Tupperware Announces First Quarter 2003 Earnings
ORLANDO, Fla.--(BUSINESS WIRE)--April 23, 2003--Tupperware
Corporation (NYSE:TUP) announced today that for the first quarter
ended March 29, 2003, sales increased eight percent to $272 million
compared to $252 million in the prior year. Excluding foreign currency
and the new business model in North America, sales were down three
percent compared to the first quarter of 2002. Net income was $6.4
million, or $0.11 cents per diluted share compared to $15.6 million,
or $0.27 per diluted share in the prior year, which included $0.6
million in re-engineering costs. The net impact of change in the
exchange rate for the major currencies has been eliminated by a
translation hedging program in effect through 2003.
The balance sheet continues to strengthen as debt has declined
from $417 million in prior year to $307 million resulting in a debt to
total capital ratio of 64 percent compared to 76 percent.
Additionally, in spite of a decline in net income, cash flow from
operations improved $14 million mainly due to positive changes in
working capital.
Rick Goings, Chairman and Chief Executive Officer, comments, "We
are very pleased with strong results in Europe although offset by
weakness in the US and ongoing challenges in Mexico, Korea and the
Philippines. We remain confident in our growth strategies and expect
to gain stability throughout our worldwide operations as we expand
them. In the meantime, we continue to strengthen our balance sheet by
managing working capital and increasing cash flow to pay down debt and
support the dividend at its current level."
Tupperware will conduct a conference call on Wednesday, April 23,
2003, at 10:00 am Eastern time. The conference call will be simulcast
and archived at http://www.Tupperware.com.
Segment Highlights
Europe
In Europe, the most important sales and profit area, sales were up
36 percent for the quarter. Excluding foreign currency, sales were up
11 percent driven by an increase in both sales force size and average
active sales force of four percent. Additionally, an increase of $3.1
million in business to business sales contributed to the sales
increase.
Profits increased $12.6 million including a $4.2 million positive
foreign currency impact. Excluding this, profits increased $8.4
million due to the sales increase along with reduced promotional
spending and cost reductions from the re-engineering program. The
positive momentum in Europe is expected to continue through the
remainder of the year although not at the same rate as comparisons
become more difficult.
North America
Sales were down four percent. Excluding foreign currency and
implementation of a new business model, sales declined 22 percent.
Although the Target expansion is a success, in the near-term the sales
force has been distracted from the party, which has affected both
sales and recruiting. Additionally, severe snowstorms in January and
February impacted nearly half of the sales force and resulted in lost
sales, recruiting opportunities and future party scheduling. These
factors combined with the distraction of the war in Iraq had a
significant influence on sales and sales force trends during this
quarter. Although trends in the US were improving in March, lost
recruiting and parties will affect the second quarter resulting in
sales being down but not as significant as the first quarter.
Promotional costs were increased during the quarter to drive sales
force activity and recruiting to regain momentum in the business. The
sales decline, along with this promotional investment and lower
margins on Target sales, resulted in an operating loss of $7.7
million, compared to a $3.6 million profit last year. The increased
promotional spending is expected to continue through the second
quarter.
Asia Pacific
Asia Pacific sales decreased six percent. Excluding foreign
currency, sales were down 13 percent. Profits were down $2.1 million
including $0.5 million positive impact from foreign currency.
Continuing challenges in Korea and the Philippines along with the
negative influence in this region from SARS resulted in sales, sales
force trends and profit declines. This segment is expected to improve
in the second half of 2003 due to recruiting efforts and compensation
plan changes in Korea.
Latin America
Latin America sales were down 41 percent in the first quarter.
Excluding foreign currency, sales were down 27 percent resulting in an
operating loss of $2.0 million, compared with an operating profit of
$2.7 million last year, including $0.7 million negative foreign
currency impact. These results are as planned and are due to
continuing challenges in Mexico because the sales force size is
insufficient to offset economic challenges. Trends are improving and
better results are expected in the second half of 2003.
