-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, FNBb7c2xhrNHmFz6XaK7CWe487RMl5okO/bVpc6ADRAoSkibkq7yxUaoVHz9sWFF pb4f0i1y4Atjb19U3ZSpvQ== 0001008654-97-000006.txt : 19970326 0001008654-97-000006.hdr.sgml : 19970326 ACCESSION NUMBER: 0001008654-97-000006 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 9 CONFORMED PERIOD OF REPORT: 19961228 FILED AS OF DATE: 19970325 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: TUPPERWARE CORP CENTRAL INDEX KEY: 0001008654 STANDARD INDUSTRIAL CLASSIFICATION: PLASTICS PRODUCTS, NEC [3089] IRS NUMBER: 364062333 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: 10-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-11657 FILM NUMBER: 97562650 BUSINESS ADDRESS: STREET 1: 14901 S ORANGE BLOSSOM TRAIL CITY: ORLANDO STATE: FL ZIP: 32802 BUSINESS PHONE: 4078265050 MAIL ADDRESS: STREET 1: 14901 S ORANGE BLOSSOM TRAIL CITY: ORLANDO STATE: FL ZIP: 32802 10-K 1 LIVE FILING OF 10K SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) X Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [Fee Required] For the fiscal year ended December 28, 1996 OR Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 [No Fee Required] For the Transition period from to Commission file number 1-11657 TUPPERWARE CORPORATION (Exact name of registrant as specified in its charter) Delaware 36-4062333 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 14901 South Orange Blossom Trail, Orlando, Florida 32837 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code:(407)826-5050 Securities registered pursuant to Section 12(b) of the Act: Name of Each Exchange Title of Each Class on Which Registered Common Stock, $0.01 par value New York Stock Exchange Preferred Stock Purchase Rights New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No . Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Aggregate market value of the Registrant's voting stock held by non-affiliates, based upon the closing price of said stock on the New York Stock Exchange-Composite Transaction Listing on March 10, 1997 was $38.875 per share: $2,370,658,689 As of March 10, 1997, 61,986,719 shares of the Common Stock, $0.01 par value, of the Registrant were outstanding. Documents Incorporated by Reference: Portions of the Annual Report to Shareholders for the year ended December 28, 1996 are incorporated by reference into Parts I, II and IV of this Report. Portions of the Proxy Statement relating to the Annual Meeting of Shareholders to be held May 5, 1997 are incorporated by reference into Part III of this Report. PART I Item 1. Business (a) General Development of Business Tupperware Corporation (the "Registrant" or "Tupperware") is a multinational consumer products company. The Registrant is a Delaware corporation which was organized on February 8, 1996 in connection with the corporate reorganization of Premark International, Inc. ("Premark"). In the reorganization, the businesses of the Registrant and certain other assets and liabilities of Premark and its subsidiaries were transferred to the Registrant. On May 31, 1996 the Registrant became a publicly-held company through the pro-rata distribution by Premark to its shareholders of all of the outstanding shares of common stock of the Registrant. BUSINESS OF TUPPERWARE CORPORATION Tupperware is a worldwide direct selling consumer products company engaged in the manufacture and sale of Tupperware products. Principal Products. Tupperware conducts its business through a single business segment, manufacturing and marketing a broad line of high-quality consumer products for the home and for personal care. The core of Tupperware's product line consists of food storage containers which preserve freshness through the well-known Tupperware seals. Tupperware also has an established line of children's educational toys, serving products and gifts. The line of products has expanded over the years into kitchen, home storage and organizing uses with products such as Modular Mates* containers, Fridge Stackables* containers, OneTouch* canisters and many specialized containers. In recent years, Tupperware has expanded its offerings in the food preparation and service areas through the addition of a number of products, including double colanders, tumblers and mugs, mixing and serving bowls, serving centers, microwaveable cooking and serving products, and kitchen utensils. Tupperware continues to introduce new designs and colors in its product lines, and to extend existing products into new markets around the world. The development of new products varies in different markets around the world in order to address differences in cultures, lifestyles, tastes and needs of the markets. New products introduced in 1996 included the Rock N' Serve* line, Meals in Minute* line, Family-Size Microsteamer, Crystal Wave* Soup Mug, Legacy Serving Line and TupperMagic* line. New product development and introduction will continue to be an important part of Tupperware's strategy. Products sold by Tupperware are primarily produced by Tupperware in its manufacturing facilities around the world. In some markets, Tupperware sources certain products from third parties and/or contracts with local manufacturers to manufacture its products, utilizing high-quality molds which are generally supplied by Tupperware. Promotional items provided at product demonstrations include items obtained from outside sources. (Words followed by * are Trademarks of the Registrant). Markets. Tupperware's business is operated on the basis of three geographic segments: Europe, Africa and the Middle East; the Americas; and Asia Pacific. Tupperware has operations in more than 60 countries and its products are sold in more than 100 foreign countries and in the United States. For the past five fiscal years, sales in foreign countries represented, on average, 83 percent of total Tupperware revenues. During 1996, Tupperware entered several new international markets, including China, Central European countries, several Middle Eastern countries, and India. Market penetration varies throughout the world. Several "developing" areas which have low penetration, such as Latin America, Asia and Eastern (Central) Europe, provide significant growth potential for Tupperware. Tupperware's strategy continues to include aggressive expansion into new markets throughout the world. Distribution of Tupperware Products. Tupperware's products are distributed worldwide through the "direct selling" method of distribution, in which products are sold to consumers outside traditional retail store channels. The distributorship system is intended to facilitate the timely distribution of products to the consumer, and to establish uniform practices regarding the use of Tupperware trademarks and the administrative arrangements with Tupperware, such as order entering and delivering, paying and recruiting, and training of dealers. Tupperware products are sold directly to distributors or dealers throughout the world. Distributors are granted the right to market Tupperware products using the demonstration method and utilizing the Tupperware trademark. The vast majority of Tupperware's distributorship system is composed of distributors, managers and dealers (known in the United States as consultants) who are independent contractors and not employees of Tupperware. In certain limited circumstances Tupperware owns the distributorship for a period of time, until an independent distributor can be installed, in order to maintain market presence. In addition to the introduction of new products and development of new geographic markets, a key element of Tupperware's strategy is expanding its business by enlarging the number of distributors and consultants. Under the Tupperware system, distributors recruit, train and motivate a large sales force to cover the distributor's geographic area. Managers are developed and promoted by distributors to assist the distributor in recruiting, training and motivating dealers, as well as continuing to hold their own demonstrations. As of December 28, 1996, the Tupperware distribution system had over 1,800 distributors, over 52,000 managers and over 966,000 consultants worldwide. The consultant force continues to increase each year. Tupperware relies primarily on the "demonstration" method of sales, which is designed to enable the purchaser to appreciate through demonstration the features and benefits of Tupperware products. Demonstrations, which are sometimes referred to as "Tupperware parties," are held in homes, offices, social clubs and other locations. In excess of 16.8 million demonstrations were held in 1996 worldwide. Tupperware products are also promoted through monthly brochures mailed to persons invited to attend Tupperware parties and various other types of demonstrations. Sales of Tupperware products are supported by Tupperware through a program of sales promotions, sales and training aids and motivational conferences for the independent salesforce. In addition, to support its salesforce, Tupperware utilizes catalogs, magazine advertising and toll-free telephone ordering, which helps increase its sales levels with hard-to-reach customers. The distribution of products to consumers is primarily the responsibility of distributors, who often maintain their own inventory of Tupperware products, the necessary warehouse facilities and delivery systems. In certain markets, Tupperware offers distributors the use of a delivery system of direct product shipment to consumers or dealers, which is intended to reduce the distributor's investment in inventory and enable distributors to be more cost-efficient. Competition. There are two primary competitive factors which affect Tupperware's business: (i) competition with other "direct sales" companies for sales personnel and demonstration dates; and (ii) competition in the markets for food storage and serving containers, toys, personal care items, and gifts in general. Tupperware believes that it holds a significant market share in each of these markets in many countries. This has been facilitated by innovative product development and a large, dedicated worldwide salesforce. Tupperware's competitive strategies are to continue to expand its direct selling distribution system, and to provide high-quality, high-value products throughout the world. Employees. Tupperware employs approximately 7,000 people, of whom approximately 1,000 are based in the United States. Tupperware's United States work force is not unionized. In certain countries, Tupperware's work force is covered by collective arrangements decreed by statute. The terms of most of these arrangements are determined on an annual basis. Additionally, approximately 138 Tupperware manufacturing employees in the Australian mold manufacturing operation are covered by a collective bargaining agreement which is negotiated annually. There have been no work stoppages or threatened work stoppages in over three years and Tupperware believes its relations with its employees to be good. The independent consultants, dealers, managers and distributors engaged in the direct sale of Tupperware products are not employees of Tupperware. Research and Development. For fiscal years ended 1996, 1995 and 1994, Tupperware incurred expenses of approximately $7.2 million, $6.3 million and $8.9 million, respectively, on research and development activities for new products. Raw Materials. Products manufactured by Tupperware require plastic resins meeting its specifications. These resins are purchased through various arrangements with a number of large chemical companies located throughout Tupperware's markets. As a result, Tupperware has not experienced difficulties in obtaining adequate supplies and generally has been successful in mitigating the effects of increases in resin market prices. Research and development relating to resins used in Tupperware products is performed by both Tupperware and its suppliers. Trademarks and Patents. Tupperware considers its trademarks and patents to be of material importance to its business; however, except for the Tupperware trademark, Tupperware is not dependent upon any single patent or trademark, or group of patents or trademarks. The trademark on the Tupperware name is registered on a country by country basis. The current duration for such registration ranges from seven years to fifteen years; however, each such registration may be renewed an unlimited number of times. The patents and trademarks used in Tupperware's business are registered and maintained on a worldwide basis, with a variety of durations. Tupperware has followed the practice of applying for design and utility patents with respect to most of the significant patentable developments. Environmental Laws. Compliance with federal, state and local environmental protection laws has not in the past had, and is not expected to have in the future, a material effect upon Tupperware's capital expenditures, liquidity, earnings or competitive position. Other. Tupperware sales do not vary significantly on a quarterly basis; however, third quarter sales are generally lower than the other quarters in any year due to vacations by Tupperware's sales consultants and their customers as well as Tupperware's reduced promotional activities during such quarter. Sales generally increase in the fourth quarter as it includes traditional gift giving occasions in many of Tupperware's markets and as children return to school and households refocus on activities that include the use of Tupperware's products. There are no working capital practices or backlog conditions which are material to an understanding of Tupperware's business. Tupperware's business is not dependent on a small number of customers, nor is any of its business subject to renegotiation of profits or termination of contracts or subcontracts at the election of the United States government. Executive Officers of the Registrant. Following is a list of the names and ages of all the Executive Officers of the Registrant, indicating all positions and offices with the Registrant held by each such person, and each such person's principal occupations or employment during the past five years. Each such person has been elected to serve until the next annual election of officers of the Registrant (expected to occur on May 5, 1997). Executive Officers of the Company. Name and Age Office and Experience Warren L. Batts, age 64 Chairman and Chief Executive Officer. Mr. Batts has served in such capacity since 1996 after serving as Chairman and Chief Executive Officer of Premark from 1986 to 1996. Mr. Batts continues to serve as Chairman of Premark. Brian R. Biggin, age 51 Vice President, Internal Audit since March 1996. Mr. Biggin previously served as Director, Computer Systems Audit, for Premark since 1986. Mark H. Bobek, age 35 Vice President and Treasurer since March 1996. Mr. Bobek previously served as Director of International and Corporate Finance since 1994 and served in various other financial positions with Premark since 1989. Luis G. Campos, age 44 President, Tupperware Americas. Mr. Campos has held such position since November, 1995. From April 1994 to November 1995, he served as President Tupperware IberoAmerica. Mr. Campos served as President and Chief Executive Officer of Sara Lee-House of Fuller-Mexico from 1992 to April 1994. From 1985 to 1992 he served as Managing Director of Hasbro Auriken Mexico. Gerald Crompton, age 53 Vice President, Product Marketing Worldwide since November 1996. Prior thereto, Mr. Crompton served as Vice President, Product Management for Tupperware Europe, Africa and Middle East since 1992 and Director of Product Management for the same Area since 1991. E.V. Goings, age 51 President and Chief Operating Officer since 1996. It is anticipated that upon Mr. Batts' retirement from the position of Chief Executive Officer of Tupperware, Mr. Goings will be elected to such position. Mr. Goings served as Executive Vice President of Premark and President of Tupperware Worldwide from November 1992 to 1996. From June 1992 to November 1992, Mr. Goings served as Senior Vice President of Sara Lee Corporation. From 1986 to June 1992, Mr. Goings served in various executive positions with Avon Products, Inc. David T. Halversen, age 52 Senior Vice President, Business Development and Communications since November, 1996. Prior thereto, he served as Senior Vice President, Planning, Business Development and Financial Relations since May 1996. He previously served as Vice President, Business Development and Planning since February, 1995. From April 1985 until February 1995. Mr. Halverson served in various planning and strategy positions with Avon Products, Inc. Christine J. Hanneman, Vice President, Financial Relations age 41 since March 1996. Ms. Hanneman served as Director, Investor Relations for Premark from June 1994 until joining Tupperware. From February 1990 to June 1994 she served as Manager Investor Relations of Premark. Carol A. Kiryluk, age 50 Senior Vice President, Human Resources since March 1996. From March 1992 until March 1996, Ms. Kiryluk served as Vice President, Human Resources Worldwide for Tupperware. From November 1989 until joining Tupperware in 1992, Ms. Kiryluk served as Vice President, Human Resources, Corporate Relations for JI Case. Gaylin L. Olson, age 51 Senior Vice President, Emerging Markets, Tupperware Worldwide. Mr. Olson has served in various executive positions for Tupperware over the years, including President of Asia Pacific and most recently President of U.S. Operations. Thomas P. O'Neill, Jr. Senior Vice President and Chief Financial age 43 Officer. Prior thereto, Mr. O'Neill served as Vice President and Chief Financial Officer, Tupperware Europe, Africa and Middle East since April 1994. Prior thereto, Mr. O'Neill served as Vice President and Treasurer of Premark from February 1992 after serving as Vice President, Auditing of Premark from April 1989. Thomas M. Roehlk, age 46 Senior Vice President, General Counsel and Secretary since December 1995. Prior thereto Mr. Roehlk served as Assistant General Counsel and Assistant Secretary of Premark. James E. Rose, Jr., age 54 Senior Vice President Taxes and Governmental Affairs. Mr. Rose served as Vice President, Tax and Government Affairs since March 1996. From 1994 to March 1996, Mr. Rose served as Vice President, Taxes and Government Affairs for Premark. Prior thereto Mr. Rose served as Vice President, Taxes for Premark. Hans Joachim Schwenzer, Senior Vice President, Tupperware age 60 Worldwide. Mr. Schwenzer is currently President, Tupperware Germany; President, Sales Programs and Promotions, Tupperware Europe, Africa and Middle East; and Regional General Manager, Austria and Eastern Europe Region and has been since May 1995, Senior Vice President, Tupperware Worldwide. Prior to assuming those positions, Mr. Schwenzer served starting in November 1990 as President, Tupperware Germany, and has held several other area positions since joining Tupperware. Christian E. Skroeder, President, Tupperware Europe, age 48 Africa and Middle East since May 1995. Prior thereto, Mr. Skroeder served in various executive positions with Tupperware. William E. Spears, Jr., President, Tupperware U.S. since age 51 February 1997. Prior thereto, Mr. Spears served as Executive Vice President and Chief Operating Officer of Nature's Sunshine Products, Inc. From 1972 to 1994, Mr. Spears served in various managerial positions with Avon Products, Inc. Jose R. Timmerman, age 48 Vice President, Operations, Tupperware Worldwide. From October 1993, Mr. Timmerman has been Vice President, Operations, Tupperware Worldwide. Prior to assuming that position, Mr. Timmerman served as Vice President, Manufacturing, Tupperware Asia Pacific starting in November 1992. From 1985 to 1992, he served as Plant Manager of the Tupperware manufacturing plant in Aalst, Belgium. Paul B. Van Sickle, age 57 Executive Vice President since March 1997. Prior thereto, Mr. Van Sickle served as Senior Vice President, Finance and Operations. Prior to assuming that position, he served as Vice President, Finance of Tupperware. Robert W. Williams, age 53 President, Tupperware Asia Pacific. From April 1995, Mr. Williams has been President, Tupperware Asia Pacific. Prior to assuming that position, Mr. Williams served in various management positions in Tupperware Asia Pacific starting in August 1993. From 1991 until joining Tupperware, Mr. Williams served as Vice President, Marketing for Cameo Coutures, Inc. From 1989 to 1991, he served as President of Impact Business Systems. Item 2. Properties The principal executive office of the Registrant is owned by the Registrant and located in Orlando, Florida. The Registrant owns and maintains manufacturing plants in Argentina, Belgium, Brazil, France, Greece, Japan, Korea, Mexico, the Philippines, Portugal, South Africa, Spain and the United States, and leases manufacturing facilities in Venezuela and China. Tupperware conducts a continuing program of new product design and development at its facilities in Florida, Japan and Belgium. None of the owned principal properties is subject to any encumbrance material to the consolidated operations of the Registrant. The Registrant considers the condition and extent of utilization of its plants, warehouses and other properties to be good, the capacity of its plants and warehouses generally to be adequate for its needs, and the nature of the properties to be suitable for its needs. Item 3. Legal Proceedings A number of ordinary course legal and administrative proceedings against Tupperware are pending. In addition to such proceedings, there are certain proceedings which involve the discharge of materials into or otherwise relating to the protection of the environment. Certain of such proceedings involve federal environmental laws such as the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as well as state and local laws. Tupperware establishes reserves with respect to certain of such proceedings. Because of the involvement of other parties and the uncertainty of potential environmental impacts, the eventual outcomes of such actions and the cost and timing of expenditures cannot be estimated with certainty. It is not expected that the outcome of such proceedings, either individually or in the aggregate, will have a materially adverse effect upon Tupperware. As part of the 1986 reorganization involving the formation of Premark, Premark was spun-off by Dart & Kraft, Inc. and Kraft, Inc. assumed any liabilities arising out of any legal proceedings in connection with certain divested or discontinued former businesses of Dart Industries Inc., a subsidiary of Tupperware, including matters alleging product liability, environmental liability and infringement of patents. The assumption of liabilities by Kraft, Inc. remains effective subsequent to the spin-off of Registrant. Item 4. Submission of Matters to a Vote of Security Holders None. PART II Item 5. Market for Registrant's Common Equity and Related Stockholder Matters The stock price information set forth in Note 12 ("Quarterly Financial Summary (unaudited)") appearing on page 34 of the Annual Report to Shareholders for the year ended December 28, 1996 is incorporated by reference into this Report. The information set forth in Note 13 ("Rights Agreement") on page 34 of the Annual Report to Shareholders for the year ended December 28, 1996 is incorporated by reference into this Report. As of March 10, 1997 the Registrant had 21,190 shareholders of record. Item 6. Selected Financial Data The information set forth under the caption "Selected Financial Data" on pages 14 and 15 of the Annual Report to Shareholders for the year ended December 28, 1996 is incorporated by reference into this Report. Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations The information entitled "Management's Discussion and Analysis" set forth on pages 16 through 20 of the Annual Report to Shareholders for the year ended December 28, 1996 is incorporated by reference into this Report. Item 8. Financial Statements and Supplementary Data (a) The following Consolidated Financial Statements of Tupperware Corporation and Report of Independent Accountants set forth on pages 21 through 34, and on page 35 respectively, of the Annual Report to Shareholders for the year ended December 28, 1996 are incorporated by reference into this Report: Consolidated Statement of Income, Cash Flows and Shareholders' Equity--Years ended December 28, 1996, December 30, 1995 and December 31, 1994. Consolidated Balance Sheet--December 28, 1996 and December 30, 1995. Notes to the Consolidated Financial Statements; and Report of Independent Accountants dated February 14, 1997. (b) The supplementary data regarding quarterly results of operations contained in Note 12 ("Quarterly Financial Summary (Unaudited)") of the Notes to the Consolidated Financial Statements of Tupperware Corporation on page 34 of the Annual Report to Shareholders for the year ended December 28, 1996 is incorporated by reference into this Report. Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None PART III Item 10. Directors and Executive Officers of the Registrant The information as to the Directors of the Registrant set forth under the sub-caption "Board of Directors" appearing under the caption "Election of Directors" on pages 1 through 3 of the Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 5, 1997 is incorporated by reference into this Report. The information as to the Executive Officers of the Registrant is included in Part I hereof under the caption "Executive Officers of the Registrant" in reliance upon General Instruction G to Form 10-K and Instruction 3 to Item 401(b) of Regulation S-K. Item 11. Executive Compensation The information set forth under the caption "Compensation of Directors" on page 14 of the Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 5, 1997 and the information on pages 10 through 15 of such Proxy Statement relating to executive officers' compensation is incorporated by reference into this Report. Item 12. Security Ownership of Certain Beneficial Owners and Management The information set forth under the captions "Security Ownership of Certain Beneficial Owners" on page 5 and "Security Ownership of Management" on page 4 of the Proxy Statement relating to the Annual Meeting of Shareholders to be held on May 5, 1997 is incorporated by reference into this Report. Item 13. Certain Relationships and Related Transactions None PART IV Item 14. Exhibits, Financial Statement Schedules and Reports On Form 8-K (a) (1) List of Financial Statements The following Consolidated Financial Statements of Tupperware Corporation and Report of Independent Accountants set forth on pages 21 through 34, and on page 35, respectively, of the Annual Report to Shareholders for the year ended December 28, 1996 are incorporated by reference into this Report by Item 8 hereof: Consolidated Statements of Income, Cash Flows and Shareholders' Equity--Years ended December 28, 1996, December 30, 1995 and December 31, 1994. Consolidated Balance Sheet--December 28, 1996 and December 30, 1995. Notes to the Consolidated Financial Statements; and Report of Independent Accountants dated February 14, 1997. (a) (2) List of Financial Statement Schedules The following consolidated financial statement schedule (numbered in accordance with Regulation S-X) of Tupperware Corporation is included in this Report: Report of Independent Accountants on Financial Statement Schedule, page 21 of this Report; and Schedule II--Valuation and Qualifying Accounts for the three years ended December 28, 1996, page 22 of this Report. All other schedules for which provision is made in the applicable accounting regulations of the Securities and Exchange Commission are not required under the related instructions, are inapplicable, or the information called for therein is included elsewhere in the financial statements or related notes contained or incorporated by reference herein. (a) (3) List of Exhibits: (numbered in accordance with Item 601 of Regulation S-K) Exhibit Number Description *1 Underwriting Agreement (Attached to Form S-3 Registration Statement as Exhibit 1 and incorporated herein by reference). *2 Distribution Agreement by and among Premark International, Inc., Tupperware Corporation and Dart Industries Inc. Attached as Exhibit 2 to Tupperware Corporation's Registration Statement on Form 10 (No. 1-11657) filed with the Commission on March 4, 1996 and incorporated herein by reference). *3.1 Amended and Restated Certificate of Incorporation of Tupperware Corporation (Attached as Exhibit 3.1 to Form 10 and incorporated herein by reference.) *3.2 Amended and Restated By-laws of Tupperware Corporation (Attached as Exhibit 3.2 to Form 10 and incorporated herein by reference.) *4.1 Rights Agreement, by and between Tupperware Corporation and the rights agent named therein (Attached as Exhibit 4 to Form 10 and incorporated herein by reference.) *4.2 Indenture dated as of October 1, 1996, among Tupperware and The First National Bank of Chicago, as Trustee, (Attached as Exhibit 4(a) to Tupperware Corporation's Registration Statement on Form S-3 (No. 3-12125) filed with the Commission on September 25, 1996 and incorporated herein by reference.) *4.3 Form of Debt Securities. (Attached as Exhibit 4(b) to Tupperware Corporation's Registration Statement on Form S-3 (No. 3-12125) filed with the Commission on September 25, 1996 and incorporated herein by reference.) *4.4 Form of Warrant Agreement, including form of Warrant Certificate (Attached as Exhibit 4(a) to Tupperware Corporation's Registration Statement on Form S-3 (No. 3-12125) filed with the Commission on September 25, 1996 and incorporated herein by reference.) *10.1 Tupperware Corporation 1996 Incentive Plan (Attached to Information Statement as Annex C and incorporated herein by reference.) *10.2 Tupperware Corporation Directors Stock Plan (Attached to Information Statement as Annex D and incorporated herein by reference.) *10.3 Tax Sharing Agreement between Tupperware Corporation and Premark International, Inc. (Attached as Exhibit 10.3 to Form 10 and incorporated herein by reference.) *10.4 Employee Benefits and Compensation Allocation Agreement between Tupperware Corporation and Premark International, Inc. (Attached as Exhibit 10.4 to Form 10 and incorporated herein by reference.) *10.5 Form of Change of Control Agreement (Attached as Exhibit 10.5 to Form 10 and incorporated herein by reference.) *10.6 Employment Agreement for Mr. Goings. (Attached as Exhibit 10.6 to Form 10 and incorporated herein by reference.) *10.7 Employment Agreement for Mr. Campos. (Attached as Exhibit 10.7 to Form 10 and incorporated herein by reference.) 10.8 Employment Agreement for Mr. Schwenzer. *10.9 Credit Agreement (Attached to Tupperware Corporation's Registration Statement Form 10 as Exhibit 10.8 and incorporated herein by reference.) 10.10 Form of Franchise Agreement between a subsidiary of the Registrant and distributors of Tupperware products in the United States. 11 Statement of Computation of Per Share Earnings. 13 Pages 14 through 35 of the Annual Report to Shareholders of the Registrant for the year ended December 28, 1996. 21 Subsidiaries of Tupperware Corporation as of March 10, 1997. 23 Manually signed Consent of Independent Accountants to the incorporation of their report by reference into the prospectus contained in specified registration statements on Form S-8 and Form S-3. 24 Powers of Attorney 27 Financial Data Schedule * Document has heretofore been filed with the Commission and is incorporated by reference and made a part hereof. The Registrant agrees to furnish, upon request of the Commission, a copy of all constituent instruments defining the rights of holders of long-term debt of the Registrant and its consolidated subsidiaries. (b) Reports on Form 8-K During the quarter ended December 28, 1996, the Registrant did not file any reports on Form 8-K. REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS ON FINANCIAL STATEMENT SCHEDULE To the Board of Directors and Shareholders of Tupperware Corporation. Our audits of the consolidated financial statements referred to in our report dated February 14, 1997 appearing on page 35 of the 1996 Annual Report to Shareholders of Tupperware Corporation (which report and consolidated financial statements are incorporated by reference in this Annual Report on Form 10-K) also included an audit of the Financial Statement Schedule listed in Item 14(a)(2) of this Form 10-K. In our opinion, this Financial Statement Schedule presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. Price Waterhouse LLP Orlando, Florida February 14, 1997 TUPPERWARE CORPORATION SCHEDULE II-VALUATION AND QUALIFYING ACCOUNTS FOR THE THREE YEARS ENDED DECEMBER 28, 1996 (In millions)
Col. A Col. B Col. C Col. D Col. E ------------------------ ---------- ----------- ----------- ---------- Additions ----------- Balance at Charged Charged Balance at Beginning to Costs to Other End of Description of Period Expenses Accounts Deductions of Period ----------- --------- -------- --------- ---------- ----------- Allowance for doubtful accounts, current and long term: Year ended $ 50.9 $ 20.9 -- $(3.7) $ 67.9 December 28, 1996 $(0.2) Year ended December 30, 1995 $ 48.0 $ 7.7 -- $(4.7) $ 50.9 $(0.1) Year ended $ 50.9 $ 6.1 -- $(8.4) $ 48.0 December 31, 1994 $(0.6) Valuation allowance for deferred tax assets: Year ended $25.9 $(0.1) -- -- $ 25.8 December 28, 1996 Year ended $28.7 $(2.8) -- -- $ 25.9 December 30, 1995 Year ended $52.5 $(23.8) -- -- $ 28.7 December 31, 1994 Represents write-offs less recoveries. Foreign currency translation adjustment.
SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized. Tupperware Corporation (Registrant) By______________________ Warren L. Batts Chairman of the Board and Chief Executive Officer March 24, 1997 Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the date indicated. Signature Title Warren L. Batts Chairman of the Board of Directors, Chief Executive Officer and Director (Principal Executive Officer) Paul B. Van Sickle Executive Vice President, (Principal Financial Officer) Thomas P. O'Neill, Jr. Senior Vice President and Chief Financial Officer (Principal Accounting Officer) * Director Rita Bornstein, Ph.D * Director William O. Bourke * Director Ruth M. Davis, Ph.D * Director Lloyd C. Elam, M.D. E.V. Goings President, Chief Operating Officer and Director * Director Clifford J. Grum * Director Joe R. Lee * Director Joseph E. Luecke * Director Bob Marbut * Director David R. Parker * Director Robert M. Price By: ____________________ Thomas M. Roehlk Attorney-in-fact March 24, 1997 EXHIBIT INDEX Exhibit No. Description 10.8 Employment Contract for Mr. Schwenzer 10.10 Form of Franchise Agreement 11 Statement of Computation of Per Share Earnings 13 Selected pages from Annual Report to Shareholders 21 List of Subsidiaries 23 Consent of Independent Accountants 24 Powers of Attorney 27 Financial Data Schedule EX-10.8 2 EMPLOYMENT CONTRACT Translation from the German language STATUTORY MANAGER AGREEMENT Between Hobart GmbH hereafter referred to as Company and Mr. Hans Joachim Schwenzer hereafter referred to as Statutory Manager SECTION ONE EMPLOYMENT AND DUTIES 1. Mr. Schwenzer has been working for the Company, respectively its legal predecessor, continuously since October 1, 1964. On August 16, 1978 he was appointed as Statutory Manager of the Company. Since Mr. Schwenzer has assumed also other duties within the Premark Group effective as of September 1, 1989, the Company appointed another statutory manager with the right to solely represent the Company on November 6, 1989 and changed Mr. Schwenzer's representation right insofar as he is representing the Company jointly with another statutory manager or an authorized signatory (Prokurist). 2. The Statutory Manager shall manage the business of the Company in accordance with the applicable law, this Agreement as well as the management regulation of the Company. With respect to the extent of his representation right, the guidelines of the Premark Group shall apply. SECTION TWO DURATION OF THE AGREEMENT 1. The Statutory Manager Agreement is concluded for an indefinite period of time. In case of a termination, both parties shall observe the notice period applicable for the termination of an employee by the employer. A termination is only possible effective as of the expiration of a calendar quarter. 2. In order to be valid, the notice of termination must be in writing. 3. The Statutory Manager Agreement will terminate at the latest, without notice of termination, at the end of that calendar month in which the Statutory Manager completes his 65th year of life. 4. The shareholder assembly has the right to release the Statutory Manager from his duties for the period between the date on which notice of termination was given and the effective date of termination continuing payment of his salary and taking into account possible vacation claims. 5. The appointment of the Statutory Manager can be revoked at any time by passing of a resolution of the shareholder assembly, irrespective of the Statutory Manager's right for compensation resulting from this Agreement. The revocation shall be deemed to be a notice of termination of the Agreement effective as of the next permissible date. SECTION THREE ADDITIONAL ACTIVITIES 1. The Statutory Manager undertakes not to work for any other company outside the Premark Group at the same time. The taking over of another gainful employment is only possible with the prior express written approval of the shareholder assembly. The same shall apply for the assumption of activities at supervisory boards or the like. 2. The Statutory Manager requires the prior written approval of the shareholder assembly for speeches and the publishing of any written material insofar as the same affect the interests of the Company. 3. The acceptance of any public or private honorary positions has to be notified to the Company immediately. SECTION FOUR REPORTING Reporting is subject to the respective guidelines of the Premark Group. SECTION FIVE CONFIDENTIALITY 1. The Statutory Manager undertakes to keep confidential vis a vis third parties any information, in particular business and company secrets, etc., coming to his knowledge within his employment during the term of his employment, both during as well as after termination of his employment contract. 2. Upon leaving the Company, the Statutory Manager is obligated to return to the Company all documents in his possession which are related to his employment. The Statutory Manager does not have a right to retain such documents. SECTION SIX REMUNERATION 1. The Statutory Manager shall receive a gross annual remuneration of DM 150,000, payable in 13 equal monthly instalments at the end of month, the 13th instalment together with the remuneration for the month of November. Furthermore, the Statutory Manager shall receive a vacation bonus according to the regulations applicable in the Company. 2. The annual gross remuneration includes overtime work and work on Sundays and public holidays. SECTION SEVEN REMUNERATION IN CASE OF ILLNESS In case of a temporary incapacity to work caused by illness or any other reason which is beyond the control of the Statutory Manager, the Statutory Manager is entitled to receive remuneration pursuant to Section Six for the duration of the incapacity to work a continuous period of six months. SECTION EIGHT INSURANCE The Company shall insure the Statutory Manager for the case of accident according to the insurance contracts presently existing. SECTION NINE OLD AGE PENSION The Statutory Manager is a member of the pension scheme of the Company. Further remunerations received by the Statutory Manager from other companies of the Premark Group shall be added in order to evaluate the benefits and contributions. The parties will conclude a separate agreement regarding such details if this should legally be necessary. SECTION TEN VACATION The Statutory Manager shall be entitled to an annual vacation of thirty working days (excluding Saturdays). The dates of vacation have to be coordinated with the other statutory managers. SECTION ELEVEN COMPANY CAR The Company shall provide to the Statutory Manager a company car of the category Mercedes S. The Statutory Manager shall be entitled to use the company car also for private purposes. Costs connected therewith shall be borne by the Company. Payroll tax arising therefrom shall be borne by the Company. After termination by the Company or the Statutory Manager, the Company shall be authorized to request the return of the company car at any time without arising any claims therefrom of the Statutory Manager against the Company. A right of retention of the company car shall not be due to the Statutory Manager. SECTION TWELVE REIMBURSEMENTS Expenses shall be reimbursed in accordance with the guidelines of the Company. SECTION THIRTEEN COMPENSATION In case the Statutory Manager Agreement is terminated by the Company, the Statutory Manager shall receive a compensation for the loss of his job in the amount of one and a half annual gross remuneration. This shall not apply in case of a termination because of important reason. SECTION FOURTEEN FINAL PROVISIONS 1. Changes of and amendments to this Agreement require written form to be valid. No oral side agreements are existing. 2. The Statutory Manager Agreement shall come into force on September 1, 1989. It shall replace all agreements and promises concluded between the parties up to now. Frankfurt am Main, December 1, 1989 (Signature) (Signature) Hobart GmbH Hans Joachim Schwenzer represented by its sole shareholder Dart Industries Inc. EX-10.10 3 FRANCHISE AGREEMENT TUPPERWARE U.S., INC. FRANCHISE AGREEMENT FRANCHISEE DATE OF AGREEMENT TABLE OF CONTENTS PAGE 1. INTRODUCTION AND DEFINITIONS . . . . . . . . . . . . . . . 1 2. GRANT, ACCEPTANCE AND INITIAL TERM . . . . . . . . . . . . 3 3. DISTRIBUTION RIGHTS AND PERFORMANCE CRITERIA . . . . . . . 4 4. GUIDANCE AND ASSISTANCE. . . . . . . . . . . . . . . . . . 4 A. GUIDANCE AND ASSISTANCE . . . . . . . . . . . . . . . 4 B. OPERATING MANUALS . . . . . . . . . . . . . . . . . . 5 5. MARKS. . . . . . . . . . . . . . . . . . . . . . . . . . . 5 A. OWNERSHIP AND GOODWILL OF MARKS . . . . . . . . . . . 5 B. LIMITATIONS ON YOUR USE OF MARKS. . . . . . . . . . . 6 C. DISCONTINUANCE OF USE OF MARKS. . . . . . . . . . . . 6 D. NOTIFICATION OF INFRINGEMENTS AND CLAIMS. . . . . . . 6 E. INDEMNIFICATION FOR USE OF MARKS. . . . . . . . . . . 7 6. RELATIONSHIP OF THE PARTIES/INDEMNIFICATION. . . . . . . . 7 A. INDEPENDENT CONTRACTORS . . . . . . . . . . . . . . . 7 B. NO LIABILITY FOR ACTS OF OTHER PARTY. . . . . . . . . 7 C. TAXES . . . . . . . . . . . . . . . . . . . . . . . . 8 D. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . 8 7. FEES AND PAYMENTS. . . . . . . . . . . . . . . . . . . . . 8 A. INITIAL FEES. . . . . . . . . . . . . . . . . . . . . 8 B. TERMS OF SALE TO FRANCHISEE . . . . . . . . . . . . . 8 C. INTEREST ON LATE PAYMENTS . . . . . . . . . . . . . . 9 D. APPLICATION OF PAYMENTS . . . . . . . . . . . . . . . 9 8. CONFIDENTIAL INFORMATION . . . . . . . . . . . . . . . . . 9 9. EXCLUSIVE RELATIONSHIP . . . . . . . . . . . . . . . . . . 10 10. IMAGE AND OPERATING PROCEDURES . . . . . . . . . . . . . . 11 A. PREMISES. . . . . . . . . . . . . . . . . . . . . . . 11 B. TUPPERWARE CONSULTANTS. . . . . . . . . . . . . . . . 11 C. STANDARDS AND PROCEDURES. . . . . . . . . . . . . . . 11 D. MAINTENANCE AND REFURBISHING OF PREMISES AND VEHICLES. . . . . . . . . . . . . . . . . . . . . . . 12 E. COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES. . . 12 F. FORMS AND INVOICES. . . . . . . . . . . . . . . . . . 13 G. CUSTOMER RELATIONS/WARRANTIES . . . . . . . . . . . . 13 H. INSURANCE . . . . . . . . . . . . . . . . . . . . . . 13 I. COMPUTER. . . . . . . . . . . . . . . . . . . . . . . 13 11. REPORTS AND FINANCIAL STATEMENTS . . . . . . . . . . . . . 14 12. INSPECTIONS AND AUDITS . . . . . . . . . . . . . . . . . . 14 A. COMPANY'S RIGHT TO INSPECT. . . . . . . . . . . . . . 14 B. COMPANY'S RIGHT TO AUDIT. . . . . . . . . . . . . . . 15 13. TRANSFER . . . . . . . . . . . . . . . . . . . . . . . . . 15 A. BY COMPANY. . . . . . . . . . . . . . . . . . . . . . 15 B. FRANCHISEE MAY NOT TRANSFER WITHOUT APPROVAL OF COMPANY . . . . . . . . . . . . . . . . . . . . . . . 15 C. CONDITIONS FOR APPROVAL OF TRANSFER . . . . . . . . . 16 D. DEATH OR INCAPACITY OF FRANCHISEE . . . . . . . . . . 17 E. EFFECT OF CONSENT TO TRANSFER . . . . . . . . . . . . 18 F. COMPANY'S RIGHT OF FIRST REFUSAL. . . . . . . . . . . 18 G. OPERATION THROUGH A CORPORATION . . . . . . . . . . . 19 H. COMPLIANCE WITH STATE AND FEDERAL LAWS. . . . . . . . 19 14. RENEWAL OF FRANCHISE . . . . . . . . . . . . . . . . . . . 19 15. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . 20 A. BY FRANCHISEE . . . . . . . . . . . . . . . . . . . . 20 B. BY COMPANY. . . . . . . . . . . . . . . . . . . . . . 20 C. OUR OTHER RIGHTS UPON DEFAULT . . . . . . . . . . . . 22 16. RIGHTS AND OBLIGATIONS OF COMPANY AND FRANCHISEE UPON TERMINATION OR EXPIRATION OF THE FRANCHISE . . . . . . . . 23 A. PAYMENT OF AMOUNTS OWED TO COMPANY. . . . . . . . . . 23 B. TRADEMARKS. . . . . . . . . . . . . . . . . . . . . . 23 C. RETURN OF CONFIDENTIAL MATERIAL . . . . . . . . . . . 24 D. NONSOLICITATION AND NONCOMPETITION. . . . . . . . . . 24 E. COMPANY OPTION TO PURCHASE PRODUCTS . . . . . . . . . 24 F. CONTINUING OBLIGATIONS. . . . . . . . . . . . . . . . 24 17. ENFORCEMENT. . . . . . . . . . . . . . . . . . . . . . . . 25 A. SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS . . 25 B. WAIVER. . . . . . . . . . . . . . . . . . . . . . . . 25 C. CUMULATIVE REMEDIES . . . . . . . . . . . . . . . . . 26 D. WRITTEN CONSENTS FROM COMPANY . . . . . . . . . . . . 26 E. COSTS AND ATTORNEYS' FEES . . . . . . . . . . . . . . 26 F. GOVERNING LAW/CONSENT TO JURISDICTION . . . . . . . . 26 G. BINDING EFFECT. . . . . . . . . . . . . . . . . . . . 27 H. ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . 27 I. NO LIABILITY TO OTHERS. . . . . . . . . . . . . . . . 27 J. CONSTRUCTION. . . . . . . . . . . . . . . . . . . . . 27 K. MULTIPLE ORIGINALS. . . . . . . . . . . . . . . . . . 28 L. INJUNCTIVE RELIEF . . . . . . . . . . . . . . . . . . 28 M. ARBITRATION . . . . . . . . . . . . . . . . . . . . . 28 N. WAIVER OF PUNITIVE DAMAGES AND JURY TRIAL . . . . . . 29 O. SECURITY INTEREST . . . . . . . . . . . . . . . . . . 29 P. NO WITHHOLDING PAYMENTS DUE TO US . . . . . . . . . . 29 18. NOTICES AND PAYMENTS . . . . . . . . . . . . . . . . . . . 30 19. ACKNOWLEDGEMENTS . . . . . . . . . . . . . . . . . . . . . 30 EXHIBITS EXHIBIT A PRIMARY AREA OF PROMOTION EXHIBIT B PREMISES EXHIBIT C AGREEMENT FOR THE DESIGNATION OF AN OPERATING COMPANY EXHIBIT D ARBITRATION EXHIBIT E ANNUAL AND QUARTERLY PERFORMANCE CRITERIA TUPPERWARE U.S., INC. FRANCHISE AGREEMENT This Franchise Agreement (this "Agreement") is being entered as of , 19 (the "Agreement Date"). The parties to this Agreement are , as Franchisee (referred to in this Agreement as "you" or "Franchisee"), and TUPPERWARE U.S., INC., a Delaware corporation, as Franchisor (referred to in this Agreement as "we," "us" or the "Company"). The principal place of business of TUPPERWARE U.S., INC. is 14901 South Orange Blossom Trail, Orlando, Florida 32837. Your principal place of business is 1. INTRODUCTION AND DEFINITIONS. We (and our Affiliates) manufacture and distribute, through our authorized Tupperware distributors, a variety of products for personal, family or household use which are identified by our registered trademark TUPPERWARE and other trademarks. We have achieved a high degree of public acceptance and goodwill for TUPPERWARE Products as a result of their high quality and widespread distribution. Tupperware distributors play an important role in distributing TUPPERWARE Products to consumers through the home party plan, personal demonstrations and other methods. We and you are signing this Agreement because of our and your mutual desire to establish a relationship as franchisor and franchisee on the terms of this Agreement. There are a number of terms used throughout this Agreement that have particular meanings. These terms and their definitions are as follows: "Affiliate" - Any person, entity or company that directly or indirectly owns or controls, is directly or indirectly owned or controlled by or is under common control with the Company. "Competing Products" - Plastic household products, including food storage containers, food preparation and service products, toys, cookware and housewares, similar to or competitive with TUPPERWARE Products, which are manufactured or marketed by persons other than us or our Affiliates. "Confidential Information" - Our Marketing Methods, lists of Consultants of Franchised Tupperware Distributorships and certain other information that we may disclose from time to time during the term of the Franchise, including information about upcoming promotions, new product development and new distribution methods. "Consultant" - An individual, acting as an independent contractor, who has contracted with a Franchised Tupperware Distributorship to sell TUPPERWARE Products to consumers under our policies and procedures. "Estimated Retail Sales" - The aggregate of the Company's suggested retail prices for all TUPPERWARE Products purchased by Consultants from the Franchised Distributorship for resale to consumers. "Franchise" - The rights we have granted you to operate a Franchised Tupperware Distributorship under this Agreement. "Franchised Distributorship" - The business you will operate under this Agreement. "Franchised Tupperware Distributorships" - The businesses we license to distribute TUPPERWARE Products through Consultants using the Marketing Methods. "Home Party Plan and Personal Demonstrations" - The technique of promoting and selling TUPPERWARE Products through demonstrations arranged by Consultants at homes or other locations. "Marketing Materials" - Supplies, goods and materials, other than TUPPERWARE Products, that we make available to you and/or Consultants to use in marketing TUPPERWARE Products, including, without limitation, incentive merchandise, promotional materials and sales aids and computer software programs. "Marketing Methods" - The sales, purchasing, distribution, marketing and administrative plans, systems, methods and techniques we may require or authorize Franchised Tupperware Distributorships to use from time to time, including, but not limited to, our direct selling techniques for the home party plan and personal demonstrations and the purchasing and distribution methods and procedures that comprise the "Traditional," "Express," "Consultant Direct" and/or other types of Franchised Tupperware Distributorships. "Marketing Methods" also may include administrative and financial controls; reporting systems; ordering and purchasing systems; bookkeeping systems; billing procedures; recruiting, retaining and motivating Consultants and instilling in Consultants the "Sharing Opportunity" through Consultant sales presentations, Consultant incentive programs and other means; promoting the reputation, distribution and use of TUPPERWARE Products; and general business operation and management. "Operating Company" - A corporation through which you operate the Franchised Distributorship under Section 13.G. of this Agreement. "Operating Manuals" - The "programs binder," "promotional binder" and other materials which we lend you under Section 4.B. of this Agreement, which we may revise and update from time to time, through which we communicate to you the Marketing Methods and our standards, specifications, requirements and/or recommendations for operating the Franchised Distributorship. "Premises" - The location and premises identified in Exhibit B to this Agreement from which you will operate the Franchised Distributorship (which may be your home). "Primary Area of Promotion" - The geographic area described in Exhibit A to this Agreement. "Sales Force Goodwill" - The benefit and value of your relationships with Consultants. "Sharing Opportunity" - Our philosophy of marketing TUPPERWARE Products through Franchised Tupperware Distributorships and Consultants in a manner which enables them to realize their potential and encourages them to introduce other persons to participate in marketing TUPPERWARE Products. "Trademarks" - The trademarks and service marks we own and use to identify TUPPERWARE Products or the services of marketing TUPPERWARE Products, including, but not limited to, the registered trademarks TUPPERWARE , TUPPERCRAFT , TUPPERWAVE and TUPPERTOYS . "Transfer" - (Defined in Section 13.B. of this Agreement.) "TUPPERWARE Products" - (a) The proprietary lines of plastic products for personal, family, household, commercial or industrial use, including food preparation and service products, food storage products, toys, cookware and housewares, manufactured by or for the Company, identified by the TUPPERWARE trademark or other trademarks the Company or its Affiliates own and marketed in whole or in part through our Franchised Tupperware Distributorships; and (b) other products for personal, family or household use marketed in whole or in part through our Franchised Tupperware Distributorships. 2. GRANT, ACCEPTANCE AND INITIAL TERM. Subject to this Agreement's provisions, we hereby grant you the right (the "Franchise") to own and operate a Franchised Tupperware Distributorship (the "Franchised Distributorship") for a period of time commencing on the Agreement Date and expiring on December 31, 19 , unless sooner terminated as provided in this Agreement. You accept the Franchise and agree that you will devote your full time and attention and best efforts to the Franchised Distributorship, use your best efforts to accomplish the purposes of this Agreement and at all times faithfully, honestly and diligently perform your obligations under this Agreement. 3. DISTRIBUTION RIGHTS AND PERFORMANCE CRITERIA. During this Agreement's term, we will make available for sale to you and/or Consultants TUPPERWARE Products for sale to consumers. You agree to concentrate your promotional and distribution efforts, and to use your best efforts to distribute TUPPERWARE Products, within the Primary Area of Promotion using the home party plan and personal demonstrations. We retain the right in the Primary Area of Promotion and elsewhere to promote, distribute and market all TUPPERWARE Products through any and all methods of distribution we think best, including, but not limited to, other Franchised Tupperware Distributorships, Tupperware Distributorships that we and our Affiliates own and operate and other channels of distribution. Your right to distribute TUPPERWARE Products in the Primary Area of Promotion is nonexclusive. You acknowledge that we are granting you the nonexclusive right to operate a Franchised Tupperware Distributorship with the expectation that you will satisfy the annual and quarterly performance criteria identified in Exhibit E. You agree that your failure to satisfy the required criteria will allow (but not obligate) us to terminate this Agreement, as provided in Section 15.B. below. 4. GUIDANCE AND ASSISTANCE. A. GUIDANCE AND ASSISTANCE. We will communicate the Marketing Methods to you through various means, including, but not limited to, the Operating Manuals, advice letters, telephone consultations, audiotapes, videotaped presentations and conferences for Franchised Tupperware Distributorships. As noted in Section 1 above, Marketing Methods are the sales, purchasing, distribution, marketing and administrative plans, systems, methods and techniques we may require or authorize Franchised Tupperware Distributorships to use from time to time, including, but not limited to, our direct selling techniques for the home party plan and personal demonstrations and the purchasing and distribution methods and procedures that comprise the "Traditional," "Express," "Consultant Direct" and/or other types of Franchised Tupperware Distributorships. We reserve the right to require you to change your selling techniques and purchasing and distribution methods and procedures. In these circumstances, your status as a Franchised Tupperware Distributorship does not change. However, the purchasing and distribution methods and procedures that you must follow in operating your Franchised Distributorship may change. "Marketing Methods" also may include administrative and financial controls; reporting systems; ordering and purchasing systems; bookkeeping systems; billing procedures; recruiting, retaining and motivating Consultants and instilling in Consultants the "Sharing Opportunity" through Consultant sales presentations, Consultant incentive programs and other means; promoting the reputation, distribution and use of TUPPERWARE Products; and general business operation and management. We may from time to time suggest pricing for TUPPERWARE Products sold to Consultants with the understanding that these suggestions are only our recommendations, that you are not required to follow those suggestions and that your rights under this Agreement will not be affected by your decision not to follow these suggestions. You agree to advise us promptly of any improvements to the Marketing Methods and any new techniques, systems, devices, plans, methods or programs for operating the Franchised Distributorship developed by you or your employees or Consultants, which we then will have the perpetual right to use and authorize others to use. From time to time, we will hold national or regional conferences for Franchised Tupperware Distributorships. You agree to attend, at your own expense, our national conferences and conferences for your region. These conferences will be held no more than six (6) times each year. We may charge you reasonable fees to attend these conferences. B. OPERATING MANUALS. We will lend you during the term of the Franchise one (1) complete set of the Operating Manuals, containing the materials (including, as applicable, written materials, audiotapes, videotapes and computer software) that we generally lend to Franchised Tupperware Distributorships to use in their operations. The Operating Manuals contain mandatory and suggested standards and operating procedures which we prescribe from time to time for Franchised Tupperware Distributorships and information about your other obligations under this Agreement. We may modify the Operating Manuals from time to time to reflect changes in both TUPPERWARE Products distributed through our Franchised Tupperware Distributorships and any of the Marketing Methods. You agree to keep your copy of the Operating Manuals current by immediately substituting in or adding to them all modified or new pages or other materials that we provide you from time to time. In the event of a dispute about the contents of the Operating Manuals, the master copy we maintain at our principal offices will control. You may not at any time copy any part of the Operating Manuals without our prior written consent. 