIES. Cash provided by operating activities was $86.1 million in
2000, compared with $113.0 million in 1999 and $118.1 million in 1998. The 2000
decrease in cash flow reflects a decrease in accrued liabilities versus an
increase in 1999, as well as an increase in net inventories in 2000 versus a
decrease in 1999. This impact was partially offset by a smaller increase in
accounts receivable. The 1999 decrease in cash flow reflects a smaller decrease
in inventories, and an increase in accounts receivable, partially offset by an
increase in net income and cash taxes in excess of the effective tax rate to a
lower extent than in 1998. Cash flow reflects the payment of $11.4 million and
$11.1 million of re-engineering and impairment costs in 2000 and 1999,
respectively.
INVESTING ACTIVITIES. For 2000, 1999 and 1998, respectively, capital
expenditures totaled $46.3 million, $40.9 million and $46.2 million. The most
significant individual component of capital spending was new molds. The increase
in capital spending in 2000 was due to the purchase of an operating software
system, partially offset by the steadily decreasing level of spending on plant
and equipment in light of the Company's manufacturing productivity improvements.
Capital expenditures are expected to be between $45 million and $50 million in
2001.
In October 2000, the Company completed the acquisition of BeautiControl,
purchasing all of the 7,231,448 common shares for $7 per share. The purchase
price, net of cash acquired, was $56.3 million and included the shares acquired,
the settlement of in-the-money stock options as well as transaction costs.
DIVIDENDS. During 2000, 1999 and 1998, the Company declared dividends of $0.88
per share of common stock totaling $50.9 million, $50.7 million and $51.6
million, respectively.
SUBSCRIPTIONS RECEIVABLE. In 1998, the Company made a non-recourse, non-interest
bearing loan of $7.7 million (the loan) to its chairman and chief executive
officer (chairman), the proceeds of which were used by the chairman to buy in
the open market 400,000 shares of the Company's common stock (the shares). The
shares are pledged to secure the repayment of the loan. The loan has been
recorded as a subscription receivable and is due November 12, 2006, with
voluntary prepayments permitted subsequent to November 12, 2002. Ten percent of
any annual cash bonus awards are being applied against the balance of the loan.
As the loan is reduced by voluntary payments after November 12, 2002, the lien
against the shares will be reduced. The subscription receivable is being reduced
as payments are received. As of December 30, 2000, the loan balance was $7.6
million.
In October 2000, a subsidiary of the Company adopted a Management Stock Purchase
Plan (the MSPP), which provides for eligible executives to purchase Company
stock. Under the MSPP, subsidiaries of the Company have issued full recourse
loans for $13.6 million to 33 senior executives to purchase 847,000 common
shares from treasury stock.
SHARE REPURCHASES. In conjunction with the MSPP, in order to minimize the
increase in the number of shares outstanding, the Company repurchased in the
open market 800,000 shares of common stock in the fourth quarter of 2000 for
$14.4 million, or an average of $18 per share.
In 1998, the Company repurchased 3.5 million shares in the open market,
completing a 5.0 million share repurchase program announced in 1996. Share
repurchases in 1998 cost $93.1 million, or an average of $27 per share.
72 Tupperware Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
YEAR 2000 ISSUES
The Company studied the "Year 2000" issues affecting its information technology,
non-information technology systems and the issues with third party companies and
other significant suppliers, and implemented a plan to address them. Year 2000
issues have not had a material adverse effect on the Company's operations. The
cost of addressing its Year 2000 issues was approximately $5.3 million. These
costs did not have a material effect on the Company's financial position or
results of operations in any one period in part because they represented the
re-deployment of existing information technology resources, and because they
would have been incurred as part of normal software upgrades and replacements.
Due to the Company's extensive foreign operations, it is exposed to Year 2000
issues related to the infrastructures of the countries where these operations
are located; however, the Company is not aware of any specific issues that have
not been addressed through implementation of its plan. Although the Company
believes that it successfully avoided any significant disruption from the Year
2000 issue, it will continue to monitor all critical systems for the appearance
of delayed complications or disruptions, problems relating to the leap year and
problems encountered through suppliers, customers and other third parties with
whom the Company deals.
EURO IMPLEMENTATION
On January 1, 1999, several European countries that are members of the European
Monetary Union adopted one common currency - the euro. To date there has been no
significant impact from the adoption of the euro, and none is expected. The
incremental cost to the Company of addressing the euro conversion has not been
material.
IMPACT OF INFLATION
Inflation as measured by consumer price indices has continued at a low level in
most of the countries in which the Company operates.
Tupperware Corporation 73
MARKET RISK
One of the Company's market risks is its exposure to the impact of interest rate
changes. The Company has elected to manage this risk through the maturity
structure of its borrowings. Under its present policy, the Company has set a
target of having approximately half of its borrowings with extended terms.
A significant portion of the Company's sales and profits comes from its
international operations. Although these operations are geographically
dispersed, which partially mitigates the risks associated with operating in
particular countries, the Company is subject to the usual risks associated with
international operations. These risks include local political and economic
environments, and relations between foreign and U.S. governments.
Another economic risk of the Company, which is associated with its operating
internationally, is the exposure to fluctuations in foreign currency exchange
rates on the earnings, cash flows and financial position of the Company's
international operations. The Company is not able to project in any meaningful
way the possible effect of these fluctuations on translated amounts or future
earnings. This is due to the Company's constantly changing exposure to various
currencies, the fact that all foreign currencies do not react in the same manner
in relation to the U.S. dollar and the large number of currencies involved,
although the Company's most significant exposure is to the euro.
Although this currency risk is partially mitigated by the natural hedge arising
from the Company's local manufacturing in many markets, a strengthening U.S.
dollar generally has a negative impact on the Company. In response to this fact,
the Company uses financial instruments, such as cross-currency interest rate
swaps, forward contracts and local currency borrowings to hedge its exposure to
certain foreign exchange risks associated with a portion of its investment in
international operations. In addition to hedging against the balance sheet
impact of changes in exchange rates, the hedge of investments in international
operations also has the effect of hedging a portion of the cash flows from those
operations. The Company also hedges with forward contracts and currency options
certain other exposures to various currencies arising from non-permanent
intercompany loans and forecasted purchase commitments.
NEW PRONOUNCEMENTS
The Company is required to adopt the provisions of Financial Accounting
Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) 133,
"Accounting for Derivative Instruments and Hedging Activities", and SFAS 138
"Accounting for Certain Derivative Instruments and Certain Hedging Activities",
as of the beginning of its 2001 fiscal year. These statements establish
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities.
It requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. If certain conditions are met, a derivative may be specifically
designated as a hedge. The accounting for changes in the fair value of a
derivative depends on the intended use of the derivative and the resulting
designation of the hedge exposure. Depending on how the hedge is used and the
designation, the gain or loss due to changes in fair value is reported either in
earnings or in other comprehensive income. Adoption of the statements will have
no significant impact on the accounting treatment and financial results related
to the hedging programs the Company has undertaken.
74 Tupperware Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following is a listing of the Company's outstanding derivative financial
instruments as of December 30, 2000 and December 25, 1999.
FORWARD CONTRACTS 2000 1999
- ------------------------------------------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
CONTRACT CONTRACT
RATE OF RATE OF
(DOLLARS IN MILLIONS) BUY SELL EXCHANGE BUY SELL EXCHANGE
- ------------------------------------------------------------------------------------------------------------------------
Euro with U.S. dollars $ 90.2 0.9091 $70.2 1.0340
Japanese yen with U.S. dollars 49.2 109.0744 19.2 101.3265
Mexican pesos with U.S. dollars 33.9 9.8267 17.5 9.5463
Australian dollars with U.S. dollars 13.3 0.5559 12.7 0.6457
Philippine pesos with U.S. dollars 9.5 51.8567 13.6 40.9280
Swiss francs with U.S. dollars 8.3 1.6488 21.1 1.5677
Singapore dollars with U.S. dollars 4.6 1.7139 4.8 1.6688
Greek drachma with U.S. dollars 4.4 370.5800 3.1 324.9300
Danish krona with U.S. dollars 3.2 8.1195
Canadian dollars with U.S. dollars 1.4 1.5086 3.9 1.4718
German marks with U.S. dollars 24.4 1.9333
Euro for U.S. dollars $40.0 0.9103 $ 4.6 1.0470
Swiss francs for U.S. dollars 11.8 1.6508 19.3 1.5631
Mexican pesos for U.S. dollars 9.7 9.8156 21.3 10.3200
Japanese yen for U.S. dollars 8.0 107.0402 17.5 101.8794
British pounds for U.S. dollars 4.5 1.4763
South Korean won for U.S. dollars 1.5 1,130.5000
Philippine pesos for U.S. dollars 1.2 51.8500
German marks for U.S. dollars 4.2 1.9368
Other currencies 4.2 4.4 various 16.2 7.6 various
- ------------------------------------------------------------------------------------------------------------------------
Total $222.2 $81.1 $206.7 $ 74.5
========================================================================================================================
Tupperware Corporation 75
CROSS CURRENCY INTEREST RATE SWAPS 1999
- ---------------------------------------------------------------------------
(DOLLARS IN MILLIONS) WEIGHTED
AVERAGE
AMOUNT AT CONTRACT RATE
CURRENCY OWED INCEPTION OF EXCHANGE
- ---------------------------------------------------------------------------
Euro $65.5 1.0650
Japanese yen 14.2 141.3300
Swiss francs 10.0 1.5000
- ---------------------------------------------------------------------------
Total $89.7
===========================================================================
The Company's derivative financial instruments at December 30, 2000 and December
25, 1999, consisted solely of the financial instruments summarized above. All of
the contracts mature within 12 months. Related to the forward contracts, the
"buy" amounts represent the U.S. dollar equivalent of commitments to purchase
foreign currencies and the "sell" amounts represent the U.S. dollar equivalent
of commitments to sell foreign currencies, all translated at the year-end market
exchange rates for the U.S. dollar. All forward contracts are hedging
cross-currency intercompany loans that are not permanent in nature, balance
sheet exposures or forcasted purchase commitments. As of the end of fiscal 2000,
the Company had no cross currency interest rate swaps.
