The following is a discussion of the results of operations for 2008 compared with 2007 and 2007 compared with 2006, and changes in financial condition during 2008. The Company's fiscal year ends on the last Saturday of December and included 52 weeks during 2008, 2007 and 2006. This information should be read in conjunction with the consolidated financial information provided in Item 8 of this Annual Report.

The Company's primary means of distributing its product is through independent sales organizations and individuals, which are also its customers. The majority of the Company's products are in turn sold to end customers who are not members of the Company's sales forces. The Company is largely dependent upon these independent sales organizations and individuals to reach end consumers and any significant disruption of this distribution network would have a negative financial impact on the Company and its ability to generate sales, earnings and operating cash flows. The Company's primary business drivers are the size, activity and productivity of its independent sales organizations.

Estimates included herein are those of the Company's management and are subject to the risks and uncertainties as described in the Forward Looking Statements caption included in Item 7A.

Overview

(Dollars in the millions, except per share amounts)

Company results 2008 vs. 2007




                                           52 Weeks Ended                                     Change
                                                                                            excluding
                                                                                            the impact         Foreign
                                  December 27,         December 29,                         of foreign         exchange
                                      2008                 2007            Change          exchange (a)         impact
Net sales                        $      2,161.8       $      1,981.4            9 %                   8 %     $     28.1
Gross margin percentage                    64.7 %               64.9 %       (0.2 ) pp               na               na
Delivery, sales &
administrative expense as a
percent of sales                           53.7 %               54.7 %       (1.0 ) pp               na               na
Operating income                 $        243.6       $        194.1           26 %                  29 %     $     (5.0 )
Net income                       $        161.4       $        116.9           38 %                  43 %     $     (3.9 )
Net income per diluted share     $         2.56       $         1.87           37 %                  42 %     $    (0.06 )

Company results 2007 vs. 2006

                                           52 Weeks Ended                                     Change
                                                                                            excluding
                                                                                            the impact         Foreign
                                  December 29,         December 30,                         of foreign         exchange
                                      2007                 2006            Change          exchange (b)         impact
Net sales                        $      1,981.4       $      1,743.7           14 %                   9 %     $     77.4
Gross margin percentage                    64.9 %               64.7 %        0.2  pp                na               na
Delivery, sales &
administrative expense as a
percent of sales                           54.7 %               56.3 %       (1.6 ) pp               na               na
Operating income                 $        194.1       $        152.1           28 %                  17 %     $     13.1
Net income                       $        116.9       $         94.2           24 %                  11 %     $     11.5
Net income per diluted share     $         1.87       $         1.54           21 %                   8 %     $     0.19

a 2008 actual compared with 2007 translated at 2008 exchange rates.

b 2007 actual compared with 2006 translated at 2007 exchange rates.

na not applicable

pp percentage points

Sales

Local currency sales in 2008 grew 8 percent compared with 2007. Sales in the Company's emerging markets accounted for the 2008 local currency growth. These markets, those with a "low" or "medium" GDP per capita as reported by the World Bank, accounted for 50 percent and 47 percent of the Company sales in 2008 and 2007, respectively. Total sales in the emerging markets increased $152.4 million or 16 percent between 2008 and 2007 and was negatively impacted by changes in foreign currency exchange rates totaling $10.1 million. Excluding the impact of foreign currency on sales, the growth for these markets was 17 percent compared with 2007. The substantial increase in sales in the Company's emerging market businesses was led by Russia, Venezuela, Indonesia and China, both the Tupperware and Fuller business in Mexico, Tupperware South Africa and Tupperware Brazil. Businesses in established market economies were up 3 percent in 2008 sales compared with 2007, although sales were down 1 percent excluding the benefit of stronger foreign currencies on the comparison. The results in the Company's established markets reflected strong improvements in Tupperware Australia, New Zealand and France as well as a slight improvement in the Tupperware United States and Canadian business, offset by declines in Tupperware Japan, Germany and BeautiControl.

The majority of 2008 sales growth occurred in the first three quarters of 2008, when local currency sales increased by 9 percent. As a result of economic conditions, during the fourth quarter of 2008, local currency sales increased at a slower rate, by 3 percent compared with the 2007 fourth quarter. In the fourth quarter, the Tupperware segments had a modest increase in local currency sales, while the Beauty segments were down slightly.

Local currency sales for 2007 increased 9 percent compared to 2006 with all segments contributing to the increase, led by a significant increase in Asia Pacific, along with strong improvements in the Tupperware and Beauty North America segments. Nearly every market contributed to the increase in sales in Asia Pacific, resulting primarily from volume from larger and more productive sales forces. The significant increase in Tupperware North America was from all three units in the segment, including the United States business resulting from a higher active sales force. Mexico had a strong increase in sales largely from the volume benefit of higher business-to-business sales. Beauty North America's sales increased 9 percent compared with 2006, due to a strong performance in Fuller Mexico and modest growth in BeautiControl. Beauty Other also reported a strong improvement in sales for 2007, reflecting increases in the Company's Central and South American businesses, as well as businesses in the Philippines, offset by a decline in local currency sales in the Nutrimetics units. Sales in Europe showed modest improvement during 2007 with a 4 percent local currency increase over 2006. This increase was due to the performance from the emerging markets, led by Russia and South Africa, offset by a decline in Germany.

