Annual Report — Form 10-K
Filing Table of Contents
Document/Exhibit Description Pages Size
1: 10-K Live Filing of 10-K 3/21/94 26± 109K
2: EX-10 Ex-10.A 11± 46K
3: EX-10 Ex-10.B 5± 24K
4: EX-10 Ex-10.C 9± 39K
5: EX-11 Statement re: Computation of Earnings Per Share 2± 8K
6: EX-13 Annual or Quarterly Report to Security Holders 30± 136K
7: EX-22 Published Report Regarding Matters Submitted to a 3± 15K
Vote of Security Holders
8: EX-24 Power of Attorney 1 6K
9: EX-25 Statement re: Eligibility of Trustee 2± 9K
EX-13 — Annual or Quarterly Report to Security Holders
| EX-13 | 1st “Page” of 9 | TOC | ↑Top | Previous | Next | ↓Bottom | Just 1st |
|---|
EXHIBIT 13
FINANCIAL REVIEW
The information contained in this financial review should be read
in conjunction with the consolidated financial information
provided on pages 26 to 40 of this Annual Report.
RESULTS OF OPERATIONS
OVERALL
Sales and Net Income (Loss) Sales increased by 5 percent in
1993 to $3.1 billion. All segments reported strong improvement
other than the Food Equipment Group, which reported a moderate
decline attributable to its European operations.
The improvement in 1993 follows a comparable percentage
increase in reported sales in 1992 over 1991. The increase in
1992 reflected strength in Tupperware's European and Asia Pacific
operations, the Food Equipment Group, and Ralph Wilson Plastics.
Net income in 1993 was $172.5 million versus a net loss of
$79.3 million reported in 1992. The prior year's net loss
included an after-tax restructuring charge of $111.4 million, and
net charges of $83.9 million for the adoption of two new
accounting standards. Net income in 1993 would have increased 49
percent over 1992, excluding these unusual items. The increase
was driven by higher sales volume throughout Tupperware and its
lower U.S. cost structure. A lower effective tax rate, along with
record volume at Ralph Wilson Plastics, record profit at West
Bend and significantly higher results in the domestic operations
of the Food Equipment Group, also contributed to the improvement.
Weakness at the Food Equipment Group in Europe and adhesive
warranty costs at Ralph Wilson Plastics had negative impacts on
1993 results.
Compared with 1991, net income in 1992, excluding the
unusual items, improved by $13.7 million. The 13 percent increase
was the result of substantially lower interest expense,
significant profit improvement in the U.S. Food Equipment Group
and Tupperware Europe, and a lower tax rate. These improvements
were partially offset by lower results in Tupperware's U.S. and
Latin American operations as well as in Food Equipment Group
Europe, and higher costs in the Decorative Products Group.
In 1993, 45 percent of Premark's sales and 62 percent of
total segment profit were generated outside the United States. In
1992, 47 percent of sales and 70 percent of segment profit,
excluding the Tupperware restructuring charge, were generated
outside the United States.
Costs and Expenses The cost of products sold in relation to
sales was 51.8 percent in 1993, 53.3 percent in 1992 and 53.8
percent in 1991. Reduced manufacturing costs and increased
capacity utilization at Tupperware U.S., as a result of the
consolidation of manufacturing operations; more favorable pricing
at Tupperware Europe; and higher volume, lower costs and
nominally higher prices at Food Equipment Group U.S. had
favorable impacts on the ratio in 1993, compared with 1992. These
factors were somewhat offset by increased adhesive warranty costs
at Ralph Wilson Plastics. There was a consistent relationship
between the components of sales and cost of sales in 1992 versus
1991.
Delivery, sales and administrative expenses as a percentage
of sales were 39.9 percent in 1993, compared with 39.7 percent in
1992 and 38.9 percent in 1991. There was no significant change in
the 1993 ratio as cost increases and decreases were comparable,
in percentage terms, with sales increases and decreases
throughout the company's operating segments. The 1992 increase
from 1991 was mainly due to increased promotional and marketing
expenses at Tupperware, as well as additional annual expenses for
retiree medical benefits due to the adoption of a new accounting
standard.
The $136.7 million pretax charge recorded by Tupperware in
1992 was primarily for the restructuring of the U.S. business. In
implementing the restructuring, Tupperware ceased manufacturing
at its Halls, Tennessee facility, wrote down certain other
manufacturing assets and took steps to strengthen its
distribution network.
Tax Rate The effective tax rate in 1993 was 24.9 percent. This
compares with 32.0 percent in 1992 before the restructuring
charge and 36.0 percent in 1991. The lower tax rate in 1993 was
attributable to improved operating income that allowed the
recognition of previously reserved tax assets for temporary
differences and foreign tax credits. The lower tax rate in 1992
compared with 1991 was due to two primary factors: lower income
taxes on foreign source income due to the use of foreign tax
credits, and a reduction in the domestic effective tax rate
attributable to the decrease in the deferred tax asset valuation
allowance recorded as a result of the change in accounting for
deferred tax assets.
Net Interest Expense Interest expense, net of interest income,
was $26.1 million in 1993, comparable with the $26.6 million of
net expense in 1992. In 1991, net interest expense was $43.5
million due to higher debt levels resulting from the 1990
acquisition of Florida Tile and a stock repurchase program
completed in the first half of 1990. Additionally, $75 million of
long-term debt was refinanced in February 1992 with commercial
paper borrowings at lower interest rates.
SEGMENTS
TUPPERWARE
Sales and Segment Profit 1993 vs. 1992 Sales were $1.23 billion
in 1993, an 11 percent increase from $1.11 billion in 1992. All
regions made strong contributions to the increase. Excluding
foreign exchange effects, sales increased by 15 percent. Segment
profit improved to $171.0 million from a reported loss of $25.3
million in 1992. After adjusting for the effect of 1992's pretax
restructuring charge of $136.7 million, 1993's segment profit
increased by $59.6 million from 1992. All regions had significant
gains, with the United States showing the most dramatic
improvement. In 1993, the worldwide average active sales force
was 6 percent higher than in 1992. For 1993 and 1992,
respectively, Tupperware accounted for 40 percent and 38 percent
of Premark's sales and generated 61 percent and 51 percent,
excluding the 1992 restructuring charge, of Premark's segment
profit.
Regional Results Europe continues to be Tupperware's largest
market, accounting for 44 percent of total Tupperware sales in
1993. Sales grew by 8 percent from 1992 despite the negative
effect of foreign exchange rates. Profits were up significantly
on substantial volume and pricing improvements in Germany and
volume improvement in Austria, partially offset by lower volume
in Spain.
Asia Pacific's sales rose by 11 percent over 1992 to $307.8
million, and segment profit was up sharply. The region's sales
accounted for 25 percent of Tupperware's 1993 total. Results
benefited from higher volume in Japan and certain other smaller
markets. This was partially offset by a less advantageous sales
mix in Japan and lower volume in Korea.
In the United States, sales of $234.1 million were 11
percent higher than in 1992 and accounted for 19 percent of
Tupperware's sales. Segment profit improved to $12.5 million from
a prior year loss of $21.5 million, after excluding 1992's
restructuring charge. The sharp improvement was due to the
combination of the higher sales, reflecting an 11 percent
increase in the active sales force, and lower manufacturing costs
resulting from the restructuring actions taken beginning in 1992.
Cost savings arising from the restructuring amounted to
approximately $25 million in 1993.
Latin America's sales rose to $120.8 million, 16 percent
higher than in 1992, and represented 10 percent of Tupperware's
sales. The strong sales increase was led by higher volume in
Argentina and improved pricing in Mexico. The area reported a
significant increase in segment profit on continued strength in
Mexico and improved operations in other markets.
1992 vs. 1991 In 1992, Tupperware's sales grew by 3 percent to
$1.11 billion from $1.08 billion in 1991. Higher sales in Europe
and Asia Pacific, together with favorable foreign exchange rates,
more than offset declines in the United States and Latin America.
Segment profit, however, was significantly affected by the 1992
restructuring charge, which resulted in a $25.3 million loss for
the year compared with segment profit of $121.2 million in 1991.
