UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the 13 weeks ended March 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _____ to _____
Commission file number 1-9256
__________________
TUPPERWARE CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 36-4062333
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
P.O. Box 2353, Orlando, Florida 32802
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (407) 826-5050
Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such
shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90
days.
Yes___X___ No_______
As of May 24, 1996, 1,000 shares of the Common Stock, $0.01 par value,
of the Registrant were outstanding.
PART I
FINANCIAL INFORMATION
Item 1. Financial Statements
a) Financial Statements of Registrant
Page
Index Number
Condensed Combined Statement of Income
(Unaudited) for the 13 week periods ended
March 30, 1996 and April 1, 1995................. 2
Condensed Combined Balance Sheet
(Unaudited) as of March 30, 1996 (pro forma),
March 30, 1996 and December 30, 1995............. 3
Condensed Combined Statement of Cash Flows
(Unaudited) for the 13 week periods ended
March 30, 1996 and April 1, 1995................. 5
Notes to Condensed Combined
Financial Statements (Unaudited)................. 6
The condensed combined financial statements of the Registrant included
herein have been prepared, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (the
Commission). Although certain information normally included in
financial statements prepared in accordance with general accepted
accounting principles has been condensed or omitted, the Registrant
believes that the disclosures are adequate to make the information
presented not misleading. It is suggested that these condensed
combined financial statements be read in conjunction with the
financial statements and the notes thereto for its fiscal year ended
December 30, 1995, included in the Form 10 of the Registrant as
declared effective by the Commission on May 2, 1996.
The condensed combined financial statements included herein reflect
all adjustments, consisting only of normal recurring items, which, in
the opinion of management, are necessary to present a fair statement
of the results for the interim periods presented.
The results for interim periods are not necessarily indicative of
trends or of results to be expected for a full year.
TUPPERWARE CORPORATION
CONDENSED COMBINED STATEMENT OF INCOME
(Unaudited)
13 Weeks Ended
-------------------
March 30, April 1,
1996 1995
-------- --------
(In millions, except per share data)
Net sales................................... $ 329.0 $ 330.2
-------- --------
Costs and expenses:
Cost of products sold..................... 120.4 113.4
Delivery, sales and
administrative expense.................. 166.2 176.4
Interest expense.......................... 0.9 0.5
Interest income........................... (1.3) (1.2)
Other (income) expense, net............... (0.5) 0.1
-------- --------
Total costs and expenses............... 285.7 289.2
-------- --------
Income before income taxes.................. 43.3 41.0
Provision for income taxes.................. 11.7 10.4
-------- --------
Net income.................................. 31.6 30.6
Shareholders' equity,
beginning of period....................... 415.6 395.1
Net transactions with Premark............... 28.9 (23.0)
Translation adjustments..................... (3.8) 8.1
-------- --------
Shareholders' equity,
end of period............................. $ 472.3 $ 410.8
======== ========
Pro forma income per common and
common equivalent share................... $ 0.46 $ 0.43
======== ========
See accompanying Notes to Condensed Combined Financial Statements
(Unaudited).
- 2 -
TUPPERWARE CORPORATION
CONDENSED COMBINED BALANCE SHEET
ASSETS
(UNAUDITED)
Pro Forma
March 30, March 30, December 30,
1996 1996 1995
--------- --------- ---------
(In millions)
Cash and cash equivalents......... $ 62.4 $ 87.4 $ 97.3
Accounts and notes receivable..... 197.4 197.4 173.6
Less allowances for
doubtful accounts............. (26.6) (26.6) (26.1)
--------- --------- ---------
170.8 170.8 147.5
Inventories....................... 210.0 210.0 206.6
Deferred income tax benefits...... 50.8 50.8 58.1
Prepaid expenses.................. 20.2 20.2 16.9
--------- --------- ---------
Total current assets.......... 514.2 539.2 526.4
--------- --------- ---------
Deferred income tax benefits...... 21.1 21.1 21.7
Property, plant, and equipment.... 939.1 939.1 938.0
Less accumulated depreciation... (626.1) (626.1) (620.3)
--------- --------- ---------
313.0 313.0 317.7
Long-term receivables, net of
allowances of $26.5 million at
March 30, 1996, and $24.8
million at December 30, 1995,
and other assets................ 75.3 75.3 78.2
--------- --------- ---------
Total assets.................. $ 923.6 $ 948.6 $ 944.0
========= ========= =========
See accompanying Notes to Condensed Combined Financial Statements
(Unaudited).
