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EX-32.2 - SECTION 906 CERTIFICATION OF THE CHIEF FINANCIAL OFFICER - TUPPERWARE BRANDS CORPtup10q063018ex322.htm
EX-32.1 - SECTION 906 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER - TUPPERWARE BRANDS CORPtup10q063018ex321.htm
EX-31.2 - SECTION 302 CERTIFICATION OF THE CHIEF FINANCIAL OFFICER - TUPPERWARE BRANDS CORPtup10q063018ex312.htm
EX-31.1 - SECTION 302 CERTIFICATION OF THE CHIEF EXECUTIVE OFFICER - TUPPERWARE BRANDS CORPtup10q063018ex311.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
________________________________________
FORM 10-Q
________________________________________
x
Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the 13 weeks ended June 30, 2018
OR
o
Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the Transition period from               to             
Commission file number 1-11657
________________________________________
TUPPERWARE BRANDS CORPORATION
(Exact name of registrant as specified in its charter)  
 ________________________________________
Delaware
36-4062333
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
Identification No.)
 
 
14901 South Orange Blossom Trail, Orlando, Florida
32837
(Address of principal executive offices)
(Zip Code)
 Registrant's telephone number, including area code: (407) 826-5050
________________________________________ 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No   o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No   o
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
x
 
Accelerated filer
o
 
 
 
 
 
Non-accelerated filer
o
(Do not check if a smaller reporting company)
Smaller reporting company
o
 
 
 
 
 
 
 
 
Emerging growth company
o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  o  No   x
As of July 26, 2018, 50,022,380 shares of the common stock, $0.01 par value, of the registrant were outstanding.



TABLE OF CONTENTS

 
 
Page
Number  
PART I. FINANCIAL INFORMATION
 
 
 
Item 1.
Financial Statements (Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
PART II. OTHER INFORMATION
 
 
 
Item 2.
 
 
 
Item 6.
 
 


2



Item 1.
Financial Statements (Unaudited)
TUPPERWARE BRANDS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
 
13 weeks ended
 
26 weeks ended
(In millions, except per share amounts)
June 30,
2018
 
July 1,
2017
 
June 30,
2018
 
July 1,
2017
Net sales
$
535.4

 
$
572.9

 
$
1,078.0

 
$
1,127.7

Cost of products sold
173.5

 
182.6

 
352.5

 
360.3

Gross margin
361.9

 
390.3

 
725.5

 
767.4

 
 
 
 
 
 
 
 
Delivery, sales and administrative expense
272.8

 
299.0

 
562.0

 
596.9

Re-engineering and impairment charges
2.1

 
32.6

 
9.7

 
34.9

Impairment of goodwill

 
62.9

 

 
62.9

Gains on disposal of assets
12.4

 
3.1

 
14.6

 
3.2

Operating income (loss)
99.4

 
(1.1
)
 
168.4

 
75.9

 
 
 
 
 
 
 
 
Interest income
0.7

 
0.7

 
1.4

 
1.2

Interest expense
11.9

 
11.6

 
23.0

 
23.2

Other (income) expense
(0.4
)
 
0.7

 
(0.2
)
 
2.4

Income (loss) before income taxes
88.6

 
(12.7
)
 
147.0

 
51.5

 
 
 
 
 
 
 
 
Provision for income taxes
24.8

 
5.0

 
47.5

 
21.8

Net income (loss)
$
63.8


$
(17.7
)
 
$
99.5

 
$
29.7

 
 
 
 
 
 
 
 
Earnings (loss) per share:
 

 
 

 
 
 
 
Basic
$
1.26

 
$
(0.35
)
 
$
1.96

 
$
0.59

Diluted
1.26

 
(0.35
)
 
1.95

 
0.58

 
 
 
 
 
 
 
 
Weighted-average shares outstanding:
 
 
 

 
 
 
 
Basic
50.5

 
50.8

 
50.8

 
50.7

Diluted
50.7

 
50.8

 
51.0

 
51.2

 
 
 
 
 
 
 
 
Dividends declared per common share
$
0.68

 
$
0.68

 
$
1.36

 
$
1.36


See accompanying Notes to Consolidated Financial Statements (Unaudited).

3


TUPPERWARE BRANDS CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
13 weeks ended
 
26 weeks ended
(In millions)
June 30,
2018
 
July 1,
2017
 
June 30,
2018
 
July 1,
2017
Net income (loss)
$
63.8

 
$
(17.7
)
 
$
99.5

 
$
29.7

Other comprehensive income:
 
 
 
 
 
 
 
Foreign currency translation adjustments
(55.1
)
 
9.8

 
(45.0
)
 
52.2

Deferred gain (loss) on cash flow hedges, net of tax benefit (provision) of ($0.6), $0.4, ($0.3) and $1.8, respectively
2.5

 
(1.4
)
 
1.8

 
(5.9
)
Pension and other post-retirement benefits (costs), net of tax benefit (provision) of ($0.6),$0.7, $0 and $1.4, respectively
2.5

 
(1.6
)
 
0.8

 
(3.3
)
Other comprehensive income (loss)
(50.1
)
 
6.8

 
(42.4
)
 
43.0

Total comprehensive income (loss)
$
13.7

 
$
(10.9
)
 
$
57.1

 
$
72.7


See accompanying Notes to Consolidated Financial Statements (Unaudited).

4


TUPPERWARE BRANDS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions, except share amounts)
June 30,
2018
 
December 30,
2017
ASSETS
 

 
 

Cash and cash equivalents
$
98.0

 
$
144.1

Accounts receivable, less allowances of $42.8 and $38.2, respectively
163.3

 
144.4

Inventories
281.6

 
262.2

Non-trade amounts receivable, net
63.4

 
58.6

Prepaid expenses and other current assets
24.8

 
21.2

Total current assets
631.1

 
630.5

Deferred income tax benefits, net
236.3

 
278.0

Property, plant and equipment, net
271.5

 
278.2

Long-term receivables, less allowances of $15.2 and $16.5, respectively
18.5

 
19.3

Trademarks and tradenames, net
57.2

 
62.5

Goodwill
76.9

 
78.9

Other assets, net
46.6

 
40.6

Total assets
$
1,338.1

 
$
1,388.0

LIABILITIES AND SHAREHOLDERS' EQUITY
 

 
 

Accounts payable
$
90.1

 
$
124.4

Short-term borrowings and current portion of long-term debt and capital lease obligations
257.8

 
133.0

Accrued liabilities
347.4

 
401.4

Total current liabilities
695.3

 
658.8

Long-term debt and capital lease obligations
604.0

 
605.1

Other liabilities
214.3

 
243.5

Shareholders' equity (deficit):
 

 
 

Preferred stock, $0.01 par value, 200,000,000 shares authorized; none issued

 

Common stock, $0.01 par value, 600,000,000 shares authorized; 63,607,090 shares issued
0.6

 
0.6

Paid-in capital
217.4

 
217.8

Retained earnings
1,073.6

 
1,043.1

Treasury stock, 13,584,710 and 12,549,392 shares, respectively, at cost
(895.3
)
 
(851.5
)
Accumulated other comprehensive loss
(571.8
)
 
(529.4
)
Total shareholders' deficit
(175.5
)
 
(119.4
)
Total liabilities and shareholders' deficit
$
1,338.1

 
$
1,388.0


See accompanying Notes to Consolidated Financial Statements (Unaudited).