FORWARD-LOOKING STATEMENTS
Certain written and oral statements made or incorporated by reference from time
to time by the Company or its representatives in this report, other reports,
filings with the Securities and Exchange Commission, press releases, conferences
or otherwise, are "forward-looking statements" within the meaning of the Private
Securities Litigation Report Reform Act of 1995 ("the Act"). Investors should
also be aware that while the Company does, from time to time, communicate with
securities analysts, it is against the Company's policy to disclose to them any
material nonpublic information or other confidential commercial information.
Accordingly, shareholders should not assume that the Company agrees with any
statement or report issued by any analyst irrespective of the content of the
confirming financial forecasts or projections issued by others.
Statements contained in this report that are not based on historical facts are
forward-looking statements involving risks and uncertainties, including sales
force recruiting and activity levels, success of new products and promotional
programs, integration of the BeautiControl business, expansion of the
BeautiControl business into foreign markets, expansion of the Company's
integrated direct access initiatives into foreign markets, economic and market
conditions generally and foreign exchange risk in particular and other risks
detailed in the Company's Securities and Exchange Commission filings. These
risks and uncertainties may cause actual results to differ materially from those
projected in forward-looking statements.
76 Tupperware Corporation
CONSOLIDATED STATEMENTS OF INCOME
YEAR ENDED
------------------------------------------------------
(In millions, except per share amounts) DEC. 30, 2000 DEC. 25, 1999 DEC. 26, 1998
- ----------------------------------------------------------------------------------------------------------
Net sales $ 1,073.1 $ 1,063.8 $ 1,103.9
- ----------------------------------------------------------------------------------------------------------
Costs and expenses:
Cost of products sold 358.4 365.1 406.3
Delivery, sales and administrative expense 578.4 556.8 583.4
Interest expense 22.9 23.0 24.8
Interest income (1.9) (2.1) (2.1)
Re-engineering and impairment charge 12.5 15.1 --
Other expense, net 1.7 2.6 --
- ----------------------------------------------------------------------------------------------------------
Total costs and expenses 972.0 960.5 1,012.4
- ----------------------------------------------------------------------------------------------------------
Income before income taxes 101.1 103.3 91.5
Provision for income taxes 26.2 24.3 22.4
- ----------------------------------------------------------------------------------------------------------
Net income $ 74.9 $ 79.0 $ 69.1
==========================================================================================================
Net income per common share:
Basic $ 1.30 $ 1.37 $ 1.19
==========================================================================================================
Diluted $ 1.29 $ 1.37 $ 1.18
==========================================================================================================
See Notes to the Consolidated Financial Statements.
Tupperware Corporation 77
CONSOLIDATED BALANCE SHEETS
(Dollars in millions, except per share amounts) DEC. 30, 2000 DEC. 25, 1999
- ----------------------------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $ 32.6 $ 24.4
Accounts receivable, less allowances of $27.7 million in 2000
and $22.5 million in 1999 112.5 114.4
Inventories 144.1 136.7
Deferred income tax benefits 47.1 48.5
Prepaid expenses and other 36.1 46.5
- ----------------------------------------------------------------------------------------------------------------
Total current assets 372.4 370.5
- ----------------------------------------------------------------------------------------------------------------
Deferred income tax benefits 123.2 107.9
Property, plant and equipment, net 233.1 242.9
Long-term receivables, net of allowances of $28.4 million in 2000
and $28.0 million in 1999 31.2 34.2
Goodwill, net of amortization of $0.2 million in 2000 57.7 2.9
Other assets 31.8 37.7
- ----------------------------------------------------------------------------------------------------------------
Total assets $ 849.4 $ 796.1
================================================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $ 88.6 $ 87.8
Short-term borrowings and current portion of long-term debt 26.9 43.9
Accrued liabilities 160.3 177.5
- ----------------------------------------------------------------------------------------------------------------
Total current liabilities 275.8 309.2
- ----------------------------------------------------------------------------------------------------------------
Long-term debt 358.1 248.5
Accrued post-retirement benefit cost 37.4 37.0
Other liabilities 54.2 56.1
Commitments and contingencies (Note 13)
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 20.3
Subscriptions receivable (21.2) (7.7)
Retained earnings 493.7 484.0
Treasury stock, 4,483,151 and 4,701,740 shares at cost in 2000
and 1999, respectively (125.5) (140.2)
Unearned portion of restricted stock issued for future service (0.4) (0.6)
Accumulated other comprehensive loss (245.0) (211.1)
- ----------------------------------------------------------------------------------------------------------------
Total shareholders' equity 123.9 145.3
- ----------------------------------------------------------------------------------------------------------------
Total liabilities and shareholders' equity $ 849.4 $ 796.1
================================================================================================================
See Notes to the Consolidated Financial Statements.
78 Tupperware Corporation
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
COMMON STOCK TREASURY STOCK
----------------------------------------------
(In millions, except per share amounts) SHARES DOLLARS SHARES DOLLARS
- -----------------------------------------------------------------------------------------------
December 27, 1997 62.4 $0.6 1.4 $ (54.0)
Net income
Other comprehensive income:
Foreign currency translation
adjustments, net of tax
benefit of $3.7 million
Comprehensive income
Cash dividends declared ($0.88 per share)
Stock issued for note receivable
Purchase of treasury stock 3.5 (93.1)
Earned restricted stock, net
Stock issued for incentive
plans and related tax benefits (0.1) 5.1
- -----------------------------------------------------------------------------------------------
December 26, 1998 62.4 0.6 4.8 (142.0)
Net income
Other comprehensive loss:
Foreign currency translation
adjustments, net of tax
provision of $4.2 million
Comprehensive income
Cash dividends declared ($0.88 per share)
Earned restricted stock, net
Stock issued for incentive
plans and related tax benefits (0.1) 1.8
- -----------------------------------------------------------------------------------------------
December 25, 1999 62.4 0.6 4.7 (140.2)
Net income
Other comprehensive loss:
Foreign currency translation adjustments,
net of tax provision of $3.3 million
Comprehensive income
Cash dividends declared ($0.88 per share)
Acquisition of BeautiControl, Inc.
Stock sold under Management
Stock Purchase Plan (0.8) 25.5
Purchase of treasury stock 0.8 (14.4)
Payment of subscription receivable
Earned restricted stock, net
Stock issued for incentive
plans and related tax benefits (0.2) 3.6
- -----------------------------------------------------------------------------------------------
December 30, 2000 62.4 $0.6 4.5 $(125.5)
===============================================================================================
See Notes to the Consolidated Financial Statements.
Tupperware Corporation 79
UNEARNED ACCUMULATED
PORTION OF OTHER
RESTRICTED STOCK COMPREHENSIVE TOTAL COMPRE-
PAID-IN SUBSCRIPTIONS RETAINED ISSUED FOR INCOME SHAREHOLDERS' HENSIVE
CAPITAL RECEIVABLE EARNINGS FUTURE SERVICE (LOSS) EQUITY INCOME
- -----------------------------------------------------------------------------------------------------
$ 19.5 $ -- $ 441.4 $ (2.4) $(190.9) $ 214.2
69.1 69.1 $ 69.1
0.5 0.5 0.5
------
$ 69.6
======
(50.9) (50.9)
(7.7) (7.7)
(93.1)
1.0 1.0
(2.4) 2.7
- ---------------------------------------------------------------------------------------
19.5 (7.7) 457.2 (1.4) (190.4) 135.8
79.0 79.0 $ 79.0
(20.7) (20.7) (20.7)
-------
$ 58.3
=======
(50.7) (50.7)
0.8 0.8
0.8 (1.5) 1.1
- ---------------------------------------------------------------------------------------
20.3 (7.7) 484.0 (0.6) (211.1) 145.3
74.9 74.9 $ 74.9
(33.9) (33.9) (33.9)
-------
$ 41.0
=======
(50.9) (50.9)
1.0 1.0
(13.6) (11.8) 0.1
(14.4)
0.1 0.1
0.2 0.2
0.4 (2.5) 1.5
- ---------------------------------------------------------------------------------------
$ 21.7 $(21.2) $ 493.7 $ (0.4) $(245.0) $ 123.9
=======================================================================================
80 Tupperware Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED
------------------------------------------------------
(In millions) DEC. 30, 2000 DEC. 25, 1999 DEC. 26, 1998
- --------------------------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES:
Net income $ 74.9 $ 79.0 $ 69.1
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 52.1 55.6 64.0
Loss on sale of assets 3.3 3.3 3.4
Foreign exchange loss (gain), net 0.3 0.1 (0.6)
Non-cash re-engineering and impairment costs 13.2 3.1 --
Changes in assets and liabilities:
(Increase) decrease in accounts and notes receivable (9.3) (30.1) 2.2
(Increase) decrease in inventories (17.9) 9.1 29.8
(Decrease) increase in accounts payable
and accrued liabilities (21.2) 6.0 (1.8)
Increase (decrease) in income taxes payable 2.7 0.6 (27.9)
Increase in net deferred income taxes (13.8) (17.7) (15.1)
Other, net 1.8 4.0 (5.0)
- --------------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 86.1 113.0 118.1
- --------------------------------------------------------------------------------------------------------------------------
INVESTING ACTIVITIES:
Capital expenditures (46.3) (40.9) (46.2)
Purchase of BeautiControl, Inc., net of cash acquired (56.3) -- --
- --------------------------------------------------------------------------------------------------------------------------
Net cash used in investing activities (102.6) (40.9) (46.2)
- --------------------------------------------------------------------------------------------------------------------------
FINANCING ACTIVITIES:
Dividend payments to shareholders (50.8) (50.7) (51.6)
Payments to acquire treasury stock (14.4) -- (93.1)
Payment of long-term debt (15.0) -- --
Proceeds from exercise of stock options 1.0 0.6 1.4
Payment (issuance) of subscription receivable 0.1 -- (7.7)
Net increase (decrease) in short-term debt 105.5 (23.2) 80.9
- --------------------------------------------------------------------------------------------------------------------------
Net cash provided by (used in) financing activities 26.4 (73.3) (70.1)
- --------------------------------------------------------------------------------------------------------------------------
Effect of exchange rate changes on cash
and cash equivalents (1.7) 2.6 (0.9)
- --------------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents 8.2 1.4 0.9
Cash and cash equivalents at beginning of year 24.4 23.0 22.1
- --------------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year $ 32.6 $ 24.4 $ 23.0
==========================================================================================================================
SUPPLEMENTAL DISCLOSURE:
Treasury shares sold for notes receivable $ 13.6 $ -- $ --
==========================================================================================================================
See Notes to the Consolidated Financial Statements.