5. MARKS. A. OWNERSHIP AND GOODWILL OF MARKS. You acknowledge that your right to use the Trademarks is derived solely from this Agreement and limited to your operating the Franchised Distributorship under this Agreement and all applicable standards and operating procedures we prescribe from time to time during the Franchise term. Your unauthorized use of the Trademarks is a breach of this Agreement and an infringement of our rights in the Trademarks. You acknowledge and agree that your use of the Trademarks and any goodwill established by your use will inure exclusively to our benefit and that this Agreement does not confer any goodwill or other interest in the Trademarks on you (other than the right to operate the Franchised Distributorship under this Agreement). All provisions of this Agreement which apply to the Trademarks will apply to any additional trademarks, service marks and commercial symbols we authorize you to use during this Agreement's term. B. LIMITATIONS ON YOUR USE OF MARKS. You agree to identify yourself as a Franchised Tupperware Distributorship in the manner we prescribe. Each use of any of the Trademarks must include the words "Authorized Distributor" prominently displayed in the following format (or in another format that we have previously approved in writing): [NAME OF DISTRIBUTOR] AUTHORIZED DISTRIBUTOR OF TUPPERWARE BRAND PRODUCTS You agree not to use any Trademark as part of any corporate or legal business name, with any prefix, suffix or other modifying words, terms, designs or symbols or in any modified form. You agree not to use any Trademark or similar commercial symbol in performing or selling any unauthorized services or products or in any other manner we have not expressly authorized in writing. You agree to display the Trademarks prominently in the manner we prescribe on forms, invoices, stationery, business cards, promotional materials and other advertising and marketing materials and to use any notices of trademark and service mark registrations that we specify. You may not use the Trademarks in any manner we have not authorized. C. DISCONTINUANCE OF USE OF MARKS. If it becomes advisable at any time in our sole discretion for us and/or you to modify or discontinue using any Mark and/or use one or more additional or substitute trade or service marks, you agree to comply with our directions within a reasonable time after receiving notice. We need not reimburse you for your expenses in making these changes, for any loss of revenue attributable to any modified or discontinued Mark or for any expenditures you make to promote a modified or substitute trademark or service mark. D. NOTIFICATION OF INFRINGEMENTS AND CLAIMS. You agree to notify us immediately of any apparent infringement of or challenge to your use of any Trademark and of any claim by any person of any rights in any Trademark. We will have sole discretion to take the action we deem appropriate and the right to control exclusively any litigation or administrative or other proceeding arising out of any infringement, challenge or claim or otherwise relating to any Trademark. You agree to sign any documents, give any assistance and perform any acts that our attorneys deem necessary or advisable to protect and maintain our interest in any litigation or proceeding related to any Trademark or otherwise to protect and maintain our interests in the Trademarks. E. INDEMNIFICATION FOR USE OF MARKS. We agree to reimburse you for all damages for which you are held liable in any proceeding arising out of your authorized use of any Mark under this Agreement and for all costs you reasonably incur in defending any such claim brought against you or any such proceeding in which you are named as a party, if you have timely notified us of the claim or proceeding and otherwise have complied with this Agreement and our directions in responding to the claim or proceeding. At our option, we may defend and control the defense of any proceeding arising out of your use of any Mark under this Agreement. 6. RELATIONSHIP OF THE PARTIES/INDEMNIFICATION. A. INDEPENDENT CONTRACTORS. You acknowledge and agree that this Agreement does not create a fiduciary relationship between you and us, that you are an independent contractor and that nothing in this Agreement is intended to make either party a general or special agent, joint venturer, partner or employee of the other party for any purpose. You agree to operate the Franchised Distributorship under your own business name (which may not include or suggest any Trademark). You agree to identify yourself conspicuously in all dealings with customers, suppliers, public officials, employees, Consultants and others as the owner of the Franchised Distributorship under a Franchise Agreement with us and to place any other notices of independent ownership that we may require from time to time on your forms, business cards, stationery and advertising and other materials. B. NO LIABILITY FOR ACTS OF OTHER PARTY. Except as this Agreement expressly authorizes, neither party to this Agreement may make any express or implied agreements, warranties, guarantees or representations or incur any debt in the name or on behalf of the other party or represent to any person, entity or government agency that the relationship between the parties is other than that of franchisor and franchisee. We will not be liable for any representations or warranties you make that are not expressly authorized under this Agreement, for any agreements you enter, for any of your actions or failures to act or for your failure to comply fully with this Agreement. We will not be liable for any damages to any person or property directly or indirectly arising out of the Franchised Distributorship's operation. C. TAXES. We will have no liability for any sales, use, service, occupation, excise, gross receipts, income, property or other taxes levied against you or your assets (or upon us) in connection with the sales made or business conducted by you and/or Consultants, payments you make to us under this or any related agreements or payments we make to you under this Agreement (except our own income taxes and any taxes we are required by law to collect from you on purchases from us). D. INDEMNIFICATION. You agree to indemnify, defend and hold harmless us and our Affiliates, and our respective shareholders, directors, officers, employees, agents, successors and assigns (the "Indemnified Parties"), against and to reimburse any one or more of the Indemnified Parties for all claims, obligations and damages described in this Paragraph, any and all taxes described in Paragraph C of this Section and any and all claims and liabilities directly or indirectly arising out of your operation of the Franchised Distributorship or your breach of this Agreement. For purposes of this indemnification, "claims" include all obligations, judgments, settlements, damages (actual, consequential or otherwise) and costs that an Indemnified Party reasonably incurs in defending any claim against it, including, without limitation, reasonable accountants', arbitrators', attorneys' and expert witness fees, costs of investigation and proof of facts, court costs, other expenses of litigation, arbitration or alternative dispute resolution and travel and living expenses. Indemnified Parties may defend any claims against them at your expense. This indemnity will continue in full force and effect subsequent to and notwithstanding this Agreement's expiration or termination. 7. FEES AND PAYMENTS. A. INITIAL FEES. You need not pay any initial fee or other type of franchise fee in connection with entering into or performing under this Agreement. You must, however, pay for goods and services you order from us (as provided below). B. TERMS OF SALE TO FRANCHISEE. We will publish from time to time a price list for TUPPERWARE Products and Marketing Materials available for sale to you and/or Consultants according to our policies and procedures. You agree to accept and pay for all TUPPERWARE Products, Marketing Materials and other items you order from us according to the price list and the applicable freight charges and shipping, handling and similar fees we publish from time to time. We may impose any customer handling, shipping and similar charges whenever we deem appropriate, and you agree to pay these charges within the timeframe we specify. We will deliver all TUPPERWARE Products, Marketing Materials and other items ordered from us according to the procedures described in the Operating Manuals or elsewhere. You agree to maintain your account with us according to the terms of payment we establish with you from time to time and within any line of credit that you establish with us. If you fail to make any payments to us on or before their due dates or otherwise to maintain your account with us according to the payment terms we have established, we may require you to use our designated accounting services until we believe, in our sole discretion, that your failures have been corrected and are not likely to recur. We will charge you our then current fee if you use our designated accounting services. In addition, we have the right not to sell any more TUPPERWARE Products to you until all payments due are made or to condition any sale on your paying for the TUPPERWARE Products before we ship them to you or others. These rights are in addition to our other rights and remedies under this Agreement and applicable law. C. INTEREST ON LATE PAYMENTS. All amounts which you owe us will, at our option, bear interest after their due dates at the rate of one and one-half percent (1.5%) per month or the highest contract rate of interest permitted by law, whichever is less. This Paragraph is not our agreement to accept any payments after they are due or our commitment to extend credit to, or otherwise finance your operation of, the Franchised Distributorship. Your failure to pay all amounts when due is a ground for terminating this Agreement, as provided in Section 15, despite this Paragraph's provisions. D. APPLICATION OF PAYMENTS. When we receive a payment from you, or money owed to you comes into our possession, we will have the right to apply it as we see fit in our sole discretion to any of your past due indebtedness to us or our Affiliates, whether for purchases or other charges, regardless of how you may designate a particular payment to be applied. 8. CONFIDENTIAL INFORMATION. You acknowledge and agree that the Confidential Information gives us, our Franchised Tupperware Distributorships and Consultants a competitive benefit. Confidential Information is confidential, may include our trade secrets and is disclosed to you solely on the condition that you agree, and you do agree, that you: (1) will not use the Confidential Information other than in operating the Franchised Distributorship; (2) will maintain the absolute confidentiality of the Confidential Information; (3) will not make unauthorized copies of any records (in written, electronic or other form) disclosing the Confidential Information; and (4) will adopt and implement all reasonable procedures we prescribe from time to time to prevent disclosure of the Confidential Information, including, but not limited to, restrictions on disclosure to Consultants and employees and using nondisclosure and/or noncompetition agreements we prescribe for Consultants or employees who have access to the Confidential Information. The restrictions on your disclosure and use of the Confidential Information will not apply to the following: (a) disclosure or use of information, methods or techniques which are generally known and used by other businesses selling household products through personal demonstrations or methods similar to the home party plan (as long as the general knowledge is not due to your disclosure and the disclosure or use otherwise is not prohibited by this Agreement), if you have first given us written notice of your intended disclosure and/or use; and (b) disclosure of the Confidential Information in legal proceedings when you are legally required to disclose it, if you have first given us the opportunity to obtain an appropriate legal protective order or other assurance satisfactory to us that the information required to be disclosed will be treated confidentially. 9. EXCLUSIVE RELATIONSHIP. You agree that you will use your best efforts to promote, sell and distribute through the Franchised Distributorship all TUPPERWARE Products. You agree not to promote, offer, sell or otherwise distribute through the Franchised Distributorship any products or services other than TUPPERWARE Products without our prior written approval. You agree that we could not protect the Confidential Information against unauthorized use or disclosure or encourage a free exchange of ideas and information among our Franchised Tupperware Distributorships if they and their immediate family members could hold interests in or perform services for any businesses marketing Competing Products or using marketing methods similar to the Marketing Methods. We have entered this Agreement with you on the express condition that, during its term, neither you nor any member of your immediate family will have any direct or indirect interest as a disclosed or beneficial owner in, or perform services as a director, officer, manager, employee, consultant, representative or agent for: (a) any business or association which promotes or sells Competing Products; or (b) any business or association that franchises, licenses or develops businesses in the United States or Canada that promote or sell Competing Products; or (c) any business or association that sells goods for household use, other than Competing Products, using methods similar to the Marketing Methods (including the home party plan and personal demonstrations); or (d) any business or association that franchises, licenses or develops businesses in the United States or Canada that promote or sell goods for household use, other than Competing Products, using methods similar to the Marketing Methods (including the home party plan and personal demonstrations). 10. IMAGE AND OPERATING PROCEDURES. A. PREMISES. You agree to operate the Franchised Distributorship at and from the Premises (as described in Exhibit B to this Agreement), which may be your home. You represent that the Premises are suitable and adequate for your storage needs for TUPPERWARE Products and Marketing Materials and for operating the Franchised Distributorship (other than holding Consultant sales presentations). If the Premises are not your home, you agree to maintain the Premises in good condition, repair, cleanliness and neatness. You acknowledge that we have an interest in the location of the Premises and agree in all cases that you will not relocate the Premises or use any other premises as office or storage facilities for the Franchised Distributorship without our prior written approval. However, you may hold sales presentations for Consultants at suitable locations away from the Premises. If you operate your Franchised Distributorship from your home, you must conduct sales presentations at appropriate meeting spaces outside your home. B. TUPPERWARE CONSULTANTS. You acknowledge and agree that our method of distributing TUPPERWARE Products through Franchised Tupperware Distributorships has been based primarily upon the promotion and sale of TUPPERWARE Products by Consultants appointed by our Franchised Tupperware Distributorships according to our policies and Marketing Methods. You understand the importance of recruiting and rewarding Consultants using the Marketing Methods and agree that you will fully and faithfully follow the Marketing Methods in all aspects of recruiting, rewarding, motivating and otherwise dealing with Consultants. You agree to coordinate the promotional and sales activities of all Consultants you appoint and to use your best efforts to instill in Consultants the "Sharing Opportunity." You may enter into Consultant contracts only with persons of good character who have sufficient aptitude to be Consultants and otherwise meet our standards and must make available to all Consultants the Marketing Materials that we recommend for Consultants. You agree not to deviate in any way from the Marketing Methods (including policies and incentive programs pertaining to the recruitment of and relations with Consultants) without our prior written approval. You agree to follow our instructions concerning the release of new TUPPERWARE Products and beginning promotions and related sales and marketing programs. C. STANDARDS AND PROCEDURES. You acknowledge that operating the Franchised Distributorship under our standards of service and quality and according to the "Sharing Opportunity" is important to us, our other Franchised Tupperware Distributorships and Consultants. We will endeavor to maintain high standards of quality and service for all Franchised Tupperware Distributorships. To this end, you agree to cooperate with us by maintaining those high standards of quality and service in operating the Franchised Distributorship. You agree to comply with all mandatory standards and operating procedures relating to the distribution of TUPPERWARE Products, recruitment of and relations with Consultants and operation of the Franchised Distributorship, whether or not part of the Marketing Methods. You agree to participate in any national promotions that we conduct (although you may determine the prices at which you sell TUPPERWARE Products). Any mandatory standards and operating procedures (whether or not part of the Marketing Methods) that we prescribe from time to time in the Operating Manuals, or otherwise communicate to you in writing, will be considered provisions of this Agreement as if fully set forth in this Agreement. All references to "this Agreement" include all of these mandatory standards and operating procedures. D. MAINTENANCE AND REFURBISHING OF PREMISES AND VEHICLES. You agree to maintain the condition and appearance of the Premises (if your Franchised Distributorship is not home-based) and any vehicles (regardless of the location of your Franchised Distributorship) used in the Franchised Distributorship under our standards and to effect any interior and exterior cleaning, repair, maintenance and refurbishing of the Premises and vehicles, including periodic painting and decorating and replacement of worn out or obsolete furniture, furnishings, equipment and signs, that we reasonably require from time to time. E. COMPLIANCE WITH LAWS AND GOOD BUSINESS PRACTICES. You agree to secure and maintain in force in your name all required licenses, permits and certificates relating to the operation of the Franchised Distributorship. You agree to operate the Franchised Distributorship in full compliance with all applicable laws, ordinances and regulations, including, without limitation, all government regulations relating to workers' compensation insurance, unemployment insurance and withholding and paying federal, state and local taxes. All advertising and promotion you use must be completely factual and in good taste (in our judgment), conform to high standards of ethical advertising and be approved by us in writing before you use them. You may not use any materials that we have disapproved or have not yet authorized for release to Consultants and the public. In all your dealings with us, Consultants, customers, potential customers and public officials, you must adhere to high standards of honesty, integrity, fair dealing and ethical conduct. You agree to refrain from any business or advertising practice that may harm us or the goodwill associated with the Trademarks, Consultants or other Franchised Tupperware Distributorships. You must notify us in writing within five (5) days after the commencement of any action, suit or proceeding, or the issuance of any order, writ, injunction, awards or decree of any court, agency or other governmental unit, which may adversely affect our, your or any other Franchised Tupperware Distributorship's operation, financial condition or reputation. F. FORMS AND INVOICES. You agree to use the invoices, purchase orders and other forms that we approve. You must obtain the forms from us or suppliers we approve to produce them using the Trademarks. G. CUSTOMER RELATIONS/WARRANTIES. You agree to provide prompt and conscientious service to all consumers serviced through the Franchised Distributorship and all Consultants and to use your best efforts to make or cause prompt delivery of TUPPERWARE Products and Marketing Materials to Consultants and/or consumers. You agree to respond to customer complaints and inquiries promptly and courteously and to comply strictly with policies and procedures we prescribe relating to customer service and warranties for TUPPERWARE Products. H. INSURANCE. During the term of the Franchise, you must maintain in force, under insurance policies issued by carriers acceptable to us, comprehensive general and motor vehicle liability insurance against claims for bodily injury, death and property damage caused by or occurring in connection with the Franchised Distributorship's operation, and insuring the Premises and any of your vehicles, under one or more insurance policies containing the minimum liability coverage we prescribe from time to time. We may periodically increase the amounts of coverage required under these insurance policies and require different or additional insurance at any time, including excess liability insurance, to reflect inflation, identification of new risks, changes in law or standards of liability, higher damage awards or other relevant changes in circumstances. These insurance policies must insure you, name us as an additional insured and provide for thirty (30) days' prior written notice to us of a policy's material modification, cancellation or expiration. We will pay or credit your account with us for the costs of naming us as an additional insured. I. COMPUTER. You must use in operating the Franchised Distributorship the brands, models and types of computer hardware, peripheral equipment and software that we prescribe from time to time. We may require you to obtain specified items and may modify specifications for and components of this computer system from time to time. Our modification of specifications for the computer system's components may require you to incur costs to purchase, lease and/or license new or modified computer hardware and/or software and to obtain service and support during this Agreement's term. You agree to incur the costs of obtaining the computer hardware and software comprising the computer system (or additions or modifications). You acknowledge that any computer software developed by or for us is our property, that you may use that software only in the manner we authorize and that you may not copy, duplicate or modify the software without our prior written consent. 11. REPORTS AND FINANCIAL STATEMENTS. You agree to furnish us each week on the day we designate, in the form we prescribe from time to time, a report of your and the Consultants' activities and sales for the preceding week and any other data, information and supporting records that we require. Upon written notice, we may require you to prepare and submit to us monthly and annual financial statements (including a balance sheet and a profit and loss statement) reflecting the Franchised Distributorship's operation and financial condition. You must verify and sign each report and financial statement in the manner we prescribe. As noted in Section 7.B. above, we may require you to use our designated accounting services under certain circumstances. 12. INSPECTIONS AND AUDITS. A. COMPANY'S RIGHT TO INSPECT. To determine whether you are complying with this Agreement, the Marketing Methods and any other specifications, standards, operating procedures and policies that we prescribe for operating Franchised Tupperware Distributorships, to assess the service being provided to Consultants and retail customers in the area served by the Franchised Distributorship and to engage in market research and testing, and in connection with our exercising our other rights under this Agreement and conducting our business, we have the right at any reasonable time to: (1) inspect the Premises (unless it is your home) and all vehicles and facilities used in operating the Franchised Distributorship; (2) contact, interview, observe and videotape you, Consultants and employees while they conduct business; (3) contact and interview hostesses and guests of Tupperware parties held by Consultants; and (4) take an inventory of any TUPPERWARE Products and Marketing Materials in your possession and remove samples of them for inspection and testing. You agree to cooperate fully with our representatives making these inspections, observations or interviews. B. COMPANY'S RIGHT TO AUDIT. We may at any time during business hours, upon forty-eight (48) hours' prior notice to you, inspect and audit, or cause to be inspected and audited, the business records, bookkeeping and accounting records, sales, use and other tax records and returns and other records of the Franchised Distributorship and any Operating Company. You agree to cooperate fully with our representatives and any independent accountants we hire to conduct any inspection or audit. 