Excluding the charge, profit would have been down 8 percent
mainly due to lower results in the United States and Latin
America as well as higher promotional costs worldwide.
FOOD EQUIPMENT GROUP
Sales and Segment Profit 1993 vs. 1992 Food Equipment Group's
worldwide sales of $1.01 billion in 1993 decreased by 4 percent
from 1992. Excluding the negative effect of foreign exchange
rates on the comparison, 1993 sales were even with 1992 as
moderately higher U.S. sales were offset by a decline in Europe.
Segment profit of $51.3 million was up 3 percent from the $49.6
million reported for 1992 as improved U.S. margins more than
offset weaker European results. The Food Equipment Group
contributed 32 percent and 36 percent of Premark's sales, and 18
percent and 23 percent, excluding the 1992 Tupperware
restructuring charge, of segment profit in 1993 and 1992,
respectively.
Regional Results Sales in the United States rose 4 percent to
$610.3 million in 1993 led by strong improvement in shipments to
restaurants and other institutions comprising the foodservice
market and a modest increase in service revenue. The higher sales
were the result of higher unit volume and nominal price
increases. Nearly all major product lines experienced increases.
Segment profit increased sharply from the higher sales and
continued cost-reduction efforts.
European sales declined 17 percent compared with 1992
because of the negative impact of foreign exchange rates and
lower volume stemming from the recessionary environment in
several markets. Likewise, despite cost-reduction measures taken
last year, segment profit was off sharply due to the lower sales
and production volumes. Domestic operations accounted for 60
percent and 56 percent of the group's sales and 79 percent and 66
percent of its segment profit in 1993 and 1992, respectively.
1992 vs. 1991 Worldwide, Food Equipment Group sales in 1992
increased more than 4 percent to $1.05 billion from $1.01 billion
in 1991. The increase was the result of higher volume in the
United States and Europe. Favorable foreign exchange rates also
contributed to the increase. Segment profit rose nearly 21
percent to $49.6 million from $41.1 million in 1991, as higher
sales volume and cost-reduction efforts in the United States led
to substantial improvement, which more than countered sharply
lower profits in Europe.
CONSUMER AND DECORATIVE PRODUCTS
Sales and Segment Profit 1993 vs. 1992 Consumer and Decorative
Products sales in 1993 rose 10 percent to $857.7 million from
$779.4 million with all units in the segment reporting strong
sales increases. Segment profit was essentially flat in 1993 at
$56.2 million compared with $55.9 million in 1992, as the higher
sales were offset by increased costs at Ralph Wilson Plastics,
Florida Tile and Precor. Consumer and Decorative Products
accounted for 28 percent and 26 percent of Premark's sales, and
21 percent and 26 percent, before the 1992 Tupperware
restructuring charge, of segment profit in 1993 and 1992,
respectively.
Decorative Products Group Group sales in 1993 were $618.3
million, which represents an 8 percent improvement from 1992. At
Ralph Wilson Plastics, sales rose 6 percent to a record $429.2
million in 1993, but segment profit declined due to adhesive
warranty claims. Excluding charges for the adhesives issue,
profit would have been at a record level based on improved unit
volume and pricing, and lower manufacturing costs. The company
has not been able to predict the aggregate cost of the adhesive
issue. Reserves have been provided based upon an evaluation of
past claim information and are subject to revision based on an
ongoing review of new claim data. Charges could continue in 1994
and beyond.
Florida Tile's 1993 sales posted a good increase on volume
improvements in all lines. Segment profit, however, was
significantly lower than in 1992 due to costs to improve the
unit's distribution system and for asset disposals and
environmental matters. Tibbals had sharply higher sales as the
result of increased volume in all of its lines except parquet.
Segment profit approached breakeven for the year, a significant
increase over 1992, as a result of the higher volume and
improvement at its Somerset plant.
Consumer Products Group In 1993, West Bend had a double digit
percentage increase in sales on the strength of new products and
its direct to-the-home cookware business, which led to record
segment profit. Precor reported a strong sales improvement in
1993 on the strength of treadmill volume. Segment profit,
however, fell significantly because of lower prices and costs
associated with developing commercial and export markets.
1992 vs. 1991 In 1992, sales in the Consumer and Decorative
Products segment rose 7 percent to $779.4 million from $729.0
million in 1991 due to higher volume in the Decorative Products
group. Segment profit was down 8 percent to $55.9 million from
$60.9 million as slight improvements at Ralph Wilson Plastics and
West Bend were overshadowed by declines at Florida Tile, Precor
and Tibbals.
FINANCIAL CONDITION
Liquidity and Capital Resources Working capital was $251.8
million at the end of 1993, compared with $251.0 million in 1992
and $256.8 million in 1991. The current ratio was 1.3-to-1 at the
end of 1993, 1992 and 1991. On February 1, 1994, the company
called its $150 million 8 3/8% notes, which had a stated maturity
date in 1997. The redemption was funded through available cash
and the issuance of commercial paper at more favorable interest
rates. At December 25, 1993, $45 million of the $150 million of
8 3/8% notes was classified as long-term, representing the
portion expected to be financed throughout 1994 using commercial
paper borrowings. The build up of cash in anticipation of the
redemption, along with higher inventories and accounts
receivable, offset by higher accounts payable and the
classification of $105 million of the 8 3/8% notes as short-term,
accounted for the slight increase in 1993's working capital. The
1992 decline in working capital was due to decreases in accounts
and notes receivable, primarily as a result of reclassification
from short-term to long-term, as well as lower inventories and
cash, and an increase in accrued liabilities, all of which was
mostly offset by a decline in short-term debt.
The total debt-to-capital ratio at the end of 1993 was 27.7
percent, compared with 29.6 percent at the end of 1992. As of
December 25, 1993, the company had unused lines of credit of
$456.1 million, including $250 million under an unsecured
revolving credit facility, which expires in May 1995. Future cash
flows, lines of credit and other short-term financing
arrangements are expected to be adequate to fund operating and
investing requirements.
Operating Activities In 1993, cash provided by operating
activities was $254.5 million compared with $239.8 million in
1992 and $323.3 million in 1991. The 1993 increase over the
previous year reflects the improvement in income partially offset
by increased working capital needs to support the higher level of
business. Cash provided by operating activities in 1992 was lower
than in 1991, as the absence of a significant reduction in
inventories was only partially offset by an increase in the
levels of accounts payable and accruals.
Investing Activities Capital expenditures amounted to $146.1
million in 1993, $136.7 million in 1992 and $96.6 million in
1991. A higher level of machinery and equipment purchases to
support Tupperware's European operations in 1993, and completion
of the Tupperware Korea plant in 1992, respectively, accounted
for significant portions of the increases over 1991. Capital
expenditures are expected to be approximately $170 million in
1994.
Share Repurchase In May 1993, the company announced it would
purchase up to three million of its shares of common stock over
five years, with volume and timing to depend on market
conditions. The purpose of the program is to minimize the
fluctuation in the number of shares outstanding resulting from
the exercise of employee stock options. Shares acquired will be
used to satisfy the exercise of stock options as well as for
other general corporate needs. Purchases will be made in the open
market and will be financed primarily by cash flow from
operations. Through December 25, 1993, and February 28, 1994,
569,400 and 989,700 shares have been repurchased at an average
cost of $70 and $75 per share, respectively.
Dividends In 1993, dividends declared per common share were
$1.09, up from $0.96 in 1992 and $0.84 in 1991. Quarterly
dividends increased to 28 cents and 25 cents in the second
quarters of 1993 and 1992, respectively.
NEW ACCOUNTING STANDARDS
In 1993, the company adopted Statement of Financial Accounting
Standards (SFAS) No. 112, "Employers' Accounting for
Postemployment Benefits." This standard requires the recognition
on the accrual basis of the company's obligation to provide
certain benefits to former or inactive employees after they leave
employment but before retirement. As Premark's existing policies
included accrual basis accounting for many of the benefits
covered by SFAS No. 112, the cumulative pretax effect of adopting
the new standard was only $2.1 million. This amount has been
included as a component of "Other expense, net" in the 1993
Consolidated Statement of Operations.