Tupperware Corporation 81
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PRINCIPLES OF CONSOLIDATION. The consolidated financial statements include the
accounts of Tupperware Corporation and all of its subsidiaries (Tupperware, the
Company). All significant intercompany accounts and transactions have been
eliminated. The Company's fiscal year ends on the last Saturday of December.
Fiscal year 2000 consisted of 53 weeks compared with 52 weeks in 1999.
USE OF ESTIMATES. The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions. These estimates and assumptions affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements, as well as the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from these estimates.
CASH AND CASH EQUIVALENTS. The Company considers all highly liquid investments
with a maturity of three months or less when purchased to be cash equivalents.
As of December 30, 2000 and December 25, 1999, $16.5 million and $8.3 million,
respectively, of the cash and cash equivalents included on the consolidated
balance sheets were held in the form of time deposits or certificates of
deposit.
INVENTORIES. Inventories are valued at the lower of cost or market. Inventory
cost includes cost of raw material, labor and overhead. Domestic Tupperware
inventories, approximately 12 percent and 17 percent of total inventories, at
December 30, 2000 and December 25, 1999, respectively, are valued on the
last-in, first-out (LIFO) cost method. The first-in, first-out (FIFO) cost
method is generally used for the remaining inventories. If inventories valued on
the LIFO method had been valued using the FIFO method, they would have been
$13.1 million and $11.9 million higher at the end of 2000 and 1999,
respectively.
INTERNAL USE SOFTWARE DEVELOPMENT COSTS. The Company capitalizes internal use
software development costs as they are incurred and amortizes such costs over
their estimated useful lives of three to five years beginning when the software
is placed in service.
PROPERTY, PLANT AND EQUIPMENT. Properties are initially stated at cost.
Depreciation is determined on a straight-line basis over estimated useful lives.
Generally, the estimated useful lives are 10 to 45 years for buildings and
improvements and 3 to 20 years for machinery and equipment. Upon the sale or
retirement of property, plant and equipment, a gain or loss is recognized. If
the carrying value of an asset, including associated intangibles, exceeds the
sum of estimated undiscounted future cash flows, then an impairment loss is
recognized for the difference between estimated fair value and carrying value.
Expenditures for maintenance and repairs are charged to expense.
GOODWILL. Goodwill represents the excess of cost over the fair value of net
assets acquired and is being amortized over 40 years using the straight-line
method.
REVENUE RECOGNITION. Revenue is recognized when product is shipped to customers.
82 Tupperware Corporation
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
SHIPPING AND HANDLING COSTS. In October 2000, the Emerging Issues Task Force
issued EITF 00-10, "Accounting for Shipping and Handling Revenues and Costs",
which requires fees billed to customers associated with shipping and handling to
be classified as revenue, and costs associated with shipping and handling to be
either classified as cost of sales or disclosed in the notes to the financial
statements. Accordingly, the Company has reclassified the revenue related to the
shipping and handling fees billed to customers, which was previously recorded as
a reduction of delivery expense, to net sales for all periods presented. Costs
associated with shipping and handling activities are comprised of outbound
freight and associated direct labor costs and were $70.0 million, $69.0 million
and $76.4 million for 2000, 1999 and 1998, respectively and were recorded in
delivery, sales and administrative expense.
ADVERTISING AND RESEARCH AND DEVELOPMENT COSTS. Advertising and research and
development costs are charged to expense as incurred. Advertising expense
totaled $5.9 million, $8.7 million and $7.2 million in 2000, 1999 and 1998,
respectively. Research and development costs totaled $12.8 million, $12.3
million and $13.8 million, in 2000, 1999 and 1998, respectively.
ACCOUNTING FOR STOCK-BASED COMPENSATION. The Company measures compensation
expense for employee and director stock options as the aggregate difference
between the market and exercise prices of the options on the date that both the
number of shares the grantee is entitled to receive and the purchase price are
known. Compensation expense associated with restricted stock grants is equal to
the market value of the shares on the date of grant and is recorded pro rata
over the required holding period. Pro forma information relating to the fair
value of stock-based compensation is presented in Note 11 to the consolidated
financial statements.
INCOME TAXES. Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to temporary differences between the financial
statement carrying amounts of assets and liabilities and their respective tax
bases. Deferred tax assets also are recognized for credit carryforwards.
Deferred tax assets and liabilities are measured using the enacted rates
applicable to taxable income in the years in which the temporary differences are
expected to reverse and the credits are expected to be used. The effect on
deferred tax assets and liabilities of the change in tax rates is recognized in
income in the period that includes the enactment date. An assessment is made as
to whether or not a valuation allowance is required to offset deferred tax
assets. This assessment includes anticipating future income.
NET INCOME PER COMMON SHARE. The financial statements include "basic" and
"diluted" per share information. Basic per share information is calculated by
dividing net income by the weighted average number of shares outstanding.
Diluted per share information is calculated by also considering the impact of
potential common stock on both net income and the weighted average number of
shares outstanding. The weighted average number of shares used in the basic
earnings per share computations were 57.7 million, 57.5 million and 58.2
million, in 2000, 1999 and 1998, respectively. The only difference in the
computation of basic and diluted earnings per share is the inclusion of
potential common stock of 0.3 million in 2000, 0.4 million in 1999 and 0.5
million in 1998. Options to purchase 7.1 million, 2.4 million and 2.6 million
shares of common stock in 2000, 1999 and 1998, 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 periods 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.
Tupperware Corporation 83
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DERIVATIVE FINANCIAL INSTRUMENTS. The Company uses derivative financial
instruments, principally cross-currency interest rate swaps, over-the-counter
forward exchange contracts and local currency options with major international
financial institutions, to offset the effects of exchange rate changes on net
investments in certain foreign subsidiaries, forecasted purchase commitments and
certain intercompany loan transactions. Gains and losses on instruments
designated as hedges of net investments in a foreign subsidies or intercompany
transactions that are permanent in nature are accrued as exchange rates change,
and are recognized in shareholders' equity, along with any points on forward
exchange contracts, as foreign currency translation adjustments. The net
interest differential on cross-currency interest rate swaps is included within
interest expense. Gains and losses on contracts designated as hedges of
intercompany transactions that are not permanent in nature are accrued as
exchange rates change and are recognized in income. Gains and losses on
contracts designated as hedges of identifiable foreign currency firm commitments
are deferred and included in the measurement of the related foreign currency
transaction. Contracts hedging nonpermanent intercompany transactions and
identifiable foreign currency firm commitments are held to maturity.
The Company is required to adopt the provisions of Financial Accounting
Standards Board (FASB) Statement of Financial Accounting Standards (SFAS) 133,
"Accounting for Derivative Instruments and Hedging Activities", and SFAS 138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities",
as of the beginning of its 2001 fiscal year. These statements establish
accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities.
It requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. If certain conditions are met, a derivative may be specifically
designated as a hedge. The accounting for changes in fair value of a derivative
depends on the intended use of the derivative and the resulting designation of
the hedge exposure. Depending on how the hedge is used and the designation, the
gain or loss due to changes in fair value is reported either in earnings or in
other comprehensive income. Adoption of the statements will have no significant
impact on the accounting treatment and financial results related to the hedging
programs the Company has undertaken.
FOREIGN CURRENCY TRANSLATION. Results of operations for foreign subsidiaries are
translated into U.S. dollars using the average exchange rates during the year.
The assets and liabilities of those subsidiaries, other than those of operations
in highly inflationary countries, are translated into U.S. dollars using the
exchange rates at the balance sheet date. The related translation adjustments
are "Accumulated other comprehensive income." Foreign currency transaction gains
and losses, as well as translation of financial statements of subsidiaries in
highly inflationary countries, are included in income.