5


TUPPERWARE BRANDS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
26 weeks ended
(In millions)
June 30,
2018
 
July 1,
2017
Operating Activities:
 
 
 

Net cash provided by (used in) operating activities
$
(38.8
)
 
$
14.2

Investing Activities:
 

 
 

Capital expenditures
(37.6
)
 
(32.0
)
Proceeds from disposal of property, plant and equipment
33.1

 
5.3

Net cash used in investing activities
(4.5
)
 
(26.7
)
Financing Activities:
 

 
 

Dividend payments to shareholders
(70.2
)
 
(69.3
)
Proceeds from exercise of stock options
0.3

 
9.9

Repurchase of common stock
(51.1
)
 
(0.6
)
Repayment of capital lease obligations
(1.3
)
 
(1.2
)
Net change in short-term debt
127.6

 
60.1

Net cash provided by (used in) financing activities
5.3

 
(1.1
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(7.1
)
 
5.5

Net change in cash, cash equivalents and restricted cash
(45.1
)
 
(8.1
)
Cash, cash equivalents and restricted cash at beginning of year
147.2

 
96.0

Cash, cash equivalents and restricted cash at end of period
$
102.1

 
$
87.9


See accompanying Notes to Consolidated Financial Statements (Unaudited).

6

TUPPERWARE BRANDS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)


Note 1:
Summary of Significant Accounting Policies
Basis of Presentation: The condensed consolidated financial statements include the accounts of Tupperware Brands Corporation and its subsidiaries, collectively “Tupperware” or the “Company”, with all intercompany transactions and balances having been eliminated. These condensed consolidated financial statements and related notes should be read in conjunction with the audited 2017 financial statements included in the Company's Annual Report on Form 10-K for the year ended December 30, 2017.
Certain prior year amounts have been reclassified to conform with current year presentation. This includes changes to the presentation of pension costs in other expense in the Company's Consolidated Statement of Income under ASU 2017-07, Improving the Presentation of Net Periodic Pension Costs and Net Periodic Post-Retirement Benefit Costs. For applying the retrospective presentation requirements under this standard, the Company used the practical expedient that allows for the use of amounts disclosed in its retirement benefit plans note for the year ended December 30, 2017 as the estimation basis.
These condensed consolidated financial statements are unaudited and have been prepared following the rules and regulations of the United States Securities and Exchange Commission and, in the Company's opinion, reflect all adjustments, including normal recurring items that are necessary for a fair statement of the results for the interim periods. Certain information and note disclosures normally included in the balance sheet, statements of income, comprehensive income and cash flows prepared in conformity with accounting principles generally accepted in the United States of America have been condensed or omitted as permitted by such rules and regulations. Operating results of any interim period presented herein are not necessarily indicative of the results that may be expected for a full fiscal year.
Use of Estimates: The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent 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 materially from these estimates.
Revenue Recognition: On December 31, 2017, the Company adopted new guidance on revenue from contracts with customers using the modified retrospective method. There was no impact on beginning retained earnings from the adoption as of December 31, 2017. Results for reporting periods beginning December 31, 2017 are presented under the new guidance, while prior period amounts continue to be reported in accordance with previous guidance without revision.
Under the new guidance, the contract is defined as the order received from the Company's customer who, in most cases, is one of the Company's independent distributors or a member of its independent sales force. Revenue is recognized when control of the product passes to the customer, which is upon shipment, and is recognized at the amount that reflects the consideration the Company expects to receive for the products sold, including various forms of discounts.  Generally, payment is either received in advance or in a relatively short period of time following shipment. When revenue is recorded, estimates of returns are made and recorded as a reduction of revenue. Contracts with customers are evaluated to determine if there are separate performance obligations, related to timing of product shipment, that will be satisfied in different accounting periods. When that is the case, revenue is deferred until each performance obligation is met. The impact in the second quarter of 2018 from deferred revenue was not material.
Compared with historical accounting under the previous guidance, the Company estimates revenue for the year-to-date period of 2018 would have been $6 million lower, with no material impact in the second quarter. This primarily reflects, under previous guidance in 2017, certain operating units recording revenue upon delivery that are now recording revenue upon shipment under the new guidance. The impact to the Company's consolidated balance sheet as a result of adopting the new guidance was not significant.
The Company primarily disaggregates revenue based on geography. Refer to disaggregation information included in Note 8 to the Consolidated Financial Statements.

7

TUPPERWARE BRANDS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

Foreign Currency Translation: Inflation in Argentina has been at relatively high levels over the past several years. The Company uses a blended index of the Consumer Price Index and National Consumer Price Index for determining highly inflationary status in Argentina. This blended index is expected to reach cumulative three-year inflation in excess of 100 percent in 2018. As such, the Company will transition to highly inflationary status as of July 1, 2018. Gains and losses resulting from the translation of monetary assets in the financial statements of subsidiaries operating in highly inflationary economies are recorded in earnings. As of the June 30, 2018, the Company had approximately $0.6 million of net monetary assets in Argentina, which are of a nature that will generate income or expense for the change in value associated with exchange rate fluctuations versus the U.S. dollar.
Note 2:
Shipping and Handling Costs
The cost of products sold line item includes costs related to the purchase and manufacture of goods sold by the Company. Among these costs are inbound freight charges, duties, purchasing and receiving costs, inspection costs, depreciation expense, internal transfer costs and warehousing costs of raw material, work in process and packing materials. The warehousing and distribution costs of finished goods are included in delivery, sales and administrative expense (“DS&A”). Distribution costs are comprised of outbound freight and associated labor costs. Fees billed to customers associated with the distribution of products are classified as revenue. The distribution costs included in DS&A expense were $35.8 million and $35.7 million for the second quarters of 2018 and 2017, respectively, and $71.3 million and $70.5 million for the respective year-to-date periods.
Note 3:
Promotional Costs
The Company frequently makes promotional offers to members of its independent sales force to encourage them to fulfill specific goals or targets for sales levels, party attendance, addition of new sales force members or other business-critical functions. The awards offered are in the form of product awards, special prizes or trips.
The Company accrues for the costs of these awards during the period over which the sales force qualifies for the award and reports these costs primarily as a component of DS&A expense. These accruals require estimates as to the cost of the awards, based upon estimates of achievement and actual cost to be incurred. During the qualification period, actual results are monitored, and changes to the original estimates are made when known. Promotional and other sales force compensation expenses included in DS&A expense totaled $82.7 million and $91.7 million for the second quarters of 2018 and 2017, respectively, and $171.1 million and $187.6 million for the respective year-to-date periods.
Note 4:
Inventories
(In millions)
June 30,
2018
 