- 3 -
TUPPERWARE CORPORATION
CONDENSED COMBINED BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY
(UNAUDITED)
Pro Forma
March 30, March 30, December 30,
1996 1996 1995
--------- --------- ---------
(In millions)
Accounts payable.................. $ 79.4 $ 79.4 $ 88.0
Short-term borrowings and current
portion of long-term debt....... 225.7 65.8 83.8
Accrued liabilities............... 263.6 241.6 266.5
--------- --------- ---------
Total current liabilities..... 568.7 386.8 438.3
--------- --------- ---------
Long-term debt.................... 100.4 0.4 0.4
Accrued postretirement
benefit cost.................... 36.2 36.2 36.1
Other liabilities................. 52.9 52.9 53.6
Shareholders' equity:
Net investment by Premark....... - 594.0 533.5
Common shareholders' equity..... 287.1 - -
Cumulative foreign currency
adjustments.................... (121.7) (121.7) (117.9)
--------- --------- ---------
Total shareholders' equity.... 165.4 472.3 415.6
--------- --------- ---------
Total liabilities and
shareholders' equity........ $ 923.6 $ 948.6 $ 944.0
========= ========= =========
See accompanying Notes to Condensed Combined Financial Statements
(Unaudited).
- 4 -
TUPPERWARE CORPORATION
CONDENSED COMBINED STATEMENT OF CASH FLOWS
(Unaudited)
13 Weeks Ended
-------------------
March 30, April 1,
1996 1995
-------- --------
(In millions)
Cash flows from operating activities:
Net income................................ $ 31.6 $ 30.6
Adjustment to reconcile net income to
net cash used in operating
activities:
Depreciation.......................... 14.9 15.6
Changes in assets and liabilities:
Increase in accounts
and notes receivable................ (25.0) (22.4)
Increase in inventory................. (5.7) (12.2)
Decrease in accounts payable
and accrued liabilities............. (19.9) (8.6)
Decrease in income taxes payable...... (6.4) (3.3)
Decrease (increase) in net
deferred income taxes............... 7.0 (1.2)
Increase in prepaid expenses.......... (3.4) (2.6)
Other, net................................ 2.0 2.4
-------- --------
Net cash used in
operating activities............... (4.9) (1.7)
-------- --------
Cash flows from investing activities:
Capital expenditures...................... (15.8) (13.2)
-------- --------
Net cash used in investing
activities......................... (15.8) (13.2)
-------- --------
Cash flows from financing activities:
Net transactions with Premark............. 28.9 (23.0)
Net (decrease) increase in short-term debt (15.8) 22.4
-------- --------
Net cash provided by (used in)
financing activities............... 13.1 (0.6)
-------- --------
Effect of exchange rate changes on cash
and cash equivalents...................... (2.3) 9.4
-------- --------
Net decrease in cash and
cash equivalents.......................... $ (9.9) $ (6.1)
======== ========
See accompanying Notes to Condensed Combined Financial Statements
(Unaudited).
- 5 -
TUPPERWARE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Basis of Presentation
The accompanying unaudited condensed combined financial statements have
been prepared in accordance with the instructions to Form 10-Q and
therefore do not include all information and footnotes necessary for a
fair presentation of financial position, results of operations, and
changes in financial position in conformity with generally accepted
accounting principles. In the opinion of management, the unaudited
condensed combined financial statements include all adjustments,
consisting only of normal recurring items, necessary for a fair
presentation of the financial position and results of operations. The
results of operations of any interim period are not necessarily
indicative of the results that may be expected for a full fiscal year.
Note 2: Inventories
Inventories, by component, are summarized as follows (in millions):
March 30, December 30,
1996 1995
----------- -----------
Finished goods.................. $ 99.6 $ 100.3
Work in process................. 42.1 40.1
Raw materials and supplies...... 68.3 66.2
-------- --------
Total inventories $ 210.0 $ 206.6
======== ========
Note 3: Distribution of Tupperware
On November 1, 1995, Premark International Inc.'s (Premark) board of
directors authorized Premark management to proceed with a plan to
establish the Tupperware business (Tupperware, the Company) as an
independent company through a stock distribution to Premark's
shareholders (the Distribution). As part of this transaction, on
May 24, 1996, the Company paid a $284.9 million special dividend
to Premark (the Dividend Payment). The Dividend Payment was funded
through available cash and a portion of the $268.0 million that was
borrowed under the Company's $300 million multicurrency credit
agreement that was entered into on May 17, 1996.