BeautiControl North America
BeautiControl North America sales increased 17 percent due to
sales force growth of 11 percent and average active sales force growth
of nine percent compared to prior year. This is due to a leadership
development program and strong recruiting promotions. The costs of
these promotional programs resulted in operating profits nearly flat
with prior year.
Promotional investments to drive sales force size and activity
will continue at BeautiControl impacting second quarter profits,
although by the third quarter, these investments are anticipated to
result in profit improvements.
Outlook
Due to the first quarter North America shortfall, which the
company now believes is unlikely to be recovered, the full year
guidance is revised down $0.10 from core operations. This results in
full-year guidance of $1.40- $1.50 per diluted share, consisting of a
decline from core operations in the range of $0.02-$0.09, $0.06
positive impact from foreign currency and $0.13-$0.16 from anticipated
gains on land development. The second quarter is expected to be down
significantly based on trends discussed by segment.
Management Update
David Halversen has recently been appointed Group President of
Latin America and BeautiControl as Dick Heath has decided to retire.
Mr. Halversen was previously the Sr. Vice President of Business
Development and Planning and was involved in the strategic acquisition
of BeautiControl as well as expansion into new channels of access in
North America. Prior to joining Tupperware in 1995, he spent 10 years
at Avon. This experience enables him to leverage BeautiControl and the
related consumable expansion in Latin America. In addition, Jesus
Buenrostro has been appointed President of Latin America and brings
significant financial, operational and marketing experience from the
Latin America markets.
Tupperware Corporation, a $1.1 billion multinational company, is
one of the world's leading direct sellers, supplying premium food
storage, preparation and serving items to consumers in more than 100
countries through its Tupperware brand. In partnership with 1.2
million independent sales consultants worldwide, Tupperware reaches
consumers through informative and entertaining home parties; retail
access points in malls and other convenient venues including
SuperTarget and Target stores; corporate and sales force Internet web
sites; and television shopping. Additionally, premium beauty and skin
care products are brought to customers through its BeautiControl brand
in North America, Latin America and Asia Pacific. Consumers can access
the brands' web sites at http://www.tupperware.com and
http://www.beauticontrol.com.
Tupperware stock is listed on the New York Stock Exchange
(NYSE:TUP). Statements contained in this release which are not
historical fact and use predictive words such as "outlook" or "target"
are forward-looking statements. These statements involve risks and
uncertainties which include recruiting and activity of the Company's
independent sales forces, the success of new product introductions and
promotional programs, the ability to obtain all government approvals
on land development, the success of buyers in attracting tenants for
commercial developments, the effects of economic and political
conditions generally and foreign exchange risk in particular and other
risks detailed in the Company's report on Form 8-K dated April 10,
2001, as filed with the Securities and Exchange Commission.
TUPPERWARE CORPORATION
CONDENSED CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
(Dollars in millions,
except per share)
13 13
Weeks Weeks
Ended Ended Reported Restated Foreign
Mar 29, Mar 30, % % Exchange
2003 2002 Inc (Dec) Inc (Dec) Impact
-------------------------------------------
SALES
- ---------------------------
Europe $135.3 $99.8 36 % 11 % $21.7
Asia Pacific 39.0 41.4 (6) (13) 3.5
Latin America 20.5 34.5 (41) (27) (6.3)
North America(a) 55.7 58.2 (4) (5) 0.2
BeautiControl 21.0 18.0 17 17 -
-------------- --------
$271.5 $251.9 8 - $19.1
============== ========
SEGMENT PROFIT (LOSS)
- ---------------------------
Europe $29.5 $16.9 74 40 $4.2
Asia Pacific 1.1 3.2 (66) (71) 0.5
Latin America (2.0) 2.7 - - (0.7)
North America (7.7) 3.6 - - -
BeautiControl 1.4 1.6 (10) (10) -
-------------- --------
22.3 28.0 (20) (30) 4.0
-------------- ========
Unallocated expenses (5.5) (3.5) 57
Translation hedge (4.2) - -
Other income - 0.7 (b) -
Re-engineering and
impairment charges - (1.4)(c) -
Interest expense, net (4.4) (4.7) (7)
--------------
Income before taxes 8.2 19.1 (57)
Provision for income taxes 1.8 3.5 (47)
--------------
Net income $6.4 $15.6 (59)
==============
Net income per common share
(diluted) $0.11 $0.27 (59)
==============
Average number of shares 58.4 58.7
==============
(a) The new business model that started in 2001 is being phased
into North America and is expected to be completed by the end of 2003.