In 1992, the company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other then Pensions," and
SFAS No. 109, "Accounting for Income Taxes." The $98.9 million
negative after-tax effect of adopting SFAS No. 106 and the $15.0
million benefit of adopting SFAS No. 109 were both recorded in
1992. The incremental annual expense of accounting for
postretirement benefits other than pensions, under SFAS 106
rather than the company's previous accounting method, was $6
million in 1993 and $8 million in 1992.
IMPACT OF INFLATION AND FOREIGN EXCHANGE
Inflation continues at a low level in the United States and
recently has not had a significant impact on the company's
domestic operations. A significant portion of Premark's profits
comes from international operations. As a result, its earnings
and financial position are subject to fluctuation in foreign
currency exchange rates. A strengthening U.S. dollar generally
has a negative impact on both. The company uses financial
instruments, including forward contracts, foreign currency
borrowings, currency swaps and financial guarantees, to hedge its
exposure to certain foreign exchange risk as appropriate.
[Enlarge/Download Table]
SELECTED FINANCIAL DATA
(Dollars in millions, except per share amounts) 1993 1992 1991 1990 1989 1988 1987
--------- --------- --------- --------- --------- --------- ---------
Operating results
Net Sales:
Tupperware $1,229.7 $1,112.3 $1,076.3 $1,019.2 $ 949.1 $ 895.1 $ 829.4
Food Equipment Group 1,009.9 1,054.3 1,010.4 999.0 931.8 874.0 808.9
Consumer and Decorative Products 857.7 779.4 729.0 703.2 634.9 555.8 489.3
--------- --------- --------- --------- --------- --------- ---------
Total net sales $3,097.3 $2,946.0 $2,815.7 $2,721.4 $2,515.8 $2,324.9 $2,127.6
========= ========= ========= ========= ========= ========= =========
Segment profit (loss):
Tupperware $ 171.0 $ (25.3) $ 121.2 $ 64.9 $ 104.2 $ 115.7 $ 65.2
Food Equipment Group 51.3 49.6 41.1 26.9 21.8 57.8 53.3
Consumer and Decorative Products 56.2 55.9 60.9 66.1 59.4 58.1 50.7
--------- --------- --------- --------- --------- --------- ---------
Total segment profit 278.5 80.2 223.2 157.9 185.4 231.6 169.2
Unallocated expenses (22.7) (19.7) (19.8) (19.7) (20.7) (22.9) (27.8)
Interest expense, net (26.1) (26.6) (43.5) (39.1) (22.3) (12.1) (15.3)
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes and
cumulative effect of accounting changes 229.7 33.9 159.9 99.1 142.4 196.6 126.1
Provision for income taxes 57.2 29.3 57.6 47.1 64.0 75.4 54.6
--------- --------- --------- --------- --------- --------- ---------
Income before cumulative
effect of accounting changes 172.5 4.6 102.3 52.0 78.4 121.2 71.5
Cumulative effect of accounting changes - (83.9) - - - (15.9) -
--------- --------- --------- --------- --------- --------- ---------
Net income (loss) $ 172.5 $ (79.3) $ 102.3 $ 52.0 $ 78.4 $ 105.3 $ 71.5
========= ========= ========= ========= ========= ========= =========
Per share:
Income before cumulative effect
of accounting changes $ 5.15 $ 0.14 $ 3.25 $ 1.64 $ 2.24 $ 3.50 $ 2.08
Net income (loss) 5.15 (2.41) 3.25 1.64 2.24 3.03 2.08
========= ========= ========= ========= ========= ========= =========
Profitability ratios
As a percent of sales:
Tupperware segment profit (loss) 13.9% (2.3)% 11.3% 6.4% 11.0% 12.9% 7.9%
Food Equipment Group segment profit 5.1 4.7 4.1 2.7 2.3 6.6 6.6
Consumer and Decorative
Products segment profit 6.6 7.2 8.4 9.4 9.4 10.5 10.4
Total segment profit 9.0 2.7 7.9 5.8 7.4 10.0 8.0
Net income (loss) 5.6 (2.7) 3.6 1.9 3.1 4.5 3.4
Return on average equity 22.7 (10.3) 12.8 6.7 10.1 14.9 11.5
Return on average invested capital<F1> 19.3 (5.6) 11.2 6.4 9.0 12.6 9.5
_____________
<FN>
<F1> Net income plus after-tax interest expense divided by average long-term debt and equity.
[Enlarge/Download Table]
(Dollars in millions, except per share amounts) 1993 1992 1991 1990 1989 1988 1987
--------- --------- --------- --------- --------- --------- ---------
Financial condition
Working capital $ 251.8 $ 251.0 $ 256.8 $ 367.5 $ 440.4 $ 430.0 $ 477.2
Property, plant and equipment, net 671.5 654.6 701.8 719.9 509.5 494.0 464.2
Total assets 2,117.0 1,958.8 2,034.0 2,034.3 1,757.2 1,655.2 1,585.7
Short-term borrowings and current
portion of long-term debt 143.4 24.6 121.4 73.9 77.3 88.9 53.0
Long-term debt 168.0 274.2 278.5 495.9 254.1 237.9 235.7
Shareholders' equity 811.9 710.3 836.4 757.9 800.6 754.4 663.1
Current ratio 1.3 1.3 1.3 1.6 1.7 1.8 1.9
Long-term debt-to-equity 20.7% 38.6% 33.3% 65.4% 31.7% 31.5% 35.5%
Total debt-to-capital 27.7% 29.6% 32.4% 42.9% 29.3% 30.2% 30.3%
Other data
Net cash provided by operating activities $ 254.5 $ 239.8 $ 323.3 $ 221.7 $ 131.4 $ 132.8 $ 182.1
Capital expenditures 146.1 136.7 96.6 183.2 103.4 104.1 87.2
Depreciation and amortization 111.9 118.0 115.3 101.2 84.3 76.0 70.5
Advertising 42.5 43.0 37.4 32.9 28.8 30.0 32.4
Research and development 41.0 41.3 31.2 31.4 28.7 24.5 25.4
Number of employees (thousands) 23.9 24.2 24.0 25.4 24.7 24.0 22.8
Common stock data
Dividends declared per share $ 1.09 $ 0.96 $ 0.84 $ 0.84 $ 0.78 $ 0.53 $ 0.29
Dividend payout ratio<F1> + 29.5% 51.2% 37.5% 25.7% 25.5% +
Average shares outstanding (thousands) 33,521 32,914 31,511 31,824 35,078 34,721 34,313
Year-end book value per share $ 25.45 $ 22.33 $ 26.87 $ 24.67 $ 23.53 $ 22.27 $ 19.67
Year-end price/earnings ratio 15.58 (17.43) 12.50 10.59 13.73 10.40 10.76
Year-end market/book ratio 3.15 1.88 1.51 0.70 1.31 1.41 1.14
Year-end shareholders (thousands) 26.9 29.0 31.3 33.7 36.3 39.3 43.5
_____________
<FN>
<F1> Dividends declared per share divided by prior year earnings per share.
[Enlarge/Download Table]
CONSOLIDATED STATEMENT OF OPERATIONS
(In millions, except per share amounts) Dec. 25, Dec. 26, Dec. 28,
Year ended 1993 1992 1991
--------- --------- ---------
Net sales $3,097.3 $2,946.0 $2,815.7
--------- --------- ---------
Costs and expenses
Cost of products sold 1,604.2 1,579.0 1,514.5
Delivery, sales and administrative expense 1,236.6 1,169.7 1,095.8
Interest expense 32.1 35.1 55.7
Interest income (6.0) (8.5) (12.2)
Other expense, net 0.7 0.1 2.0
Restructuring costs - 136.7 -
--------- --------- ---------
Total costs and expenses 2,867.6 2,912.1 2,655.8
--------- --------- ---------
Income before income taxes and
cumulative effect of accounting changes 229.7 33.9 159.9
Provision for income taxes 57.2 29.3 57.6
--------- --------- ---------
Income before cumulative effect
of accounting changes 172.5 4.6 102.3
Cumulative effect of change in accounting for:
Income taxes - 15.0 -
Postretirement benefits (net of $41.1 tax benefit) - (98.9) -
--------- --------- ---------
Net income (loss) $ 172.5 $ (79.3) $ 102.3
========= ========= =========
Net income (loss) per common and common equivalent share:
Before cumulative effect of accounting changes $ 5.15 $ 0.14 $ 3.25
Cumulative effect of change in accounting for:
Income taxes - 0.46 -
Postretirement benefits - (3.01) -
--------- --------- ---------
Net income (loss) per common and common equivalent share $ 5.15 $ (2.41) $ 3.25
========= ========= =========
See Notes to the Consolidated Financial Statements.
