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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

For the 13 weeks ended June 29, 2002

OR

For the Transition period from          to         

Commission file number 1-11657

TUPPERWARE CORPORATION
(Exact name of registrant as specified in its charter)

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.

As of August 12, 2002, 58,301,314 shares of the Common Stock, $0.01 par value, of the Registrant were outstanding.

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The financial statements of the Registrant included herein have been prepared, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the Commission). Although certain information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America has been condensed or omitted, the Registrant believes that the disclosures are adequate to make the information presented not misleading. It is suggested that these consolidated financial statements are read in conjunction with the financial statements and the notes thereto included in the Annual Report on Form 10-K of the Registrant for its fiscal year ended December 29, 2001.

The consolidated financial statements included herein reflect all adjustments, consisting only of normal recurring items, which, in the opinion of management, are necessary to present a fair statement of the results for the interim periods presented.

The results for interim periods are not necessarily indicative of trends or results to be expected for a full year.

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TUPPERWARE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

See accompanying Notes to Consolidated Financial Statements (Unaudited).

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TUPPERWARE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)

See accompanying Notes to Consolidated Financial Statements (Unaudited).

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TUPPERWARE CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS
(Unaudited)

See accompanying Notes to Consolidated Financial Statements (Unaudited).

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TUPPERWARE CORPORATION
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND SHAREHOLDERS’ EQUITY
(Unaudited)

See accompanying Notes to Consolidated Financial Statements (Unaudited).

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TUPPERWARE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)

See accompanying Notes to Consolidated Financial Statements (Unaudited).

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TUPPERWARE CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1: Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q, and therefore, do not include all notes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, the unaudited consolidated financial statements include all adjustments, consisting only of normal, recurring items, necessary for a fair presentation of financial position and results of operations. The results of operations of any interim period are not necessarily indicative of the results that may be expected for a full fiscal year.

Note 2: Inventories

Inventories, by component, are summarized as follows (in millions):

Note 3: 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. The weighted average number of shares used in the basic earnings per share computations was 58.3 million and 57.9 million for the 13 weeks ended June 29, 2002 and June 30, 2001, respectively. For the six-month period, the weighted average number of shares used in the basic earnings per share computations was 58.2 million and 57.8 million for 2002 and 2001, respectively. The differences in the computation of basic and diluted earnings per share for the second quarter of 2002 and the second quarter and six-month period of 2001 were the inclusion of 1.0 million shares of potential common stock and for the six-month period of 2002 was the inclusion of 0.8 million shares of potential common stock. Options to purchase 2.1 million and 2.2 million shares of common stock in the second quarter of 2002 and 2001, respectively, and 2.9 million and 2.2 million shares in the year-to-date period of 2002 and 2001, respectively, were outstanding but were excluded from the computation of earnings per share because their inclusion would have been anti-dilutive. The Company’s potential common stock consists of employee and director stock options and restricted stock.

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Note 4: Comprehensive Income

In addition to net income, comprehensive income includes certain amounts recorded directly in equity. The components of comprehensive income, net of related income tax effects, for the second quarter and year-to-date periods, were as follows (in millions):

Accumulated other comprehensive loss is comprised of foreign currency translation adjustments and hedge activity as disclosed in Note 7, "Accounting for Derivative Instruments and Hedging Activities".

Note 5: Re-engineering Program

In 1999, the Company announced a re-engineering program designed to improve operating profit return on sales through improved organizational alignment, a higher gross margin percentage and reduced operating expenses. Costs incurred by line item were as follows:

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Note 5: Re-engineering Program (continued)