December 30,
2017
Finished goods
$
217.0

 
$
203.5

Work in process
31.5

 
26.0

Raw materials and supplies
33.1

 
32.7

Total inventories
$
281.6

 
$
262.2

Note 5:
Net Income Per Common Share
Basic per share information is calculated by dividing net income by the weighted average number of shares outstanding. Diluted per share information is calculated by also considering the impact of potential common stock on both net income and the weighted average number of shares outstanding.

8

TUPPERWARE BRANDS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

The elements of the earnings per share computations were as follows:
 
13 weeks ended
 
26 weeks ended
(In millions, except per share amounts)
June 30,
2018
 
July 1,
2017
 
June 30,
2018
 
July 1,
2017
Net income (loss)
$
63.8

 
$
(17.7
)
 
$
99.5

 
$
29.7

Weighted average shares of common stock outstanding
50.5

 
50.8

 
50.8

 
50.7

Common equivalent shares:
 
 
 
 
 
 
 
Assumed exercise of dilutive options, restricted shares, restricted stock units and performance share units
0.2

 

 
0.2

 
0.5

Weighted average common and common equivalent shares outstanding
50.7

 
50.8

 
51.0

 
51.2

Basic earnings (loss) per share
$
1.26

 
$
(0.35
)
 
$
1.96

 
$
0.59

Diluted earnings (loss) per share
$
1.26

 
$
(0.35
)
 
$
1.95

 
$
0.58

Shares excluded from the determination of potential common stock because inclusion would have been anti-dilutive
3.2

 
2.9

 
2.6

 
1.0

Note 6:
Accumulated Other Comprehensive Loss
(In millions, net of tax)
Foreign Currency Items
 
Cash Flow Hedges
 
Pension and Other Post-retirement Items
 
Total
Balance at December 30, 2017
$
(501.9
)
 
$
1.6

 
$
(29.1
)
 
$
(529.4
)
Other comprehensive income (loss) before reclassifications
(45.0
)
 
3.1

 
0.7

 
(41.2
)
Amounts reclassified from accumulated other comprehensive loss

 
(1.3
)
 
0.1

 
(1.2
)
Net current-period other comprehensive income (loss)
(45.0
)
 
1.8

 
0.8

 
(42.4
)
Balance at June 30, 2018
$
(546.9
)
 
$
3.4

 
$
(28.3
)
 
$
(571.8
)
(In millions, net of tax)
Foreign Currency Items
 
Cash Flow Hedges
 
Pension and Other Post-retirement Items
 
Total
Balance at December 31, 2016
$
(544.3
)
 
$
4.9

 
$
(32.1
)
 
$
(571.5
)
Other comprehensive income (loss) before reclassifications
52.2

 
(4.7
)
 
(4.0
)
 
43.5

Amounts reclassified from accumulated other comprehensive loss

 
(1.2
)
 
0.7

 
(0.5
)
Net current-period other comprehensive income (loss)
52.2

 
(5.9
)
 
(3.3
)
 
43.0

Balance at July 1, 2017
$
(492.1
)
 
$
(1.0
)
 
$
(35.4
)
 
$
(528.5
)
Pretax amounts reclassified from accumulated other comprehensive loss that related to cash flow hedges consisted of net gains of $1.9 million and $1.7 million for the year-to-date periods ended June 30, 2018 and July 1, 2017, respectively. Associated with these items were tax provisions of $0.6 million and $0.5 million, respectively. See Note 10 for further discussion of derivatives.

9

TUPPERWARE BRANDS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

For the year-to-date periods ended June 30, 2018 and July 1, 2017, pretax amounts reclassified from accumulated other comprehensive loss related to pension and other post-retirement items consisted of prior service benefits of $0.7 million and $0.6 million, actuarial losses of $0.4 million and $0.7 million, and pension settlement costs of $0.4 million and $0.8 million, respectively. Associated with these items was a tax benefit of $0.2 million in 2017 and none in 2018. See Note 12 to the Consolidated Financial Statements for further discussion of pension and other post-retirement benefit costs.
Note 7:
Re-engineering and Impairment Costs
The Company recorded $2.1 million and $32.6 million in re-engineering charges during the second quarters of 2018 and 2017, respectively, and $9.7 million and $34.9 million for the respective year-to-date periods.
In 2018 and 2017, the re-engineering and impairment charges incurred were primarily related to severance costs and restructuring actions taken in connection with the Company's plans, through 2018 or 2019, to rationalize its supply chain and to adjust the cost base of several marketing units. The restructuring charges also relate to the Company's decision to wind-down the Beauticontrol reporting unit in 2017. Year-to-date in 2018, the Company recorded $0.7 million in cost of sales for inventory obsolescence in connection with the Company's re-engineering program.
The total cost of the restructuring actions is estimated to be $90 million to $100 million from the second quarter of 2017 forward. This excludes the benefit of selling fixed assets that will become excess in light of the re-engineering actions. The Company expects about 90 percent of second quarter 2017 and forward re-engineering costs to require cash outflows, and for these to be funded with cash flow from operations as well as asset sales as a result of the restructuring actions, notwithstanding the timing during each fiscal year in which the Company generates the majority of its cash. Of the total costs, the Company estimates that about 65 percent relates to severance and benefits related to headcount reductions, while the balance is predominantly related to costs to exit leases and other contracts, mainly related to wind-down of Beauticontrol and closure of the French manufacturing facility, as well as write-offs of excess assets for which there are not expected to be disposal proceeds.
The re-engineering charges by segment during the second quarter and year-to-date period ended June 30, 2018 were as follows:
 
Second Quarter
 
Year-to-Date
(In millions)
2018
 
2018
Europe
$
0.8

 
$
6.5

Asia Pacific

 
0.8

North America
1.3

 
2.0

South America

 
0.4

Total re-engineering charges
$
2.1

 
$
9.7

The balances included in accrued liabilities related to re-engineering and impairment charges as of June 30, 2018 and December 30, 2017 were as follows:
(In millions)
June 30,
2018
 