[Enlarge/Download Table]
CONSOLIDATED STATEMENT OF CASH FLOWS
Dec. 25, Dec. 26, Dec. 28,
(In millions) Year ended 1993 1992 1991
--------- --------- ---------
Cash flows from operating activities
Net income (loss) $ 172.5 $ (79.3) $ 102.3
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Depreciation and amortization 111.9 118.0 115.3
Loss (gain) on sale of assets 3.6 (0.5) 1.4
Foreign exchange gain, net (1.9) (1.7) (0.9)
Cumulative effect of changes in accounting for:
Income taxes - (15.0) -
Postretirement benefits - 98.9 -
Write-down of manufacturing facilities - 60.4 -
Changes in assets and liabilities, excluding effects of acquisitions:
(Increase) decrease in accounts and notes receivable (35.7) 18.3 (4.4)
(Increase) decrease in inventory (45.3) 6.8 72.1
Increase in deferred income taxes (15.8) (30.4) (2.9)
Increase in accounts payable and accruals 41.5 61.8 34.9
Increase in income taxes payable 5.4 9.0 10.5
Other 18.3 (6.5) (5.0)
--------- --------- ---------
Net cash provided by operating activities 254.5 239.8 323.3
--------- --------- ---------
Cash flows from investing activities
Capital expenditures (146.1) (136.7) (96.6)
Other 11.1 0.7 5.2
--------- --------- ---------
Net cash used in investing activities (135.0) (136.0) (91.4)
--------- --------- ---------
Cash flows from financing activities
Repayment of long-term debt (5.5) (86.2) (17.8)
Net increase (decrease) in short-term debt 15.4 (20.2) (153.3)
Proceeds from long-term debt 2.5 1.9 0.8
Purchase of equipment for lease - - (35.9)
Proceeds from equipment lease receivable - 1.9 33.4
Payment of dividends (33.8) (29.0) (25.9)
Proceeds from exercise of stock options 12.9 14.1 8.7
Purchase of treasury stock (36.3) - -
--------- --------- ---------
Net cash used in financing activities (44.8) (117.5) (190.0)
--------- --------- ---------
Effect of exchange rate changes on cash and cash equivalents (6.7) (2.3) 4.7
--------- --------- ---------
Net increase (decrease) in cash and cash equivalents 68.0 (16.0) 46.6
Cash and cash equivalents at beginning of year 72.0 88.0 41.4
--------- --------- ---------
Cash and cash equivalents at end of year $ 140.0 $ 72.0 $ 88.0
========= ========= =========
See Notes to the Consolidated Financial Statements.
[Enlarge/Download Table]
CONSOLIDATED BALANCE SHEET
Dec. 25, Dec. 26,
(In millions, except share amounts) 1993 1992
--------- ---------
Assets
Cash and cash equivalents $ 140.0 $ 72.0
Accounts and notes receivable, less allowances of $37.1 in 1993 and $34.5 in 1992 434.4 414.2
Inventories 441.2 410.8
Deferred income tax benefits 96.3 78.8
Prepaid expenses 27.5 25.4
--------- ---------
Total current assets 1,139.4 1,001.2
--------- ---------
Investments, long-term receivables, less
allowances of $29.0 in 1993 and $36.1 in 1992, and deferred charges 123.8 112.1
Property, plant and equipment, net 671.5 654.6
Intangibles, less accumulated amortization of $73.8 in 1993 and $66.1 in 1992 182.3 190.9
--------- ---------
Total assets $2,117.0 $1,958.8
========= =========
Liabilities and shareholders' equity
Accounts payable $ 194.4 $ 165.9
Short-term borrowings and current portion of long-term debt 143.4 24.6
Accrued liabilities 549.8 559.7
--------- ---------
Total current liabilities 887.6 750.2
--------- ---------
Long-term debt 168.0 274.2
Accrued postretirement benefit cost 144.5 140.1
Deferred income taxes 9.0 10.3
Other liabilities 96.0 73.7
Shareholders' equity:
Preferred stock, $1.00 par value, authorized 50,000,000 shares; issued - none - -
Common stock, $1.00 par value, authorized 200,000,000 shares;
issued 34,501,920 shares 34.5 34.5
Capital surplus 582.3 566.4
Retained earnings 418.7 286.8
Treasury stock, 2,595,387 shares at December 25, 1993
and 2,694,832 shares at December 26, 1992, at cost (93.0) (69.3)
Unearned portion of restricted stock issued for future service (1.0) (2.2)
Cumulative foreign currency adjustments (129.6) (105.9)
--------- ---------
Total shareholders' equity 811.9 710.3
--------- ---------
Total liabilities and shareholders' equity $2,117.0 $1,958.8
========= =========
See Notes to the Consolidated Financial Statements.
[Enlarge/Download Table]
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
Number of shares Amounts
----------------- ------------------------------------------------------
Cumulative
foreign
Common Treasury Common Capital Retained Treasury currency
(In millions) stock stock stock surplus earnings stock adjustments
------- --------- ------- -------- --------- --------- ------------
December 29, 1990 34.5 (3.8) $34.5 $571.7 $320.2 $(97.1) $(67.4)
Net income 102.3
Cash dividends declared (26.0)
Treasury stock issued for option
and restricted stock plans 0.4 (2.4) 10.3
Translation adjustments (7.6)
------- --------- ------- -------- --------- --------- ------------
December 28, 1991 34.5 (3.4) 34.5 569.3 396.5 (86.8) (75.0)
Net loss (79.3)
Cash dividends declared (30.4)
Treasury stock issued for option
and restricted stock plans 0.7 (2.9) 17.5
Translation adjustments (30.9)
------- --------- ------- -------- --------- --------- ------------
December 26, 1992 34.5 (2.7) 34.5 566.4 286.8 (69.3) (105.9)
Net income 172.5
Cash dividends declared (34.8)
Purchase of treasury stock (0.6) (39.6)
Treasury stock issued for option
and restricted stock plans and
related tax benefits 0.7 15.9 (5.8) 15.9
Translation adjustments (23.7)
------- --------- ------- -------- --------- --------- ------------
December 25, 1993 34.5 (2.6) $34.5 $582.3 $418.7 $(93.0) $(129.6)
======= ========= ======= ======== ========= ========= ============
See Notes to the Consolidated Financial Statements.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 Summary of Significant Accounting Policies
Principles of Consolidation The consolidated financial
statements include the accounts of Premark and all of its
subsidiaries. Intercompany accounts and transactions have been
eliminated. The company's fiscal year ends on the last Saturday
of December.
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.
Inventories Inventories are valued at the lower of cost or
market. Inventory cost includes cost of raw material, labor and
overhead. Substantially all domestic inventories are valued on
the last-in, first-out (LIFO) cost method. For the remaining
inventories - approximately 44 percent - the first-in, first-out
(FIFO) cost method is generally used. If inventories valued on
the LIFO method had been valued using the FIFO method, they would
have been $56.0 million higher at the end of 1993 and 1992.
Property and Depreciation Properties are stated at the lower of
cost or fair value. An impairment loss is recognized for the
difference between estimated fair value and carrying value when
the carrying value of an asset, including associated intangibles,
exceeds the sum of estimated undiscounted future cash flows.
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.
Expenditures for maintenance and repairs are charged to expense.
Intangibles The excess of cost over the fair value of net
assets of businesses acquired ($164.1 million in 1993 and $169.6
million in 1992) and other intangibles are being amortized over
periods ranging up to 40 years.
