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Tupperware Brands Corp. Reports Operating Results (10-K/A)
Posted by: gurufocus (IP Logged)
Date: January 9, 2013 03:06PM
Tupperware Brands Corp. (TUP) filed Amended Annual Report for the period ended 2011-12-31. Tupperware Brands Corporation has a market cap of $3.58 billion; its shares were traded at around $64.44 with a P/E ratio of 13.6 and P/S ratio of 1.4. The dividend yield of Tupperware Brands Corporation stocks is 2.2%. Tupperware Brands Corporation had an annual average earning growth of 7.7% over the past 10 years.
Highlight of Business Operations:In the second quarter of 2009, the Company noted the rates of growth of sales, profit and cash flow of the Nutrimetics and NaturCare businesses were below the Company s projections used in its previous valuations, as was the forecast for growth in future periods. At that time, the Company also noted that financial results of the South African beauty business were not meeting the projections used in the 2008 annual valuation. Given the sensitivity of the valuations to changes in cash flows for these reporting units, the Company performed interim impairment tests of tradenames and reporting units, reflecting reduced future forecasts in these businesses, including the impact of the external environment. The result of the interim impairment tests was to record tradename impairments of $10.1 million for Nutrimetics, $4.2 million for NaturCare and $2.0 million for Avroy Shlain in the second quarter of 2009. In addition to the impairment of tradenames, the Company also recognized impairments of goodwill of $8.6 million and $3.2 million relating to the Nutrimetics and South African beauty reporting units, respectively.
The Company recorded re-engineering and impairment charges of $5.9 million, $6.5 million and $5.2 million in 2011, 2010 and 2009, respectively, related to severance costs incurred to reduce head count in various units, mainly due to implementing changes in the businesses' management structures. These costs were primarily related to operations in France, Fuller Mexico, Japan and Malaysia in 2011; Australia, France and Japan in 2010; and Australia, BeautiControl, France, Fuller Mexico and Japan in 2009. In 2011, re-engineering and impairment charges also included $1.3 million related to the decision to merge the Nutrimetics and Tupperware businesses in Malaysia and $0.7 million related to asset impairments, exit activities and relocation costs. Also in 2011, in connection with the decision to cease operating Nutrimetics Malaysia, the Company recorded a $1.7 million charge to cost of sales for inventory obsolescence. In 2010, re-engineering and impairment charges also included $1.1 million related to moving costs and the impairment of property, plant and equipment associated with the relocation of certain manufacturing facilities in Japan. In 2009, these costs also included $2.1 million related to the impairment of software and property, plant and equipment and $0.7 million of costs associated with the relocation of certain manufacturing facilities.
Asia Pacific achieved strong growth in 2010 with an 18 percent increase in reported sales from improvements in the emerging markets in this segment. Excluding the impact of foreign currency exchange rates sales increased 8 percent. Emerging markets accounted for $384.6 million and $282.2 million, or 66 and 57 percent, of the sales in this segment for 2010 and 2009, respectively. Total emerging market sales increased $102.4 million, or 36 percent, in 2010 compared with 2009, and the comparison was positively impacted by changes in foreign currency exchange rates totaling $21.5 million. Excluding the impact of foreign currencies, these markets increased by 27 percent in 2010, compared with 2009. This result was from larger, more active sales forces, reflecting strong recruiting, training and retention, attractive consumer offers and successful promotional activities.
In 2011, 2010 and 2009, the Company spent $73.9 million, $56.1 million and $46.4 million respectively, for capital expenditures. The most significant type of spending in all years was for molds for new products, with the greatest amount spent in Europe, and capital expenditures related to automobiles purchased for the sales force. In 2011, the Company also spent capital for molding machinery and increasing warehouse and manufacturing capacity in South Africa, India, and Brazil. In 2010, the Company spent capital on molding machines and outfitting a new leased manufacturing facility in India. In 2009, the Company also had road costs related to the Orlando property and spent $8.2 million to improve the distribution capability at the Company s Hemingway facility in South Carolina, following the 2007 destruction of its main finished goods warehouse at that facility. The cost of this project was reimbursed by insurance proceeds and is shown net in the Consolidated Statement of Cash Flows.
Additionally, as of December 31, 2011 the Company had $7.2 million included on its Consolidated Balance Sheets as the value of acquired sales forces. The estimated annual amortization expense associated with these intangibles for each of the five succeeding years is $2.0 million, $1.4 million, $1.0 million, $0.7 million and $0.6 million, respectively. As of December 31, 2011, the product formulation asset recorded as part of the acquisition was fully amortized.
Stocks Discussed: TUP,