December 30,
2017
Beginning of the year balance
$
45.4

 
$
1.6

Provision
9.7

 
63.7

Non-cash charges
(0.4
)
 
(0.4
)
Cash expenditures:
 
 
 

Severance
(14.7
)
 
(12.7
)
Other
(8.6
)
 
(6.8
)
Currency translation adjustment
(0.6
)
 

End of period balance
$
30.8

 
$
45.4


10

TUPPERWARE BRANDS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

The accrual balance as of June 30, 2018, related primarily to severance payments to be made through the second quarter of 2019.
Note 8:
Segment Information
The Company manufactures and distributes a broad portfolio of products, primarily through independent direct sales consultants. Certain operating segments have been aggregated based upon geography, consistency of economic substance, products, production process, class of customers and distribution method.
Effective in the fourth quarter of 2017, in connection with the closure of its Beauticontrol business, the Company changed its segment reporting. The change was to combine its previous Beauty North America and Tupperware North America segments into one North America segment. Comparable information from all historical periods presented has been revised to conform with the new presentation.
The Company's reportable segments primarily sell design-centric preparation, storage and serving solutions for the kitchen and home through the Tupperware® brand. Europe includes Avroy Shlain® in South Africa and Nutrimetics® in France, which sell beauty and personal care products. Some units in Asia Pacific also sell beauty and personal care products under the NaturCare®, Nutrimetics® and Fuller® brands. North America also includes the Fuller Mexico beauty and personal care products business and sells products under the Fuller Cosmetics® brand in that unit and in Central America. South America also sells beauty products under the Fuller®, Nutrimetics® and Nuvo® brands.
Worldwide sales of beauty and personal care products totaled $75.5 million and $86.7 million in the second quarters of 2018 and 2017, respectively, and $148.3 million and $166.3 million in the respective year-to-date periods.

11

TUPPERWARE BRANDS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

 
13 weeks ended
 
26 weeks ended
(In millions)
June 30,
2018
 
July 1,
2017
 
June 30,
2018
 
July 1,
2017
Net sales:
 
 
 
 
 
 
 
Europe
$
132.7

 
$
135.4

 
$
276.6

 
$
284.9

Asia Pacific
180.0

 
183.5

 
352.2

 
360.8

North America
136.8

 
141.8

 
271.8

 
273.1

South America
85.9

 
112.2

 
177.4

 
208.9

Total net sales
$
535.4

 
$
572.9

 
$
1,078.0

 
$
1,127.7

Segment profit:
 
 
 

 
 
 
 
Europe
$
15.1

 
$
11.9

 
$
27.5

 
$
31.8

Asia Pacific
45.4

 
46.2

 
83.3

 
86.2

North America
22.7

 
20.7

 
41.7

 
36.5

South America
17.8

 
27.9

 
35.1

 
46.1

Total segment profit
$
101.0

 
$
106.7

 
$
187.6

 
$
200.6

Unallocated expenses
(11.5
)
 
(16.1
)
 
(23.9
)
 
(32.5
)
Re-engineering and impairment charges (a)
(2.1
)
 
(32.6
)
 
(9.7
)
 
(34.9
)
Impairment of goodwill

 
(62.9
)
 

 
(62.9
)
Gains on disposal of assets
12.4

 
3.1

 
14.6

 
3.2

Interest expense, net
(11.2
)
 
(10.9
)
 
(21.6
)
 
(22.0
)
Income (loss) before taxes
$
88.6

 
$
(12.7
)
 
$
147.0

 
$
51.5

(In millions)
June 30,
2018
 
December 30,
2017
Identifiable assets:
 
 
 
Europe
$
312.8

 
$
308.5

Asia Pacific
294.4

 
297.2

North America
282.8

 
266.3

South America
139.9

 
138.6

Corporate
308.2

 
377.4

Total identifiable assets
$
1,338.1

 
$
1,388.0

_________________________
(a)
See Note 7 to the Consolidated Financial Statements for a discussion of re-engineering and impairment charges.

12

TUPPERWARE BRANDS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

Note 9:
Debt
Debt Obligations
(In millions)
June 30,
2018
 
December 30, 2017
Fixed rate senior notes due 2021
$
599.6

 
$
599.5

Five year Revolving Credit Agreement (a)
256.2

 
131.0

Belgium facility capital lease
6.0

 
7.5

Other

 
0.1

Total debt obligations
$
861.8

 
$
738.1

____________________
(a)
$94.5 million and $96.1 million denominated in euros as of June 30, 2018 and December 30, 2017, respectively.

Credit Agreement
As of June 30, 2018, the Company had a weighted average interest rate on outstanding LIBOR-based borrowings of 2.8 percent under its multicurrency Amended and Restated Credit Agreement (“Credit Agreement”) that has a final maturity date of June 9, 2020.
At June 30, 2018, the Company had $426.0 million of unused lines of credit, including $342.4 million under the committed, secured Credit Agreement, and $83.6 million available under various uncommitted lines around the world.
The Credit Agreement has customary financial covenants related to interest coverage and leverage. These restrictions are not expected to impact the Company's operations. As of June 30, 2018, and currently, the Company had considerable cushion under its financial covenants.
Note 10:
Derivative Instruments and Hedging Activities
The Company is exposed to fluctuations in foreign currency exchange rates on the earnings, cash flows and financial position of its international operations. Although this currency risk is partially mitigated by the natural hedge arising from the Company's local manufacturing in many markets, a strengthening U.S. dollar generally has a negative impact on the Company. In response, the Company uses financial instruments to hedge certain of its exposures and to manage the foreign exchange impact to its financial statements. At its inception, a derivative financial instrument is designated as a fair value, cash flow or net equity hedge.
Fair value hedges are entered into with financial instruments such as forward contracts, with the objective of limiting exposure to certain foreign exchange risks primarily associated with accounts payable and non-permanent intercompany transactions. For derivative instruments that are designated and qualify as fair value hedges, the gain or loss on the derivative, as well as the offsetting gain or loss on the hedged item attributable to the hedged risk, are recognized in current earnings. In assessing hedge effectiveness, the Company excludes forward points, which are considered to be a component of interest expense. The forward points on fair value hedges resulted in pretax gains of $4.7 million and $5.3 million in the second quarters of 2018 and 2017, respectively, and $10.7 million and $10.2 million for the respective year-to-date periods.
The Company also uses derivative financial instruments to hedge foreign currency exposures resulting from certain forecasted purchases and classifies these as cash flow hedges. At initiation, the Company's cash flow hedge contracts are generally for periods ranging from one to fifteen months. The effective portion of the gain or loss on the hedging instrument is recorded in other comprehensive income and is reclassified into earnings as the transactions being hedged are recorded. As such, the balance at the end of the current reporting period in other comprehensive income, related to cash flow hedges, will generally be reclassified into earnings within the next twelve months. The associated asset or liability on the open hedges is recorded in other current assets or accrued liabilities, as applicable. In assessing hedge effectiveness, the Company excludes forward points, which are included as a component of interest expense.