Postemployment and Postretirement Benefits The company adopted
SFAS No. 112, "Employers' Accounting for Postemployment Benefits"
in 1993. This standard requires the company to recognize the cost
of certain benefits provided to former or inactive employees on
the accrual basis rather than when they are paid. The cumulative
pretax effect of adopting this standard was $2.1 million, which
has been included as a component of "Other expense, net" in the
1993 Consolidated Statement of Operations.
In 1992, the company adopted SFAS No. 106, "Employers'
Accounting for Postretirement Benefits Other Than Pensions," for
its retiree medical and life insurance plans. Under SFAS No. 106,
the company accrues the cost of retiree benefits during the years
that employees provide service. The company's past practice was
to recognize these costs on a cash basis. As part of adopting the
new standard, the company recorded a one-time, non-cash charge of
$140.0 million before taxes, or $98.9 million after tax in 1992.
The new standard resulted in additional annual expense of
approximately $6 million in 1993 and $8 million in 1992.
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.
Income Taxes In 1992, the company adopted SFAS No. 109,
"Accounting for Income Taxes." Under SFAS No. 109, 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 a change in
tax rates is recognized in income in the period that includes the
enactment date. SFAS No. 109 requires an assessment, which
includes anticipating future income, in determining the
likelihood of realizing deferred tax assets. The cumulative
effect of this change was a benefit to income of $15.0 million in
1992.
The company previously followed SFAS No. 96 in accounting
for income taxes, under which only reversing temporary
differences were considered when recording the deferred tax
assets and liabilities.
Net Income (Loss) Per Share Net income (loss) per share is
based upon the weighted average number of common shares and
common equivalent shares, consisting of stock options,
outstanding during the year.
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, other
than those of operations in highly inflationary countries, are
translated into U.S. dollars using the exchange rates at the
balance sheet date. Resulting translation adjustments are
recorded in a separate component of shareholders' equity,
"Cumulative Foreign Currency Adjustments." Gains and losses on
transactions that hedge the value of investments in foreign
subsidiaries also are included in shareholders' equity. Gains and
losses on foreign currency transactions and translation of
financial statements of subsidiaries in highly inflationary
countries are included in income. Foreign exchange (losses) gains
included in income before taxes in 1993, 1992 and 1991 were
$(1.8) million, $(1.4) million and $1.0 million, respectively.
Note 2 Tupperware Restructuring Charge
In 1992, the company recorded a pretax charge of $136.7 million
($111.4 million after tax, or $3.39 per share) primarily to
consolidate manufacturing capacity and restructure the Tupperware
U.S. distribution system. Of that amount, $60.4 million related
to the write-down of Tupperware's Halls, Tennessee manufacturing
facility and certain other manufacturing assets to their
estimated net realizable values. The charge included $45.6
million to restructure and strengthen Tupperware's distribution
network in the United States. The remaining $30.7 million related
to shutdown costs, including severance, relocation and transfer
costs. The restructuring plan was intended to result in
manufacturing capacity and related overhead consistent with U.S.
sales levels, and in improved distributor profitability.
Note 3 Inventories
[CAPTION]
(In millions) 1993 1992
------ ------
[S] [C] [C]
Finished goods $196.8 $183.5
Work in process 65.1 64.5
Raw materials and supplies 179.3 162.8
------ ------
Total inventories $441.2 $410.8
====== ======
In 1993 and 1992, certain inventories were reduced, resulting in
liquidations of LIFO inventory quantities carried at lower costs
prevailing in prior years. The effect was to increase net income
by $0.4 million in 1993 and $2.9 million in 1992.
Note 4 Property, Plant and Equipment
[CAPTION]
(In millions) 1993 1992
-------- --------
[S] [C] [C]
Land $ 32.0 $ 34.0
Buildings and improvements 381.8 374.9
Machinery and equipment 1,132.6 1,064.2
Construction in progress 60.0 52.6
-------- --------
Total property, plant and equipment 1,606.4 1,525.7
Less accumulated depreciation 934.9 871.1
-------- --------
Property, plant and equipment, net $ 671.5 $ 654.6
======== ========
Note 5 Accrued Liabilities
[CAPTION]
(In millions) 1993 1992
-------- --------
[S] [C] [C]
Compensation and employee benefits $ 121.8 $ 120.0
Warranties and maintenance
service agreements 74.8 65.3
Insurance 60.9 56.0
Restructuring reserves 52.1 70.8
Taxes other than income taxes 51.4 47.8
Advertising and promotion 43.0 41.3
Income taxes 17.3 26.3
Other 128.5 132.2
-------- --------
Total accrued liabilities $ 549.8 $ 559.7
======== ========
Note 6 Financing Arrangements
Short-term Borrowings
[CAPTION]
(Dollars in millions) 1993 1992 1991
------ ------- -------
[S] [C] [C] [C]
Total short-term borrowings
at year-end $35.0 $ 19.1 $ 35.6
Weighted average interest
rate at year-end 5.4% 11.3% 10.4%
Average borrowings
during the year $28.3 $ 80.7 $149.6
Weighted average interest
rate for the year 8.5% 6.3% 8.3%
Maximum borrowings
during the year $54.3 $117.5 $210.4
The average borrowings and weighted average interest rates
were determined using month-end borrowings and the interest rates
applicable to them. All short-term borrowings are obligations of
foreign entities at the end of 1993.
Long-term Debt
[CAPTION]
(Dollars in millions) 1993 1992
------ ------
[S] [C] [C]
8 3/8% notes due 1997 $150.0 $150.0
10 1/2% notes due 2000 100.0 100.0
5.95% - 6.5% industrial revenue
bonds due 1996-2009 17.9 20.0
Other 8.5 9.7
------ ------
276.4 279.7
Less current portion 108.4 5.5
------ ------
Total long-term debt $168.0 $274.2
====== ======
Interest paid in 1993, 1992 and 1991 was $30.6 million,
$37.4 million and $50.7 million, respectively.
The company's 8 3/8% long-term notes were called at par on
February 1, 1994. The redemption was funded through available
cash and the issuance of commercial paper. As of December 25,
1993, $45.0 million of the $150 million of borrowings outstanding
were classified as long-term, representing the portion expected
to be financed throughout 1994 using commercial paper borrowings.
Based on the borrowing rates currently available to the
company for long-term debt with similar terms and average
maturities, the fair value of the 10 1/2% notes at the end of
1993 is $122.6 million. The fair value of the remaining long-term
debt approximates its book value.
The company had unused lines of credit amounting to $456.1
million at December 25, 1993, including $250 million under an
unsecured revolving credit facility, which expires in May 1995.
Total principal payments due on long-term debt in the five
years subsequent to December 25, 1993, are as follows: 1994 -
$153.4 million; 1995 - $1.3 million; 1996 - $0.7 million; 1997 -
$0.8 million; and 1998 - $4.3 million. The 1994 amount includes
$150 million for the company's 8 3/8% notes, which had been
irrevocably called for February 1, 1994 redemption, prior to the
1993 fiscal year end. Under agreements entered into prior to the
spinoff of Premark from Dart & Kraft, Inc., Dart guaranteed
certain long-term indebtedness of Kraft, Inc. and its
subsidiaries. As of December 25, 1993, such outstanding debt
totaled $10.6 million.
Operating Leases Rental expense for operating leases (reduced
by sublease income of approximately $1 million in 1993 and $2
million in each of 1992 and 1991) totaled $79.6 million in 1993,
$75.0 million in 1992 and $75.6 million in 1991. Approximate
minimum rental commitments under noncancelable operating leases
in effect at December 25, 1993, are: 1994 - $37.7 million; 1995 -
$24.7 million; 1996 - $15.4 million; 1997 - $12.6 million; 1998 -
$5.9 million; after 1998 - $32.6 million.
Other Financial Instruments The company manages its exposure to
fluctuations in foreign currency exchange rates using financial
instruments that include forward contracts, foreign currency
borrowings, currency swaps and financial guarantees. The
counterparties to these agreements are major international
financial institutions. The company continually monitors its
positions and the credit ratings of its counterparties and
believes the risk of incurring losses related to credit risk is
remote.