RECLASSIFICATIONS. Certain prior year amounts have been reclassified to conform
with the current year presentation.
84 Tupperware Corporation
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 2: ACQUISITION
In October 2000, the Company completed the acquisition of BeautiControl, Inc.
(BeautiControl), by purchasing all of the 7,231,448 common shares outstanding
for $7 per share. BeautiControl is a party plan direct seller that markets
premium cosmetics and skin care products through a highly trained independent
sales force in North America. The purchase price, net of cash acquired, was
$56.3 million and included shares acquired, settlement of in-the-money stock
options and other transaction costs. The Company also assumed $5.6 million of
debt. The acquisition has been accounted for under the purchase method of
accounting, and results of operations of BeautiControl have been included in the
consolidated financial statements since October 18, 2000. The total cost of the
acquisition was allocated to the tangible and intangible assets acquired and
liabilities assumed based on their respective fair values. Subsequent to the
acquisition, the Company has closed BeautiControl's Taiwan and Hong Kong
subsidiaries, discontinued its Eventus nutritional supplement product line and
recorded $5.0 million of associated costs. Goodwill recorded in connection with
the transaction was $55.0 million and is being amortized over 40 years using the
straight-line method. On a pro forma basis, if the acquisition would have
occurred January 1, 1999, the results of BeautiControl would not have had a
material impact on consolidated results in 1999 and 2000.
NOTE 3: 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 a pretax
re-engineering and impairment charge of $12.5 million in the fourth quarter of
2000 and $15.1 million in the second quarter of 1999.
The Company also incurred $7.9 million and $1.0 million in 2000 and 1999,
respectively, of internal and external consulting costs associated with
designing and executing the re-engineering projects, which are included in
delivery, sales and administrative expense. As part of the organizational
alignment, the Company decided in 2000 that all Latin American countries other
than Mexico and Brazil will be operated under third party importer arrangements.
This decision resulted in the write-down of inventory and accounts receivable
totaling $6.3 million, as well as fixed asset write-downs and severance
payments. The fixed asset write-downs and severance payments are classified as
part of the re-engineering and impairment charge, while the inventory write-down
is included in cost of sales, and the accounts receivable write-down is
classified as delivery, sales and administrative expense. As a result of the
importer arrangements, certain assets will be held for sale, and the fixed asset
write-downs represent the book value in excess of fair market values less
estimated selling expenses. The total after tax cost of the re-engineering
program was $24.2 million in 2000 and $12.3 million in 1999.
Tupperware Corporation 85
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The re-engineering charge includes the following categories of expenditures and
relates to activities in the Company's geographic segments as indicated below
(in millions):
2000 1999 2000 1999
- --------------------------------------------------------------------------------------------------------------
Severance $ 3.1 $ 9.0 Europe $ 0.8 $ 7.1
Fixed asset write-downs 3.7 3.1 Asia Pacific 0.7 4.0
Other 5.7 3.0 Latin America 8.7 4.0
United States 2.3 --
- --------------------------------------------------------------------------------------------------------------
Total $ 12.5 $ 15.1 Total $ 12.5 $ 15.1
==============================================================================================================
In 2000, the severance costs relate primarily to the approximately 115 employees
whose positions were eliminated as a result of the decision to close the
Argentina distribution center. The fixed asset write-downs and other expenses
relate primarily to the closure of certain Latin America offices associated with
the new importer distribution method.
In 1999, the severance costs relate primarily to the approximately 200 employees
whose positions were eliminated as a result of the decision to close the Spanish
and Argentine manufacturing plants and to restructure the Japanese manufacturing
operation and the area headquarters in Europe and Asia Pacific. The fixed asset
write-downs relate primarily to the plant closures. The expenses included in the
other category are primarily for non-asset write-down costs of exiting
facilities and professional fees associated with accomplishing the
re-engineering actions.
The liability balance as of December 30, 2000 and December 25, 1999 was as
follows:
(In millions) 2000 1999
- ------------- ------- -------
Beginning balance $ 0.9 $ --
Provision 12.5 15.1
Cash expenditures:
Severance (3.0) (9.0)
Other (0.5) (2.1)
Non-cash write downs (7.6) (3.1)
- --------------------------------------------------------------------------------------------------------------
Ending balance $ 2.3 $ 0.9
==============================================================================================================
NOTE 4: INVENTORIES
(In millions) 2000 1999
- ------------- -------- --------
Finished goods $ 70.4 $ 66.0
Work in process 25.5 27.9
Raw materials and supplies 48.2 42.8
- ---------------------------------------------------------------------------------------------------------------
Total inventories $ 144.1 $ 136.7
===============================================================================================================
86 Tupperware Corporation
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 5: PROPERTY, PLANT AND EQUIPMENT
(In millions) 2000 1999
- ---------------------------------------------------------------------------------------------------------------
Land $ 19.9 $ 12.5
Buildings and improvements 169.8 173.2
Machinery and equipment 746.2 758.1
Construction in progress 13.0 10.3
- ---------------------------------------------------------------------------------------------------------------
Total property, plant and equipment 948.9 954.1
Less accumulated depreciation (715.8) (711.2)
- ---------------------------------------------------------------------------------------------------------------
Property, plant and equipment, net $ 233.1 $ 242.9
===============================================================================================================
NOTE 6: ACCRUED LIABILITIES
(In millions) 2000 1999
- ---------------------------------------------------------------------------------------------------------------
Compensation and employee benefits $ 51.3 $ 55.1
Advertising and promotion 18.9 33.8
Taxes other than income taxes 17.8 18.3
Other 72.3 70.3
- ---------------------------------------------------------------------------------------------------------------
Total accrued liabilities $ 160.3 $ 177.5
===============================================================================================================
NOTE 7: FINANCING ARRANGEMENTS
Debt
Debt consists of the following:
(In millions) 2000 1999
- ---------------------------------------------------------------------------------------------------------------
6.84% Series Notes due 2000 $ -- $ 15.0
7.05% Series Notes due 2003 15.0 15.0
7.25% Notes due 2006 100.0 100.0
8.33% Mortgage Note 5.6 --
Short-term borrowings 264.0 161.9
Other 0.4 0.5
- ---------------------------------------------------------------------------------------------------------------
385.0 292.4
Less current portion (26.9) (43.9)
- ---------------------------------------------------------------------------------------------------------------
Long-term debt $ 358.1 $ 248.5
===============================================================================================================
Tupperware Corporation 87
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in millions) 2000 1999
- --------------------- -------- --------
Total short-term borrowings at year-end $ 264.0 $ 161.9
Weighted average interest rate at year-end 5.8% 5.3%
Average short-term borrowings during the year $ 242.3 $ 217.6
Weighted average interest rate for the year 5.9% 4.6%
Maximum short-term borrowings during the year $ 300.3 $ 258.5
The average borrowings and weighted average interest rates were determined using
month-end borrowings and the interest rates applicable to them. Of total
short-term year-end borrowings at December 30, 2000, $170.1 million consisted of
outstanding commercial paper. The remaining $93.9 million of short-term
borrowings was loaned by several banks, with $57.1 million in Japanese yen,
$15.3 million in German marks, $11.1 million in Belgian francs and $10.4 million
in various other currencies. As of December 30, 2000, $237.1 million of the
Company's outstanding borrowings that were due within one year by their terms
were classified as non-current due to the Company's ability and intent that
those borrowings be outstanding throughout 2001.
The mortgage note is a ten-year note amortized over a twenty-two year period
with monthly payments of principal and interest of $47,988. The note is secured
by certain real estate, and a balloon payment of $4.4 million is due to be paid
June 1, 2009.
As of December 30, 2000, the Company had $333.9 million of unused lines of
credit, including $129.9 million under the Company's $300.0 million
multicurrency financing facility (the $300 Million Facility) and $204.0 million
available under the $280.0 million foreign uncommitted lines of credit. The $300
Million Facility supports the Company's commercial paper borrowing capability
and expires on August 8, 2002. Interest paid on total debt in 2000, 1999 and
1998 was $21.9 million, $21.6 million and $26.2 million, respectively.
Fair Value of Financial Instruments
Due to their short maturity or their insignificance, the carrying amounts of
cash and cash equivalents, accounts and notes receivable, accounts payable,
accrued liabilities, short-term borrowings and outstanding forward exchange
contracts approximated their fair values at December 30, 2000 and December 25,
1999. The approximate fair value of the Company's $100 million of 7.25 percent
notes due in 2006, determined through reference to market yields, was $97.1
million and $92.5 million as of December 30, 2000 and December 25, 1999,
respectively. The fair value of the remaining long-term debt approximated its
book value at the end of 2000 and 1999.