The pro forma condensed combined balance sheet reflects the following
transactions as if the Distribution had occurred on March 30, 1996:
a) payment of the Dividend Payment; b) an increase in borrowings and a
decrease in cash to fund the Dividend Payment; c) an accrual of $10.0
million for non-recurring costs expected to be incurred by Tupperware
in 1996 that are directly related to the Distribution; and d) an
accrual of $12.0 million for the amount that Tupperware will pay
related to the quarterly dividend declared on Premark's common stock
on May 1, 1996 (Premark Dividend).
Pro forma net income per common and common equivalent share is
calculated as if the Distribution had occurred at the beginning of
fiscal 1995 and assumes that Tupperware would use $25.0 million of
available cash and $271.9 million of additional borrowings to fund both
the Dividend Payment of $284.9 million and the $12.0 million payment
related to the Premark Dividend. The pro forma net income per common
and common equivalent share is based on: a) the Company's historical
net income for the 13 week periods ended March 30, 1996 and April 1,
1995, adjusted for $4.2 million of additional interest expense, net
of $1.6 million of tax benefits, related to the increase in borrowings
at an assumed weighted average interest rate of 6.2%; and b) an assumed
63.2 million and 65.3 million weighted average common and common
equivalent shares for the 13 week periods ended March 30, 1996 and
April 1, 1995, respectively. The actual number of common and common
equivalent shares used to compute earnings per share after the
Distribution will depend on Tupperware's stock price at that time,
but is expected to be lower than 63.2 million.
- 6 -
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following is a discussion of the results of operations for the 13
weeks ended March 30, 1996, compared with the 13 weeks ended April 1,
1995, and changes in financial condition during the 13 weeks ended
March 30, 1996.
The Distribution
On November 1, 1995, Premark's board of directors authorized Premark
International Inc.'s (Premark) management to proceed with a plan to
establish the Tupperware business (Tupperware, the Company) as an
independent company through a stock distribution to Premark's
shareholders (the Distribution). The Distribution is expected to be
effected on May 31, 1996 through a stock dividend, which is tax free to
Premark's shareholders pursuant to a favorable ruling received from the
Internal Revenue Service.
Net Sales and Income from Operations
Net sales for the first quarter of 1996 were $329.0 million, $1.2
million or 0.4 percent lower than 1995 sales of $330.2 million. Net
income increased by $1.0 million to $31.6 million, which was a 3
percent improvement from 1995 net income of $30.6 million. The modest
variations from the prior year reflect lower performance by Europe,
Africa and the Middle East, which was offset by improvement in all
other regions. The only region where foreign exchange had a
significant impact on the year-to-year variation was Asia Pacific.
Costs and Expenses
The cost of products sold in relation to sales was 36.6 percent and
34.3 percent in the first quarter of 1996 and 1995, respectively. The
1996 increase reflects a lower level of U.S. production to more closely
match sales demand, and higher product costs in Latin America due to
increased third party product sourcing. Delivery, sales and
administrative expense as a percentage of sales was 50.5 percent in
1996 compared with 53.4 percent in 1995. The improvement was due to
lower promotional spending and operating expenses in the Americas and
Asia Pacific.
Tax Rate
The effective tax rates for the quarters ended March 30, 1996 and April
1, 1995, and for the year ended December 30, 1995, were 26.7 percent,
25.2 percent and 25.4 percent, respectively. The increase in the rate
in 1996 is due to the absence of the 1995 benefit from the resolution
of certain international and domestic tax audit contingencies and a
lower 1996 benefit from repatriating foreign earnings. These factors
were only partially offset by the 1996 benefit from reducing the
valuation allowance for U.S. federal deferred tax assets.
Net Interest
In the first quarters of 1996 and 1995, Tupperware had net interest
income of $0.4 million and $0.7 million, respectively. As a subsidiary
of Premark, Tupperware's income only reflects interest on legal
obligations owed or on amounts held by Tupperware. Dart Industries
Inc. (Dart), which is now a subsidiary of the Company, paid a special
dividend to Premark of $284.9 million, on May 24, 1996, which
substantially increased the debt of Tupperware.
Regional Results
Europe, Africa and the Middle East
Sales decreased by 15 percent in the first quarter of 1996 to $146.8
million from $173.4 million in 1995. The decrease resulted from
reduced volume in Germany, reflecting weak economic conditions. The
region's sales represented 45 percent and 52 percent of Tupperware's
total sales in the first quarter of 1996 and 1995, respectively.
Segment profit in the region was $30.2 million in 1996, which
represented a $13.8 million, or 31 percent, decrease compared with
1995's segment profit of $44.0 million. The decrease reflects the
lower sales in Germany. For the first quarter of 1996 and 1995,
respectively, the region accounted for 65 percent and 93 percent of
Tupperware's segment profit.