At December 25, 1993, the company had forward exchange
contracts maturing between January 10 and December 15, 1994, to
purchase $18.0 million and sell $111.0 million in foreign
currencies at fixed rates on the value dates. The company also
had a currency swap to exchange 37.1 million German Deutsche
Marks on October 2, 1995, for $20.0 million. The fair value of
forward exchange contracts is calculated using published year end
exchange rates.
Note 7 Income Taxes
The domestic and foreign components of income (loss) before
income taxes were as follows:
[CAPTION]
(In millions) 1993 1992 1991
------- ------- -------
[S] [C] [C] [C]
Domestic $164.4 $(18.9) $ 53.3
Foreign 65.3 52.8 106.6
------- ------- -------
Total $229.7 $ 33.9 $159.9
======= ======= =======
The provision for income taxes charged to continuing
operations was as follows:
[CAPTION]
(In millions) 1993 1992 1991
------- ------- -------
[S] [C] [C] [C]
Current
Federal $ 26.7 $ 20.6 $ 10.6
Foreign 43.7 40.4 47.6
State 5.0 (0.9) 4.1
------- ------- -------
75.4 60.1 62.3
------- ------- -------
Deferred
Federal (12.1) (22.4) (5.7)
Foreign (5.2) (9.5) 3.2
State (0.9) 1.1 (2.2)
------- ------- -------
(18.2) (30.8) (4.7)
------- ------- -------
Total $ 57.2 $ 29.3 $ 57.6
======= ======= =======
The differences between the provision for income taxes and
income taxes computed using the U.S. federal statutory rate were
as follows:
[CAPTION]
(In millions) 1993 1992 1991
------- ------- -------
[S] [C] [C] [C]
Amount computed using
statutory rate $ 80.4 $ 11.5 $ 54.4
Increase (reduction) in taxes
resulting from:
Foreign tax
benefits recognized (27.9) (22.9) (9.4)
Unrecognized portion of
federal deferred
tax assets (16.1) 24.0 5.2
Foreign income taxes 10.9 14.1 8.7
Repatriation of
foreign earnings 4.7 1.6 1.4
Effect of U.S. statutory
rate increase on net
deferred tax asset (2.5) - -
Net amortization
of intangibles 1.6 1.6 1.6
State taxes 2.4 (1.7) 1.2
Other 3.7 1.1 (5.5)
------- ------- -------
Total $ 57.2 $ 29.3 $ 57.6
======= ======= =======
In 1993, the company recognized $16.3 million of benefits
for deductions associated with the exercise of employee stock
options. These benefits were added directly to capital surplus
and are not reflected in the provision for income taxes.
In 1991, the company purchased computer equipment for $35.9
million and leased it back to the sellers. A portion of the
future rent receivable was sold to a third party. This
transaction resulted in taxable income for federal and state
purposes, but not for financial statement purposes.
Deferred tax assets (liabilities) are comprised of the
following:
[CAPTION]
(In millions) 1993 1992
-------- --------
[S] [C] [C]
Depreciation $ (69.8) $ (67.2)
Undistributed earnings
of subsidiaries (7.3) (7.0)
Other (3.1) (4.5)
-------- --------
Gross deferred tax liabilities (80.2) (78.7)
-------- --------
Postretirement benefits 59.7 55.7
Restructuring reserves 41.5 56.7
Computer leasing transactions 25.6 31.8
Tax carryforwards 22.7 17.0
Employee benefit accruals 22.6 24.3
Self-insurance reserves 17.5 17.0
Bad debt reserves 17.5 14.7
Other 55.9 43.1
-------- --------
Gross deferred tax assets 263.0 260.3
-------- --------
Valuation allowance (66.7) (84.6)
-------- --------
Net deferred tax assets $ 116.1 $ 97.0
======== ========
The net decrease in the deferred tax asset valuation
allowance during 1993 was $17.9 million. The reserve decreased
due to improvement in operating income allowing the recognition
of previously reserved domestic tax assets for temporary
differences and foreign tax credits. These decreases were
partially offset by reserves applicable to assets recognized in
the current year at certain foreign entities. In determining the
amount of its valuation allowance against its deferred tax
assets, the company has used certain assumptions about levels of
future pretax income that are consistent with historical results.
Provision has been made for U.S. federal income taxes to be
paid on that portion of the undistributed earnings of certain
foreign subsidiaries expected to be remitted to the parent
company. Undistributed earnings expected to be permanently
reinvested totaled $200.3 million at December 25, 1993. Foreign
withholding taxes payable, if these earnings were distributed,
would be approximately $18.0 million.
At December 25, 1993 the company has foreign net operating
loss carryforwards of $14.7 million. Of the total, $12.9 million
expire at various dates from 1994 to 1999, and the remainder have
unlimited lives. The company also has alternative minimum tax
credit carryforwards of approximately $8.0 million that are
available to reduce future regular federal income taxes.
The company paid income taxes in 1993, 1992 and 1991 of
$48.9 million, $66.2 million and $54.9 million, respectively.
Note 8 Retirement Benefit Plans
Pension Plans The company has various pension plans covering
substantially all domestic employees and certain employees in
other countries.
The company's 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 U.S. plans.
Net pension expense included the following components:
[CAPTION]
(In millions) 1993 1992 1991
------- ------- -------
[S] [C] [C] [C]
Service cost on benefits
earned during the year $ 11.6 $ 10.6 $10.4
Interest cost on benefits
earned in prior years 22.7 21.5 20.6
Return on plan assets
Actual gain (32.6) (22.3) (40.6)
Deferred gain (loss) 9.0 (0.7) 18.6
------- ------- -------
Net gain recognized (23.6) (23.0) (22.0)
Net amortization (1.6) (1.1) (0.4)
------- ------- -------
Net pension expense $ 9.1 $ 8.0 $ 8.6
======= ======= =======
The assumed long-term rates of return on assets used in
determining net pension expense were: U.S. plans - 9%; foreign-
funded plans - various rates from 6.5% to 10%. The assumed
discount rates used in determining the actuarial present value of
the projected benefit obligation were: U.S. plans - 7.25% at
December 25, 1993, and 8.5% at December 26, 1992; foreign plans -
various rates from 5.0% to 10.0%. The assumed rates of increase
in future compensation levels were: U.S. plans - 6%; foreign
plans - various rates from 3.0% to 8.0%. The funded status of the
company's plans is as follows:
[CAPTION]
U.S. plans Foreign plans
------------- -------------
(In millions) 1993 1992 1993 1992
----- ----- ----- -----
[S] [C] [C] [C] [C]
Actuarial present value of
benefit obligations:
Vested benefits $216.8 $177.9 $ 50.0 $ 42.3
Nonvested benefits 7.7 5.9 4.8 3.5
------- ------- ------- -------
Accumulated benefit
obligation 224.5 183.8 54.8 45.8
Effect of projected future
salary increases 39.8 29.4 18.5 16.9
------- ------- ------- -------
Projected benefit
obligation 264.3 213.2 73.3 62.7
Plan assets at fair value -
primarily equity securities
and corporate and
government bonds 257.0 248.2 42.7 36.3
------- ------- ------- -------
Plan assets (less than)
in excess of projected
benefit obligation (7.3) 35.0 (30.6) (26.4)
Unrecognized prior
service cost 2.3 3.1 1.6 1.2
Unrecognized net loss (gain) 22.2 (16.8) 7.4 6.3
Unrecognized net transition
(asset) obligation (15.6) (17.8) 4.3 5.4
------- ------- ------- -------
Prepaid pension asset
(liability) $ 1.6 $ 3.5 $(17.3) $(13.5)
======= ======= ======= =======
The accumulated benefit obligations of certain plans,
primarily at foreign locations, exceeded plan assets. For those
plans, the obligations were $39.8 million and $24.1 million for
1993 and 1992, respectively. The fair value of those plans'
assets at the end of 1993 and 1992 were $17.9 million and $6.2
million, respectively.