88 Tupperware Corporation
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Derivative Financial Instruments
Following is a listing of the Company's outstanding derivative financial
instruments as of December 30, 2000 and December 25, 1999:
FORWARD CONTRACTS 2000 1999
- ----------------------------------------------------------------------------------------------------------------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
CONTRACT CONTRACT
RATE OF RATE OF
(Dollars in millions) BUY SELL EXCHANGE BUY SELL EXCHANGE
- ----------------------------------------------------------------------------------------------------------------------------
Euro with U.S. dollars $ 90.2 0.9091 $ 70.2 1.0340
Japanese yen with U.S. dollars 49.2 109.0744 19.2 101.3265
Mexican pesos with U.S. dollars 33.9 9.8267 17.5 9.5463
Australian dollars with U.S. dollars 13.3 0.5559 12.7 0.6457
Philippine pesos with U.S. dollars 9.5 51.8567 13.6 40.9280
Swiss francs with U.S. dollars 8.3 1.6488 21.1 1.5677
Singapore dollars with U.S. dollars 4.6 1.7139 4.8 1.6688
Greek drachma with U.S. dollars 4.4 370.5800 3.1 324.9300
Danish krona with U.S. dollars 3.2 8.1195
Canadian dollars with U.S. dollars 1.4 1.5086 3.9 1.4718
German marks with U.S. dollars 24.4 1.9333
Euro for U.S. dollars $ 40.0 0.9103 $ 4.6 1.0470
Swiss francs for U.S. dollars 11.8 1.6508 19.3 1.5631
Mexican pesos for U.S. dollars 9.7 9.8156 21.3 10.3200
Japanese yen for U.S. dollars 8.0 107.0402 17.5 101.8794
British pounds for U.S. dollars 4.5 1.4763
South Korean won for U.S. dollars 1.5 1,130.5000
Philippine pesos for U.S. dollars 1.2 51.8500
German marks for U.S. dollars 4.2 1.9368
Other currencies 4.2 4.4 various 16.2 7.6 various
- ----------------------------------------------------------------------------------------------------------------------------
Total $ 222.2 $ 81.1 $ 206.7 $ 74.5
============================================================================================================================
Tupperware Corporation 89
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
CROSS-CURRENCY INTEREST RATE SWAPS 1999
- ---------------------------------- ---------------------------
(Dollars in millions) WEIGHTED
AVERAGE
AMOUNT AT CONTRACT RATE
Currency owed INCEPTION OF EXCHANGE
- ------------- --------- -------------
Euro $ 65.5 1.0650
Japanese yen 14.2 141.3300
Swiss francs 10.0 1.5000
- --------------------------------------------------------------------------------------------------------------
Total $ 89.7
==============================================================================================================
The Company's derivative financial instruments at December 30, 2000 and December
25, 1999, consisted solely of the financial instruments summarized above. All of
the contracts mature within 12 months. Related to the forward contracts, the
"buy" amounts represent the U.S. dollar equivalent of commitments to purchase
foreign currencies and the "sell" amounts represent the U.S. dollar equivalent
of commitments to sell foreign currencies, all translated at the year-end market
exchange rates for the U.S. dollar. All forward contracts are hedging
cross-currency intercompany loans that are not permanent in nature, balance
sheet exposures or forecasted purchase commitments. As of the end of fiscal
2000, the Company had no cross currency interest rate swaps.
The Company's theoretical credit risk for each derivative instrument is its
replacement cost, but management believes that the risk of incurring credit
losses is remote and that such losses, if any, would not be material. The
Company also is exposed to market risk on its derivative instruments due to
potential changes in foreign exchange rates; however, such market risk would be
substantially offset by changes in the valuation of the underlying items being
hedged. For all outstanding derivative instruments, the net accrued loss was
$0.8 million and $3.3 million, at December 30, 2000 and December 25, 1999,
respectively. The aggregate impact of all foreign currency transactions was not
material to the Company's income.
90 Tupperware Corporation
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 8: SUBSCRIPTIONS RECEIVABLE
In October 2000, a subsidiary of the Company adopted a Management Stock Purchase
Plan (the MSPP), which provides for eligible executives to purchase Company
stock. Under the MSPP, subsidiaries of the Company have issued full recourse
loans for $13.6 million to 33 senior executives to purchase 847,000 common
shares from treasury stock. The annual interest rate on the loans is 5.96
percent, and all dividends, while the loans are outstanding, will be applied
toward interest due. Under the terms of the MSPP, at scheduled repayment dates,
if the Company's stock price per share is below the executive's per share
purchase price, and the associated loan remains outstanding, the Company will
make cash bonus payments to be applied toward the repayment of the loan. The
cash bonus payments are limited to not more than 25 percent of the outstanding
principle on the loan then due. For each share purchased, a stock option on two
shares of the Company's common stock was granted under the 2000 Incentive Plan.
See Note 11 - Incentive Compensation. The loans have been recorded as
subscriptions receivable, and are secured by the shares purchased. Principal
amounts are due as follows: $3.4 million in 2005, $3.4 million in 2006 and $6.8
million in 2008.
On November 30, 1998, the Company made a non-recourse, non-interest bearing loan
of $7.7 million (the loan) to its chairman and chief executive officer
(chairman), the proceeds of which were used by the chairman to buy in the open
market 400,000 shares of the Company's common stock (the shares). The shares are
pledged to secure the repayment of the loan. The loan has been recorded as a
subscription receivable and is due November 12, 2006, with voluntary prepayments
permitted subsequent to November 12, 2002. Ten percent of any annual cash bonus
awards to the chairman are being applied against the balance of the loan. As the
loan is reduced by voluntary payments after November 12, 2002, the lien against
the shares will be reduced. The subscription receivable is being reduced as
payments are received. In late 2000, the loan and related agreements were
assigned to a subsidiary of the Company.
Tupperware Corporation 91
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 9: INCOME TAXES
For income tax purposes, the domestic and foreign components of income (loss)
before taxes were as follows:
(In millions) 2000 1999 1998
- ----------------------------------------------------------------------------------------------------------------------------
Domestic $ 39.0 $ (15.7) $ 24.5
Foreign 62.1 119.0 67.0
- ----------------------------------------------------------------------------------------------------------------------------
Total $ 101.1 $ 103.3 $ 91.5
=============================================================================================================================
The provision for income taxes was as follows:
(In millions) 2000 1999 1998
- ----------------------------------------------------------------------------------------------------------------------------
Current:
Federal $ 10.8 $ 8.7 $ (2.1)
Foreign 25.4 26.1 43.9
State 3.6 3.5 1.4
- ----------------------------------------------------------------------------------------------------------------------------
39.8 38.3 43.2
- ----------------------------------------------------------------------------------------------------------------------------
Deferred:
Federal (13.5) (15.9) (10.3)
Foreign 0.8 3.7 (9.3)
State (0.9) (1.8) (1.2)
- ----------------------------------------------------------------------------------------------------------------------------
(13.6) (14.0) (20.8)
- ----------------------------------------------------------------------------------------------------------------------------
Total $ 26.2 $ 24.3 $ 22.4
=============================================================================================================================
The differences between the provision for income taxes and income taxes computed
using the U.S. federal statutory rate were as follows:
(In millions) 2000 1999 1998
- ----------------------------------------------------------------------------------------------------------------------------
Amount computed using statutory rate $ 35.4 $ 36.1 $ 32.0
Increase (reduction) in taxes resulting from:
Net benefit from repatriating foreign earnings (18.8) (0.3) (22.0)
Foreign income taxes 10.3 (11.5) 11.1
Other (0.7) -- 1.3
- ----------------------------------------------------------------------------------------------------------------------------
Total $ 26.2 $ 24.3 $ 22.4
=============================================================================================================================
92 Tupperware Corporation
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
In 2000, 1999 and 1998, the Company recognized $0.4 million, $0.2 million and
$0.6 million, respectively, of benefits for deductions associated with the
exercise of employee stock options. These benefits were added directly to
capital surplus, and are not reflected in the provision for income taxes.
Deferred tax assets (liabilities) are composed of the following:
(In millions) 2000 1999
- --------------------------------------------------------------------------------------------------------------
Depreciation $ (4.3) $ (4.2)
Other (2.6) (2.9)
- --------------------------------------------------------------------------------------------------------------
Gross deferred tax liabilities (6.9) (7.1)
- --------------------------------------------------------------------------------------------------------------
Credit carry forwards 50.7 42.6
Fixed assets basis differences 57.2 60.5
Employee benefits accruals 13.7 21.0
Post-retirement benefits 15.9 15.8
Inventory reserves 16.8 17.3
Bad debt reserves 10.7 3.2
Other accruals 39.3 29.3
- --------------------------------------------------------------------------------------------------------------
Gross deferred tax assets 204.3 189.7
- --------------------------------------------------------------------------------------------------------------
Valuation allowances (31.8) (30.8)
- --------------------------------------------------------------------------------------------------------------
Net deferred tax assets $ 165.6 $ 151.8
==============================================================================================================
At December 30, 2000, the Company has a domestic net operating loss carry
forward of $7.7 million, which expires in 2018, and foreign net operating loss
carry forwards of $119.9 million. Of the total net operating loss carry
forwards, $62.1 million expire at various dates from 2001 to 2010, while the
remainder have unlimited lives. During 2000, the Company recognized net benefits
of $7.6 million related to foreign net operating loss carry forwards.
Repatriation of foreign earnings would not result in a significant incremental
cost to the Company. At December 30, 2000, the Company had a foreign tax credit
carry forward of $3.6 million, which expires in 2005. At December 30, 2000 and
December 25, 1999, the Company had valuation allowances against certain deferred
tax assets totaling $31.8 million and $30.8 million, respectively. These
valuation allowances relate to tax assets in jurisdictions where it is
management's best estimate that there is not a greater than 50 percent
probability that the benefit of the assets will be realized in the associated
tax returns. The likelihood of realizing the benefit of deferred tax assets is
assessed on an ongoing basis. Consequently, future material changes in the
valuation allowance are possible. The Company paid income taxes in 2000, 1999
and 1998, of $35.5 million, $47.7 million and $65.3 million, respectively.