The re-engineering and impairment charge line item was primarily made up of severance associated with the consolidation of European operations related to finance, marketing and information technology and the establishment of regional clusters. Also included were severance and impairments costs related to the downsizing of Japanese marketing and manufacturing operations. A smaller downsizing of operations in Mexico has also been included in this line. Total impairment write downs recorded were $1.2 million in the second quarter and year-to-date periods of 2002 and are based on the excess of book value over the estimated fair market values of the assets impaired. Fair values were determined based on quoted market prices and discounted cash flows. Severance charges, totaling $12.7 million and $13.7 million for the second quarter and six month periods, respectively, of 2002, relate to approximately 115 employees in Europe, 110 in Japan and 45 in Mexico. The balance of the 2002 re-engineering and impairment charge related primarily to other costs related to the downsizing of Japanese manufacturing operation and the consolidation of BeautiControl distribution. The re-engineering and impairment line for 2001 related primarily to severance payments for approximately 150 employees whose positions were eliminated in connection with the implementation of an importer model in Latin America. The Company expects to sell one of its Japanese manufacturing/distribution facilities in the next one to three years. The cost of products sold amount represented an inventory write down in connection with a decision to restructure the Company’s United Kingdom operations. This inventory is primarily related to items that will no longer be saleable following restructure due to changes in product line focus and distributor realignment. Delivery, sales and administrative expense included a write down of accounts receivable in connection with the United Kingdom restructure as well as a write down of accounts receivable related to the sale of the Company’s Taiwan operation to an independent importer in 2002, primarily relating to amounts due from closed distributors. In 2001, this line was primarily comprised of internal and external consulting costs associated with executing the re-engineering projects and other cost savings initiatives. The other income related to gains recognized on the disposal of the Company’s Spanish manufacturing facility and convention center located on its Orlando, Florida headquarters site. Both of these facilities were closed as part of the re-engineering program.

Activity related to the Company's accruable re-engineering program costs for the six months ended June 29, 2002 and the year ended December 29, 2001 was as follows (in millions):

The remaining accrual relates primarily to costs of eliminating positions as a result of re-engineering actions and will largely be paid out over the next 18 months.

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Note 6: Segment Information

The Company manufactures and distributes products primarily through independent direct sales forces: (1) plastic food storage and serving containers, microwave cookware and educational toys marketed under the Tupperware brand worldwide, and organized into four geographic segments, and (2) premium cosmetics and skin care products marketed under the BeautiControl brand in North America, Latin America and Asia Pacific. International BeautiControl operations are reported in the applicable geographic segment.

As a result of a change in management reporting structures, effective with the beginning of the Company’s 2002 fiscal year, the Company is reporting the United States and Canada as a Tupperware North America business segment and BeautiControl operations outside North America have been included in their respective geographic segments. Prior year sales and operating profit amounts have been restated to reflect this change. This change did not have a material impact on other previously reported segment information.

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Note 7: Accounting for Derivative Instruments and Hedging Activities

The Company markets its products in over 100 countries and 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 to this fact, the Company uses financial instruments to hedge its exposure and manage the foreign exchange impact to its financial statements. At its inception, a derivative financial instrument is designated as either a fair value hedge, cash flow hedge, net equity hedge or speculative hedge.

Fair value hedges are entered into with financial instruments such as forward contracts with the objective of controlling exposure to certain foreign exchange risks primarily associated with accounts receivable, accounts payable and non-permanent intercompany transactions. In assessing hedge effectiveness, the Company excludes forward points. The Company enters into interest rate swaps to convert fixed-rate U.S. dollar long-term debt to floating-rate U.S. dollar debt and records the impact as a component of interest expense. In addition, the Company has entered into an interest rate swap agreement that effectively converts Japanese yen floating interest expense into Japanese yen fixed interest expense. Effective July 30, 2002, the Company terminated two of its interest rate swap agreements representing notional amounts of $50 million and $75 million and generating gains of approximately $2.3 million and $3.4 million, respectively. These gains will be recognized over the remaining lives of the related debt, approximately 4 years and 9 years, respectively. The hedging relationships the Company has entered into have been highly effective, and the ineffective net gains recognized in interest expense and other expense for both the second quarter and year-to-date periods were immaterial.

The Company also uses derivative financial instruments to hedge foreign currency exposures resulting from firm purchase commitments or anticipated transactions, and classifies these as cash flow hedges. The Company generally enters into cash flow hedge contracts for periods ranging from three to twelve 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. Approximately $1.1 million was recorded in foreign exchange loss as a component of other expense in the second quarter and year-to-date periods of 2002. The ineffective portion of the gain or loss on the hedging instrument is recorded in other expense. As of June 29, 2002 and for the second quarter and year-to-date periods ended June 29, 2002, the amount recorded in other comprehensive income was $5.4 million after tax. Based on exchange rates at the end of the second quarter of 2002, approximately $3.5 million of this loss would be a component of net income in the remainder of 2002. The balance would be a component of net income in the first half of 2003. The ineffective portion in other expense was immaterial.