13. TRANSFER. A. BY COMPANY. This Agreement is fully transferable by us and will inure to the benefit of any transferee or other legal successor to our interests in it. B. FRANCHISEE MAY NOT TRANSFER WITHOUT APPROVAL OF COMPANY. You understand and acknowledge that the rights and duties created by this Agreement are personal to you and that we have entered this Agreement with you in reliance upon your individual (or collective) character, skill, aptitude, attitude, business ability and financial capacity. Accordingly, neither this Agreement, the Franchise (or any interest in the Franchise), any ownership interest in an Operating Company nor the Franchised Distributorship (or any interest in it) may be transferred without our prior written approval. Any transfer without this approval is a breach of this Agreement and conveys no rights to or interests in this Agreement, the Franchise, the Operating Company or the Franchised Distributorship. A transfer of this Agreement and the Franchise (or any interest in them) may be made only with a transfer of the Franchised Distributorship. As used in this Agreement, the term "transfer" includes the voluntary, involuntary, direct or indirect assignment, sale, gift or other disposition of any interest in: (1) this Agreement; (2) the Franchise; (3) the Franchised Distributorship or any of its essential assets, including, without limitation, sales force goodwill (other than sales or other dispositions of inventory in the normal course of business); or (4) the ownership of an Operating Company. An assignment, sale or other disposition includes, without limitation: (a) the transfer of an interest in this Agreement, the Franchise, the Franchised Distributorship or an Operating Company in a divorce, dissolution or insolvency proceeding or otherwise by operation of law; (b) the transfer of an interest in this Agreement, the Franchise, the Franchised Distributorship or an Operating Company, in the event of your death, by will, declaration of or transfer in trust or under the laws of intestate succession; (c) the transfer of ownership of a partnership interest or capital stock in an Operating Company; (d) merger or consolidation or issuance of additional securities representing an ownership interest in an Operating Company; (e) any sale of common stock, or any security convertible to common stock, of an Operating Company; and (f) pledge of this Agreement or the Franchised Distributorship's assets as security, foreclosure upon the Franchised Distributorship or any of its assets or your transfer, surrender or loss of possession, control or management of the Franchised Distributorship. C. CONDITIONS FOR APPROVAL OF TRANSFER. If you are fully complying with this Agreement, then, subject to the other provisions of this Section 13, we will not unreasonably withhold our approval of a transfer that meets all the applicable requirements of this Agreement. The proposed transferee must be an individual of good character and otherwise meet our then applicable standards and criteria for new owners of Franchised Distributorships. If the transfer is of this Agreement or a controlling interest in the Franchised Distributorship, or is one of a series of transfers (regardless of the period of time over which these transfers take place) which taken together would constitute the transfer of this Agreement or a controlling interest in the Franchised Distributorship, we may impose additional conditions. The conditions that we may require you and/or the transferees (as applicable) to satisfy before, or concurrently with, the effective date of the transfer are: (a) The transferee must have sufficient business experience, aptitude and financial resources to operate the Franchised Distributorship; (b) You must pay any amounts owed for purchases from us and our Affiliates and all other amounts owed to us or our Affiliates which then are unpaid; (c) The transferee must complete to our satisfaction any orientation program we then require for Franchised Tupperware Distributorships; (d) The transferee must assume and agree to be bound by all terms and conditions of this Agreement for the remainder of its term or, at our option, sign our then current form of franchise agreement (which may provide for different rights and obligations than those provided in this Agreement) for a term equal to the remaining term under this Agreement; (e) You (and each owner of an interest in the Operating Company) must execute a general release, in a form satisfactory to us, of any and all claims against us, our Affiliates and our and their respective officers, directors, employees and agents; (f) We must have reviewed the material terms and conditions of the transfer to determine to our satisfaction (without representing to you or the transferee) that the price and terms of payment are not so burdensome as to affect adversely the transferee's operation of the Franchised Distributorship (this does not apply to transfers by gift, bequest or inheritance); (g) If you or any shareholder in an Operating Company finances any part of the sale price of the transferred interest, you and/or that shareholder must agree that all of the transferee's obligations under any promissory notes, agreements or security interests that you or your owners have reserved in the assets of the Franchised Distributorship will be subordinate to the transferee's obligations to pay amounts owed to us and our Affiliates for purchases and other items and otherwise to comply with this Agreement and any other agreements with us; and (h) You (and each owner of an interest in the Operating Company) must, for a two (2) year period commencing on the effective date of the transfer, comply with the restrictions set forth in Section 16.D. below. If two or more persons own the Franchised Distributorship, we granted the Franchise to you based on the collective qualifications of all owners. Accordingly, if one owner proposes to transfer its interest, we also may require the transferee to possess qualifications and experience which, when combined with the qualifications and experience of the remaining owner(s), will meet our standards and expectations regarding the Franchised Distributorship's overall management and operation. D. DEATH OR INCAPACITY OF FRANCHISEE. If you die or become permanently incapacitated, your personal representative must transfer your interest in this Agreement, the Franchise and the Franchised Distributorship to a third party (whom we approve) within a reasonable time, not to exceed nine (9) months from the date of death or permanent incapacity. The transfer will be subject to all the terms and conditions applicable to transfers contained in this Section 13. Failure to dispose of the interest in this Agreement, the Franchise and the Franchised Distributorship within this period of time will be a breach of this Agreement. The term "permanently incapacitated" means a mental or physical disability, impairment or condition that is reasonably expected to prevent or actually does prevent you from managing and operating the Franchised Distributorship for ninety (90) days or more. Until your interest in this Agreement, the Franchise and the Franchised Distributorship is transferred as required, we have the right (but not the obligation) to appoint a manager to operate the Franchised Distributorship (even if there is another living owner). You must reimburse us for our expenses of providing management services. We may cease providing those services at any time. We also have the right (but not the obligation) to appoint a manager to operate the Franchised Distributorship (even if there is another living owner) if you become "incapacitated," although not permanently incapacitated. The term "incapacitated" means a mental or physical disability, impairment or condition that is reasonably expected to prevent or actually does prevent you from managing and operating the Franchised Distributorship for any period of time. You must reimburse us for our expenses of providing management services, which we may cease providing at any time. E. EFFECT OF CONSENT TO TRANSFER. Our consent to a proposed transfer under this Section 13 will not be a guarantee of the transferee's success or a waiver of any claims we may have against you or of our right to demand the transferee's exact compliance with this Agreement. F. COMPANY'S RIGHT OF FIRST REFUSAL. If you at any time determine to sell an interest in this Agreement, the Franchise or the Franchised Distributorship, you must obtain a bona fide, executed written offer from a responsible and fully disclosed purchaser and immediately submit a true and complete copy of the offer (and any proposed "side" or ancillary agreements) to us. The offer must apply only to an interest in this Agreement, the Franchise or the Franchised Distributorship. It may not include the purchase of any other property or rights, but, if the offeror proposes to buy any other property or rights from you under a separate offer, the price and terms of purchase offered to you for the interest in this Agreement, the Franchise or the Franchised Distributorship must reflect the bona fide price offered for that interest and not reflect any value for any other property or rights. We will have the right, exercisable by written notice delivered to you within thirty (30) days after we receive both an exact copy of the offer and all other information we request, to purchase the interest for the price and on the terms and conditions contained in the offer, provided that we may substitute cash for any form of payment proposed in the offer, our credit will be deemed equal to the credit of any proposed purchaser and we will have not less than sixty (60) days to prepare for closing. We may purchase the interest subject to all customary representations and warranties given by the seller of the assets of a business (including, without limitation, representations and warranties as to ownership and condition of and title to assets; liens and encumbrances relating to the assets; validity of contracts; and liabilities affecting the assets). If we do not exercise our right of first refusal, you may complete the sale to the purchaser on the exact terms of the original offer, subject to our approval of the transfer as provided in Paragraphs B and C of this Section. However, if the sale to the purchaser is not completed within ninety (90) days after delivery of the offer to us, or if there is a material change in the terms of the sale (which you agree promptly to communicate to us), we will have an additional right of first refusal for thirty (30) days following either the expiration of the ninety (90) day period or notice to us of the material change(s) in the terms of the sale, either on the terms originally offered or the modified terms, at our option. G. OPERATION THROUGH A CORPORATION. If you wish to operate the Franchised Distributorship through a corporation (referred to as the "Operating Company"), we will allow you to do so under certain conditions. You (and, if the Franchisee is more than one individual, all individuals collectively) must at all times own not less than seventy percent (70%) of the equity interests in the Operating Company, have at least the percentage of voting power in the Operating Company needed to authorize a transfer of substantially all of its assets, have the power to control the operation and transfer of the Franchised Distributorship and be the Operating Company's principal officers. The Franchised Distributorship must be the only business that the Operating Company conducts and must be operated solely by the Operating Company. The Operating Company must assume all your liabilities and obligations under or relating to the Franchised Distributorship, but you will be jointly and severally liable for all of the Operating Company's obligations. You may operate the Franchised Distributorship through an Operating Company only under a separate written agreement with us in the form we require. Under that agreement, you will retain all renewal rights, and the Operating Company will not have any renewal rights of its own. If you renew by signing a new franchise agreement and related documents, you must sign them, and the Operating Company may continue operating the Franchised Distributorship only if we, you and the Operating Company sign a new agreement containing the terms and conditions we then prescribe. H. COMPLIANCE WITH STATE AND FEDERAL LAWS. You agree that, in any proposed transfer of an interest in this Agreement, the Franchise, the Franchised Distributorship or an Operating Company, you will comply, and assist us in complying, with any laws that apply to the transfer, including state and federal laws governing the offer and sale of franchises. 14. RENEWAL OF FRANCHISE. This Agreement will be renewed automatically for a renewal period of one (1) year when its initial term or then current renewal period expires unless: (a) You have given us written notice, not less than ninety (90) days before the end of the initial term or then current renewal period, that you elect not to renew the Franchise; or (b) We have given you written notice, not less than ninety (90) days before the end of the initial term or then current renewal period, that we will renew the Franchise only on the condition that you execute the standard form of franchise agreement and ancillary agreements we then are using for renewing or granting franchises for Franchised Tupperware Distributorships (modified as appropriate to reflect that it pertains to the renewal of a franchise), which may contain terms and conditions materially different from those contained in this Agreement; or (c) We have given you written notice, not less than ninety (90) days before the end of the initial term or then current renewal period, that we will not renew the Franchise due to your failure to comply substantially with this Agreement during the initial term or then expiring renewal period; or (d) Both we and you agree not to renew the Franchise. If renewal of the Franchise is subject to subparagraph (b) above, you must sign and deliver to us, within thirty (30) days after you receive them, the form of franchise agreement and ancillary agreements we then are using, which may include, without limitation, general releases of any and all claims against us and our Affiliates and our and their respective shareholders, officers, directors, employees and agents. We may extend the term of this Agreement for the period of time necessary to give you the notice of nonrenewal required by this Agreement or applicable law. 15. TERMINATION. A. BY FRANCHISEE. You may terminate this Agreement at any time, with or without cause, by giving us not less than sixty (60) days' prior written notice of your election to terminate. We and you also may terminate this Agreement at any time by mutual consent. B. BY COMPANY. This Agreement will terminate immediately upon delivery of written notice of termination to you if you, any owner of an Operating Company or, as appropriate, the Franchised Distributorship: (1) fails to satisfy the annual or quarterly performance criteria within the Primary Area of Promotion, as provided in Section 3 and Exhibit E; (2) abandons, or surrenders or transfers control of, the Franchised Distributorship's operation without our prior written approval; (3) makes any material misrepresentation or omission in applying for the Franchise or operating the Franchised Distributorship; (4) is convicted by a trial court of, or pleads no contest to, a felony or other crime or offense; (5) engages in any dishonest or unethical conduct that is likely to affect adversely the reputation of your Franchised Distributorship, us, TUPPERWARE Products or any other Franchised Tupperware Distributorship; (6) interferes with our inspection or audit rights, as provided in Section 12 of this Agreement; (7) fails to make the required transfer upon death or permanent incapacity; (8) fails to pay when due any federal or state income, sales or other taxes due on the Franchised Distributorship's operation, unless you are in good faith contesting your liability for these taxes; (9) makes any unauthorized use of the Marks or any unauthorized use or disclosure of the Operating Manuals or other Confidential Information; (10) makes an unauthorized transfer of any interest in this Agreement, the Franchise, the Franchised Distributorship or an Operating Company; or (11) (i) fails on three (3) or more separate occasions within any period of six (6) consecutive months to submit when due reports or other data, information or supporting records, to pay when due amounts owed for purchases from us or our Affiliates or other items or otherwise to comply with this Agreement, whether or not any of these failures to comply are corrected after you receive notice of default, or (ii) fails on two (2) or more separate occasions within any period of six (6) consecutive months to comply with the same obligation under this Agreement, whether or not the failures are corrected after you receive notice of default. In addition to these grounds for terminating the Agreement immediately without your having an opportunity to cure, this Agreement will terminate without further action by us or notice to you if you: (a) fail (i) to comply strictly with our customer service and warranty requirements or (ii) to follow our instructions concerning the release of new TUPPERWARE Products and beginning promotions and related sales and marketing programs and do not correct the failures in subparagraphs (i) or (ii) within seven (7) days after written notice of the failure is delivered to you; or (b) fail to make payments of any amounts due to us or our Affiliates for purchases or any other reason and do not correct the failure within ten (10) days after written notice of the failure is delivered to you; or (c) fail to comply with any other provision of this Agreement or any mandatory standard or operating procedure we prescribe and do not correct the failure within thirty (30) days after written notice of the failure to comply is delivered to you. C. OUR OTHER RIGHTS UPON DEFAULT. In addition to and without limiting our other rights and remedies if you default under this Agreement, we have certain rights that we may exercise in our sole discretion after we give you any notice of your default under this Agreement and until the default is fully cured. Our rights include (but are not limited to) the following: (a) the right to condition the shipment or sale of goods to you on our receipt of full payment for the goods with your order; (b) the right to suspend any and all services provided on a fee for service basis if we do not receive full payment for the services in advance; (c) the right to manage the Franchised Distributorship for you, as provided below; (d) the right to prohibit you and your agents and employees from attending any and all meetings, conferences or training sessions we hold or sponsor; and (e) the right to suspend the dissemination to you of any and all publications, materials or updated information for Franchised Distributorships. Our exercising the rights under this Paragraph will not be a defense for you to our enforcement of any provision of this Agreement or suspend or release you from or waive any obligation that you otherwise would owe to us or our Affiliates. If we have the right to assume the management of the Franchised Distributorship, we have sole discretion to determine whether to exercise that right and when to cease our management. You agree to cooperate fully with us if we exercise our management right. Our management of the Franchised Distributorship under this Paragraph will be as your agent on your behalf and not as a partner or joint venturer with you. As manager, we may do all things necessary or appropriate to operate the Franchised Distributorship under this Agreement, including to control all receipts and disbursements of the Franchised Distributorship. We will not be a fiduciary but will have a duty only to utilize our reasonable efforts to manage the Franchised Distributorship under this Agreement. We will not be liable to you or any third party for any debts, losses or obligations the Franchised Distributorship incurs during our management or otherwise. 16. RIGHTS AND OBLIGATIONS OF COMPANY AND FRANCHISEE UPON TERMINATION OR EXPIRATION OF THE FRANCHISE. A. PAYMENT OF AMOUNTS OWED TO COMPANY. You agree to pay us within fifteen (15) days after this Agreement terminates or expires, or on any later date that the amounts due to us are determined, any amounts owed for purchases from us or our Affiliates and all other amounts owed to us or our Affiliates which then are unpaid. B. TRADEMARKS. You agree that, after this Agreement terminates or expires; you will: (1) not directly or indirectly at any time or in any manner identify yourself or any business as our current or former franchisee or licensee or as otherwise associated with us, use any of the Trademarks or any colorable imitation of a Trademark in any manner or for any purpose or use for any purpose any trade name, trademark or service mark or other commercial symbol that suggests or indicates a connection or association with us; (2) remove all of the Trademarks from any facilities and vehicles you have used and return to us or destroy all invoices, purchase orders, advertising and marketing materials, forms and other materials containing any Trademark or otherwise identifying or relating to a Franchised Tupperware Distributorship; (3) take any action that may be required to cancel all fictitious or assumed name or equivalent registrations relating to your use of any Trademark; and (4) within thirty (30) days after this Agreement terminates or expires, give us evidence satisfactory to us of your compliance with these obligations. C. RETURN OF CONFIDENTIAL MATERIAL. You agree that, after this Agreement terminates or expires, you will immediately cease using in any business or otherwise the Confidential Information disclosed to you under this Agreement and return to us all copies of the Operating Manuals which we have loaned you and any other materials that contain any Confidential Information, including computer software. D. NONSOLICITATION AND NONCOMPETITION. To protect our Confidential Information and the goodwill associated with Franchised Tupperware Distributorships, you agree that for a period of two (2) years beginning on the date this Agreement terminates or expires: (1) you will not, directly or indirectly, solicit any person who was your Consultant during any part of the year preceding the date of termination or expiration to engage as an employee or independent contractor in any business which promotes, distributes or sells (a) Competing Products or (b) consumer goods or services (other than Competing Products) using methods similar to the Marketing Methods (including the home party plan and personal demonstrations); and (2) you will not, directly or indirectly, on your own account or otherwise, engage in any business or activity involving the promotion, distribution or sale of (a) Competing Products or (b) goods or services (other than Competing Products) in whole or in part through the use of methods similar to the Marketing Methods (including the home party plan and personal demonstrations). E. COMPANY OPTION TO PURCHASE PRODUCTS. When this Agreement terminates or expires, we have the right to purchase all or any part of your inventory of TUPPERWARE Products and Marketing Materials. The purchase price will be our then current price (but not to exceed the amount you originally paid for the inventory) to Franchised Tupperware Distributorships for the TUPPERWARE Products and Marketing Materials that are part of our then current line and our then current standard repurchase allowance for obsolete TUPPERWARE Products and Marketing Materials. F. CONTINUING OBLIGATIONS. All obligations of this Agreement (whether yours or ours) which expressly or by their nature survive the expiration or termination of this Agreement will continue in full force and effect after the expiration or termination until they are satisfied in full or by their nature expire. 