NOTE 10: RETIREMENT BENEFIT PLANS
PENSION PLANS. The Company has various pension plans covering substantially all
domestic employees and certain employees in other countries. In addition to
providing pension benefits, the Company provides certain post-retirement
healthcare and life insurance benefits for selected U.S. and Canadian employees.
Most employees and retirees outside the United States are covered by government
healthcare programs. Employees may become eligible for these benefits if they
reach normal retirement age while working for the Company and satisfy certain
years of service
Tupperware Corporation 93
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
requirements. The medical plans are contributory, with retiree contributions
adjusted annually, and contain other cost-sharing features, such as deductibles
and coinsurance. The medical plans include an allowance for Medicare for post-65
retirees. The Company has the right to modify or terminate these plans.
The funded status of the plans was as follows:
U.S. plans Foreign plans
- ------------------------------------------------------------------------------------------------------------------------
Pension benefits Post-retirement benefits Pension benefits
------------------- ------------------------ ---------------------
(In millions) 2000 1999 2000 1999 2000 1999
- ------------------------------------------------------------------------------------------------------------------------
Change in benefit obligations:
Beginning balance $ 26.3 $ 29.9 $ 36.5 $ 41.0 $ 58.6 $ 64.1
Service cost 1.2 1.2 0.4 0.4 2.4 2.7
Interest cost 2.2 1.9 2.8 2.6 2.5 2.5
Actuarial loss (gain) 3.4 (4.8) 2.7 (4.0) 2.7 (4.4)
Benefits paid (2.2) (1.9) (3.1) (3.5) (6.9) (4.8)
Impact of exchange rates -- -- -- -- (5.7) (1.5)
- ------------------------------------------------------------------------------------------------------------------------
Ending balance 30.9 26.3 39.3 36.5 53.6 58.6
- ------------------------------------------------------------------------------------------------------------------------
Change in plan assets at fair value:
Beginning balance 27.1 25.3 -- -- 29.8 27.4
Actual return on plan assets 0.2 3.6 -- -- 2.1 4.9
Company contributions 1.1 -- 3.1 3.5 2.3 2.1
Plan participant contributions -- -- -- -- 0.2 0.2
Benefits paid (2.2) (1.8) (3.1) (3.5) (6.9) (4.8)
Impact of exchange rates -- -- -- -- (2.7) --
- ------------------------------------------------------------------------------------------------------------------------
Ending balance 26.2 27.1 -- -- 24.8 29.8
- ------------------------------------------------------------------------------------------------------------------------
Funded status of the plan (4.7) 0.8 (39.3) (36.5) (28.8) (28.8)
Unrecognized actuarial
(gain) loss (1.3) (6.6) 1.0 (1.9) (2.1) (5.7)
Unrecognized prior
service benefit (0.1) (0.1) (1.5) (1.7) -- (0.2)
Unrecognized net transaction
(asset) liability -- (0.1) -- -- 0.9 1.5
Impact of exchange rates -- -- -- -- (0.1) 0.5
- ------------------------------------------------------------------------------------------------------------------------
Accrued benefit cost $ (6.1) $ (6.0) $ (39.8) $ (40.1) $ (30.1) $ (32.7)
========================================================================================================================
Weighted average assumptions:
Discount rate 7.5% 7.8% 7.5% 7.8% 4.7% 4.5%
Return on plan assets 9.0 9.0 n/a n/a 5.2 5.3
Salary growth rate 4.5 6.0 n/a n/a 2.3 2.5
94 Tupperware Corporation
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Plan assets consist primarily of equity securities and corporate and government
bonds. At December 30, 2000 and December 25, 1999, the accumulated benefit
obligations of certain pension plans exceeded those plans' assets. For those
plans, the accumulated benefit obligations were $65.7 million and $41.0 million,
and the fair value of those plans' assets as of December 30, 2000 and December
25, 1999, were $41.3 million and $18.2 million, respectively.
The costs associated with the plans were as follows:
(In millions) Pension benefits Post-retirement benefits
- --------------------------------------------------------------------------------------------------------------------------
2000 1999 1998 2000 1999 1998
- --------------------------------------------------------------------------------------------------------------------------
Components of net periodic benefit cost:
Service cost $ 3.4 $ 4.0 $ 4.1 $ 0.4 $ 0.4 $ 0.3
Interest cost 4.7 4.5 4.7 2.8 2.6 2.7
Actual return on plan assets (1.2) (5.2) (2.3) -- -- --
Net deferral and (amortization) (2.2) 2.4 (0.3) (0.1) (0.1) (0.2)
- --------------------------------------------------------------------------------------------------------------------------
Net periodic benefit cost $ 4.7 $ 5.7 $ 6.2 $ 3.1 $ 2.9 $ 2.8
==========================================================================================================================
The assumed healthcare cost trend rate was 6 percent where it is expected to
remain. The healthcare cost trend rate assumption has a significant effect on
the amounts reported. A one percentage point change in the assumed healthcare
cost trend rates would have the following effects:
(In millions) One percentage point
- ---------------------------------------------------------------------------------------------------------------
Increase Decrease
- ---------------------------------------------------------------------------------------------------------------
Effect on total of service and interest cost components $ 0.3 $ (0.3)
Effect on post-retirement benefit obligation 4.1 (3.5)
The Company also has several savings, thrift and profit-sharing plans. Its
contributions to these plans are based upon various levels of employee
participation. The total cost of these plans was $4.5 million in 2000, $3.8
million in 1999 and $4.5 million in 1998.
NOTE 11: INCENTIVE COMPENSATION PLANS
INCENTIVE PLANS. Certain officers and other key employees of the Company
participate in the Tupperware Corporation 2000 and 1996 Incentive Plans (the
Incentive Plans). Annual and long-term performance awards and awards of options
to purchase Tupperware shares and of restricted stock are made under the
Incentive Plans. For the 2000 Incentive Plan, which was approved by the
Company's shareholders in May 2000, the total number of shares initially
available for grant was 4,000,000 and 200,000 shares may be used for restricted
stock awards. For the 1996 Incentive Plan, the total number of shares initially
available for grant was 7,600,000 and 300,000 shares may be used for restricted
stock awards. As of December 30, 2000, shares available for award under the
Incentive Plans totaled 1,454,393, of which 238,693 could be granted in the form
of restricted stock. For options granted in 2000,approximately 1.7 million
shares under option were granted in conjunction with the Management Stock
Purchase Plan. See Note 8 - Subscriptions Receivable.
Tupperware Corporation 95
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Other than the 157,118 options exchanged for certain BeautiControl options and
issued below the grant date value, all options' exercise prices are equal to the
underlying shares' grant date market values. Outstanding options granted in 1998
on 339,000 shares and options granted in 1999 have vesting dates that are three
years from the date of grant. The remainder of the options granted in 1998 vest
ratably from the second through fifth anniversaries of the date of grant.
Options granted in conjunction with participation under the Management Stock
Purchase Plan vest seven years after date of the grant; however, vesting may be
accelerated beginning three years after the grant date if certain stock
appreciation goals are attained. Other than 34,400 options that vest two years
from the date of the grant, the remainder of the non-MSPP related options
granted in 2000 vest three years from the date of the grant. Outstanding
restricted shares have initial vesting periods ranging from 1 to 5 years. All
outstanding options have exercise periods that are 10 years from the date of
grant.
DIRECTOR PLAN. Under the Tupperware Corporation Director Stock Plan (Director
Plan), non-employee directors may elect to receive their annual retainers in the
form of stock or stock options. Options granted to directors become exercisable
on the last day of the fiscal year in which they are granted, have a term of 10
years and have an exercise price that compensates for the foregone cash
retainer. This amount and the value of stock grants on the date of award have
been recognized as an expense by the Company. The number of shares initially
available for grant under the Director Plan and the number of shares available
as of December 30, 2000, were 300,000 and 190,604, respectively.
Earned performance awards of $12.8 million, $9.3 million and $9.6 million are
included in the consolidated statements of income for 2000, 1999 and 1998,
respectively.