In addition to fair value and cash flow hedges, the Company uses financial instruments such as forward contracts to hedge a portion of its net equity investment in international operations, and classifies these as net equity hedges. For the second quarter of 2002 and the year-to-date period ended June 29, 2002, the Company recorded net losses associated with these hedges of $3.3 million and $2.4 million, respectively, in other comprehensive income. Due to the permanent nature of the investments, the Company does not anticipate reclassifying any portion of this amount to the income statement in the next twelve months.

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Note 8: Revolving Line of Credit

On April 30, 2002, the Company entered into a new $250 million revolving line of credit. Of the $250 million, $100 million expires on April 28, 2003 and the remaining $150 million expires on April 29, 2005. This credit facility replaced the Company’s previous $300 million unsecured multicurrency credit facility that was due to expire on August 8, 2002 and was terminated as part of the implementation of the new agreement. This agreement requires the Company to meet certain financial covenants that are not materially different from those in the prior multicurrency credit facility. The new agreement does, however, subject the Company to a net worth test that could restrict the Company’s ability to pay dividends if consolidated net worth is insufficient to meet the requirements of this test. At the end of the second quarter 2002, the requirement was $93.9 million. The Company’s consolidated net worth at the end of the second quarter was $156.4 million. The requirement is increased quarterly by 25 percent of the Company’s consolidated net income for the quarter. There is no adjustment for losses.

Note 9: Investments

To better manage the impact of foreign currency exposure on the Company’s net income, in the second quarter of 2002, the Company began a program to hedge, for the following twelve months, its foreign income related to the euro, Japanese yen, Korean won, and Mexican peso. In this program, the Company utilizes forward contracts coupled with high-grade U.S. dollar denominated securities. The securities purchased are classified as available-for-sale with gains or losses on these securities recorded as a component of other comprehensive income until maturity or sale, at which time any accumulated gains or losses are recorded as a component of net income. These investment securities have maturities of less than three months and are recorded as a cash equivalent. At June 29, 2002, the Company had no such investments outstanding. During the second quarter of 2002, the Company sold available-for-sale securities and generated $35.1 million of proceeds and gross realized losses of $1.1 million based upon specific identification.

Note 10: New Pronouncements

In July 2001, The Financial Accounting Standards Board (the Board) issued Statement of Financial Accounting Standards (SFAS) No. 142, “Goodwill and Other Intangible Assets”, which superseded Accounting Principles Board Opinion No. 17, “Intangible Assets”. This statement addresses how goodwill and other intangible assets should be accounted for after they have been initially recognized in the financial statements. Beginning with fiscal year 2002, the Company is no longer amortizing goodwill, but will evaluate it for impairment at least annually. The transition impairment review has been completed and no impairment charge was necessary. The goodwill recorded on the Company’s balance sheet at June 29, 2002 was largely included in the BeautiControl segment with smaller amounts included in the Latin America and Asia Pacific segments as they relate to international operations. The Company expects a modest ongoing benefit from the elimination of goodwill amortization. The Company has no other intangible assets impacted by this statement. Goodwill amortization totaled $0.4 million in the second quarter of 2001 and $0.7 million in the year-to-date period ended June 30, 2001. Exclusive of this item, net income in the second quarter of 2001 would have been $28.0 million and basic and diluted earnings per share would have been $0.48. Net income in the year-to-date period ended June 30, 2001 would have been $46.3 million and basic and diluted earnings per share would have been $0.80 and $0.79, respectively.

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Note 10: New Pronouncements (continued)

The Board also issued, in August 2001, SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.” This statement, which is effective for fiscal years beginning after December 15, 2001, addresses financial accounting and reporting for the impairment of long-lived assets, excluding goodwill and intangible assets, to be held and used or disposed of. The Company adopted this pronouncement in the first quarter of 2002, with no material impact.

In February 2002, the Emerging Issues Task F