17. ENFORCEMENT. A. SEVERABILITY AND SUBSTITUTION OF VALID PROVISIONS. The provisions of this Agreement are deemed to be severable. If any court, agency or other tribunal with proper jurisdiction in a proceeding to which we are a party holds, in a final unappealable ruling, that any part of this Agreement is invalid or conflicts with any applicable law, that ruling will not affect that part of this Agreement unless and until: (1) if you are party to that proceeding, the time for appeal expires; or (2) if you are not a party to that proceeding, we give you written notice that we will not enforce that part of this Agreement and/or will modify this Agreement according to the ruling. In either case, we and you agree that the only effect of the ruling and our nonenforcement of the invalid or unenforceable part of this Agreement will be that the invalid part(s) will be deleted from this Agreement or modified according to the ruling, and the parts of this Agreement which are meaningful after the deletion or modification of the invalid part will continue to be effective and bind you and us. To the extent that either Section 9 or Section 16.D. is deemed unenforceable because of its scope in terms of area, activity prohibited or length of time, you agree that the unenforceable provision will be deemed modified or limited to the extent and in the manner necessary to make that particular provision valid, and to make your obligations enforceable to the fullest extent possible, under the laws applicable to the covenant's validity. If any provision of this Agreement is inconsistent with any law applicable to this Agreement or the Franchise which requires a greater advance notice of the termination or nonrenewal of this Agreement than is required under this Agreement, or the taking of some other action which is not required by this Agreement, then both parties will comply with the requirements of that law as if they were substituted for the inconsistent provision of this Agreement or added to this Agreement. If any law applicable to this Agreement or the Franchise makes any provision of this Agreement (including any mandatory specification, standard or operating procedure we prescribe) invalid or unenforceable, then we will have the right, in our sole discretion, to modify that provision to the extent necessary to make it valid and enforceable. You agree to be bound by each provision of this Agreement to the greatest extent to which you may lawfully be bound. B. WAIVER. (1) Unilateral Waiver. Either you or we may, by written notice, unilaterally waive or reduce any obligation of or restriction on the other party under this Agreement. The waiver or reduction may be revoked at any time for any reason on ten (10) days' written notice. (2) No Guarantees. If we give you any waiver, approval, consent or suggestion, or if we delay our response or deny any request for waiver, approval or consent, we will not be deemed to have made any warranties or guarantees on which you may rely and will not assume any liability or obligation to you. (3) No Waiver. If at any time we do not exercise a right available under this Agreement or do not insist on your compliance with the terms of the Agreement, or if a custom or practice develops which is inconsistent with this Agreement, we will not have waived the right to demand compliance with any of the terms of this Agreement at a later time. Similarly, the waiver of any particular breach or series of breaches under this Agreement or of any term in any other agreement between you and us will not affect our rights with any later breach. It will not be a waiver of any breach of this Agreement for us to accept payments which are due to us under this Agreement. Any agreement that we have, or any action that we take, with another Franchised Tupperware Distributorship will have no effect on our rights under this Agreement or any action we take with you. C. CUMULATIVE REMEDIES. The rights and remedies that this Agreement grants to either party will not prohibit either party from exercising any other right or remedy provided under this Agreement or permitted by law or equity. D. WRITTEN CONSENTS FROM COMPANY. Whenever this Agreement requires our advance approval or consent, you agree to make a timely written request for it. Our approval or consent will not be valid unless it is in writing. E. COSTS AND ATTORNEYS' FEES. If we or any of our Affiliates incurs expenses due to your failure to comply with this Agreement or to pay any amounts due to us or our Affiliates, or for any other reason due to your actions or inactions, you agree to reimburse us and our Affiliates for any of the costs and expenses that we incur, including, without limitation, reasonable accounting, attorneys', arbitrators' and related fees. F. GOVERNING LAW/CONSENT TO JURISDICTION. ALL MATTERS RELATING TO ARBITRATION WILL BE GOVERNED EXCLUSIVELY BY THE FEDERAL ARBITRATION ACT (9 U.S.C. Section 1 ET SEQ.). EXCEPT TO THE EXTENT GOVERNED BY THE FEDERAL ARBITRATION ACT, THE UNITED STATES TRADEMARK ACT OF 1946 (LANHAM ACT, 15 U.S.C. SECTIONS 1051 ET SEQ.), OR OTHER FEDERAL LAW, THIS AGREEMENT, THE FRANCHISE AND THE RELATIONSHIP BETWEEN US AND YOU WILL BE GOVERNED BY THE LAWS OF THE STATE OF FLORIDA, WITHOUT REGARD TO ITS CONFLICT OF LAWS PRINCIPLES, EXCEPT THAT ANY FLORIDA LAW REGULATING THE SALE OF FRANCHISES OR GOVERNING THE RELATIONSHIP OF A FRANCHISOR AND ITS FRANCHISEE WILL NOT APPLY UNLESS ITS JURISDICTIONAL REQUIREMENTS ARE MET INDEPENDENTLY WITHOUT REFERENCE TO THIS PARAGRAPH. YOU AGREE THAT WE MAY INSTITUTE ANY ACTION ARISING OUT OF OR RELATED TO THIS AGREEMENT OR OUR RELATIONSHIP THAT IS NOT REQUIRED TO BE ARBITRATED IN ANY STATE OR FEDERAL COURT OF GENERAL JURISDICTION IN THE STATE OF FLORIDA, AND YOU IRREVOCABLY SUBMIT TO THE JURISDICTION OF THOSE COURTS AND WAIVE ANY OBJECTION YOU MAY HAVE TO EITHER THE JURISDICTION OF OR VENUE IN THOSE COURTS. G. BINDING EFFECT. This Agreement is binding on and will inure to the benefit of our successors and assigns and will be binding on and inure to the benefit of your permitted successors, assigns, heirs, executors and administrators. H. ENTIRE AGREEMENT. This Agreement, including the introduction and exhibits to it, together with our Operating Manuals and other policies, constitutes the entire agreement between you and us, and there are no other oral or written understandings or agreements between you and us concerning the subject matter of this Agreement. This Agreement may be modified only by a written agreement signed by both you and us. I. NO LIABILITY TO OTHERS. We will not, because of this Agreement or any approvals, advice or services provided to you, be liable to any person or legal entity who is not a party to this Agreement, and no other party will have any rights because of this Agreement. J. CONSTRUCTION. All headings of the various sections and paragraphs of this Agreement are for convenience only and do not affect the meaning or construction of any provision. All references in this Agreement to masculine, neuter or singular usage will be construed to include the masculine, feminine, neuter or plural usages wherever applicable. If two or more persons are the Franchisee, their obligations and liabilities under this Agreement will be joint and several, and the Franchisee will be deemed to be a general partnership. A reference to "you" or "franchisee" includes each individual partner and the partnership. Except where this Agreement expressly requires that we reasonably approve or not unreasonably withhold our approval of any of your actions or requests, we have the absolute right to refuse any of your requests or to withhold our approval of any of your actions or omissions. K. MULTIPLE ORIGINALS. The parties may execute multiple copies of this Agreement, and each executed copy will be deemed an original. L. INJUNCTIVE RELIEF. Notwithstanding anything to the contrary contained in Section 17.M., each party has the right in a proper case to seek temporary restraining orders and temporary or preliminary injunctive relief from a court of competent jurisdiction. In that case, the parties will contemporaneously submit their dispute for arbitration on the merits according to Section 17.M. M. ARBITRATION. EXCEPT FOR CLAIMS RELATING TO THE VALIDITY OR OWNERSHIP OF THE TRADEMARKS, AND EXCEPT AS WE MAY ELECT TO COLLECT AMOUNTS DUE UNDER ANY PROMISSORY NOTE IN A JUDICIAL PROCEEDING, ALL CONTROVERSIES, DISPUTES OR CLAIMS BETWEEN US (AND OUR AFFILIATES AND OUR RESPECTIVE SHAREHOLDERS, OFFICERS, DIRECTORS, AGENTS AND EMPLOYEES) AND YOU (YOUR OWNERS, AFFILIATES AND EMPLOYEES, IF APPLICABLE) ARISING OUT OF OR RELATED TO: (a) THIS AGREEMENT OR ANY OTHER AGREEMENT BETWEEN THE PARTIES OR ANY PROVISION OF ANY OF THESE AGREEMENTS; (b) THE RELATIONSHIP OF THE PARTIES TO THIS AGREEMENT; (c) THE VALIDITY OF THIS AGREEMENT OR ANY OTHER AGREEMENT BETWEEN THE PARTIES OR ANY PROVISION OF ANY OF THESE AGREEMENTS; OR (d) ANY STANDARD, SPECIFICATION OR OPERATING PROCEDURE RELATING TO THE FRANCHISED DISTRIBUTORSHIP'S OPERATION MUST BE SUBMITTED FOR ARBITRATION. ANY PARTY WITH A CLAIM SUBJECT TO ARBITRATION MUST NOTIFY THE OTHER PARTY IN WRITING OF THE CLAIM BEFORE SUBMITTING THE CLAIM FOR ARBITRATION TO ANY FORUM. IF THE PARTIES HAVE NOT AGREED ON THE RESOLUTION OF THE DISPUTE WITHIN TEN (10) DAYS AFTER DELIVERY OF THE NOTICE, THE CLAIM MAY BE SUBMITTED FOR ARBITRATION ON DEMAND OF EITHER PARTY. ANY AND ALL ARBITRATION PROCEEDINGS WILL BE GOVERNED BY THE PROVISIONS SET FORTH IN EXHIBIT D, WHICH IS A PART OF THIS AGREEMENT. N. WAIVER OF PUNITIVE DAMAGES AND JURY TRIAL. EXCEPT FOR YOUR OBLIGATION TO INDEMNIFY US UNDER SECTION 6.D. AND CLAIMS WE BRING AGAINST YOU FOR YOUR UNAUTHORIZED USE OF THE MARKS OR UNAUTHORIZED USE OR DISCLOSURE OF ANY CONFIDENTIAL INFORMATION, WE AND YOU WAIVE TO THE FULLEST EXTENT PERMITTED BY LAW ANY RIGHT TO OR CLAIM FOR ANY PUNITIVE OR EXEMPLARY DAMAGES AGAINST THE OTHER AND AGREE THAT, IN THE EVENT OF A DISPUTE BETWEEN US AND YOU, THE PARTY MAKING A CLAIM WILL BE LIMITED TO EQUITABLE RELIEF AND TO RECOVERY OF ANY ACTUAL DAMAGES IT SUSTAINS. WE AND YOU IRREVOCABLY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM, WHETHER AT LAW OR IN EQUITY, BROUGHT BY EITHER OF US. O. SECURITY INTEREST. As security for your performing your obligations under this Agreement, including paying us or our Affiliates for purchases, you hereby grant us a security interest in: (1) all of the goods, equipment, inventory, accounts, accounts receivable, general intangibles (including, but not limited to, goodwill of the Franchised Distributorship), instruments, documents and chattel paper of the Franchised Distributorship, both presently owned and hereafter acquired; (2) all accessories, substitutions, additions, replacements, parts and accessions affixed to or used with any of these; and (3) the products and proceeds of any and all of these. You agree to execute any other documents we reasonably request to further document, perfect and record our security interest. If you default on any of your obligations under this Agreement, we may exercise all rights of a secured creditor granted to us by law in addition to our other rights under this Agreement and applicable law. P. NO WITHHOLDING PAYMENTS DUE TO US. You agree that you will not withhold payment of any amounts owed to us or our Affiliates on the grounds of our alleged nonperformance of any of our obligations under this Agreement or for any other reason whatsoever. 18. NOTICES AND PAYMENTS. All written notices and reports permitted or required to be delivered by the provisions of this Agreement or the Operating Manuals will be deemed delivered at the earliest of the following times: (a) the time delivered by hand, (b) one (1) business day after transmission by telegraph, telecopy or other electronic system or after placement with a commercial courier service for next business day delivery, or (c) three (3) business days after placement in the United States Mail by Registered or Certified Mail, Return Receipt Requested, postage prepaid. All notices and reports must be addressed to the party to be notified at its most current principal business address of which the notifying party has been notified. You agree to send all payments and required reports to us at any address(es) we designate to you in writing. Any required payment or report which we do not actually receive at the correct address during regular business hours on the date due (or postmarked by postal authorities at least two (2) days before it is due) will be deemed delinquent. 19. ACKNOWLEDGEMENTS. You acknowledge that you have received and have had the opportunity to review, for not less than ten (10) business days, a copy of our franchise offering circular describing certain information about us and the terms of the Tupperware Franchise Agreement. You acknowledge that you have read this Agreement and our franchise offering circular and understand and accept the terms, conditions and covenants contained in this Agreement as being reasonably necessary to maintain our high standards of quality and service and the uniformity of those standards for all Franchised Tupperware Distributorships. You acknowledge that you have conducted an independent investigation of the business venture contemplated by this Agreement and recognize that it involves business risks and that the venture's success is largely dependent upon your business abilities. We have not made, and you acknowledge that you have not received or relied upon, any guarantee, express or implied, as to the revenue, profits or likelihood of success of the Franchised Distributorship. You acknowledge that you have not received or relied on any representations about the Franchise or the Franchised Distributorship by us or our officers, directors, employees or agents that are contrary to the statements made in our franchise offering circular or the terms of this Agreement. The parties to this Agreement now execute and deliver this Agreement as of the Agreement Date. TUPPERWARE U.S., INC., a Delaware corporation FRANCHISEE (Print Name) FRANCHISEE (Signature) Gaylin Olson, President FRANCHISEE (Print Name) FRANCHISEE (Signature) EXHIBIT A TO THE FRANCHISE AGREEMENT DATED ________________________ BY AND BETWEEN TUPPERWARE U.S., INC. AND ______________________________ The Primary Area of Promotion referred to in Section 1 of the Agreement is: TUPPERWARE U.S., INC., a Delaware corporation FRANCHISEE (Print Name) FRANCHISEE (Signature) Gaylin Olson, President FRANCHISEE (Print Name) FRANCHISEE (Signature) EXHIBIT B TO THE FRANCHISE AGREEMENT DATED BY AND BETWEEN TUPPERWARE U.S., INC. AND ______________________________ The Premises are located at: TUPPERWARE U.S., INC., a Delaware corporation FRANCHISEE (Print Name) FRANCHISEE (Signature) Gaylin Olson, President FRANCHISEE (Print Name) FRANCHISEE (Signature) EXHIBIT C AGREEMENT FOR THE DESIGNATION OF AN OPERATING COMPANY This Agreement is made and entered into this _____ day of _________________, 19__ by and among TUPPERWARE U.S., INC., a Delaware corporation ("Franchisor"), (collectively, "Owner") and _________________________________________________, a ____________________ corporation (the "Operating Company"). 1. Recitals. Franchisor and Owner entered into that certain TUPPERWARE Franchise Agreement dated __________________________, 19__ (the "Franchise Agreement") for Owner to operate a Franchised TUPPERWARE Distributorship (the "Distributorship") from premises located at ____________________________________. The Franchise Agreement is incorporated into and made a part of this Agreement. Owner wishes to operate the Distributorship through the Operating Company. Franchisor is willing to permit Owner to operate the Distributorship through the Operating Company on the conditions set forth in this Agreement. 2. Representations To Franchisor. Owner and the Operating Company jointly and severally represent and warrant to Franchisor that now and at all times during the term of the Franchise Agreement: (a) Owner is and will be the owner of not less than seventy percent (70%) of the equity interests in the Operating Company; (b) Owner has and will have at least the percentage of voting power of the Operating Company's capital stock that may be required under applicable law and the articles of incorporation, bylaws and other documents relating to the Operating Company's governance to authorize a transfer of substantially all of the Operating Company's assets; (c) Owner has and will have the right and power to control the Operating Company and the Distributorship's operation and transfer; (d) Owner will be the Operating Company's chief executive and operating officers; (e) the Operating Company is duly incorporated and validly existing and is and will be duly authorized and qualified to do business and in good standing in each state in which it transacts business; and (f) the sole business the Operating Company will conduct will be the operation of the Distributorship. Owner and the Operating Company jointly and severally represent and warrant to Franchisor that Exhibit A to this Agreement is a complete and accurate description of certain information about the Operating Company and its shareholders, directors and officers. Except to the extent that the Franchise Agreement restricts transfers of ownership interests in the Operating Company, Owner and the Operating Company agree to notify Franchisor in writing of any change in the information in Exhibit A not later than thirty (30) days after the change occurs. Owner and the Operating Company further represent and warrant to Franchisor that the only consideration that the Operating Company is giving Franchisor for the rights granted to the Operating Company is the Operating Company's agreement to assume and perform all of Owner's obligations under the Franchise Agreement. 3. Operation Solely by Operating Company. Franchisor and Owner agree that the Distributorship will be operated solely by the Operating Company and no other person during the term of the Franchise Agreement. 4. Rights Retained Solely By Owner. Owner and the Operating Company acknowledge and agree that Owner retains, and is the only person or entity who may exercise, all renewal rights under the Franchise Agreement. The Operating Company has no rights under the Franchise Agreement concerning renewal. If Franchisor and Owner renew the franchise by signing a new franchise agreement, as provided in subparagraph (b) of Section 14 of the Franchise Agreement, the Operating Company will have no further rights under this Agreement. In order for the Operating Company to continue operating the Distributorship, the parties must execute a new agreement similar to this Agreement or on the form that Franchisor then requires for a corporation's operation of a Franchised TUPPERWARE Distributorship. 5. Liability Of Owner And The Operating Company. The Operating Company hereby assumes, jointly and severally with Owner, all of Owner's liabilities now existing or hereafter arising under or relating to the Franchise Agreement or the operation of the Distributorship. The Operating Company agrees to perform, observe and fulfill all of Owner's covenants and obligations as the franchisee under the Franchise Agreement and in any dealings with Franchisor or third parties relating to the Franchise Agreement, whether arising before or after the date of this Agreement. Owner acknowledges that this Agreement does not and will not relieve Owner of any of Owner's liabilities and obligations under the Franchise Agreement or the operation of the Distributorship, now existing or hereafter arising, including, but not limited to, payment for all goods and services the Operating Company orders from the Franchisor or its Affiliates. IN WITNESS WHEREOF the undersigned have executed this Agreement this _____ day of __________________, 19____. OWNER: (Signature) (Print Name) (Signature) (Print Name) TUPPERWARE U.S., INC., OPERATING COMPANY: a Delaware corporation a corporation Gaylin Olson, President (Print Name) By: Title: ATTACHMENT A INFORMATION ABOUT THE OPERATING COMPANY 1. NAME OF OPERATING COMPANY Full name of operating company: State of incorporation: Date of incorporation: Other name(s) under which it conducts business: State in which qualified to do business: Name and address of Registered Agent in state of incorporation: 2. SHAREHOLDER INFORMATION Name of Shareholder Number of Shares Held* Percentage Ownership 3. DIRECTORS AND OFFICERS Name of Director/Officer Position(s) Held *If there is more than one class of stock, the information must reflect the kind of shares held. EXHIBIT D ARBITRATION ANY CONTROVERSY, DISPUTE OR CLAIM SUBMITTED FOR ARBITRATION MUST BE SUBMITTED FOR ARBITRATION TO THE ORLANDO, FLORIDA OFFICE OF THE AMERICAN ARBITRATION ASSOCIATION ON DEMAND OF EITHER PARTY. THE ARBITRATION PROCEEDINGS WILL BE CONDUCTED UNDER THIS AGREEMENT IN ORLANDO, FLORIDA, OR ANY OTHER PLACE AS MAY BE MUTUALLY AGREED UPON BY THE PARTIES, AND HEARD IN ACCORDANCE WITH THE THEN CURRENT COMMERCIAL ARBITRATION RULES OF THE AMERICAN ARBITRATION ASSOCIATION, EXCEPT AS THESE RULES ARE MODIFIED BY THIS AGREEMENT. ALL MATTERS WITHIN THE SCOPE OF THE FEDERAL ARBITRATION ACT (9 U.S.C. Section 1 ET SEQ.) WILL BE GOVERNED BY IT AND NOT BY ANY STATE ARBITRATION LAW. EXCEPT AS LIMITED BY THIS AGREEMENT, THE ARBITRATOR WILL HAVE THE RIGHT TO AWARD OR INCLUDE IN HIS OR HER AWARD ANY RELIEF WHICH HE OR SHE DEEMS PROPER IN THE CIRCUMSTANCES, INCLUDING, WITHOUT LIMITATION, MONEY DAMAGES (WITH INTEREST ON UNPAID AMOUNTS FROM THE DATE DUE), SPECIFIC PERFORMANCE, INJUNCTIVE RELIEF AND ATTORNEYS' FEES AND COSTS (ACCORDING TO SECTION 17.E. OF THIS AGREEMENT), PROVIDED THAT THE ARBITRATOR WILL NOT HAVE AUTHORITY TO AWARD EXEMPLARY OR PUNITIVE DAMAGES, EXCEPT AS PROVIDED IN SECTION 17.N., OR TO ORDER EITHER PARTY TO CONTINUE OR REINSTATE A RELATIONSHIP THAT HAS EXPIRED OR THAT THE OTHER PARTY HAS SOUGHT TO TERMINATE ACCORDING TO THE PROVISIONS OF THIS AGREEMENT AND ANY APPLICABLE LAW. THE AWARD AND DECISION OF THE ARBITRATOR WILL BE CONCLUSIVE AND BINDING UPON ALL PARTIES, AND JUDGMENT UPON THE AWARD MAY BE ENTERED IN ANY COURT OF COMPETENT JURISDICTION. THE PARTIES AGREE THAT, IN ARBITRATIONS UNDER THIS AGREEMENT, NO EVIDENCE OF ARBITRATION AWARDS IN OTHER CASES MAY BE INTRODUCED INTO EVIDENCE OR CONSIDERED BY THE ARBITRATOR. THE PARTIES AGREE TO BE BOUND BY THE PROVISIONS OF ANY LIMITATION ON THE PERIOD OF TIME IN WHICH CLAIMS MUST BE BROUGHT UNDER APPLICABLE LAW. THE PARTIES FURTHER AGREE THAT, IN ANY ARBITRATION PROCEEDING, EACH MUST SUBMIT OR FILE ANY CLAIM WHICH WOULD CONSTITUTE A COMPULSORY COUNTERCLAIM (AS DEFINED BY RULE 13 OF THE FEDERAL RULES OF CIVIL PROCEDURE) WITHIN THE SAME PROCEEDING AS THE CLAIM TO WHICH IT RELATES; OTHERWISE, THAT CLAIM WILL BE FOREVER BARRED. ARBITRATION UNDER THIS AGREEMENT MAY BE CONDUCTED ONLY ON AN INDIVIDUAL, AND NOT A CLASS-WIDE, BASIS. AN ARBITRATION PROCEEDING BETWEEN THE PARTIES (INCLUDING OWNERS AND AFFILIATES AND OTHERS AS PROVIDED IN THIS PARAGRAPH) MAY NOT BE CONSOLIDATED WITH ANY OTHER ARBITRATION PROCEEDING INVOLVING THE COMPANY AND ANY OTHER PERSON. THE PROVISIONS OF THIS AGREEMENT CONCERNING ARBITRATION ARE INTENDED TO BENEFIT AND BIND CERTAIN THIRD PARTY NON-SIGNATORIES IDENTIFIED IN SECTION 17.M. AND WILL CONTINUE IN FULL FORCE AND EFFECT SUBSEQUENT TO AND NOTWITHSTANDING THE EXPIRATION OR TERMINATION OF THIS AGREEMENT. TUPPERWARE U.S., INC., a Delaware corporation FRANCHISEE (Print Name) FRANCHISEE (Signature) Gaylin Olson, President FRANCHISEE (Print Name) FRANCHISEE (Signature) EXHIBIT E TO THE FRANCHISE AGREEMENT DATED BY AND BETWEEN TUPPERWARE U.S., INC. AND ANNUAL AND QUARTERLY PERFORMANCE CRITERIA You must demonstrate your ability to grow sales during each year of operation. If you were not an existing Franchised Tupperware Distributor before signing this Agreement, your Franchised Distributorship's Estimated Retail Sales within the Primary Area of Promotion during the yearly period beginning , 19 and ending , 19 were $ . You agree, as provided in Section 3 of the Agreement, to increase your Estimated Retail Sales within the Primary Area of Promotion over this amount by the first anniversary date of this Agreement. If you do not satisfy this requirement, we will have the right, but not the obligation, to terminate the Agreement under Section 15.B. In addition, if at any time after the first anniversary date of this Agreement the growth in your Franchised Distributorship's Estimated Retail Sales within the Primary Area of Promotion during a three (3) month period falls ten percent (10%) or more below the average regional estimated retail sales growth during that same period, we have the right to give you a three (3) month period of business planning and coaching to help you improve your performance, defined as increased sales force recruiting and manager promoting within the Primary Area of Promotion, over the levels in the same three (3) month period during the previous calendar year. If you fail by the end of this three (3) month period to increase sales force recruiting and manager promoting within the Primary Area of Promotion over the levels in the same three (3) month period during the previous calendar year, we will have the right, but not the obligation, to terminate the Franchise Agreement. If you satisfy this performance criteria, we will give you additional coaching for a second three (3) month period to help you increase your Estimated Retail Sales within the Primary Area of Promotion, consistent with regional, area and national averages, over your levels of Estimated Retail Sales within the Primary Area of Promotion in the same three (3) month period during the previous calendar year. We will measure sales performance using the consistent averages derived from the Tupperware Regional Weekly Sales Analysis, the Formula to Grow Sales and long and short term objectives. If you do not satisfy this Estimated Retail Sales requirement within the Primary Area of Promotion by the end of the second three (3) month coaching period, we will have the right, but not the obligation, to terminate the Franchise Agreement. If you were an existing Franchised Tupperware Distributor before signing this Agreement, you agree that you will increase your Franchised Distributorship's Estimated Retail Sales within the Primary Area of Promotion over its Estimated Retail Sales within the Primary Area of Promotion during the preceding calendar year. You agree to increase your Estimated Retail Sales within the Primary Area of Promotion during the course of each year consistent with area, regional and national averages. If at any time the growth in your Franchised Distributorship's Estimated Retail Sales within the Primary Area of Promotion during a three (3) month period falls ten percent (10%) or more below the average regional estimated retail sales growth during that same period, we have the right to give you a three (3) month period of business planning and coaching to help you improve your performance, defined as increased sales force recruiting and manager promoting within the Primary Area of Promotion, over the levels in the same three (3) month period during the previous calendar year. If you fail by the end of this three (3) month period to increase sales force recruiting and manager promoting within the Primary Area of Promotion over the levels in the same three (3) month period during the previous calendar year, we will have the right, but not the obligation, to terminate the Franchise Agreement. If you satisfy this performance criteria, we will give you additional coaching for a second three (3) month period to help you increase your Estimated Retail Sales within the Primary Area of Promotion, consistent with regional, area and national averages, over your levels of Estimated Retail Sales within the Primary Area of Promotion in the same three (3) month period during the previous calendar year. We will measure sales performance using the consistent averages derived from the Tupperware Regional Weekly Sales Analysis, the Formula to Grow Sales and long and short term objectives. If you do not satisfy this Estimated Retail Sales requirement within the Primary Area of Promotion by the end of the second three (3) month coaching period, we will have the right, but not the obligation, to terminate the Franchise Agreement. TUPPERWARE U.S., INC., a Delaware corporation FRANCHISEE (Print Name) FRANCHISEE (Signature) Gaylin Olson, President FRANCHISEE (Print Name) FRANCHISEE (Signature) EX-11 4 STATEMENT OF COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11 TUPPERWARE CORPORATION STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
52 Weeks Ended December 28, December 30, 1996 1995 (Dollars in millions, shares in thousands) Pro Forma earnings . . . . . . . . . . . $ 170.4 $ 161.1 PRIMARY METHOD Shares Cumulative average outstanding shares . . 62,164 62,030 Common equivalent shares. . . . . . . . . 1,052 1,065 Weighted average number of common and common equivalent shares outstanding . . 63,216 63,095 Primary pro forma earnings per common and common equivalent share . . . . . . $ 2.70 $ 2.55 FULLY DILUTED METHOD Shares Cumulative average outstanding shares . . 62,164 62,030 Common equivalent shares. . . . . . . . . 1,068 1,065 Weighted average number of common and common equivalent shares outstanding . . 63,232 63,095 Fully diluted pro forma earnings per common and common equivalent share. . . . $ 2.69 $ 2.55 For all periods prior to the Distribution, the number of shares actually outstanding and the number of common equivalent shares existing at the date of the Distribution have been used.