Stock option and restricted stock activity and information about stock options
for the Incentive Plans and the Director Plan are summarized in the following
tables:
Shares subject Average option
Stock options to option price per share
- ---------------------------------------------------------------------------
Balance at December 27, 1997 3,346,870 $ 27.81
Granted 1,975,402 19.43
Canceled (174,646) 32.84
Exercised (125,413) 11.65
- --------------------------------------------------------
Balance at December 26, 1998 5,022,213 24.75
Granted 1,434,650 18.62
Canceled (233,732) 29.78
Exercised (70,805) 11.42
- --------------------------------------------------------
Balance at December 25, 1999 6,152,326 23.28
Granted 3,818,968 17.11
Canceled (485,262) 22.64
Exercised (115,707) 9.86
- --------------------------------------------------------
Balance at December 30, 2000 9,370,325 $ 20.95
===========================================================================
96 Tupperware Corporation
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Shares Shares available
Restricted stock outstanding for issuance
- ---------------------------------------------------------------------------
Balance at December 27, 1997 127,341 134,604
Awarded 59,760 (59,760)
Canceled (7,000) 7,000
Vested (29,728) --
- ---------------------------------------------------------------------------
Balance at December 26, 1998 150,373 81,844
Awarded 11,000 (11,000)
Canceled -- --
Vested (101,711) --
- ---------------------------------------------------------------------------
Balance at December 25, 1999 59,662 70,844
Increase in shares available due to
adoption of 2000 Incentive Plan 200,000
Shares transferred to 1996 Incentive Plan
non-qualified status (23,151)
Awarded 15,000 (15,000)
Canceled (6,000) 6,000
Vested (3,662) --
- ---------------------------------------------------------------------------
Balance at December 30, 2000 65,000 238,693
===========================================================================
Stock options outstanding
As of December 30, 2000 Outstanding Exercisable
- ---------------------------------------------------------------------------------------------------
Average Average Average
remaining exercise exercise
Exercise price range Shares life price Shares price
- ---------------------------------------------------------------------------------------------------
$ 8.40 - $11.84 127,015 3.9 $ 10.95 127,015 $ 10.95
12.85 - 15.94 2,164,379 8.3 15.40 430,129 13.30
18.39 - 25.55 5,435,780 8.4 19.40 1,027,930 21.95
26.70 - 34.28 1,108,801 3.3 30.26 727,468 32.08
39.18 - 42.25 534,350 4.9 42.19 534,350 42.19
- ------------------------------- ---------
9,370,325 7.5 $ 20.95 2,846,892 $ 26.54
===================================================================================================
The Company uses the intrinsic value method of accounting for stock-based
compensation. The Company has estimated the fair value of its option grants. If
these fair value estimates had been used to record compensation expense in the
consolidated statements of income, net income would have been reduced by $5.6
million, $4.5 million and $3.7 million, to $69.3 million, $74.5 million and
$65.3 million, or $1.19, $1.29 and $1.11 per diluted common share ($1.20, $1.30
and $1.12 per basic common share) in 2000, 1999 and 1998, respectively.
The fair value of the stock option grants were estimated using the Black-Scholes
option-pricing model with the following assumptions: dividend yield of 3.5
percent for 2000 and 1999 grants and 3.0 percent for 1998 grants; expected
volatility of 40.0 percent for 2000, 1999 and 1998 grants; risk-free interest
rates of 5.9 percent for 2000 and 1999 and 4.5 percent for 1998; and expected
lives of 5 years for all grants. Compensation expense associated with restricted
stock grants is equal to the fair market value of the shares on the date of
grant and is recognized ratably over the required holding period. Compensation
expense associated with restricted stock grants was not significant.
Tupperware Corporation 97
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 12: 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.
(In millions) 2000 1999 1998
- -------------------------------------------------------------------------------------------
Net sales:
Europe $ 424.1 $ 489.1 $ 518.7
Asia Pacific 242.0 242.3 211.5
Latin America 193.0 154.2 186.8
United States 201.8 178.2 186.9
BeautiControl 12.2 -- --
- -------------------------------------------------------------------------------------------
Total net sales $1,073.1 $1,063.8 $1,103.9
===========================================================================================
Operating profit (loss):
Europe $ 94.1 $ 110.7 $ 123.9
Asia Pacific 44.8 35.0 20.2
Latin America 8.0(a) 12.0 (16.4)(b)
United States 15.6 4.7 4.0(b)
BeautiControl 0.1 -- --
- -------------------------------------------------------------------------------------------
Total operating profit 162.6 162.4 131.7
Unallocated expenses (27.9)(a) (23.1)(a) (17.5)(b)
Re-engineering and impairment charge (12.5)(a) (15.1)(a) --
Interest expense, net (21.1) (20.9) (22.7)
- -------------------------------------------------------------------------------------------
Income before income taxes $ 101.1 $ 103.3 $ 91.5
===========================================================================================
Depreciation and amortization:
Europe $ 17.0 $ 22.0 $ 25.7
Asia Pacific 10.6 11.5 12.0
Latin America 9.9 10.0 12.5
United States 11.6 10.3 11.7
BeautiControl 0.2 -- --
Corporate 2.8 1.8 2.1
- -------------------------------------------------------------------------------------------
Total depreciation and amortization $ 52.1 $ 55.6 $ 64.0
===========================================================================================
a. The Company announced a three-year re-engineering program in 1999. The
re-engineering and impairment charge line provides for severance and
other exit costs. In addition, unallocated expenses include $7.9
million and $1.0 million for 2000 and 1999, respectively, for internal
and external consulting costs incurred in connection with the program.
Additionally, $6.3 million was recorded as a reduction to Latin
America's operating profit related to the write-down of inventory and
receivables associated with adopting an importing distribution model
for certain countries. Together, the after-tax impact of these costs
was $24.2 million and $12.3 million in 2000 and 1999, respectively. See
Note 3 to the financial statements.
b. Includes a pretax charge totaling $42.4 million ($31.4 million after
tax): $22.2 million in Latin America, primarily for bad debts in
Brazil; $16.0 million in the United States, primarily for inventory
obsolescence; and $4.2 million in unallocated expenses, primarily for
corporate downsizing.
98 Tupperware Corporation
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(In millions) 2000 1999 1998
- -----------------------------------------------------------------------------------------
Capital expenditures:
Europe $ 16.4 $ 14.1 $ 13.1
Asia Pacific 7.2 2.6 5.6
Latin America 7.3 11.5 13.6
United States 6.5 11.5 9.0
BeautiControl -- -- --
Corporate 8.9 1.2 4.9
- -----------------------------------------------------------------------------------------
Total capital expenditures $ 46.3 $ 40.9 $ 46.2
=========================================================================================
Identifiable assets:
Europe $ 228.1 $ 237.6 $ 260.7
Asia Pacific 128.2 139.1 148.4
Latin America 130.8 148.7 165.1
United States 141.7 153.4 151.7
BeautiControl 24.4 -- --
Corporate 196.2 117.3 97.5
- -----------------------------------------------------------------------------------------
Total identifiable assets $ 849.4 $ 796.1 $ 823.4
=========================================================================================
Sales and operating profit in the preceding table are from transactions with
customers. Inter-area transfers of inventory are accounted for at cost. Sales
generated by product line are not captured in the financial statements, and
disclosure of the information is impractical. Sales to a single customer did not
exceed 10 percent of total sales. Export sales were insignificant. Sales to
customers in Germany were $184.8 million, $209.2 million and $241.2 million in
2000, 1999 and 1998, respectively ($178.9 million and $198.1 million in 1999
and 1998, respectively, at 2000 exchange rates). No other foreign country's
sales were material to the Company's total sales. The accounting policies of the
segments are the same as those described in Note 1 - Summary of Significant
Accounting Policies. The Company evaluates the performance of its segments based
on operating profit. Operating profit for each segment included promotion,
distribution and other expenses directly attributable to the segment and
excluded certain expenses managed outside the reportable segment. Unallocated
expenses are corporate expenses and other items not directly related to the
operations of any particular segment.
Corporate assets consist of cash, goodwill and assets maintained for general
corporate purposes. The United States was the only country with long-lived
assets greater than 10 percent of the Company's total assets at December 30,
2000. As of the end of 2000, 1999 and 1998, respectively, long-lived assets in
the United States were $99.3 million, $109.0 million and $110.3 million.
As of December 30, 2000 and December 25, 1999, the Company's net investment in
international operations was $190.8 million and $223.7 million, respectively.
The Company is subject to the usual economic risks associated with international
operations; however, these risks are partially mitigated by the broad geographic
dispersion of the Company's operations.
NOTE 13: COMMITMENTS AND CONTINGENCIES
The Company and certain subsidiaries are involved in litigation and various
legal matters that are being defended and handled in the ordinary course of
business. Included among these matters are environmental issues. None of the
Company's contingencies are expected to have a material adverse effect on its
financial position, results of operations or cash flow.
Tupperware Corporation 99
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Kraft Foods, Inc., which was formerly affiliated with Premark International,
Inc., the Company's former parent, and Tupperware, has assumed any liabilities
arising out of any legal proceedings in connection with certain divested or
discontinued businesses. The liabilities assumed include matters alleging
product liability, environmental liability and infringement of patents.
OPERATING LEASES. Net rental expense for operating leases totaled $35.0 million
in 2000, $37.0 million in 1999 and $36.7 million in 1998. Approximate minimum
rental commitments under non-cancelable operating leases in effect at December
30, 2000, were: 2001 - $14.5 million; 2002 - $8.3 million; 2003 - $2.7 million;
2004 - $1.0 million; 2005 - $0.7; and after 2005 - $0.3 million.
NOTE 14: QUARTERLY FINANCIAL SUMMARY (UNAUDITED)
Following is a summary of the unaudited interim results of operations for each
quarter in the years ended December 30, 2000 and December 25, 1999.