13

TUPPERWARE BRANDS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

The Company also uses financial instruments, such as forward contracts and certain euro denominated borrowings under its Credit Agreement, to hedge a portion of its net equity investment in international operations and classifies these as net equity hedges. Changes in the value of these financial instruments, excluding any ineffective portion of the hedges, are included in foreign currency translation adjustments within accumulated other comprehensive loss. The Company recorded, net of tax, in other comprehensive income net gains of $30.9 million and $14.0 million associated with these hedges in the second quarter and year-to-date period of 2018 and losses of $10.8 million and $32.1 million for the respective periods of 2017. Due to the permanent nature of the investments, the Company does not anticipate reclassifying any portion of these amounts to the income statement in the next twelve months. In assessing hedge effectiveness, the Company excludes forward points, which are included as a component of interest expense.
While the forward contracts used for net equity and fair value hedges of non-permanent intercompany balances mitigate its exposure to foreign exchange gains or losses, they result in an impact to operating cash flows as they are settled, whereas the hedged items do not generate offsetting cash flows. The net cash flow impact of these currency hedges for the year-to-date periods ended June 30, 2018 and July 1, 2017 were outflows of $7.8 million and $1.6 million, respectively.
The Company considers the total notional value of its forward contracts as the best measure of the volume of derivative transactions. As of June 30, 2018 and December 30, 2017, the notional amounts of outstanding forward contracts to purchase currencies were $86.0 million and $111.1 million, respectively, and the notional amounts of outstanding forward contracts to sell currencies were $74.2 million and $112.1 million, respectively. As of June 30, 2018, the notional values of the largest positions outstanding were to purchase $69.3 million of U.S. dollars and to sell $13.7 million of Mexican pesos.
The following table summarizes the Company's derivative positions, which are the only assets and liabilities recorded at fair value on a recurring basis, and the impact they had on the Company's financial position as of June 30, 2018 and December 30, 2017. Fair values were determined based on third party quotations (Level 2 fair value measurement):

 
Asset derivatives
 
Liability derivatives
 
 
 
 
Fair value
 
 
 
Fair value
Derivatives designated as hedging instruments (in millions)
 
Balance sheet location
 
Jun 30,
2018
 
Dec 30,
2017
 
Balance sheet location
 
Jun 30,
2018
 
Dec 30,
2017
Foreign exchange contracts
 
Non-trade amounts receivable
 
$
32.5

 
$
32.2

 
Accrued liabilities
 
$
18.6

 
$
29.6

The following table summarizes the impact of the Company's fair value hedging positions on the results of operations for the second quarters of 2018 and 2017:
Derivatives designated as fair value hedges (in millions)
 
Location of gain or (loss) recognized in income on derivatives
 
Amount of gain or (loss) recognized in income on derivatives 
 
Location of gain or (loss) recognized in income on related hedged items
 
Amount of gain or (loss) recognized in income on related hedged items
 
 
 
 
2018
 
2017
 
 
 
2018
 
2017
Foreign exchange contracts
 
Other expense
 
$
(29.9
)
 
$
10.0

 
Other expense
 
$
28.9

 
$
(10.0
)

14

TUPPERWARE BRANDS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

The following table summarizes the impact of the Company's hedging activities on comprehensive income for the second quarters of 2018 and 2017:
Cash flow and net equity hedges (in millions)
 
Amount of gain or (loss) recognized in OCI (effective portion)
 
Location of gain or (loss) reclassified from accumulated OCI into income (effective portion)
 
Amount of gain or (loss) reclassified from accumulated OCI into income (effective portion)
 
Location of gain or (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)
 
Amount of gain or (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)
Cash flow hedging relationships
 
2018
 
2017
 
 
 
2018
 
2017
 
 
 
2018
 
2017
Foreign exchange contracts
 
$
4.9

 
$
(1.6
)
 
Cost of products sold
 
$
1.8

 
$
0.1

 
Interest expense
 
$
(0.7
)
 
$
(1.1
)
Net equity hedging relationships
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
 
33.8

 
(13.2
)
 
 
 
 
 
 
 
Interest expense
 
(5.4
)
 
(6.3
)
Euro denominated debt
 
5.7

 
(3.6
)
 
 
 
 
 
 
 
 
 
 
 
 
The following table summarizes the impact of the Company's fair value hedging positions on the results of operations for the year-to-date periods ended June 30, 2018 and July 1, 2017:
Derivatives designated as fair value hedges (in millions)
 
Location of gain or (loss) recognized in income on derivatives
 
Amount of gain or (loss) recognized in income on derivatives 
 
Location of gain or (loss) recognized in income on related hedged items
 
Amount of gain or (loss) recognized in income on related hedged items
 
 
 
 
2018
 
2017
 
 
 
2018
 
2017
Foreign exchange contracts
 
Other expense
 
$
(14.8
)
 
$
38.2

 
Other expense
 
$
14.2

 
$
(38.1
)
The following table summarizes the impact of the Company's hedging activities on comprehensive income for the year-to-date periods ended June 30, 2018 and July 1, 2017:
Cash flow and net equity hedges (in millions)
 
Amount of gain or (loss) recognized in OCI (effective portion)
 
Location of gain or (loss) reclassified from accumulated OCI into income (effective portion)
 
Amount of gain or (loss) reclassified from accumulated OCI into income (effective portion)
 
Location of gain or (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)
 
Amount of gain or (loss) recognized in income (ineffective portion and amount excluded from effectiveness testing)
Cash flow hedging relationships
 
2018
 
2017
 
 
 
2018
 
2017
 
 
 
2018
 
2017
Foreign exchange contracts
 
$
4.1

 
$
(6.0
)
 
Cost of products sold
 
$
1.9

 
$
1.7

 
Interest expense
 
$
(1.8
)
 
$
(2.4
)
Net equity hedging relationships
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Foreign exchange contracts
 
16.2

 
(43.2
)
 
 
 
 
 
 
 
Interest expense
 
(11.4
)
 
(12.2
)
Euro denominated debt
 
1.6

 
(6.9
)
 
 
 
 
 
 
 
 
 
 
 
 