This model results in a higher company sales price that includes the
margin that was previously realized by the distributors who are now
compensated with a commission. This represents an increase in the
selling price of $12.0 million in 2003 and $2.4 million in 2002.
(b) Other income of $0.7 million pretax ($0.5 million after tax)
represents the amount received as compensation for land to be used for
a road.
(c) The re-engineering and impairment charge line item, $1.4
million pretax ($1.1 million after tax), included costs for severance
primarily due to the restructuring of administrative functions mainly
in Europe and BeautiControl. It also included costs of approximately
$0.4 million associated with the maintenance of previously unused
facilities in Europe and North America.
TUPPERWARE CORPORATION
CONSOLIDATED STATEMENT OF INCOME
(UNAUDITED)
13 Weeks Ended
Mar 29, Mar 30,
(In millions, except per share data) 2003 2002
------- -------
Sales and other income:
Net Sales(a) $271.5 $251.9
Other Income - 0.7 (b)
Interest Income 0.6 0.5
------- -------
Total sales and other income $272.1 $253.1
Costs and expenses :
Cost of products sold 89.3 79.8
Delivery, sales and administrative expense 164.8 147.2
Interest expense 5.0 5.2
Re-engineering and impairment charges - 1.4 (c)
Other expense 4.8 0.4
------- -------
Total costs and expenses 263.9 234.0
------- -------
Income before income taxes 8.2 19.1
Provision for income taxes 1.8 3.5
------- -------
Net income $6.4 $15.6
======= =======
Net income per common share:
Basic $0.11 $0.27
======= =======
Diluted $0.11 $0.27
======= =======
(a) The new business model that started in 2001 is being phased
into North America and is expected to be completed by the end of 2003.
This model results in a higher company sales price that includes the
margin that was previously realized by the distributors who are now
compensated with a commission. This represents an increase in the
selling price of $12.0 million in 2003 and $2.4 million in 2002.
(b) Other income of $0.7 million pretax ($0.5 million after tax)
represents the amount received as compensation for land to be used for
a road.
(c) The re-engineering and impairment charge line item, $1.4
million pretax ($1.1 million after tax), included costs for severance
primarily due to the restructuring of administrative functions mainly
in Europe and BeautiControl. It also included costs of approximately
$0.4 million associated with the maintenance of previously unused
facilities in Europe and North America.
TUPPERWARE CORPORATION
CONSOLIDATED BALANCE SHEET
ASSETS
(UNAUDITED)
Mar. 29, Dec. 28,
(In millions) 2003 2002
---------- ------------
Cash and cash equivalents $ 19.9 $ 32.6
Accounts receivable 136.6 139.8
Less allowances for doubtful accounts (33.1) (36.6)
------------ ------------
103.5 103.2
Inventories 154.9 148.2
Deferred income tax benefits 43.8 44.1
Prepaid expenses and other assets 34.3 32.0
------------ ------------
Total current assets 356.3 360.1
------------ ------------
Deferred income tax benefits 125.0 124.8
Property, plant and equipment 988.4 981.1
Less accumulated depreciation (765.9) (752.2)
------------ ------------
222.5 228.9
Long-term receivables, net of allowance of
$14.0 million at March 29, 2003 and
$12.4 million at December 28, 2002 40.9 39.6
Goodwill, net of accumulated amortization of
$1.6 million at March 29, 2003 and
December 28, 2002 56.2 56.2
Other assets 25.7 21.0
------------ ------------
Total assets $ 826.7 $ 830.6
============ ============
TUPPERWARE CORPORATION
CONSOLIDATED BALANCE SHEET
LIABILITIES AND SHAREHOLDERS' EQUITY