EX-13 5 SELECTED PAGES FROM ANNUAL REPORT TO SHAREHOLDERS Selected Financial Data
1996 1995 1994 1993 1992 --------- --------- --------- --------- -------- (Dollars in millions, except per share amounts) Operating results Net sales: Europe $ 581.7 $ 595.1 $ 540.1 $ 505.1 $ 490.7 Americas: United States 181.1 208.6 228.8 225.4 207.1 Latin America 268.5 200.6 176.4 154.4 138.7 --------- --------- --------- -------- --------- 449.6 409.2 405.2 379.8 345.8 Asia Pacific 338.0 355.1 329.3 286.9 268.3 --------- --------- --------- --------- --------- Total net sales $1,369.3 $1,359.4 $1,274.6 $1,171.8 $1,104.8 ========= ========= ========= ========= ========= Operating profit (loss): Europe $ 153.0 $ 156.8 $ 125.0 $ 110.3 $ 92.4 Americas: United States 10.4 10.3 16.0 12.5 (139.6) Latin America 43.3 19.4 15.7 15.7 5.9 --------- --------- --------- --------- --------- 53.7 29.7 31.7 28.2 (133.7) Asia Pacific 61.0 59.4 46.3 40.3 32.9 --------- --------- --------- --------- --------- Total operating profit (loss) 267.7 245.9 203.0 178.8 (8.4) --------- --------- --------- --------- --------- Unallocated expenses (16.1) (22.9) (12.0) (17.8) (24.1) Costs associated with becoming an independent company (9.1) -- -- -- -- Interest (expense) income, net (8.0) 1.9 0.2 (12.6) (9.3) --------- ---------- --------- --------- --------- Income (loss) before income taxes & cumulative effect of accounting changes 234.5 224.9 191.2 148.4 (41.8) Provision for income taxes 59.8 53.5 42.0 30.5 1.9 --------- ---------- --------- --------- --------- Income (loss) before cumulative effect of accounting changes $ 174.7 $ 171.4 $ 149.2 $ 117.9 $ (43.7) ========= ========== ========= ========= ========= Pro forma net $ 170.4 $ 161.1 NA NA NA income ========= ========== ========= ========= ========= Pro forma net income per common and common equivalent share $ 2.70 $ 2.55 NA NA NA ========= ========== ========= ========= ========= Profitability ratios Operating profit as a percent of sales: Europe 26.3% 26.3% 23.1% 21.8% 18.8% Americas: United States 5.7 4.9 7.0 5.6 (67.4) Latin America 16.1 9.7 8.9 10.2 4.3 Asia Pacific 18.0 16.7 14.1 14.1 12.3 Total operating proft 19.5 18.1 15.9 15.3 (0.8) Return on average equity 65.0 Return on average invested capital 32.6 Financial Condition Working capital $143.4 $88.1 $72.9 $(49.6) $(11.3) Property, plant, and equipment, net 331.0 317.7 310.2 277.2 250.8 Total assets 978.5 944.0 882.6 785.1 661.1 Short-term borrowings and current portion of long-term debt 25.3 83.8 58.3 139.9 19.3 Long-term debt 215.3 0.4 0.5 45.6 153.3 Shareholders' equity 305.5 415.6 395.1 163.3 68.2 Current ratio 1.38 1.20 1.18 0.90 0.97 Long-term debt-to-equity 70.5% Total debt-to-capital 44.1% Other Data Net cash provided by operating activities $150.5 $179.2 $142.7 $105.3 $71.1 Capital expenditures 96.0 69.3 72.9 85.6 80.0 Depreciation 65.3 61.3 55.7 44.7 50.1 Common Stock Data Dividends declared per share $ 0.44 Dividend payout ratio 32.6% Average common and common equivalent shares outstanding (thousands) 63,232 Year-end book value per share $ 4.90 Year-end price/earnings ratio 20.1 Year-end market/book ratio 11.1 Year-end shareholders (thousands) 21.6 For all periods prior to the Distribution, the number of shares used were the 63.1 common and common equivalent shares as of the date of the Distribution. Due to the change in the company's capital structure in connection with the Distribution, this information is not applicable or not meaningful prior to 1996. Returns on average equity and invested capital are calculated using 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. The company initiated regular quarterly dividends of $0.22 per share beginning in the third quarter of 1996. The dividend payout ratio is calculated assuming four quarterly dividend declarations divided by 1996 pro forma earnings per common and common equivalent share. Includes $105.0 million of the $150.0 million of 8.375 percent notes that were called at par on February 1, 1994. In 1992, the company recorded 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. Pro forma net income is based on historical net income adjusted for interest expense related to the increase in borrowings incurred in connnection with the distribution of the company's equity to Premark International, Inc.'s shareholders in May 1996.
MANAGEMENT'S DISCUSSION AND ANALYSIS The following is a discussion of the results of operations for 1996 compared with 1995 and 1995 compared with 1994, and changes in financial condition during 1996. This information should be read in conjunction with the consolidated financial information provided on pages 21 to 34 of this Annual Report. The Distribution On November 1, 1995, Premark's board of directors authorized Premark management to proceed with a plan to establish the Tupperware business as an independent company through a stock distribution to Premark's shareholders (the Distribution). The Distribution was effected on May 31, 1996, through a 1-for-1 distribution of stock, which was tax free to Premark's shareholders pursuant to a ruling received from the Internal Revenue Service. Results of Operations Net Sales and Net Income Net sales in 1996 of $1.4 billion were 0.7 percent higher than 1995 net sales, reflecting a substantial increase from operations in Latin America and slight improvements in Europe and Asia Pacific. These increases were mostly offset by the unfavorable impact of foreign exchange and lower U.S. sales. In 1995, sales increased 7 percent over 1994 sales of $1.3 billion, due to improvement in international operations and the benefit of favorable foreign exchange, which more than offset a decline in the United States. Pro forma net income increased 6 percent to $170.4 million in 1996, compared with $161.1 million in 1995. All areas had operational improvements, but foreign exchange had an $11.3 million negative impact on the comparison. Corporate expenses decreased substantially compared with 1995, which included an allocation of overhead from Premark for the full year. Additionally during 1996, the company incurred $9.1 million of pretax costs associated with becoming an independent company. Net income increased 15 percent to $171.4 million in 1995, compared with $149.2 million in 1994, also on the strength of international operations and an $8.5 million benefit of favorable foreign exchange. Partially offsetting these factors was a lower profit in the United States. In 1996 and 1995, 87 percent and 85 percent, respectively, of the company's sales were from international operations. International operations generated 96 percent of operating profit in both years. Costs and Expenses The cost of products sold in relation to sales was 35.6 percent, 35.4 percent, and 36.2 percent in 1996, 1995, and 1994, respectively. The improvement in 1995 compared with 1994 was the result of reduced manufacturing costs along with selected price increases, which outweighed significant increases in raw material costs. Delivery, sales, and administrative expense as a percentage of sales was 45.8 percent, 48.1 percent, and 48.9 percent in 1996, 1995, and 1994, respectively. The ratio has improved as costs have been contained while sales have risen, particularly in Latin America. Tax Rate The effective tax rates for 1996, 1995, and 1994, were 25.5 percent, 23.8 percent, and 22.0 percent, respectively. The increase in 1996 was due to a lower benefit from repatriating foreign earnings and the absence of the 1995 benefit from the resolution of certain international and domestic tax audit contingencies. These factors were only partially offset by the 1996 benefit of a capital loss carryforward and from reducing the valuation allowance for U.S. federal deferred tax assets. The 1995 rate is higher than the 1994 rate due to the absence of the 1994 reduction of the valuation allowance against U.S. federal deferred tax assets, which was only partially offset by the benefit associated with the favorable resolution of tax contingencies. Net Interest The company had $8.0 million of net interest expense in 1996, compared with net interest income of $1.9 million and $0.2 million in 1995 and 1994, respectively. Until immediately prior to the Distribution, the company was capitalized primarily through Premark's net investment. No interest was charged to the company for this funding. In 1997 and future years, the company expects to incur a higher level of net interest expense than in 1996, since it will have net borrowings outstanding throughout the year. See the Financial Condition section of Management's Discussion and Analysis for a discussion of the financing activities of the company during 1996. Regional Results 1996 vs. 1995
Negative foreign Increase exchange Percent of (decrease) impact total --------------- ----------- ------------ 1996 1995 Dollar Percent Dollar pp 1996 1995 ------ ------ ------ ------- ------ ---- ---- ---- (Dollars in millions) Sales: Europe $ 581.7 $ 595.1 $(13.4) (2)% $(25.5) (4) 42% 44% Americas: United States 181.1 208.6 (27.5) (13) - - 13 15 Latin America 268.5 200.6 67.9 34 (9.6) (7) 20 15 -------- -------- ------ ------ --- --- 449.6 409.2 40.4 10 (9.6) (3) 33 30 Asia Pacific 338.0 355.1 (17.1) (5) (27.6) (8) 25 26 -------- -------- ------ ------ --- --- $1,369.3 $1,359.4 $ 9.9 1% $(62.7) (5) 100% 100% ======== ======== ====== ====== === === Operating Profit: Europe $153.0 $156.8 $ (3.8) (2)% $ (7.7) (5) 57% 64% Americas: United States 10.4 10.3 0.1 1 - - 4 4 Latin America 43.3 19.4 23.9 122 (2.0) (26) 16 8 ------ ------ ----- ------ --- --- 53.7 29.7 24.0 80 (2.0) (13) 20 12 Asia Pacific 61.0 59.4 1.6 3 (5.1) (10) 23 24 ------ ------ ----- ------ --- --- $267.7 $245.9 $ 21.8 9% (14.8) (7) 100% 100% ====== ====== ====== ====== === ===
Europe The sales improvement in Europe, excluding the negative impact of foreign exchange, was from higher volume in Italy and certain smaller markets and was only partially offset by lower volume in France. Italy's increase in volume was attributable to its success in recruiting and motivating a higher active sales force, while the lower volume in France was attributable to a smaller active sales force and the weak economic environment. In Germany, which accounts for a substantial portion of the region's sales and operating profit, 1996 sales were even with 1995 sales, after considering the unfavorable impact of foreign exchange. Lower sales in Germany in the first quarter of 1996 were offset by higher volume during the remainder of the year, particularly the second and third quarters. In the first quarter, a weak economy together with lower sales during an important promotional period, led to the poor comparison with the first quarter of 1995. The impact of strong sales force recruiting for the remainder of the year offset the sales shortfall in the first quarter. The higher operating profit in 1996, excluding the impact of foreign exchange, reflects the sales fluctuations addressed above, along with lower promotional costs in Germany and a lower cost structure in the United Kingdom, partially offset by higher costs in Spain. The negative impact of foreign exchange on both sales and operating profit reflects the dollar's strength against the currencies throughout the region. The Americas The decline in U.S. sales was the result of a transition to distributors that do not stock inventory and the impact of implementing higher sales force standards. The new sales force standards led to a considerable decrease in the number of managers and therefore a reduced number of dealers recruited. The slightly higher U.S. operating profit in 1996 compared with 1995, in spite of the lower sales, was due to improved manufacturing efficiencies and lower administrative expenses. In Latin America, more than 100 new distributors were added, leading to a 77 percent increase in the average active sales force. The resulting improvements in sales and operating profit were due to higher volume in Mexico, Brazil, and Argentina. In addition to the positive impact of higher volume, operating profit also improved due to a lower operating expense structure in relation to the higher sales and more focused promotional spending. The negative impact of foreign exchange on the region's sales and operating profit comparisons was primarily from weakness in the Mexican peso. Asia Pacific Excluding the impact of a weak Japanese yen, Asia Pacific's higher sales were from significant volume improvements in Korea and Malaysia, which were only partially offset by decreases in volume in Taiwan and the Philippines. For Korea, Malaysia, and Taiwan, the variations from 1995 reflected the sizes of the active sales forces. The lower sales in the Philippines were mainly due to the effect of an inventory liquidation program in 1995. Operating profit increased as a result of the higher volume in Korea, partially offset by lower profit in Japan due to the weak yen and a lower gross margin because of sales of a higher percentage of third party sourced product. Operating profit in Malaysia did not increase in line with the higher sales due to the costs associated with importing a greater proportion of products. Operating profit in Taiwan and the Philippines fell as a result of the lower sales. Regional Results 1995 vs. 1994
Positive (negative) foreign Increase exchange Percent (decrease) impact of total --------------- ------------- ------------ 1995 1994 Dollar Percent Dollar pp 1995 1994 ------ ------ ------ ------- ------ ---- ----- ---- (Dollars in millions) Sales: Europe $ 595.1 $ 540.1 $55.0 10% $56.9 11 44% 42% Americas: United States 208.6 228.8 (20.2) (9) - - 15 18 Latin America 200.6 176.4 24.2 14 (39.9) (23) 15 14 -------- -------- ----- ----- --- --- 409.2 405.2 4.0 1 (39.9) (10) 30 32 Asia Pacific 355.1 329.3 25.8 8 16.2 5 26 26 -------- -------- ----- ----- --- --- $1,359.4 $1,274.6 $84.8 7% $33.2 3 100% 100% ======== ======== ===== ===== === === Operating Profit: Europe $156.8 $125.0 $31.8 25% $15.3 12 64% 61% Americas: United States 10.3 16.0 (5.7) (36) - - 4 8 Latin America 19.4 15.7 3.7 24 (9.8) (63) 8 8 ------ ------ ----- ----- --- --- 29.7 31.7 (2.0) (6) (9.8) (31) 12 16 Asia Pacific 59.4 46.3 13.1 28 3.1 7 24 23 ------ ------ ----- ----- --- --- $245.9 $203.0 $42.9 21% $ 8.6 4 100% 100% ====== ====== ===== ===== === ===
Europe The 1995 sales increase was due to the favorable impact of foreign exchange, largely attributable to Germany. The operating profit increase reflects the benefit of foreign exchange, as well as higher profit in Germany on a local currency basis, a smaller loss in the United Kingdom, and lower area administrative costs. Germany's operating profit increase, excluding the impact of foreign exchange, was due primarily to improved gross margins. Operating efficiencies in the United Kingdom and Spain resulted in a reduction in the loss in the United Kingdom and a small profit in Spain, despite the lower sales in these countries. The Americas U.S. sales and operating profit decreased due to lower sales volume. The number of consultants increased 4 percent and the average active sales force grew 2 percent, but there was a large decrease in the productivity of the sales force. Productivity in 1995 was down due to weakness in response by the sales force to certain promotional programs. In Latin America, the sales increase was led by operating improvements in Brazil, Mexico, and Venezuela. A net of 69 new distributors was added in 1995. The total number of consultants more than doubled and the average active sales force grew 68 percent. As a result, sales rose sharply in Brazil and significantly in Venezuela, and Mexico's sales increased substantially in local currency terms, although they decreased overall due to the negative impact of the peso devaluation. The negative impact of foreign exchange on the operating profit comparison of Latin America was due to the Mexican peso's devaluation. Profit in Brazil increased substantially from a small base in 1994, and Venezuela had a profit in 1995 versus a loss in 1994. Despite a weaker Mexican peso, the improvement in Latin America, particularly Brazil, was attributable to relatively stable economic conditions, a focus on recruiting and distributor expansion, streamlining of operations, and simplified promotional programs. Asia Pacific The sales increase in Asia Pacific was the result of favorable foreign exchange, along with operational improvements in Korea, the Philippines, and some of the region's smaller markets. Sales in Japan increased due to the beneficial impact of foreign exchange, but excluding that effect, decreased modestly due to an estimated $9 million impact from the Kobe earthquake at the beginning of the year. Korea had a significant sales increase due to higher volume generated by a much more productive sales force. The Philippines had a strong increase in sales, which was the result of a substantial increase in the average active sales force and the 1995 inventory liquidation. The operating profit increase was due primarily to a substantial increase in Korea and a profit in Australia versus a loss in 1994. The increase in Korea was due to the higher sales along with improved margins. Australia's favorable profit comparison was primarily due to lower promotional costs and the absence of 1994's costs incurred to shut down a manufacturing plant. Japan had a strong increase in operating profit from the favorable impact of foreign exchange despite the negative impact of the Kobe earthquake, which affected profit by approximately $5 million. Financial Condition Liquidity and Capital Resources Under the Distribution Agreement between Premark, Tupperware, and Dart Industries Inc. (Dart), which is now a wholly-owned subsidiary of Tupperware, 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 expenditures, were 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, but, in late June, all outstanding borrowings were refinanced through the issuance of commercial paper. On October 1, 1996, Tupperware Finance Company B.V. (TFC), a subsidiary of the company, completed the sale of $100 million of 7.25 percent ten-year notes under a $200 million registration statement filed with the Securities and Exchange Commission. On December 23, 1996, TFC sold $15 million of 7.05 percent 6.5 year notes through a private placement. The proceeds of both note sales have been used to refinance a portion of outstanding commercial paper borrowings. As of December 28, 1996, $98.8 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 1997. As of December 28, 1996, amounts available under the multicurrency credit facility, through commercial paper borrowings and through $187.1 million of foreign uncommitted lines of credit, along with cash generated by operating activities, are expected to be adequate to finance any additional working capital needs and capital expenditures. Working capital increased to $143.4 million as of December 28, 1996, compared with $88.1 million as of December 30, 1995, and $72.9 million as of December 31, 1994. The current ratio was 1.4-to-1 at the end of 1996 and 1.2-to-1 at the end of both 1995 and 1994. The 1996 increase was due to a reduction in debt classified as current for the reasons discussed above, and an increase in inventories because of substantial sales growth in Latin America and lower than planned fourth quarter sales in certain markets. These factors were only partially offset by a decrease in cash and cash equivalents, reflecting efforts to reduce overseas deposits. Working capital was also higher at the end of 1995 compared with the end of 1994 to support growth in Latin America, as well as due to higher sales activity in December and higher inventory levels in the United States and Europe. Operating Activities Cash provided by operating activities was $150.5 million in 1996, compared with $179.2 million in 1995 and $142.7 million in 1994. The primary reason for the lower 1996 amount compared with 1995 was a more significant increase in inventories. In 1995 compared with 1994, higher income accounted for the majority of the increase. Investing Activities For 1996, 1995, and 1994, respectively, capital expenditures totaled $96.0 million, $69.3 million, and $72.9 million. The higher 1996 expenditures primarily relate to the increase of manufacturing capacity in Latin America and the purchase of molds to support new product programs. Capital expenditures are expected to be between $85 million and $95 million in 1997. Dividends Quarterly dividends were initiated in August 1996 at 22 cents per share, and the company declared dividends of 44 cents per share of common stock during 1996. Share Repurchases On November 7, 1996, the company announced it would repurchase up to 5 million shares of its common stock, with volume and timing to depend on market conditions. Shares acquired will be used for general corporate needs. Repurchases will be made in the open market or through other transactions and will be financed through cash flow from operations or issuance of additional debt. Repurchases under this program began in January 1997. Through March 10, 1997, 625,000 shares were repurchased at an average cost of $44 per share. New Accounting Standard In October 1995, the Financial Accounting Standards Board adopted Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," which governs the accounting for stock-based compensation plans, including employee stock options. The statement allows companies the choice of adopting a new fair value based method of accounting for such plans that includes expensing related compensation costs in the income statement, or continuing to apply the preexisting method under which generally no compensation expense is recorded. If companies elect to follow preexisting guidelines, the new rule requires that the notes to the financial statements include pro forma information on net income and earnings per share as if the fair value based method were being used. The company has elected to continue to measure compensation expense under the preexisting guidelines. Pro forma information relating to stock-based compensation is presented in Note 9 to the consolidated financial statements. U.S. sales and operating profit decreased due to lower sales volume. The number of consultants increased 4 percent and the average active sales force grew 2 percent, but there was a large decrease in the productivity of the sales force. Productivity in 1995 was down due to weakness in response by the sales force to certain promotional programs. In Latin America, the sales increase was led by operating improvements 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. One of the economic risks associated with operating internationally is the exposure to fluctuation 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 large number of currencies involved, the constantly changing exposure in these currencies, and the fact that all foreign currencies do not react in the same manner in relation to the U.S. dollar. In response to the fact that a strengthening U.S. dollar generally has a negative impact on the company, the company uses financial instruments, such as forward contracts, to hedge its exposure to certain foreign exchange risks as appropriate. See Note 6 to the consolidated financial statements for a description of the nature of the risks associated with the company's derivative financial instruments. TUPPERWARE CORPORATION CONSOLIDATED STATEMENT OF INCOME
Year Ended ------------------------------------- Dec. 28, Dec. 30, Dec. 31, (In millions, except per share amounts) 1996 1995 1994 -------- -------- -------- Net sales. . . . . . . . . . . . . . . . . . $1,369.3 $1,359.4 $1,274.6 Costs and expenses: Cost of products sold. . . . . . . . . . . . 487.3 481.5 460.9 Delivery, sales, and administrative expense 627.2 653.5 622.7 Interest expense . . . . . . . . . . . . . . 13.2 3.1 3.7 Interest income. . . . . . . . . . . . . . . (5.2) (5.0) (3.9) Costs associated with becoming an independent company. . . . . . . . . . . . 9.1 -- -- Other expense, net . . . . . . . . . . . . . 3.2 1.4 -- ------- ------- ------- Total costs and expenses . . . . . . . . . 1,134.8 1,134.5 1,083.4 ------- ------- ------- Income before income taxes . . . . . . . . . . 234.5 224.9 191.2 Provision for income taxes . . . . . . . . . . 59.8 53.5 42.0 ------- ------- ------- Net income . . . . . . . . . . . . . . . . . . $ 174.7 $ 171.4 $ 149.2 ======= ======= ======= Pro forma net income per common and common equivalent share (unaudited) . . . . . $ 2.70 $ 2.55 ======= ======= See Notes to the Consolidated Financial Statements.