15

TUPPERWARE BRANDS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

Note 11:
Fair Value Measurements
Due to their short maturities or their insignificance, the carrying amounts of cash and cash equivalents, accounts and notes receivable, accounts payable, accrued liabilities and short-term borrowings approximated their fair values at June 30, 2018 and December 30, 2017. The Company estimates that, based on current market conditions, the value of its 4.75%, 2021 senior notes was $617.3 million at June 30, 2018, compared with the carrying value of $599.6 million. The higher fair value resulted from changes, since issuance, in the corporate debt markets and investor preferences. The fair value of debt is classified as a Level 2 liability, and is estimated using quoted market prices as provided in secondary markets that consider the Company's credit risk and market related conditions. See Note 10 to the Consolidated Financial Statements for discussion of the Company's derivative instruments and related fair value measurements.
Note 12:
Retirement Benefit Plans
Components of net periodic benefit cost for the second quarters and year-to-date periods ended June 30, 2018 and July 1, 2017 were as follows:
 
Second Quarter
 
Year-to-Date
 
Pension benefits
 
Post-retirement benefits
 
Pension benefits
 
Post-retirement benefits
(In millions)
2018
 
2017
 
2018
 
2017
 
2018
 
2017
 
2018
 
2017
Service cost
$
2.4

 
$
2.7

 
$
0.1

 
$
0.1

 
$
5.0

 
$
5.3

 
$
0.1

 
$
0.1

Interest cost
1.4

 
1.4

 
0.1

 
0.1

 
2.8

 
2.8

 
0.2

 
0.3

Expected return on plan assets
(1.3
)
 
(1.2
)
 

 

 
(2.4
)
 
(2.4
)
 

 

Settlement/curtailment
0.3

 

 

 

 
0.4

 
0.8

 

 

Net amortization
0.3

 
0.4

 
(0.3
)
 
(0.3
)
 
0.3

 
0.7

 
(0.6
)
 
(0.6
)
Net periodic benefit cost
$
3.1

 
$
3.3

 
$
(0.1
)
 
$
(0.1
)
 
$
6.1

 
$
7.2

 
$
(0.3
)
 
$
(0.2
)
During the year-to-date periods ended June 30, 2018 and July 1, 2017, approximately $0.1 million and $0.9 million of pretax expense, respectively, were reclassified from other comprehensive income to a component of net periodic benefit cost. As they relate to non-U.S. plans, the Company uses current exchange rates to make these reclassifications. The impact of exchange rate fluctuations is included on the net amortization line of the table above. The Company included $0.7 million and $1.6 million related to the components of net periodic benefit cost, excluding service cost, in other expense in the year-to-date periods ended June 30, 2018 and July 1, 2017, respectively.
Note 13:
Income Taxes
The effective tax rates for the second quarter and year-to-date periods of 2018 were 28.1 percent and 32.3 percent compared with negative 38.9 percent and positive 42.3 percent for the comparable 2017 periods. In 2017, the Company incurred impairment and other charges resulting in a loss for the second quarter and a related negative tax rate. The tax rate for the first quarter of 2018 was 38.8 percent. The decrease in the rate from the first quarter to the second quarter of 2018, was the result of a change in the mix of income, tax audit settlements, and certain actions taken by the Company to partially reduce the negative impact of the international provisions of the newly enacted U.S. Tax Cuts and Jobs Act of 2017 (Tax Act), particularly the Global Intangible Low-Taxed Income (GILTI) provisions.
The Company continues to evaluate the impact of the GILTI provisions under the Tax Act which are complex and subject to continuing regulatory interpretation by the U.S. Internal Revenue Service (“IRS”). The Company is required to make an accounting policy election of either (1) treating taxes due on future U.S. inclusions in taxable income related to GILTI as a current period expense when incurred (the “period cost method”) or (2) factoring such amounts into the Company’s measurement of its deferred taxes (the “deferred method”). The Company’s accounting policy election with respect to the new GILTI Tax rules will depend, in part, on further guidance issued by the IRS, and on analyzing its global income to determine whether it can reasonably estimate the tax impact. While the Company has included an estimate of GILTI in its estimated effective tax rate for 2018, it has not completed its analysis and is not yet able to determine which method to elect. Adjustments related to the amount of GILTI Tax recorded in its Consolidated Financial Statements may be required based on the outcome of this election.

16

TUPPERWARE BRANDS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

As of June 30, 2018 and December 30, 2017, the Company's accrual for uncertain tax positions was $16.7 million and $19.8 million, respectively. The decrease in the accrual for uncertain tax positions was primarily due to audit closures in various jurisdictions. The Company estimates that as of June 30, 2018, approximately $15.9 million of the unrecognized tax benefits, if recognized, will impact the effective tax rate. Interest and penalties related to uncertain tax positions in the Company's global operations are recorded as a component of the provision for income taxes. Accrued interest and penalties were $6.3 million and $7.3 million as of the periods ended June 30, 2018 and December 30, 2017, respectively.
The Company estimates that it may settle one or more audits in the next twelve months that may result in cash payments decreasing the amount of accrual for uncertain tax positions by up to $0.5 million. For the remaining balance as of June 30, 2018, the Company is not able to reliably estimate the timing or ultimate settlement amount. While the Company does not currently expect material changes, it is possible that the amount of unrecognized benefit with respect to the uncertain tax positions will significantly increase or decrease related to audits in various foreign jurisdictions that may conclude during that period or new developments that could also, in turn, impact the Company's assessment relative to the establishment or reversal of valuation allowances against certain existing deferred tax assets. These valuation allowances relate to tax assets in jurisdictions where it is management's best estimate that there is not a greater than 50 percent probability that the benefit of the assets will be realized in the associated tax returns. The likelihood of realizing the benefit of deferred tax assets is assessed on an ongoing basis. This assessment requires estimates as to future operating results, as well as an evaluation of the effectiveness of the Company's tax planning strategies. At this time, the Company is not able to make a reasonable estimate of the range of impact on the balance of unrecognized tax benefits or the impact on the effective tax rate related to these items.
Note 14:
Statement of Cash Flow Supplemental Disclosure
Under the Company's stock incentive programs, in certain jurisdictions, employees are allowed to use shares retained by the Company to satisfy minimum statutorily required withholding taxes. In the year-to-date periods ended June 30, 2018 and July 1, 2017, 22,494 and 9,256 shares, respectively, were retained to fund withholding taxes, with values totaling $1.1 million and $0.6 million, respectively, which were included as stock repurchases in the Condensed Consolidated Statements of Cash Flows.
Restricted cash is recorded in either prepaid and other current assets or in long-term other assets.
Note 15:
Stock Based Compensation
Stock option activity for 2018 is summarized in the following table:
 
Shares subject to option
 
Weighted average exercise price per share
 
Aggregate intrinsic value
(in millions)
Outstanding at December 30, 2017
3,045,316

 
$
58.96

 
 
Granted
69,736

 
47.05

 
 
Expired / Forfeited
(6,594
)
 
58.12

 
 
Exercised
(19,047
)
 
25.46

 
 
Outstanding at June 30, 2018
3,089,411

 
$
58.90

 
$

Exercisable at June 30, 2018
1,784,764

 
$
59.92

 
$

The intrinsic value of options exercised totaled $3.0 million and $4.0 million in the second quarter and year-to-date periods of 2017, respectively, and was $0.4 million for both periods in 2018.