(UNAUDITED)
Mar. 29, Dec. 28,
(Dollars in millions, except per share 2003 2002
amounts)
------------ ------------
Accounts payable $ 66.2 $ 89.3
Short-term borrowings and current
portion of long-term debt 42.2 21.2
Accrued liabilities 175.4 172.5
------------ ------------
Total current liabilities 283.8 283.0
------------ ------------
Long-term debt 264.5 265.1
Accrued post-retirement benefit cost 36.2 35.7
Other liabilities 69.7 69.3
Commitments and contingencies
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 22.8 22.8
Subscription receivable (21.3) (21.2)
Retained earnings 528.9 535.3
Treasury Stock, 4,003,179 shares at
March 29, 2003 and 4,006,381 shares at
December 28, 2002 at cost (110.1) (110.2)
Unearned portion of restricted stock
issued
for future service (0.1) (0.1)
Accumulated other comprehensive loss (248.3) (249.7)
------------ ------------
Total shareholders' equity 172.5 177.5
------------ ------------
Total liabilities and shareholders' equity $ 826.7 $ 830.6
============ ============
TUPPERWARE CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
13 weeks ended
March March
29, 30,
(In millions) 2003 2002
------ ------
OPERATING ACTIVITIES
Net income $6.4 $15.6
Adjustments to reconcile net income to net
cash used in operating activities:
Depreciation and amortization 13.5 11.6
Loss (gain) on sale of assets 0.2 (0.4)
Changes in assets and liabilities:
Decrease in accounts receivable 0.2 8.7
Increase in inventories (5.8) (14.6)
Decrease in accounts payable and
accrued liabilities (13.9) (41.9)
Decrease in income taxes payable (8.8) (0.2)
Increase in net deferred income taxes 0.5 0.5
Other, net (5.0) (6.3)
------ ------
Net cash used in operating activities (12.7) (27.0)
------ ------
INVESTING ACTIVITIES
Capital expenditures (7.4) (8.1)
Proceeds from disposal of property, plant & equipment 0.2 0.9
------ ------
Net cash used in investing activities (7.2) (7.2)
------ ------
FINANCING ACTIVITIES
Dividend payments to shareholders (12.8) (12.8)
Proceeds from exercise of stock options - 0.6
Purchase of treasury stock
Net increase in short-term debt 20.7 51.2
------ ------
Net cash provided by financing activities 7.9 39.0
------ ------
Effect of exchange rate changes on cash and
cash equivalents (0.7) 0.1
------ ------
Net (decrease) increase in cash and cash equivalents (12.7) 4.9
Cash and cash equivalents at beginning of period 32.6 18.4
------ ------
Cash and cash equivalents at end of period $19.9 $23.3
====== ======
TUPPERWARE CORPORATION
SUPPLEMENTAL INFORMATION - First Quarter Ended March 2003
Sales Force Statistics:(i)
Segment DIST. % AVG. % TOTAL %
CHG. ACTIVE CHG. CHG.
- -------------------------------------------------------------------
Europe 697 3 62,899 4 201,820 4
Asia Pacific 686 9 37,321 (26) 453,367 (12)
Latin America 208 (25) 60,117 (21) 308,022 (18)
North America 358 5 20,432 (12) 128,962 (2)
------ -------- ----------
Tupperware 1,949 1 180,769 (14) 1,092,171 (10)
BeautiControl N.A. n/a n/a 22,786 9 57,905 11
------ -------- ----------
Total 1,949 1 203,555 (12) 1,150,076 (9)
====== ======== ==========
(i) As collected by the Company and provided by distributors
UNAUDITED SELECTED FINANCIAL DATA FIRST QUARTER 2003
($ - millions except per share data)
Cash $19.9 Total Debt to Capital Ratio 64.0%
Net Current Receivables 103.5 Equity $172.5
Net Inventory 154.9 Capital Expenditures 7.4
Short-Term Debt 42.2 Depreciation and Amortization 13.5
Long-Term Debt 264.5 Free Cash Flow Per Share (0.34)
CONTACT: Tupperware Corporation World Headquarters, Orlando
Jane Garrard, 407/826-4522