TUPPERWARE CORPORATION CONSOLIDATED BALANCE SHEET
Dec. 28, Dec. 30, (Dollars in millions, except per share amounts) 1996 1995 -------- -------- Assets Cash and cash equivalents. . . . . . . . . . $ 53.0 $ 97.3 Accounts receivable, less allowances of $27.7 in 1996 and $26.1 in 1995 . . . . . 154.8 147.5 Inventories. . . . . . . . . . . . . . . . 252.8 206.6 Deferred income tax benefits . . . . . . . . 35.1 58.1 Prepaid expenses . . . . . . . . . . . . . . 27.5 16.9 ------- ------- Total current assets . . . . . . . . . . . 523.2 526.4 ------- ------- Deferred income tax benefits . . . . . . . . 56.4 21.7 Property, plant, and equipment, net. . . . . 331.0 317.7 Long-term receivables, net of allowances of $40.2 in 1996 and $24.8 in 1995, and other assets . . . . . . . . . . . . . . . . 67.9 78.2 ------- ------- Total assets. . . . . . . . . . . . . . . $ 978.5 $ 944.0 ======= ======= Liabilities and shareholders' equity Accounts payable . . . . . . . . . . . . . . . $ 95.6 $ 88.0 Short-term borrowings and current portion of long-term debt . . . . . . . . . . . . . . . 25.3 83.8 Accrued liabilities. . . . . . . . . . . . . 258.9 266.5 ------- ------- Total current liabilities . . . . . . . . . 379.8 438.3 ------- ------- Long-term debt . . . . . . . . . . . . . . . 215.3 0.4 Accrued postretirement benefit cost. . . . . 36.9 36.1 Other liabilities. . . . . . . . . . . . . . 41.0 53.6 Shareholders' equity: Net investment by Premark. . . . . . . . . -- 533.5 Preferred stock, $0.01 par value, 200,000,000 shares authorized; none issued. . . . . -- -- Common stock, $0.01 par value, 600,000,000 shares authorized; 62,359,824 shares issued . . . . . . . . . . . . . . . . . . 0.6 -- Capital surplus . . . . . . . . . . . . . . 19.1 -- Retained earnings . . . . . . . . . . . . . 418.2 -- Unearned portion of restricted stock issued for future service . . . . . . . . . . . . (3.9) -- Cumulative foreign currency adjustments (128.5) (117.9) ------- ------- Total shareholders' equity . . . . . . . . . 305.5 415.6 ------- ------- Total liabilities and shareholders' equity $ 978.5 $ 944.0 ======= ======= See Notes to the Consolidated Financial Statements.
TUPPERWARE CORPORATION CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Net Cumulative Common stock investment foreign --------------- by Capital Retained currency Shares Dollars Premark surplus earnings adjustments ------ ------- ----------- ------- -------- ----------- (In millions, except per share amount) December 25, 1993. . . . . . . . -- -- $282.0 -- -- $(118.7) Net income. . . . . . . . . . 149.2 Net transactions with Premark 76.9 Translation adjustments . . . 5.7 ------ ------ ------ ------ ------ ------- December 31, 1994. . . . . . . . -- -- 508.1 -- -- (113.0) Net income. . . . . . . . . . 171.4 Net transactions with Premark (146.0) Translation adjustments (4.9) ------ ------ ------ ------ ------ ------- December 30, 1995. . . . . . . . -- -- 533.5 -- -- (117.9) Net income. . . . . . . . . . 31.6 $143.1 Shares issued to Premark . . 62.1 $ 0.6 (0.6) Net transactions with Premark other than special dividend 31.7 Special dividend to Premark (293.7) $ 8.8 Distribution of equity of the company to Premark's shareholders. . . . . . . (302.5) 302.5 Cash dividends declared . . ($0.44 per share) . . . . (27.4) Stock issued for incentive plans and related tax benefits 0.3 -- 10.3 Translation adjustments . . (10.6) ----- ----- ------ ----- ------ ------- December 28, 1996. . . . . . . 62.4 $ 0.6 $ -- $19.1 $418.2 $(128.5) ===== ===== ====== ===== ====== ======= See Notes to the Consolidated Financial Statements.
TUPPERWARE CORPORATION CONSOLIDATED STATEMENT OF CASH FLOWS
Year Ended ---------------------------------- Dec. 28, Dec. 30, Dec. 31, (In millions) 1996 1995 1994 -------- -------- -------- Cash flows from operating activities: Net Income . . . . . . . . . . . . . . $ 174.7 $ 171.4 $ 149.2 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation . . . . . . . . . . . . 65.3 61.3 55.7 Loss on sale of assets . . . . . . . 5.2 5.3 2.1 Foreign exchange loss, net . . . . . 1.3 0.6 0.1 Changes in assets and liabilities: (Increase) decrease in accounts and notes receivable. . . . . . . . . . (12.7) (36.1) 10.3 Increase in inventories. . . . . . . (54.0) (24.5) (6.7) Increase (decrease) in accounts payable and accrued liabilities . . . . . . 2.0 4.1 (23.7) Increase in income taxes payable . . 0.6 2.0 5.8 (Increase) decrease in net deferred income taxes. . . . . . . . . . . . (16.3) 7.8 (19.6) Other, net . . . . . . . . . . . . . (15.6) (12.7) (30.5) ------- ------- ------- Net cash provided by operating activities. . . . . . . . . . . . 150.5 179.2 142.7 ------- ------- ------- Cash flows from investing activities: Capital expenditures . . . . . . . . (96.0) (69.3) (72.9) ------- ------- ------- Net cash used in investing activities (96.0) (69.3) (72.9) ------- ------- ------- Cash flows from financing activities: Special dividend to Premark. . . . . . (284.9) -- -- Net transactions with Premark other than special dividend. . . . . . . . . . 37.6 (146.0) 76.9 Dividend payments to shareholders . . (13.7) -- -- Proceeds from exercise of stock options 6.3 -- -- Net (decrease) increase in short-term debt (54.1) 31.4 28.0 Proceeds from issuance of long-term debt 315.5 0.7 -- Repayment of long-term debt. . . . . . . (100.6) (0.7) (153.2) ------- ------- ------- Net cash used in financing activities (93.9) (114.6) (48.3) ------- ------- ------- Effect of exchange rate changes on cash and cash equivalents. . . . . . . . . . (4.9) (0.3) (7.5) ------- ------- ------- Net (decrease) increase in cash and cash equivalents. . . . . . . . . . . (44.3) (5.0) 14.0 Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . 97.3 102.3 88.3 ------- ------- ------- Cash and cash equivalents at end of year $ 53.0 $ 97.3 $ 102.3 ======= ======= ======= See Notes to the Consolidated Financial Statements.
TUPPERWARE CORPORATION 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 (the company or Tupperware). All significant intercompany accounts and transactions have been eliminated. Certain prior year amounts have been restated to conform with the current year's presentation. The company's fiscal year ends on the last Saturday of December, and included 52 weeks in 1996 and 1995, and 53 weeks in 1994. 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 28, 1996 and December 30, 1995, $28.1 million and $65.6 million, respectively, of the cash and cash equivalents included on the consolidated balance sheet were held in the form of time deposits or certifcates of deposit. Inventories Inventories are valued at the lower of cost or market. Inventory cost includes cost of raw material, labor, and overhead. Approximately 25 percent of inventories, including all domestic inventories, are valued on the last-in, first-out (LIFO) cost method. The first-in, first-out (FIFO) cost method is generally used for the remaining inventories. If inventories valued on the LIFO method had been valued using the FIFO method, they would have been $20.6 million higher at the end of 1996 and $21.3 million higher at the end of 1995. Property and Depreciation 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. Statement of Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of" (SFAS 121), was adopted by the Financial Accounting Standards Board (FASB) in March 1995 and has been implemented by the company in 1996. However, since the company's previous accounting policy was consistent with the provisions of SFAS 121, there was no impact as a result of adopting the new standard. Revenue Recognition Revenue is recognized when product is shipped. Advertising and Research and Development Costs Advertising and research and development costs are charged to expense as incurred. Advertising expense totaled $7.3 million, $8.7 million, and $8.5 million in 1996, 1995, and 1994, respectively. Research and development costs totaled $7.2 million, $6.3 million, and $8.9 million in 1996, 1995, and 1994, respectively. Accounting for Stock-Based Compensation In October 1995, the FASB adopted Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation," which governs the accounting for stock-based compensation plans, including employee stock options. The statement allows companies the choice of adopting a new fair value based method of accounting for such plans that includes expensing related compensation cost in the income statement, or continuing to apply the method specified under preexisting guidelines under which generally no compensation expense is recorded. If companies elect to follow preexisting guidelines, the new statement requires that the notes to the financial statements include pro forma information on net income and earnings per share as if the fair value based method were being used. The company has elected to continue to measure compensation expense under the preexisting guidelines. Pro forma information relating to stock-based compensation is presented in Note 9. Income Taxes Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets are also recognized for credit carryforwards. Deferred tax assets and liabilities are measured using the rates expected to apply to taxable income in the years in which the temporary differences are expected to reverse and the credits are expected to be used. The effect on deferred tax assets and liabilities of the change in tax rates is recognized in income in the period that includes the enactment date. In determining the amount of any valuation allowance required to offset deferred tax assets, an assessment is made that includes anticipating future income, in determining the likelihood of realizing deferred tax assets. The results of the company's domestic operations were included in Premark International, Inc.'s (Premark) consolidated U.S. federal tax return through May 31, 1996, the date of the Distribution. The provisions for income taxes included in these financial statements for periods prior to the Distribution are the company's allocated share of Premark's domestic income tax expense, representing the expense that the company would have incurred on a separate return basis, and the actual income tax provisions of its foreign subsidiaries. As part of the plan of Distribution, Tupperware and Premark entered into a tax sharing agreement. This agreement generally provides that for periods prior to the Distribution, the two companies will retain the liability for any unpaid taxes attributable to their respective operations. Pro Forma Net Income Per Common and Common Equivalent Share (Unaudited) Historical net income per share has been omitted since the company was not a separate entity with a capital structure of its own throughout any of the years presented. 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 the company used $25.0 million of available cash and $271.9 million of additional borrowings to fund a special dividend payment to Premark of $284.9 million and $12.0 million for the amount that the company paid in July 1996 related to the quarterly dividend declared on Premark's common stock on May 1, 1996. Pro forma net income is based on the company's historical net income adjusted in 1996 and 1995 for $7.0 million and $16.9 million of additional interest expense, net of $2.7 million and $6.6 million of tax benefits, respectively, related to the increase in borrowings at an assumed weighted average interest rate of 6.2 percent. Pro forma net income per share includes pro forma net income divided by an assumed 63.1 million weighted average common and common equivalent shares for all periods prior to the Distribution and actual net income per share for the period subsequent to the Distribution. The company's only common stock equivalents are stock options. Derivative Financial Instruments The company periodically uses derivative financial instruments, principally over-the-counter forward exchange contracts with major international financial institutions, to offset the effects of exchange rate changes on net investments in foreign subsidiaries, firm purchase commitments, and certain intercompany loan transactions. Gains and losses on contracts designated as hedges of net investments in a foreign subsidiary or intercompany transactions that are permanent in nature are accrued as exchange rates change, and are recognized in shareholders' equity as foreign currency translation adjustments. Gains and losses on contracts designated as hedges of intercompany transactions that are not 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 non-permanent intercompany transactions and identifiable foreign currency firm commitments are held to maturity. 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, short-term borrowings, and outstanding forward exchange contracts approximated their fair values at December 28, 1996, and December 30, 1995. 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 $102.2 million as of December 28, 1996. The fair value of the remaining long-term debt approximated its book value at the end of 1996 and 1995. Foreign Currency Translation Results of operations for foreign subsidiaries are translated into U.S. dollars using the average exchange rates during the year. The assets and liabilities of those subsidiaries, other than those of operations in highly inflationary countries, are translated into U.S. dollars using the exchange rates at the balance sheet date. The related translation adjustments are recorded in a separate component of shareholders' equity, "Cumulative foreign currency adjustments." Foreign currency transaction gains and losses, as well as translation of financial statements of subsidiaries in highly inflationary countries, are included in income. Note 2: Relationship and Transactions with Premark International,Inc. On November 1, 1995, Premark's board of directors authorized Premark management to proceed with a plan to establish the Tupperware business as an independent company through a stock distribution to Premark's shareholders (the Distribution). The Distribution was effected on May 31, 1996, through a 1-for-1 distribution of stock, which was tax free to Premark's shareholders pursuant to a ruling received from the Internal Revenue Service. Pursuant to the plan to distribute the shares of the company to Premark shareholders, Premark and Tupperware entered into several agreements, including a Distribution Agreement, an Employee Benefits and Compensation Allocation Agreement, and a Tax Sharing Agreement. Under the Distribution Agreement, on May 24, 1996, Dart Industries Inc. (Dart), which is now a wholly-owned subsidiary of Tupperware, paid a $284.9 million special dividend (the Dividend Payment) to Premark. Dart funded the Dividend Payment with new bank borrowings and available cash. In addition, the company paid Premark $12.0 million in July 1996 to fund a portion of the quarterly dividend on Premark's common stock declared in May 1996. Included in the consolidated statement of income is an allocation of general corporate expenses related to services provided for the company by Premark in the amounts of $4.4 million for 1996 through the date of the Distribution, $14.5 million in 1995, and $13.8 million in 1994. This allocation was based on an estimate of the proportion of corporate expenses related to the company for the periods presented and, in the opinion of management, has been made on a reasonable basis and approximates the incremental costs that would have been incurred had the company been operating on a stand-alone basis. There are no material intercompany purchase or sale transactions between Premark and the company. Under Premark's centralized cash management system, short-term advances from Premark and excess cash sent to Premark were reflected as "Net transactions with Premark" during the periods prior to the Distribution. No interest was charged or otherwise allocated by Premark to the company. Note 3: Inventories (In millions) 1996 1995 ------ ------ Finished goods . . . . . . . . . . . $127.5 $100.3 Work in process. . . . . . . . . . . 49.0 40.1 Raw materials and supplies . . . . . 76.3 66.2 ------ ------ Total inventories. . . . . . . . . . $252.8 $206.6 ====== ====== Note 4: Property, Plant, and Equipment (In millions) 1996 1995 ------ ------ Land . . . . . . . . . . . . . . . . $ 11.9 $ 12.7 Buildings and improvements . . . . . 175.4 173.1 Machinery and equipment. . . . . . . 760.8 732.5 Construction in progress . . . . . . 26.1 19.7 ------ ------ Total property, plant, and equipment 974.2 938.0 Less accumulated depreciation. . . . (643.2) (620.3) ------ ------ Property, plant, and equipment, net $331.0 $317.7 ====== ====== Note 5: Accrued Liabilities (In millions) 1996 1995 ------ ------ Compensation and employee benefits . $ 76.8 $ 61.3 Advertising and promotion. . . . . . 53.5 52.3 Taxes other than income taxes. . . . 29.5 40.9 Income taxes . . . . . . . . . . . . 27.1 29.8 Other. . . . . . . . . . . . . . . . 72.0 82.2 ------ ------ Total accrued liabilities. . . . . . $258.9 $266.5 ====== ====== Note 6: Financing Arrangements Short-term Borrowings (Dollars in millions) 1996 1995 1994 ------ ------ ------ Total short-term borrowings at year-end $123.7 $83.8 $58.3 Weighted average interest rate at year-end 5.3% 3.6% 3.7% Average borrowings during the year $186.4 $75.3 $48.4 Weighted average interest rate for the year 5.0% 3.3% 4.3% Maximum borrowings during the year $316.6 $95.8 $70.2 The average borrowings and weighted average interest rates were determined using month-end borrowings and the interest rates applicable to them. Of total year-end borrowings, $70.0 million was in the form of U.S. commercial paper. The remaining $53.7 million of short-term borrowing was from several banks, with $19.0 million payable in Japanese yen and $7.4 million in British pounds. As of December 28, 1996, $98.8 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 1997. Operating Leases Rental expense for operating leases totaled $32.8 million in 1996, $37.9 million in 1995, and $45.4 million in 1994. Approximate minimum rental commitments under noncancelable operating leases in effect at December 28, 1996, were: 1997 -- $19.5 million; 1998 -- $10.8 million; 1999 -- $3.6 million; 2000 -- $2.2 million; 2001 - $1.8 million; after 2001 - $1.4 million. Long-term Debt (In millions) 1996 1995 ------ ------ 7.05% Series Notes due 2003. . . . . . $ 15.0 $ -- 7.25% Notes due 2006 . . . . . . . . . 100.0 -- Short-term borrowings classified as non-current . . . . . . . . . . . . . 98.8 -- Other. . . . . . . . . . . . . . . . . 1.5 0.4 ------ ----- Total long-term debt $215.3 $ 0.4 ====== ===== On October 1, 1996, a subsidiary of the company sold to the public $100.0 million of 10-year 7.25 percent unsecured notes that are due in October 2006, and on December 23, 1996, a subsidiary of the company sold through a private placement $15.0 million of 6.5 year 7.05 percent notes due in June 2003. The proceeds from these borrowings were used to refinance a portion of the company's commercial paper borrowings. As of December 28, 1996, the company had $487.1 million of unused lines of credit, including $300.0 million under an unsecured multicurrency facility that was entered into in May 1996. This facility supports the company's commercial paper borrowing capability and expires in May 2001. Interest paid on total debt in 1996, 1995, and 1994 was $10.8 million, $2.8 million, and $9.0 million, respectively. Derivative Financial Instruments The company's derivative financial instruments at December 28, 1996, consisted solely of the forward exchange contracts summarized below. All of the contracts mature within 12 months. 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. Weighted average contract rate (Dollars in millions) Buy Sell of exchange ---- ---- ------------- Philippine pesos with U.S. dollars . . $15.1 26.5000 Belgian francs with U.S. dollars . . . 14.2 31.7642 German marks with U.S. dollars . . . . 9.7 1.5584 Italian lira with U.S. dollars . . . . 5.3 1,526.452 Swiss francs with U.S. dollars . . . . 4.8 1.3292 Belgian francs for U.S. dollars. . . . $44.9 30.7505 French francs for U.S. dollars . . . . 26.2 5.0888 Spanish pesetas for Belgian francs . . 12.1 32.0513 Portuguese escudos for U.S. dollars 9.9 155.7788 Swiss francs for U.S. dollars. . . . . 6.5 1.2436 French francs for Swiss francs . . . . 5.4 1.3461 British pounds for Netherlands guilders 5.1 1.7464 Netherlands guilders for U.S. dollars 4.9 1.6787 Other currencies . . . . . . . . . . . 19.3 10.3 various ----- ------ Total. . . . . . . . . . . . . . . . $68.4 $125.3 ===== ====== The contracts to sell Belgian, French, and Swiss francs; Portuguese escudos; and Netherlands guilders for U.S. dollars are hedging a portion of the company's net investments in those countries. All other contracts are hedging cross-currency intercompany loans that are not permanent in nature. The company's theoretical credit risk for each forward exchange contract 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 is also exposed to market risk on its forward exchange contracts 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. At December 28, 1996, and December 30, 1995, the net accrued gain and the net accrued loss on all forward exchange contracts were $2.3 million and $6.8 million, respectively. The aggregate impact of all foreign currency transactions was not material to the company's income. Note 7: Income Taxes For income tax purposes, the domestic and foreign components of income before taxes were as follows: (In millions) 1996 1995 1994 ------ ------ ------ Domestic $ 97.8 $106.4 $105.7 Foreign 136.7 118.5 85.5 ------ ------ ------ Total $234.5 $224.9 $191.2 ====== ====== ====== The provision for income taxes was as follows: (In millions) 1996 1995 1994 ------ ------ ------ Current: Federal. . . . . . . . . . . . . $ 7.7 $(40.6) $ 1.2 Foreign. . . . . . . . . . . . . 63.3 84.4 54.8 State. . . . . . . . . . . . . . 3.4 -- 0.9 ------ ------ ------ 74.4 43.8 56.9 ------ ------ ------ Deferred: Federal. . . . . . . . . . . . . (6.8) 38.3 (6.1) Foreign. . . . . . . . . . . . . (6.6) (30.6) (7.7) State. . . . . . . . . . . . . . (1.2) 2.0 (1.1) ------ ------ ------ (14.6) 9.7 (14.9) ------ ------ ------ Total. . . . . . . . . . . . . . $ 59.8 $ 53.5 $ 42.0 ======= ====== ====== The differences between the provision for income taxes and income taxes computed using the U.S. federal statutory rate were as follows: (In millions) 1996 1995 1994 ------ ------ ------ Amount computed using statutory rate $ 82.1 $ 78.7 $ 66.9 Increase (reduction) in taxes resulting from: Net benefit from repatriating foreign earnings . . . . . . . . (6.8) (22.6) (15.7) Foreign income taxes . . . . . . . . -- 5.7 5.9 Changes in valuation allowance for federal deferred tax assets. . . (9.9) -- (19.0) Benefit of capital loss carryforward (10.0) -- -- Resolution of tax audit contingencies -- (10.4) -- Other. . . . . . . . . . . . . . . . 4.4 2.1 3.9 ------ ------ ------ $59.8 $ 53.5 $ 42.0 ====== ====== ====== In 1996, 1995, and 1994, Tupperware recognized $3.1 million, $5.7 million, and $9.4 million, respectively, of benefits for deductions associated with the exercise of employee stock options. These benefits were added directly to capital surplus in 1996 and to "Net Investment by Premark" in 1995 and 1994, and are not reflected in the provision for income taxes. Deferred tax assets (liabilities) are composed of the following: (In millions) 1996 1995 -------- -------- Depreciation . . . . . . . . . . . . . . . $ (29.0) $ (29.7) Deferred costs . . . . . . . . . . . . . . (4.9) (4.4) Other. . . . . . . . . . . . . . . . . . . (3.4) (3.9) ------- ------- Gross deferred tax liabilities . . . . . . (37.3) (38.0) ------- ------- Credit carryforwards . . . . . . . . . . . 31.7 9.1 Fixed assets basis differences . . . . . . 23.8 17.5 Bad debt reserves. . . . . . . . . . . . . 14.9 9.9 Postretirement benefits. . . . . . . . . . 14.3 15.1 Employee benefits accruals . . . . . . . . 18.2 13.6 Inventory reserves . . . . . . . . . . . . 10.3 17.0 Computer leasing transactions. . . . . . . 7.6 9.1 Other accruals . . . . . . . . . . . . . . 28.8 38.3 ------- ------- Gross deferred tax assets. . . . . . . . . 