(In millions, except per share amounts) First quarter Second quarter Third quarter Fourth quarter
- ------------------------------------------------------------------------------------------------------------------------
Year ended December 30, 2000:
Net sales $ 273.1(a) $ 278.4(a) $ 225.1(a) $ 296.5
Cost of products sold 93.8 93.5 74.8 96.3
Net income 19.2(b) 29.1(b) 4.7(b) 21.9(b)
Net income per share:
Basic 0.33(b) 0.50(b) 0.09(b) 0.38(b)
Diluted 0.33(b) 0.50(b) 0.08(b) 0.38(b)
Dividends declared per share 0.22 0.22 0.22 0.22
Composite stock price range:
High 19.00 24.50 23.13 20.62
Low 14.56 15.50 17.19 15.50
Close 15.81 22.02 18.00 20.44
Year ended December 25, 1999:
Net sales $ 255.1(a) $ 276.9(a) $ 216.2(a) $ 315.6(a)
Cost of products sold 84.1 93.1 79.1 108.8
Net income 17.8 14.3(c) 3.5 43.4(c)
Net income per share:
Basic 0.31 0.25(c) 0.06 0.75(c)
Diluted 0.31 0.25(c) 0.06 0.75(c)
Dividends declared per share 0.22 0.22 0.22 0.22
Composite stock price range:
High 21.44 24.06 25.50 21.13
Low 15.06 17.00 19.13 16.00
Close 19.06 20.44 19.38 16.88
a. In October 2000, the Emerging Issues Task Force issued EITF 00-10
"Accounting for Shipping and Handling Revenues and Costs", 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, which was previously recorded as a reduction of delivery
expense, to net sales. For 2000, $4.5 million, $5.8 million and $4.9
million were reclassified in the first, second and third quarters,
respectively. For 1999, $4.2 million, $5.6 million, $4.3 million and
$5.9 million were reclassified in the first, second, third and fourth
quarters, respectively.
b. Includes pretax re-engineering and impairment costs of $2.5 million
($1.9 million after tax), $2.1 million ($1.7 million after tax), $1.8
million ($1.3 million after tax) and $20.3 million ($19.3 million after
tax) for the first, second, third and fourth quarter, respectively.
c. Includes pretax re-engineering costs of $15.1 million in the second
quarter ($11.6 million after tax) and $1.0 million in the fourth
quarter ($0.7 million after tax).
100 Tupperware Corporation
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTE 15: RIGHTS AGREEMENT
In 1996, the Company adopted a shareholders' rights plan with a duration of 10
years, under which shareholders received a right to purchase one one-hundredth
of a share of preferred stock for each right owned. The rights are exercisable
if 15 percent of the Company's common stock is acquired or threatened to be
acquired, and the rights are redeemable by the Company if exercisability has not
been triggered. Under certain circumstances, if 50 percent or more of the
Company's consolidated assets or earning power are sold, a right entitles the
holder to buy shares of the Company equal in value to twice the exercise price
of each right. Upon acquisition of the Company by a third party, a holder could
receive the right to purchase stock in the acquirer. The foregoing percentage
thresholds may be reduced to not less than 10 percent.
Tupperware Corporation 101
REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF TUPPERWARE CORPORATION:
In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of income, of shareholders' equity and of cash flows
present fairly, in all material respects, the financial position of Tupperware
Corporation and its subsidiaries at December 30, 2000 and December 25, 1999, and
the results of their operations and their cash flows for each of the three years
in the period ended December 30, 2000, in conformity with accounting principles
generally accepted in the United States of America. These financial statements
are the responsibility of Tupperware Corporation's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these statements in accordance with
auditing standards generally accepted in the United States of America 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.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
Orlando, Florida
February 20, 2001
102 Tupperware Corporation
REPORT OF MANAGEMENT
The management of Tupperware is responsible for the preparation of the financial
statements and other information contained in this Annual Report. The financial
statements were prepared in accordance with generally accepted accounting
principles and include amounts that are based upon management's best estimate
and judgments, as appropriate. PricewaterhouseCoopers LLP has audited these
financial statements and has expressed an independent opinion thereon.
The Company maintains internal control systems, policies and procedures designed
to provide reasonable assurance that assets are safeguarded, transactions are
executed in accordance with management's authorization and properly recorded and
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 benefit
derived. Management believes that the Company's systems provide the appropriate
balance of costs and benefits. The Company also maintains an internal auditing
function that evaluates and reports on the adequacy and effectiveness of
internal accounting controls, policies and procedures.
The Audit and Corporate Responsibility Committee of the Board of Directors is
composed entirely of outside directors. The Committee meets periodically and
independently with management, the vice president of internal audit and
PricewaterhouseCoopers LLP to discuss the Company's internal accounting
controls, auditing and financial reporting matters. The vice president of
internal audit and PricewaterhouseCoopers LLP have unrestricted access to the
Audit and Corporate Responsibility Committee.
Management recognizes its responsibility for conducting the Company's affairs in
a manner that is responsive to the interests of its shareholders and its
employees. This responsibility is characterized in the Code of Conduct, which
provides that the Company will fully comply with laws, rules and regulations of
every country in which it operates and will observe the rules of ethical
business conduct. Employees of the Company are expected and directed to manage
the business of the Company accordingly.
/s/ Rick Goings /s/ Paul B. Van Sickle
Rick Goings Paul B. Van Sickle
Chairman and Chief Executive Vice President
Executive Officer and Chief Financial Officer
Tupperware Corporation 103
OFFICERS AND BOARD OF DIRECTORS
OFFICERS
RICK GOINGS MICHAEL S. POTESHMAN JOE R. LEE(2,3)
Chairman of the Board and Vice President, Investor Chairman and Chief Executive
Chief Executive Officer Relations and Treasurer Officer,
Darden Restaurants, Inc.,
GERALD M. CROMPTON THOMAS M. ROEHLK Casual Dining Restaurants
Senior Vice President, Senior Vice President,
Product Marketing Worldwide General Counsel and BOB MARBUT(2(*),3)
Secretary Chairman,
JUDY B. CURRY Hearst-Argyle Television, Inc.,
Vice President and Controller JAMES E. ROSE, JR. Television and
Senior Vice President, Communications
KAREL A. DEVYDT Taxes and Government Affairs
Vice President and Chief ANGEL R. MARTINEZ(2)
Information Officer HANS JOACHIM SCHWENZER Executive Vice President and
Senior Vice President, Chief Marketing Officer,
R. GLENN DRAKE Tupperware Worldwide Reebok International Ltd.,
President, Tupperware North Athletic Apparel
America CHRISTIAN E. SKRODER
Group President, Tupperware DAVID R. PARKER(1(*),3)
LILLIAN D. GARCIA Europe, Africa and Managing Partner,
Senior Vice President, Middle East Interprise Technology
Human Resources Partners, L.P.
JOSE R. TIMMERMAN
DAVID T. HALVERSEN Senior Vice President, ROBERT M. PRICE(1)
Senior Vice President, Worldwide Operations President,
Business Development and PSV, Inc.,
Communications PAUL B. VAN SICKLE Technology Consulting
Executive Vice President Services
RICHARD W. HEATH and Chief Financial Officer
Senior Vice President, JOYCE M. ROCHE(1)
Beauty and Nutritional BOARD OF DIRECTORS President and
Products Chief Executive Officer,
RITA BORNSTEIN, PH.D.(1) Girls Incorporated
CHARLES H.R. HENRY President, Rollins College
Vice President, M. ANNE SZOSTAK(2)
Process Re-engineering RICK GOINGS(3(*)) Executive Vice President and
Chairman of the Board and Corporate Director of
ALAN D. KENNEDY Chief Executive Officer, Human Resources,
President Tupperware Corporation FleetBoston Financial,
Diversified Financial Company
STEVEN R. KROOS CLIFFORD J. GRUM(1)
President, Chairman and Chief
Tupperware Asia Pacific Executive Officer, retired,
Temple-Inland Inc.,
ANNE E. NAYLOR Packaging, Paperboard,
Vice President, Internal Audit Building Products and
Financial Services
GAYLIN L. OLSON
President, Tupperware BETSY D. HOLDEN(2)
Latin America President and
Chief Executive Officer,
Kraft Foods, Inc.,
Food Products
Numbers denote committee
memberships:
1 Audit and Corporate Responsibility Committee
2 Compensation and Directors Committee
3 Executive Committee
(*) Chairperson
104 Tupperware Corporation
CORPORATE INFORMATION
CORPORATE OFFICE
Tupperware Corporation
P.O. Box 2353
Orlando, FL 32802-2353
(407) 826-5050
14901 S. Orange Blossom Trail
Orlando, FL 32837
TRANSFER AGENT AND REGISTRAR
Wells Fargo Bank Minnesota, N.A.
Shareholder inquiries should
be directed to the agent at:
Wells Fargo Shareowner Services
161 North Concord Exchange
South St. Paul, MN 55075
or:
P.O. Box 64854
St. Paul, MN 55164-0854
Telephone: (800) 468-9716
or (651) 450-4064
Fax: (651) 450-4033
E-mail:
stocktransfer@wellsfargo.com
Notices regarding changes of address and inquiries regarding lost dividend
checks, lost or stolen certificates and transfers of stock should be directed to
the transfer agent.
COMMON STOCK
Listed in the United States on the New York Stock Exchange and traded under the
symbol TUP.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP
Orlando, Florida
SEC FILINGS AND OTHER
INFORMATION
Copies of the Annual Report,
filings with the Securities and
Exchange Commission and
press releases maybe
obtained by writing to:
Tupperware Corporation
Investor Relations Department
P.O. Box 2353
Orlando, FL 32802-2353
or by calling: (800) 514-3081
via email:
finrel@tupperware.com
FINANCIAL RELATIONS
Michael S. Poteshman
Vice President,
Investor Relations and
Treasurer
(407) 826-4522
Website:
www.tupperware.com
ANNUAL MEETING
The Annual Meeting of
Shareholders will be held at
1:00 p.m. on Thursday, May 17,
2001, at The Hyatt Regency
Orlando International Airport
Hotel, 9300 Airport Boulevard,
Orlando, Florida.
Note: Except as indicated below, trademarks owned by the Company are
(indicated by the use of (R) or (TM) throughout this report.
HSN is a service mark of the Home Shopping Network, Inc.
(*)(C) Disney
Pokemon is a registered trademark of
Nintendo of America, Inc.
Barbie is a registered trademark of
Mattel, Inc.
Barney is a registered trademark
of Lyons Partnership L.P.