17

TUPPERWARE BRANDS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

The Company also has time-vested, performance-vested and market-vested share awards. The activity for such awards in 2018 is summarized in the following table:
 
Shares outstanding
 
Weighted average grant date fair value
December 30, 2017
635,507

 
$
58.59

Time-vested shares granted
51,862

 
44.36

Market-vested shares granted
24,571

 
63.48

Performance shares granted
92,621

 
50.51

Performance share adjustments
(68,060
)
 
54.46

Vested
(95,406
)
 
70.97

Forfeited
(31,118
)
 
59.67

June 30, 2018
609,977

 
$
54.82

Compensation expense related to the Company's stock-based compensation for the second quarter and year-to-date periods ended June 30, 2018 and July 1, 2017 were as follows:
 
Second Quarter
 
Year-to-Date
(In millions)
2018
 
2017
 
2018
 
2017
Stock options
$
0.9

 
$
0.8

 
$
1.7

 
$
1.5

Time, performance and market vested share awards
2.8

 
3.6

 
5.3

 
7.7

As of June 30, 2018, total unrecognized stock-based compensation expense related to all stock based awards was $23.5 million, which is expected to be recognized over a weighted average period of 1.8 years.
Note 16:
Allowance for Long-Term Receivables
As of June 30, 2018, $16.0 million of long-term receivables from both active and inactive customers were considered past due, the majority of which were reserved through the Company's allowance for uncollectible accounts.
The balance of the allowance for long-term receivables as of June 30, 2018 was as follows:
(In millions)
 
Balance at December 30, 2017
$
16.5

Provision and reclassifications
(0.8
)
Currency translation adjustment
(0.5
)
Balance at June 30, 2018
$
15.2

Note 17:
Guarantor Information
The Company's payment obligations under its senior notes due in 2021 are fully and unconditionally guaranteed, on a senior secured basis, by Dart Industries Inc. (the "Guarantor"). The guarantee is secured by certain "Tupperware" trademarks and service marks owned by the Guarantor.
Condensed consolidated financial information as of June 30, 2018 and December 30, 2017 and for the quarter and year-to-date periods ended June 30, 2018 and July 1, 2017 for the Company (the "Parent"), the Guarantor and all other subsidiaries (the "Non-Guarantors") is as follows.

18

TUPPERWARE BRANDS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

Each entity in the consolidating financial information follows the same accounting policies as described in the consolidated financial statements, except for the use by the Parent and Guarantor of the equity method of accounting to reflect ownership interests in subsidiaries that are eliminated upon consolidation. The Guarantor is 100% owned by the Parent, and there are certain entities within the Non-Guarantors' classification that the Parent owns directly. There are no significant restrictions on the ability of either the Parent or the Guarantor to obtain adequate funds from their respective subsidiaries by dividend or loan that should interfere with their ability to meet their operating needs or debt repayment obligations.

Consolidating Statement of Income
 
13 weeks ended June 30, 2018
(In millions)
Parent
 
Guarantor
 
Non-Guarantors
 
Eliminations
 
Total
Net sales
$

 
$

 
$
536.7

 
$
(1.3
)
 
$
535.4

Other revenue

 
19.6

 
1.9

 
(21.5
)
 

Cost of products sold

 
2.1

 
194.6

 
(23.2
)
 
173.5

Gross margin

 
17.5

 
344.0

 
0.4

 
361.9

Delivery, sales and administrative expense
3.3

 
23.1

 
246.0

 
0.4

 
272.8

Re-engineering and impairment charges

 
0.7

 
1.4

 

 
2.1

Gains on disposal of assets

 

 
12.4

 

 
12.4

Operating income (loss)
(3.3
)
 
(6.3
)
 
109.0

 

 
99.4

Interest income
5.1

 
0.6

 
11.1

 
(16.1
)
 
0.7

Interest expense
10.3

 
15.8

 
1.9

 
(16.1
)
 
11.9

Income from equity investments in subsidiaries
70.3

 
71.2

 

 
(141.5
)
 

Other expense (income)
(0.2
)
 
(14.5
)
 
14.3

 

 
(0.4
)
Income before income taxes
62.0

 
64.2

 
103.9

 
(141.5
)
 
88.6

Provision (benefit) for income taxes
(1.8
)
 
(2.5
)
 
29.1

 

 
24.8

Net income
$
63.8

 
$
66.7

 
$
74.8

 
$
(141.5
)
 
$
63.8

Comprehensive income (loss)
$
13.7

 
$
14.0

 
$
(1.1
)
 
$
(12.9
)
 
$
13.7



19

TUPPERWARE BRANDS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

Consolidating Statement of Income
 
13 weeks ended July 1, 2017
(In millions)
Parent
 
Guarantor
 
Non-Guarantors
 
Eliminations
 
Total
Net sales
$

 
$

 
$
574.0

 
$
(1.1
)
 
$
572.9

Other revenue

 
32.7

 
6.4

 
(39.1
)
 

Cost of products sold

 
6.4

 
214.1

 
(37.9
)
 
182.6

Gross margin

 
26.3

 
366.3

 
(2.3
)
 
390.3

Delivery, sales and administrative expense
4.5

 
23.2

 
273.6

 
(2.3
)
 
299.0

Re-engineering and impairment charges

 
0.3

 
32.3

 

 
32.6

Impairment of goodwill and intangible assets

 

 
62.9

 

 
62.9

Gains on disposal of assets

 

 
3.1

 

 
3.1

Operating income (loss)
(4.5
)
 
2.8

 
0.6

 

 
(1.1
)
Interest income
5.1

 
0.3

 
9.5

 
(14.2
)
 
0.7

Interest expense
9.5

 
14.6

 
1.7

 
(14.2
)
 
11.6

Income (loss) from equity investments in subsidiaries
(12.0
)
 
1.9

 

 
10.1

 

Other expense (income)
(1.0
)
 
9.6

 
(7.9
)
 

