Tupperware Brands Corp. (TUP) filed Quarterly Report for the period ended 2009-06-27.
Tupperware Brands Corporation is a global direct seller of premium innovative products across multiple brands and categories through an independent sales force. Product brands and categories include design-centric preparation storage and serving solutions for the kitchen and home through the Tupperware brand and beauty and personal care products through its Avroy Shlain BeautiControl Fuller NaturCare Nutrimetics Nuvo and Swissgarde brands. Tupperware Brands Corp. has a market cap of $2.13 billion; its shares were traded at around $34.06 with a P/E ratio of 12.7 and P/S ratio of 1. The dividend yield of Tupperware Brands Corp. stocks is 2.5%. Tupperware Brands Corp. had an annual average earning growth of 1.2% over the past 10 years.
Highlight of Business Operations:
Net cash flow from operating activities was an inflow of $87.4 million for the first half of 2009 compared with an inflow of $5.4 million for the same period of 2008. The increase most significantly reflected $11.1 million in cash inflow to settle foreign currency hedge contracts and a $7.3 million inflow from the reduction of inventory held, in 2009, compared with outflows of $27.2 million and $37.1 million, respectively in the 2008 period.
The Company recorded $1.4 million and $4.1 million in re-engineering and impairment charges during the second quarter and first half of 2009, respectively, primarily related to severance costs incurred in the Company’s Argentina, Australia, BeautiControl and Mexico operations, mainly due to implementing changes in the businesses’ management structures. Also included was $0.2 million related to relocation of the BeautiControl manufacturing facility and $1.0 million related to software impairment.
In prior periods, the Company recorded impairments related to its Nutrimetics and NaturCare businesses, in part, due to the fact that current and forecasted future results of operations were below its prior projections. This resulted from benefits related to strategies implemented since the acquisition of these businesses in 2005 not occurring as quickly or significantly as had been projected. Also contributing to the previous impairments was an overall increase to the assumed discount rates used in the valuations. Although some improvements have been made in these businesses, the rate of growth of sales, profit and cash flow of the Nutrimetics and NaturCare businesses in the second quarter of 2009 were below the Company’s projections used in its previous valuations, as was the forecast for growth in future periods. In the second quarter of 2009, the Company also noted that financial results of the South African beauty business was not meeting the projections used in the 2008 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 markets, 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 impaired goodwill by $8.6 million and $3.2 million relating to the Nutrimetics and South African beauty reporting units, respectively. Refer to Note 8 to the Consolidated Financial Statements for further discussion of goodwill and tradename impairments.
In the second quarter of 2008, the Company recorded impairments of the tradenames of Nutrimetics of $6.5 million and NaturCare of $2.5 million.
Also contributing to this decrease was less amortization expense related to definite-lived intangible assets acquired with the direct selling businesses of Sara Lee Corporation in December 2005. These intangible assets are primarily the value of independent sales forces. The amortization is recorded to reflect the estimated turnover rates of the sales forces and was $1.3 million in the second quarter of 2009 as compared with $2.4 million in the same period of 2008. For the full year of 2009, the amortization is expected to be $5.0 million versus $9.0 million in 2008.
Net interest expense was $6.2 million for the second quarter of 2009 compared with $8.7 million for the same period of 2008. For the first half of 2009 net interest expense was $13.6 million compared with $16.3 million for the same period of 2008. The decreases were mainly related to a lower average debt level and lower U.S. interest rates in 2009 compared with 2008.
TUP is in the portfolios of John Hussman of Hussman Economtrics Advisors, Inc..
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