There are also several savings, thrift and profit-sharing
plans. The company's contributions to these plans are based upon
various levels of employee participation. The total cost of these
plans was $14.9 million in 1993, $14.6 million in 1992 and $13.7
million in 1991.
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 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 1993 and
1992 are:
[CAPTION]
(In millions) 1993 1992
------- -------
[S] [C] [C]
Service cost $ 2.9 $ 3.1
Interest on accumulated
postretirement benefit
obligation 11.8 11.9
Net amortization (0.5) -
------- -------
Total $ 14.2 $ 15.0
======= =======
The expense recognized for retiree health care and life
insurance benefits was $5.7 million in 1991.
The projected liabilities, which are not funded, are
reconciled to the amounts recognized in the company's statement
of financial position as follows:
[CAPTION]
(In millions) 1993 1992
------- -------
[S] [C] [C]
Accumulated postretirement
benefit obligation:
Retirees $ 96.2 $ 95.9
Other fully eligible
participants 18.0 17.0
Other active participants 39.1 37.4
------- -------
153.3 150.3
Unrecognized prior service
benefit 10.0 -
Unrecognized loss (9.5) (2.1)
------- -------
Accrued postretirement
benefit cost 153.8 148.2
Less current portion 9.3 8.1
------- -------
Total long-term accrued
postretirement benefit cost $144.5 $140.1
======= =======
The weighted-average discount rate used in determining the
accumulated postretirement benefit obligation was 7.25% at
December 25, 1993 and 8.5% at December 26, 1992. The assumed
health care cost trend rate is 13% for the pre-65 plan and 10%
for the post-65 plan for 1993. These rates are assumed to
decrease by 1% per year until an ultimate level of 6% is reached
and 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 for the medical
plan as of December 25, 1993 by $15.6 million, and the aggregate
of the service and interest cost components of net periodic
postretirement benefit cost for 1993 by $2.0 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
Incentive Plans Key employees, including officers of the
company, earned approximately $17.5 million in 1993, $12.7
million in 1992 and $19.4 million in 1991 under the Annual
Incentive Plan and other incentive plans. As of December 25,
1993, 482 employees participated in these plans. The company's
Long-Term Incentive Plan is comprised of performance-based
incentive programs available to key employees who make
substantial contributions to the company's long-term financial
objectives. Payouts are based entirely on achievement of
financial objectives; no payouts are made unless a threshold
level of financial performance is attained. In 1993, $6.8 million
was earned under these programs.
Restricted Stock Plan The company's Restricted Stock Plan
authorizes the issuance of restricted stock to retain key
employees, including officers. The maximum number of shares of
common stock that may be issued under the plan may not exceed
1,000,000. The holding periods, prior to any vesting occurring on
restricted shares, range from one to five years. Restrictions
lapse on the majority of unvested shares awarded to date in 1994
and 1995. Compensation expense is determined by reference to the
market value of the stock on the date of award and is being
amortized over the period during which the restrictions lapse.
The expense was $0.6 million in 1993, $1.1 million in 1992 and
$2.4 million in 1991. Restricted stock activity in 1993 and 1992
is summarized below:
[CAPTION]
Shares
available
Outstanding for issuance
----------- ------------
[S] [C] [C]
Balance at December 28, 1991 150,009 103,520
Shares awarded 33,250 (33,250)
Shares forfeited (3,600) 3,600
Shares released (30,242) -
-------- --------
Balance at December 26, 1992 149,417 73,870
Shares awarded 1,200 (1,200)
Shares forfeited (20,350) 20,350
Shares released (35,867) -
-------- --------
Balance at December 25, 1993 94,400 93,020
======== ========
Stock Option Plans The company's Stock Option Plan authorizes
the grant of stock options to officers and other key employees of
the company. As of December 25, 1993, 449 employees participated
in the plan. The maximum number of shares of common stock that
may be granted under the Stock Option Plan may not exceed
5,500,000. The exercise prices of options granted to date have
been the fair market value of the shares on the date of grant.
Options have a term of 10 years and one day, and all options that
are not exercisable at December 25, 1993 become exercisable three
years after the date of grant. Options outstanding will expire
during the period December 26, 1996 through November 2, 2003. No
charges have been reflected in income for any period with respect
to these options.
In May 1993, the company's stockholders approved a Director
Stock Plan under which non-employee directors may elect to
receive stock options for up to 2,000 shares of the company's
common stock in lieu of all or part of their annual retainers.
Options granted to directors become exercisable on the last day
of the fiscal year in which they are granted and have a term of
10 years. Directors' stock options have exercise prices that
compensate for the foregone cash retainer based on the market
price of the company's stock on the date of grant. This amount
has been recognized as an expense by the company. The number of
shares available for grant under this plan is 300,000.
Stock option activity in 1993 and 1992 is summarized below:
[CAPTION]
Average
Shares subject option price
to option per share
-------------- ------------
[S] [C] [C]
Balance at December 28, 1991 3,582,400 $22.74
Options granted 652,100 36.33
Options canceled (73,500) 23.86
Options exercised (663,359) 21.33
---------- ------
Balance at December 26, 1992 3,497,641 25.52
Options granted 365,700 74.44
Options canceled (83,600) 32.47
Options exercised (774,731) 21.20
---------- ------
Balance at December 25, 1993 3,005,010 $32.39
========== ======
Shares reserved for future grants at December 25, 1993,
December 26, 1992 and December 28, 1991, were 463,750, 445,850
and 1,024,450, respectively.
Options to purchase 1,490,210 and 1,595,591 shares were
exercisable at December 25, 1993 and December 26, 1992,
respectively.
Note 10 Segments of the Business
The company has the following business segments: Tupperware-
plastic food storage and serving containers, microwave cookware,
and educational toys; Food Equipment Group- commercial food
equipment for the foodservice and food retail industries; and
Consumer and Decorative Products-home appliances, direct-to-the-
home cookware, physical fitness equipment, decorative laminates,
ceramic tile and prefinished hardwood flooring.
Segments of Business by Classes of Products
[CAPTION]
(In millions) 1993 1992 1991
--------- --------- ---------
[S] [C] [C] [C]
Net sales
Tupperware $1,229.7 $1,112.3 $1,076.3
Food Equipment Group 1,009.9 1,054.3 1,010.4
Consumer and
Decorative Products 857.7 779.4 729.0
--------- --------- ---------
Total net sales $3,097.3 $2,946.0 $2,815.7
========= ========= =========
Segment profit (loss)
Tupperware $ 171.0 $ (25.3)<F1>$ 121.2
Food Equipment Group 51.3 49.6 41.1
Consumer and
Decorative Products 56.2 55.9 60.9
--------- --------- ---------
Total segment profit 278.5 80.2 223.2
Unallocated expenses (22.7) (19.7) (19.8)
Interest expense, net (26.1) (26.6) (43.5)
--------- --------- ---------
Income before income taxes
and cumulative effect of
accounting changes $ 229.7 $ 33.9 $ 159.9
========= ========= =========
Identifiable assets
Tupperware $ 711.7 $ 619.7 $ 624.1
Food Equipment Group 583.5 571.8 618.2
Consumer and
Decorative Products 646.5 624.5 660.7
Corporate 175.3 142.8 131.0
--------- --------- ---------
Total identifiable assets $2,117.0 $1,958.8 $2,034.0
========= ========= =========
Depreciation and amortization
Tupperware $ 42.5 $ 49.9 $ 45.9
Food Equipment Group 25.0 27.3 28.3
Consumer and
Decorative Products 41.1 38.5 37.3
Corporate 3.3 2.3 3.8
--------- --------- ---------
Total depreciation
and amortization $ 111.9 $ 118.0 $ 115.3
========= ========= =========
Capital expenditures
Tupperware $ 85.4 $ 79.7 $ 49.6
Food Equipment Group 22.4 26.0 19.8
Consumer and
Decorative Products 36.4 30.3 26.6
Corporate 1.9 0.7 0.6
--------- --------- ---------
Total capital expenditures $ 146.1 $ 136.7 $ 96.6
========= ========= =========
[FN]
<F1> Includes a $136.7 million charge primarily to restructure
Tupperware U.S.