The Americas
Sales in the Americas totaled $106.0 million in the first quarter of
1996, which was a 25 percent improvement compared with 1995 sales of
$84.8 million. Segment profit in 1996 was $7.3 million compared with a
loss of $1.6 million in 1995. The region's sales accounted for 32
percent and 26 percent of Tupperware's total in 1996 and 1995,
respectively, and the 1996 segment profit was 15 percent of its total.
U.S. sales were $43.8 million in 1996, $0.2 million higher than 1995
sales of $43.6 million. However, the U.S. segment loss decreased
sharply to $1.9 million in 1996 from $4.6 million in 1995, reflecting a
more efficient use of promotional expenditures and a lower
administrative cost structure. During the quarter, the U.S. business
implemented several strategic initiatives to simplify operations,
increase sales force productivity and improve profitability.
In the Americas, excluding the United States, sales increased by 51
percent to $62.2 million in 1996 from $41.2 million in 1995. Mexico
was the biggest factor in the improvement, where sales increased
sharply. Sales in Brazil increased substantially with the
improvements in both Mexico and Brazil resulting from successful
programs to boost the size of the sales force. Segment profit in the
Americas, excluding the United States, rose by $6.2 million to $9.2
million in 1996 from $3.0 million in 1995. Substantial improvements in
Mexico and Brazil, reflecting the higher sales, were the largest
factors in the increase. Also, Argentina had a profit in 1996 versus a
loss in 1995, reflecting higher volume from a much larger sales force
and lower selling and administrative costs.
Asia Pacific
Sales in Asia Pacific were $76.2 million in 1996, which was an
improvement of $4.2 million or 6 percent, from 1995 sales of $72.0
million. Foreign exchange had a $4.2 million negative impact on the
comparison. Excluding foreign exchange, sales in Japan increased
significantly due to the impact in 1995 of the Kobe earthquake.
However, the negative impact of foreign exchange in Japan offset a
large part of the increase. Sales in Korea increased substantially,
but Taiwan had a significant sales decrease. The sales fluctuations
were due to an increase in the size of the active sales force in Korea
and a decrease in Taiwan, reflecting the results of recruiting programs
in those countries. The region's sales represented 23 percent and 22
percent of Tupperware's total sales in the first quarter of 1996 and
1995, respectively.
Segment profit in the region increased by 87 percent to $9.3 million in
1996 from $5.0 million in 1995. Foreign exchange had a minor impact on
the comparison. A substantial increase in Korea and a sharp
improvement in Japan, reflecting the higher sales along with the
absence of costs related to the 1995 earthquake, were the main reasons
for the increase. Taiwan's segment profit fell substantially as a
result of its lower sales. For the first quarter of 1996 and 1995,
respectively, the region accounted for 20 percent and 11 percent of
Tupperware's segment profit.
Financial Condition
Under the Distribution Agreement between Premark, Tupperware and Dart,
Dart paid a special dividend to Premark of $284.9 million on May 24,
1996.
Prior to the Distribution, the Company's domestic cash requirements,
including working capital and capital expenditures, have been financed
by Premark through its centralized cash management system. On May 17,
1996, Tupperware and certain of its subsidiaries entered into a 5-year
$300 million unsecured multicurrency credit facility. This facility
was used in funding the dividend payment to Premark, and along with cash
generated by operating activities and continuing foreign uncommitted
lines of credit, which totalled $199.9 million at March 30, 1996, is
expected to be adequate to finance any additional working capital needs
and capital expenditures.
Net cash used in operating activities was $4.9 million and $1.7 million
in the first quarter of 1996 and 1995, respectively. Net cash used in
investing activities was for capital expenditures and totaled $15.6
million and $23.2 million in 1996 and 1995, respectively.
Working capital as of March 30, 1996, increased by $64.3 million to
$152.4 million from $88.1 million at December 30, 1995. The increase
reflects higher receivables and lower accounts payable and accrued
liabilities at March 30, 1996 compared with December 30, 1995, similar
to the trend experienced in the first quarter of 1995.
PART II
OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits (numbered in accordance with Item 601 of
Regulation S-K)
(27) A Financial Data Schedule for the first quarter of
1996 is filed as an exhibit to this Report
(b) Reports on Form 8-K
During the quarter, the Registrant did not file any
current reports on Form 8-K.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this Report to be signed on its behalf
by the undersigned thereunto duly authorized.
TUPPERWARE CORPORATION
By: Thomas M. Roehlk
-------------------------
Senior Vice President,
General Counsel and
Secretary
By: Paul B. Van Sickle
-------------------------
Senior Vice President,
Finance and Operations
(Chief Financial Officer)
Orlando, Florida
May 30, 1996