149.6 129.6 ------- ------- Valuation allowances . . . . . . . . . . . (25.8) (25.9) ------- ------- Net deferred tax assets. . . . . . . . . . $ 86.5 $ 65.7 ======= ======= At December 28, 1996, the company had a domestic capital loss carryforward of $40.7 million and foreign net operating loss carryforwards of $51.3 million. The capital loss carryforward expires in 2001. Of the total net operating loss carryforwards, $43.7 million expire at various dates from 1997 to 2001, while the remainder have unlimited lives. During 1996, the company recognized net benefits of $3.7 million related to foreign net operating loss carryforwards. Repatriation of foreign earnings would not result in a significant incremental cost to the company. At December 28, 1996, and December 30, 1995, the company had valuation allowances against certain deferred tax assets totaling $25.8 million and $25.9 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 company paid income taxes in 1996, 1995, and 1994, of $76.5 million, $75.2 million, and $47.9 million, respectively. For periods prior to the Distribution when the company's domestic operations were included in Premark's U.S. tax returns, income tax payments were only made by foreign subsidiaries of the company. Note 8: Retirement Benefit Plans Pension Plans The company has various pension plans covering substantially all domestic employees and certain employees in other countries. Prior to the Distribution, the participants in the domestic plan were covered by a pension plan with similar benefits, sponsored by Premark (the Premark Plan). Under an agreement with Premark, the company has assumed or retained pension liabilities related to substantially all Tupperware participants. Assets of the Premark Plan have been allocated in accordance with ERISA rules between the Premark Plan and the company's plan for domestic participants. The actuarial cost method used in determining pension expense is the projected unit credit method. Generally, annual cash contributions are equal to the minimum funding amounts required by ERISA for the U.S. plan. Net pension expense included the following components: (In millions) 1996 1995 1994 ----- ----- ----- Service cost on benefits earned during the year. . . . . . . . $ 5.2 $ 4.8 $ 3.2 Interest cost on benefits earned in prior years . . . . . . . . 5.4 5.8 3.9 Return on plan assets: Actual (gain) loss . . . . . . . (4.2) (6.7) 1.0 Deferred gain (loss) . . . . . . 0.8 3.2 (3.9) ----- ----- ----- Net gain recognized. . . . . . . . (3.4) (3.5) (2.9) Net amortization . . . . . . . . . 0.8 0.8 0.3 ----- ----- ----- Net pension expense. . . . . . . . $ 8.0 $ 7.9 $ 4.5 ===== ===== ===== The assumed long-term rates of return on assets used in determining net pension expense were: U.S. plan -- 9.0 percent; foreign plans -- various rates from 4.0 percent to 11.0 percent. The assumed discount rates used in determining the actuarial present value of the projected benefit obligations were: U.S. plan -- 7.75 percent at December 28, 1996; 7.25 percent at December 30, 1995; and 8.75 percent at December 31, 1994; foreign plans -- various rates from 3.5 percent to 10.0 percent. The assumed rates of increase in future compensation levels were: U.S. plan -- 6.0 percent; foreign plans -- various rates from 3.0 percent to 8.0 percent. The funded status of the plans was as follows: U.S. Foreign plan plans -------------- -------------- (In millions) 1996 1995 1996 1995 ---- ---- ---- ---- Actuarial present value of benefit obligations: Vested benefits. . . . . . . . . . $ 20.3 $20.0 $49.2 $49.8 Nonvested benefits . . . . . . . . 1.0 0.9 5.6 6.3 ------ ----- ----- ----- Accumulated benefit obligations. . . 21.3 20.9 54.8 56.1 Effect of projected future salary increases . . . . . . . . . . . . 3.0 4.0 13.4 14.6 ------ ----- ----- ----- Projected benefit obligations. . . . 24.3 24.9 68.2 70.7 Plan assets at fair value -- primarily equity securities and corporate and government bonds . . . . . . . 21.7 20.8 29.4 28.0 ------ ----- ----- ----- Plan assets less than projected benefit obligations. . . . . . . . (2.6) (4.1) (38.8) (42.7) Unrecognized prior service (benefit) cost . . . . . . . . . . . . . . . -- (0.3) 0.1 0.1 Unrecognized net (gain) loss. . . . . (0.5) 2.2 7.4 11.2 Unrecognized net transition (asset) obligations. . . . . . . . (0.4) (0.5) 3.2 3.9 ------ ----- ------ ------ Accrued pension cost . . . . . . . . $ (3.5) $(2.7) $(28.1) $(27.5) ====== ===== ====== ====== At December 28, 1996, and December 30, 1995, the accumulated benefit obligations of certain foreign plans exceeded plan assets. For those plans, the accumulated benefit obligations were $45.0 million and $47.1 million and the projected benefit obligations were $54.7 million and $57.2 million for 1996 and 1995, respectively. The fair values of those plans' assets at the end of 1996 and 1995 were $17.5 million and $17.1 million, respectively. The company also has several savings, thrift, and profit-sharing plans. Its contributions to these plans are based upon various levels of employee participation. The total cost of these plans was $3.5 million in 1996, $2.8 million in 1995, and $3.9 million in 1994. Medical and Life Insurance Benefits In addition to providing pension benefits, the company provides certain postretirement health care and life insurance benefits for selected U.S. and Canadian employees. Most employees and retirees outside the United States are covered by government health care programs. Employees may become eligible for these benefits if they reach normal retirement age while working for the company and satisfy certain years of service requirements. The medical plans are contributory, with retiree contributions adjusted annually, and contain other cost-sharing features, such as deductibles and coinsurance. The medical plans include an allowance for Medicare for post-65 retirees. The net periodic postretirement benefit costs for 1996, 1995, and 1994 were: (In millions) 1996 1995 1994 ----- ----- ----- Service cost . . . . . . . . . . . . . $ 0.5 $ 0.3 $ 0.4 Interest on accumulated postretirement benefit obligation. . . . . . . . . . 2.8 3.0 3.0 Net amortization . . . . . . . . . . . (0.1) (0.2) -- ----- ----- ----- Total. . . . . . . . . . . . . . . . . $ 3.2 $ 3.1 $ 3.4 ===== ===== ===== The projected liabilities, which are not funded, are reconciled with the amounts recognized in the company's consolidated balance sheet, as follows: (In millions) 1996 1995 ------ ------ Accumulated postretirement benefit obligations: Retirees . . . . . . . . . . . . $34.4 $33.8 Other fully eligible participants 0.1 1.2 Other active participants. . . . 3.9 6.1 ----- ----- 38.4 41.1 Unrecognized prior service benefit 2.1 2.3 Unrecognized loss. . . . . . . . . (1.2) (4.5) ----- ----- Accrued postretirement benefit cost 39.3 38.9 Less current portion . . . . . . . . 2.4 2.8 ----- ----- Total long-term accrued postretirement benefit cost. . . . . . . . . . . $36.9 $36.1 ===== ===== The weighted-average discount rate used in determining the accumulated postretirement benefit obligation was 7.75 percent at December 28, 1996, and 7.25 percent at December 30, 1995. The assumed health care cost trend rate is 10 percent for the pre-65 plan and 7 percent for the post-65 plan for 1996. These rates are assumed to decrease by one percentage point per year until an ultimate level of 6 percent is reached. The rate is assumed to remain at that level thereafter. The health care cost trend rate assumption has a significant effect on the amounts reported. For example, increasing the assumed health care cost trend rates by one percentage point in each year would increase the accumulated postretirement benefit obligation as of December 28, 1996, by $3.9 million. The effect of a one percentage point increase on the aggregate of the service and interest cost components of net periodic postretirement benefit cost for 1996 would be $0.4 million. The company continues to evaluate ways in which it can improve management of these benefits and control the costs. Any changes in the plans or revisions to assumptions that affect the amount of expected future benefits may have a significant effect on the amount of the reported obligation and future annual expense. Note 9: Incentive Compensation Plans Certain officers and other key employees of the company participate in the Tupperware Corporation 1996 Incentive Plan (the Incentive Plan). Annual and long-term performance awards and awards of options to purchase Tupperware shares and of restricted stock are made under the Incentive Plan. Performance Awards Earned performance awards of $19.3 million, $12.9 million, and $9.0 million are included in the consolidated statement of income for 1996, 1995, and 1994, respectively. Stock Awards The total number of shares initially available for grant under the Incentive Plan was 6,100,000; however, that amount may be increased by up to 1,500,000 shares in the event that the company repurchases shares during the Incentive Plan's 10-year term. Of the total number of shares available for grant, up to 300,000 may be used for restricted stock awards. As of December 28, 1996, shares available for award under the Incentive Plan totaled 3,323,573 of which 151,689 could be granted in the form of restricted stock. In connection with the Distribution, options to purchase Premark shares and restricted shares of Premark stock that were held by Tupperware officers and employees were canceled and reissued under the Incentive Plan as options to purchase Tupperware shares and restricted shares of Tupperware stock. The reissuances were in amounts and at exercise prices that maintained the amount of unrealized stock appreciation. The vesting dates and exercise periods of these options and restricted shares were not affected by the cancellation and reissuance. The exercise prices of all outstanding options have been set at the fair market value of the shares on the date of grant. Under the options outstanding as of December 28, 1996, 70,792 shares may be purchased at prices less than $10.00 per share; 652,926 shares at prices between $10.01 and $20.00 per share; 309,815 shares at prices between $20.01 and $30.00 per share; 721,560 shares at prices between $30.01 and $40.00 per share; and 682,050 shares at prices greater than $40.00 per share. All outstanding options have vesting dates that are three years from the date of grant and exercise periods that are 10 years from the date of grant. Outstanding restricted shares have initial vesting periods ranging from 1 to 5 years. Options outstanding as of December 28, 1996, will expire during the period 1999 through 2006, and have a weighted-average remaining life of 7.5 years. As of December 28, 1996, options to purchase 995,731 shares were exercisable. Since the exercise prices of all outstanding options have been set at the grant date market prices, under the company's accounting policy no compensation expense has been reflected in the consolidated income statement. As required by FASB Statement 123, "Accounting for Stock-Based Compensation," the company has estimated the fair value of its 1996 option grants and the 1995 option grants for Premark stock made to individuals who became officers and employees of Tupperware Corporation. If these fair value estimates had been used to record compensation expense in the consolidated income statement, pro forma net income would have been reduced by $1.6 million and $0.1 million to $168.8 million and $161.0 million, or $2.67 and $2.55 per common and common equivalent share, in 1996 and 1995, respectively. The fair values of the 1996 and 1995 stock option grants were estimated using the Black-Scholes option-pricing model with the following assumptions: dividend yield of 2.0 percent for both years; expected volatility of 30.0 percent for both years; risk free interest rates of 6.4 percent and 5.8 percent for 1996 and 1995, respectively; and expected lives of 5 years for both 1996 and 1995. 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. 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 28, 1996, were 300,000 and 254,412, respectively. As of December 28, 1996, options to purchase 44,213 shares were exercisable. For Tupperware directors with options under the Premark Director Stock Option plan (Premark plan) who were Premark directors prior to the Distribution, the options were canceled and reissued in a manner similar to employee awards. For outside Tupperware directors who continued as Premark directors as of the date of the Distribution, one-half of the unvested options under the Premark plan were canceled and reissued and the other half remained as Premark stock options. Stock option and restricted stock activity for the Incentive Plan and the Director Plan is summarized below: Average Shares subject option price Stock Options to option per share - ------------------------------ --------------- -------------- Balance at December 30, 1995 . . . . . -- -- Options granted to replace Premark options . . . . . . . . . . . . . 2,006,566 $22.60 Options granted . . . . . . . . . . . 685,500 42.22 Options canceled . . . . . . . . . . (19,737) 33.57 Options exercised . . . . . . . . . . (235,186) 13.45 ---------- Balance at December 28, 1996 . . . . 2,437,143 28.91 ========== Shares Shares available Restricted Stock outstanding for issuance - ------------------------------- --------------- -------------- Balance at December 30, 1995 . . . . . -- -- Increase in shares available due to adoption of Incentive Plan . . . . -- 300,000 Shares awarded to replace Premark shares . . . . . . . . . . 61,311 (61,311) Shares awarded . . . . . . . . . . . 87,000 (87,000) --------- --------- Balance at December 28, 1996 . . . . 148,311 151,689 ========= ========= Note 10: Geographic Information The company operates worldwide in one business segment: the manufacture and distribution, through independent direct sales forces, of plastic food storage and serving containers, microwave cookware, and educational toys. (In millions) 1996 1995 1994 ------ ------ ------ Net sales: Europe . . . . . . . . . . . . $ 581.7 $ 595.1 $ 540.1 Americas: United States. . . . . . . . 181.1 208.6 228.8 Latin America. . . . . . . . 268.5 200.6 176.4 -------- -------- -------- 449.6 409.2 405.2 Asia Pacific . . . . . . . . . 338.0 355.1 329.3 -------- -------- -------- Total net sales . . . . . . $1,369.3 $1,359.4 $1,274.6 ======== ======== ======== Operating Profit: Europe . . . . . . . . . . . . $ 153.0 $ 156.8 $ 125.0 Americas: United States. . . . . . . . 10.4 10.3 16.0 Latin America. . . . . . . . 43.3 19.4 15.7 -------- -------- -------- 53.7 29.7 31.7 Asia Pacific . . . . . . . . . 61.0 59.4 46.3 -------- -------- -------- Total operating profit . . . . 267.7 245.9 203.0 Unallocated expenses . . . . . . (16.1) (22.9) (12.0) Costs associated with becoming an independent company. . . . . . . (9.1) -- -- Interest (expense) income, net . (8.0) 1.9 0.2 -------- -------- -------- Income before income taxes . . $ 234.5 $ 224.9 $ 191.2 ======== ======== ======== Identifiable assets: Europe . . . . . . . . . . . . $ 315.6 $ 327.7 $ 284.5 Americas: United States. . . . . . . . . 176.3 159.1 161.6 Latin America. . . . . . . . . 181.1 115.6 90.8 -------- -------- -------- 357.4 274.7 252.4 Asia Pacific . . . . . . . . . 198.5 187.9 192.1 Corporate. . . . . . . . . . . 107.0 153.7 153.6 -------- -------- -------- Total identifiable assets. . . $ 978.5 $ 944.0 $ 882.6 ======== ======== ======== Sales to a single customer did not exceed 10 percent of total sales. Export sales were insignificant. Unallocated expenses are corporate expenses and other items not directly related to the operations of any particular geographic area. Corporate assets consist of cash and assets maintained for general corporate purposes. As of December 28, 1996, the company's net investment in international operations was $316.9 million. 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 11: Contingencies The company and certain subsidiaries are involved in litigation and various legal matters that are being defended and handled in the ordinary course of business. Included among these matters are environmental issues. None of the company's contingencies are expected to have a material adverse effect on its financial position, results of operations, or cash flow. Kraft Foods, Inc., which was formerly affiliated with Premark 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. Note 12: Quarterly Financial Summary (Unaudited) Following is a summary of the unaudited interim results of operations for each quarter in the years ended December 28, 1996, and December 30, 1995. (In millions, except First Second Third Fourth per share amounts) quarter quarter quarter quarter ------- ------- ------- ------- Year ended December 28, 1996: Net sales. . . . . . . . . . . $329.0 $379.0 $290.6 $370.7 Cost of products sold. . . . . 120.4 134.3 104.6 128.0 Net income . . . . . . . . . . 31.6 50.6 18.1 74.4 Pro forma net income per common and common equivalent share 0.46 0.77 0.29 1.17 Dividends, declared per share -- -- 0.22 0.22 Composite stock price range: High . . . . . . . . . . . . N/A 46 3/8 49 7/8 55 1/2 Low. . . . . . . . . . . . . N/A 38 3/4 38 1/4 45 7/8 Close. . . . . . . . . . . . N/A 42 1/4 49 54 3/8 Year ended December 30, 1995: Net sales . . . . . . . . . . . $330.2 $351.0 $291.9 $386.3 Cost of products sold . . . . . 113.4 122.6 112.1 133.4 Net income. . . . . . . . . . . 30.6 47.9 18.3 74.6 Pro forma net income per common and common equivalent share. . 0.44 0.72 0.25 1.14 Note 13: 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. REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Shareholders of Tupperware Corporation: In our opinion, the accompanying consolidated balance sheet and the related consolidated statements of income, of cash flows and of shareholders' equity present fairly, in all material respects, the financial position of Tupperware Corporation and its subsidiaries at December 28, 1996 and December 30, 1995, and the results of their operations and their cash flows for each of the three years in the period ended December 28, 1996, in conformity with generally accepted accounting principles. 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 generally accepted auditing standards which require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for the opinion expressed above. Price Waterhouse LLP Orlando, Florida February 14, 1997 EX-21 6 LIST OF SUBSIDIARIES Exhibit 21 Tupperware Corporation Active Subsidiaries as of March 10, 1997 The following subsidiaries are wholly-owned by the Registrant or another subsidiary of the Registrant. Subsidiary Location Cook Insurance Co., Ltd. Bermuda Deerfield Land Corporation Delaware Tupperware Finance Holding Company B.V. Netherlands Tupperware Finance Company B. V. Netherlands Tupperware Financial Corporation Delaware Tupperware Services, Inc. Delaware Dart Industries Inc. Delaware Tupperware Far East, Inc. Delaware Tupperware Polska Sp.zo.o Poland Tupperware Turkey, Inc. Delaware Dart Far East Sdn. Bhd. Malaysia Dart Argentina S.A. Argentina Dart de Venezuela, C.A. Venezuela Tupperware Colombia S.A. Colombia Dart do Brasil Industria e Comercio Ltda. Brazil Daypar Participacoes Ltda Brazil Academia Negocios S/C Ltda. Brazil Adota Artigos Domesticos Ltda. Brazil Tupperware Hellas, S.A.I.C. Greece Tupperware Israel Ltd. Israel Tupperware Espana, S.A. Spain Tupperware Belgium N.V. Belgium Tupperware France S.A. France Tupperware Deutschland G.m.b.H. Germany Tupperware Del Ecuador Tupperware Cia. Ltda. Ecuador Dart Industries G.m.b.H. Austria Dart Industries Hong Kong Limited Hong Kong Tupperware India Private Limited India Tupperware Asia Pacific Holdings Private Limited Mauritius Tupperware China, Inc. Delaware Tupperware (China) Company Limited PRC Tupperware Nederland Properties B.V. Netherlands Tupperware Nederland B.V. Netherlands Tupperware Southern Africa (Proprietary) Limited South Africa Tupperware East Africa Limited Kenya Dart Industries (New Zealand) Limited New Zealand Tupperware Italia S.p.A. Italy Dart (Philippines), Inc. Philippines Tupperware Realty Corporation Philippines Dart, S.A. de C.V. Mexico Servicios Especializados de Arrendamiento en Latinoamerica S.A. de C.V Mexico Asociacion Nacional Mexico Mexico Tupperware (Suisse) S.A. Switzerland Dartco Manufacturing Inc. Delaware Tupperware Industria Lusitana de Artigos Domesticos, Lda. Portugal Tupperware (Portugal) Artigos Domesticos, Lda. Portugal Premiere Products, Inc. Delaware Exportadora Lerma, S.A. de C.V. Mexico Tupperware General Services N.V. Belgium Premiere Manufacturing, Inc. Delaware Premiere Korea Ltd. Korea Tupperware U.S., Inc. Delaware Tupperware Distributors, Inc. Delaware Tupperware Factors Inc. Delaware Tupperware Canada Inc. Canada Japan Tupperware Co., Ltd. Japan Tupperware Australia Pty. Ltd. Australia Dart Staff Superannuation Fund Pty Ltd. Australia Tupperware Commercial Ltd. Hungary Orlando Sociedad Comercializadora Limitada Chile Importadora Y Distribuidora Importupp Limitada Chile Tupperware Czech Republic, spol. s.r.o. Czech Republic Tupperware Iberica S.A. Spain Tupperware Singapore Pte. Ltd. Singapore Tupperware (Thailand) Limited Thailand Tupperware Uruguay S.A. Uruguay Dart Executive Pension Fund Limited United Kingdom Dart Pension Fund Limited United Kingdom Tupperware Home Parties Corporation Delaware Tupperware U.K. Holdings, Inc. Delaware Dart Industries Limited United Kingdom Premark Scandinavia A/S Denmark The Tupperware Foundation Deleware EX-23 7 CONSENT OF INDEPENDENT ACCOUNTANTS Exhibit 23 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Registration Statement on Form S-8 (No. 33-04871), the Registration Statement on Form S-8 (No. 33-04869), the Registration Statement on Form S-8 (No. 33-18331) and the Prospectus constituting part of the Registration Statement on Form S-3 (No. 33-12125) of Tupperware Corporation of our report dated February 14, 1997 appearing on page 35 of the Annual Report to Shareholders which is incorporated in this Annual Report on Form 10-K. We also consent to the incorporation by reference of our report on the Financial Statement Schedule, which appears on page 21 of this Form 10-K. Price Waterhouse LLP Orlando, Florida March 24, 1997 EX-24 8 POWERS OF ATTORNEY POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned director of Tupperware Corporation, a Delaware corporation,(the "Corporation"), hereby constitutes and appoints Thomas M. Roehlk, Charles L. Dunlap and Carol A. Vix, and each of them, true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign the Annual Report on Form 10-K of the Corporation for its fiscal year ended December 28, 1996, and any and all amendments thereto, and to file or cause to be filed the same, together with any and all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents and substitutes, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents and substitutes, and each of them, may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereunto set his or her hand and seal this 5th day of March, 1997. Rita Bornstein William O. Bourke Ruth M. Davis Lloyd C. Elam Clifford J. Grum Joe R. Lee Joseph E. Luecke Bob Marbut David R. Parker Robert M. Price POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that the undersigned officer of Tupperware Corporation a Delaware corporation, (the "Corporation"), hereby constitutes and appoints Thomas M. Roehlk, Charles L. Dunlap and Carol A. Vix, and each of them, true and lawful attorneys-in-fact and agents of the undersigned, with full power of substitution and resubstitution, for and in the name, place and stead of the undersigned, in any and all capacities, to sign the Annual Report on Form 10-K of the Corporation for its fiscal year ended December 28, 1996, and any and all amendments thereto, and to file or cause to be filed the same, together with any and all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents and substitutes, and each of them, full power and authority to do and perform each and every act and thing requisite or necessary to be done in and about the premises as fully to all intents and purposes as the undersigned might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and agents and substitutes, and each of them may lawfully do or cause to be done by virtue hereof. IN WITNESS WHEREOF, the undersigned has hereto set his hand and seal this 17 day of March, 1997. __________________________ Thomas P. O'Neill EX-27 9 FINANCIAL DATA SCHEDULE
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM TUPPERWARE CORPORATION'S 1996 FINANCIAL STATEMENTS AS INCORPORATED BY REFERENCE IN ITS ANNUAL REPORT ON FORM 10-K AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1000 12-MOS DEC-28-1996 DEC-31-1995 DEC-28-1996 53000 0 182500 27700 252800 523200 974200 643200 978500 379800 215300 0 0 600 304900 978500 1369300 1369300 487300 487300 3200 20900 13200 234500 59800 174700 0 0 0 174700 2.70 2.69
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