Segments of Business by Geographical Areas
[CAPTION]
(In millions) 1993 1992 1991
-------- -------- --------
[S] [C] [C] [C]
Net sales
United States $1,693.3 $1,569.7 $1,544.5
Europe 882.4 908.7 810.2
Asia Pacific 311.7 278.2 253.9
Latin America 131.3 111.9 115.1
Canada 78.6 77.5 92.0
-------- -------- --------
Total net sales $3,097.3 $2,946.0 $2,815.7
======== ======== ========
Segment profit (loss)
Europe $ 115.4 $ 107.1 $ 98.7
United States 106.1 (53.9) 71.2
Asia Pacific 38.5 19.3 29.5
Latin America 14.0 9.3 15.7
Canada 4.5 (1.6) 8.1
-------- -------- --------
Total segment profit $ 278.5 $ 80.2 $ 223.2
======== ======== ========
Identifiable assets
United States $1,175.6 $1,077.3 $1,179.3
Europe 462.7 455.4 460.2
Asia Pacific 196.0 191.6 167.8
Latin America 79.4 61.5 55.0
Canada 28.0 30.2 40.7
Corporate 175.3 142.8 131.0
-------- -------- --------
Total identifiable assets $2,117.0 $1,958.8 $2,034.0
======== ======== ========
Sales to a single customer did not exceed 10 percent of
total sales. Export sales were insignificant. In the Consumer and
Decorative Products segment the only class of products that
accounted for more than 10 percent of combined sales is
decorative laminates with sales of approximately $429 million in
1993, $405 million in 1992 and $368 million in 1991.
Unallocated expenses are corporate expenses and other items
not related to the operations of the segments. Corporate assets
consist of cash and assets maintained for general corporate
purposes. As of December 25, 1993, the company's net investment
in international operations was $416.5 million.
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 for which the company estimates its range of
possible exposure as $19 million to $44 million. The company
anticipates that any necessary expenditures would be made over
the next 10 years. As of December 25, 1993, the company has
accrued $20.9 million for these matters. The company has not
recorded any significant claims against third parties associated
with these accruals. None of the company's contingencies are
expected to have a material adverse effect on its financial
position, results of operations or any individual year's cash
flow.
Note 12 Quarterly summary (unaudited)
Following is a summary of the unaudited interim results of
operations, the dividends declared per share of common stock and
the price range of the common stock composite for each quarter in
the years ended December 25, 1993 and December 26, 1992.
[CAPTION]
First Second Third Fourth
quarter quarter quarter quarter
------- ------- ------- -------
(In millions, except
per share amounts)
[S] [C] [C] [C] [C]
Year ended December 25, 1993
Net sales $706.1 $763.2 $744.8 $883.2
Cost of products sold 365.5 388.5 395.3 454.9
Net income 24.0 41.0 32.9 74.6
Net income per share 0.72 1.22 0.98 2.21
Dividends declared
per share 0.25 0.28 0.28 0.28
Composite stock price range:
High 49 59 65 5/8 83 3/4
Low 38 1/4 45 1/4 54 1/2 61
Close 46 1/4 54 1/4 63 1/4 80 1/4
Year ended December 26, 1992
Net sales $678.4 $731.5 $712.9 $823.2
Cost of products sold 364.4 385.7 395.4 433.5
Net income (loss) before
cumulative effect of
accounting changes 19.1 29.4 (94.7) 50.8
Net income (loss) (64.8) 29.4 (94.7) 50.8
Per share:
Net income (loss) before
cumulative effect of
accounting changes 0.58 0.89 (2.89) 1.55
Net income (loss) (1.97) 0.89 (2.89) 1.55
Dividends declared
per share 0.21 0.25 0.25 0.25
Composite stock price range:
High 50 1/4 51 1/4 37 1/4 42 1/2
Low 39 29 3/4 32 1/2 34
Close 45 1/2 35 37 1/4 42
During the third quarter of 1992, the company adopted SFAS
No. 106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions," and SFAS No. 109, "Accounting for Income Taxes,"
retroactive to the beginning of 1992. The first and second
quarters' results for 1992 have been restated to reflect the
effects of the changes in the accounting methods. See notes 1 and
7.
Also in the third quarter of 1992, the company recorded a
$136.7 million pretax charge primarily to consolidate
manufacturing capacity and restructure the Tupperware U.S.
distribution system. See note 2.
Note 13 Shareholders' Rights Plan
In 1989, the company adopted a shareholders' rights plan with a
duration of 10 years, under which shareholders received a
dividend of a right to purchase a share of common stock for each
share owned. The rights are exercisable if 20 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 30
percent of the company's shares are acquired, a right entitles
the holder to buy shares of the company equal to twice the $125
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 15 percent.
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Directors and Shareholders of Premark
International, Inc.:
In our opinion, the accompanying consolidated balance sheet and
the related consolidated statements of operations, of cash flows
and of shareholders' equity present fairly, in all material
respects, the financial position of Premark International, Inc.
and its subsidiaries at December 25, 1993 and December 26, 1992,
and the results of their operations and their cash flows for each
of the three years in the period ended December 25, 1993, in
conformity with generally accepted accounting principles. These
financial statements are the responsibility of Premark
International, Inc.'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.
As discussed in Note 1 to the financial statements, Premark
International, Inc. changed its method of accounting for
postretirement benefits other than pensions and income taxes in
1992 to reflect the requirements of SFAS No. 106, "Employers
Accounting for Postretirement Benefits other than Pensions" and
SFAS No. 109, "Accounting for Income Taxes."
Price Waterhouse
Chicago, Illinois February 11, 1994
REPORT OF MANAGEMENT
The management of Premark is responsible for the preparation of
the financial statements and other information contained in this
Annual Report. The financial statements were prepared in
accordance with generally accepted accounting principles and
include amounts that are based upon management's best estimates
and judgments, as appropriate. Price Waterhouse has audited these
financial statements and has expressed an independent opinion
thereon.
The company maintains internal control systems, policies and
procedures designed to provide reasonable assurances that assets
are safeguarded, that transactions are executed in accordance
with management's authorization and properly recorded, and that
accounting records may be relied upon for the preparation of
financial information. There are inherent limitations in all
internal control systems based on the fact that the cost of such
systems should not exceed the benefits derived. Management
believes the company's systems provide the appropriate balance of
costs and benefits. The company also maintains an internal
auditing function that evaluates and reports on the adequacy and
effectiveness of internal accounting controls, policies and
procedures.
The Audit Committee of the Board of Directors is composed
entirely of outside directors. The Committee meets periodically
and independently with management, the internal auditors and
Price Waterhouse to discuss the company's internal accounting
controls, auditing and financial reporting matters. Both the
internal auditors and Price Waterhouse have unrestricted access
to the Audit Committee.
Management recognizes its responsibility for conducting the
company's affairs in a manner that is responsive to the interests
of its shareholders and its employees. This responsibility is
characterized in the Code of Conduct, which provides that the
company will fully comply with laws, rules and regulations of
every country in which it operates and will observe the rules of
ethical business conduct. Employees of the company are expected
and directed to manage the businesses of the company accordingly.
Warren L. Batts Lawrence B. Skatoff
Chairman of the Board Senior Vice President
and Chief Executive Officer and Chief Financial Officer
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘10-K’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| | 11/2/03 | | 9 |
| | 12/26/96 | | 9 |
| | 10/2/95 | | 9 |
| | 12/15/94 | | 9 |
| Filed on: | | 3/21/94 |
| | 2/28/94 | | 2 |
| | 2/11/94 | | 9 |
| | 2/1/94 | | 2 | | 9 |
| For Period End: | | 12/25/93 | | 2 | | 9 | | | 10-K/A |
| | 12/26/92 | | 7 | | 9 |
| List all Filings |
↑Top
Filing Submission 0000800575-94-000010 – Alternative Formats (Word / Rich Text, HTML, Plain Text, et al.)
Copyright © 2024 Fran Finnegan & Company LLC – All Rights Reserved.
About — Privacy — Redactions — Help —
Fri., Apr. 19, 9:13:32.1am ET 