 
0.7

Income (loss) before income taxes
(19.9
)
 
(19.2
)
 
16.3

 
10.1

 
(12.7
)
Provision (benefit) for income taxes
(2.2
)
 
(4.6
)
 
11.8

 

 
5.0

Net income (loss)
$
(17.7
)
 
$
(14.6
)
 
$
4.5

 
$
10.1

 
$
(17.7
)
Comprehensive income (loss)
$
(10.9
)
 
$
(4.8
)
 
$
21.9

 
$
(17.1
)
 
$
(10.9
)

Consolidating Statement of Income

 
26 weeks ended June 30, 2018
(In millions)
Parent
 
Guarantor
 
Non-Guarantors
 
Eliminations
 
Total
Net sales
$

 
$

 
$
1,079.5

 
$
(1.5
)
 
$
1,078.0

Other revenue

 
41.3

 
12.0

 
(53.3
)
 

Cost of products sold

 
12.1

 
393.3

 
(52.9
)
 
352.5

Gross margin

 
29.2

 
698.2

 
(1.9
)
 
725.5

Delivery, sales and administrative expense
6.3

 
45.4

 
512.2

 
(1.9
)
 
562.0

Re-engineering and impairment charges

 
1.0

 
8.7

 

 
9.7

Gains on disposal of assets

 

 
14.6

 

 
14.6

Operating income (loss)
(6.3
)
 
(17.2
)
 
191.9

 

 
168.4

Interest income
10.2

 
1.1

 
21.9

 
(31.8
)
 
1.4

Interest expense
19.5

 
31.3

 
4.0

 
(31.8
)
 
23.0

Income from equity investments in subsidiaries
111.1

 
141.7

 

 
(252.8
)
 

Other expense (income)
(0.8
)
 
(2.5
)
 
3.1

 

 
(0.2
)
Income before income taxes
96.3

 
96.8

 
206.7

 
(252.8
)
 
147.0

Provision (benefit) for income taxes
(3.2
)
 
(8.8
)
 
59.5

 

 
47.5

Net income
$
99.5

 
$
105.6

 
$
147.2

 
$
(252.8
)
 
$
99.5

Comprehensive income
$
57.1

 
$
65.9

 
$
97.2

 
$
(163.1
)
 
$
57.1


20

TUPPERWARE BRANDS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)

Consolidating Statement of Income
 
26 weeks ended July 1, 2017
(In millions)
Parent
 
Guarantor
 
Non-Guarantors
 
Eliminations
 
Total
Net sales
$

 
$

 
$
1,130.7

 
$
(3.0
)
 
$
1,127.7

Other revenue

 
58.2

 
15.0

 
(73.2
)
 

Cost of products sold

 
15.0

 
416.7

 
(71.4
)
 
360.3

Gross margin

 
43.2

 
729.0

 
(4.8
)
 
767.4

Delivery, sales and administrative expense
8.4

 
46.4

 
546.9

 
(4.8
)
 
596.9

Re-engineering and impairment charges

 
0.7

 
34.2

 

 
34.9

Impairment of goodwill and intangible assets

 

 
62.9

 

 
62.9

Gains on disposal of assets

 

 
3.2

 

 
3.2

Operating income (loss)
(8.4
)
 
(3.9
)
 
88.2

 

 
75.9

Interest income
10.2

 
1.0

 
17.8

 
(27.8
)
 
1.2

Interest expense
18.1

 
28.9

 
4.0

 
(27.8
)
 
23.2

Income from equity investments in subsidiaries
39.9

 
80.6

 

 
(120.5
)
 

Other expense (income)
(1.0
)
 
25.0

 
(21.6
)
 

 
2.4

Income before income taxes
24.6

 
23.8

 
123.6

 
(120.5
)
 
51.5

Provision (benefit) for income taxes
(5.1
)
 
(12.3
)
 
39.2

 

 
21.8

Net income
$
29.7

 
$
36.1

 
$
84.4

 
$
(120.5
)
 
$
29.7

Comprehensive income
$
72.7

 
$
84.6

 
$
154.7

 
$
(239.3
)
 
$
72.7



21

TUPPERWARE BRANDS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
(Unaudited)


Condensed Consolidating Balance Sheet
 
June 30, 2018
(In millions)
Parent
 
Guarantor
 
Non-Guarantors
 
Eliminations
 
Total
ASSETS
 

 
 

 
 
 
 
 
 
Cash and cash equivalents
$

 
$
0.4

 
$
97.7

 
$
(0.1
)
 
$
98.0

Accounts receivable, net

 

 
163.3

 

 
163.3

Inventories

 

 
281.5

 
0.1

 
281.6

Non-trade amounts receivable, net

 
26.8

 
36.6

 

 
63.4

Intercompany receivables
87.7

 
1,161.5

 
280.7

 
(1,529.9
)
 

Prepaid expenses and other current assets
1.7

 
6.4

 
64.6

 
(47.9
)
 
24.8

Total current assets
89.4

 
1,195.1

 
924.4

 
(1,577.8
)
 
631.1

Deferred income tax benefits, net
33.4

 
72.5

 
136.9

 
(6.5
)
 
236.3

Property, plant and equipment, net

 
62.8

 
208.7

 

 
271.5

Long-term receivables, net

 

 
18.4

 
0.1

 
18.5

Trademarks and tradenames, net

 

 
57.2

 

 
57.2

Goodwill

 
2.9

 
74.0

 

 
76.9

Investments in subsidiaries
1,245.3

 
1,333.9

 

 
(2,579.2
)
 

Intercompany notes receivable
505.2

 
96.8

 
920.4

 
(1,522.4
)
 

Other assets, net
0.5

 
0.6

 
73.8

 
(28.3
)
 
46.6

Total assets
$
1,873.8

 
$
2,764.6

 
$
2,413.8

 
$
(5,714.1
)
 
$
1,338.1

LIABILITIES AND SHAREHOLDERS' EQUITY
 

 
 

 
 

 
 

 
 

Accounts payable
$

 
$
3.1

 
$
86.9

 
$
0.1

 
$
90.1

Short-term borrowings and current portion of long-term debt and capital lease obligations
256.2

 

 
1.6

 

 
257.8

Intercompany payables
1,084.8

 
275.7

 
169.4

 
(1,529.9
)
 

Accrued liabilities
51.7

 
57.4

 
286.2

 
(47.9
)
 
347.4

Total current liabilities
1,392.7

 
336.2

 
544.1

 
(1,577.7
)
 
695.3

Long-term debt and capital lease obligations
599.6

 

 
4.4

 

 
604.0

Intercompany notes payable
47.7

 
1,170.4

 
304.3

 
(1,522.4
)