Specific segment impacts are further discussed in the segment result section.

Gross Margin

Gross margin as a percentage of sales was 64.7 percent in 2008 and 64.9 percent in 2007. The slight decline was primarily the result of higher freight costs driven by increased fuel costs and a higher provision for inventory obsolescence. In 2008, the Company experienced an approximate $10 million increase in the costs of resin used in its manufacturing of Tupperware® products. This represents an 8 percent increase in those material costs compared with 2007, which was offset by leverage from higher sales volume and manufacturing efficiencies.

Gross margin as a percentage of sales increased to 64.9 percent in 2007 compared with 64.7 percent in 2006. Margins in Europe and Beauty Other increased slightly in 2007 compared with 2006, primarily due to a favorable mix of products. This was offset by a decrease in margins in Beauty North America, reflecting a margin investment to clear inventory during the third and fourth quarters of 2007, as well as promotional offers designed to reinvigorate the sales force. Margins in Asia Pacific and Tupperware North America stayed flat during 2007.

Operating Expenses

Delivery, sales and administrative expenses (DS&A) as a percentage of sales was 53.7 percent compared with 54.7 percent for 2007. The decline in DS&A as a percentage of sales reflected less amortization expense related to definite-lived intangible assets of the Acquired Units. These intangible assets are primarily the value of acquired independent sales forces. The amortization is recorded to reflect the estimated turnover rates of the sales forces and was $9.0 million in 2008 compared with $13.6 million in 2007. In addition to the decrease in amortization expense, the Company also had a decrease in the provision for doubtful accounts compared with 2007 and lower costs associated with an incentive accrual that was remeasured at each reporting period based on the Company's stock price. In the fourth quarter of 2008, the Company modified this incentive plan to a stock based award and will no longer remeasure the award at each reporting period. These lower costs were partially offset by an overall increase in promotional spending.

DS&A as a percentage of sales was 54.7 percent in 2007 compared with 56.3 percent in 2006. DS&A as a percentage of sales decreased in 2007 compared with 2006 reflecting less amortization expense related to the definite-lived intangible assets. Amortization expense was $13.6 million in 2007 compared with $23.7 million in 2006. Also contributing to the decrease in DS&A as a percentage of sales were improved cost management and leverage from higher sales volume, offset by a higher provision for doubtful accounts and higher unallocated costs.

The Company allocates corporate operating expenses to its reporting segments based upon estimated time spent related to those segments where a direct relationship is present and based upon segment revenue for general expenses. The unallocated expenses reflect amounts unrelated to segment operations. Allocations are determined at the beginning of the year based upon estimated expenditures. Total unallocated expenses for 2008 decreased $4.1 million compared with 2007 due to lower costs associated with the incentive accrual. Unallocated expenses for 2007 increased $7.5 million compared with 2006 primarily due to an increase in incentive program accruals reflecting the Company's favorable financial results, increased equity compensation and costs related to the new office of the Chief Operating Officer.

As discussed in Note 1 to the Consolidated Financial Statements, the Company includes costs related to the distribution of its products in DS&A expense. As a result, the Company's gross margin may not be comparable with other companies that include these costs in cost of products sold.

Included in 2008 net income were pretax charges of $9.0 million for re-engineering and impairment charges compared with $9.0 million in 2007 and $7.6 million in 2006. These charges are discussed in the re-engineering costs section following.

During the second quarter of 2008, the financial results of the Nutrimetics and NaturCare businesses were below expectations and the Company lowered its forecast of future sales and profit below that used to value these tradenames in the Company's 2007 annual impairment analysis. As a result of these factors, the Company performed interim impairment tests of these tradenames. The result of the tests was to record a $6.5 million impairment to the Nutrimetics tradename and a $2.5 million impairment to the NaturCare tradename. In the third quarter of 2007, the Company completed the annual review of goodwill and indefinite-lived intangible assets of the Acquired Units. As a result of this review, the Nutrimetics goodwill and tradename were deemed to be impaired, resulting in a non-cash impairment charge of $11.3 million. Refer to Note 6 to the Consolidated Financial Statements for a discussion of the impairment of goodwill and intangible assets.

During 2008, the Company continued its program to sell land for development near its Orlando, Florida headquarters which began in 2002. A pretax gain of $2.2 million was recognized as a result of a transaction completed during 2008. This amount compared with pretax gains of $5.6 million during 2007 and $9.3 million during 2006. Gains on land transactions are recorded based upon when the transactions close and proceeds are collected. Transactions in one period may not be representative of what may occur in other periods. Since the Company began this program in 2002, cumulative proceeds from these sales have totaled $66.9 million and currently are expected to be up to $125.0 million when the program is completed. However, these sales have been impacted by the current credit crisis and as a result the program will likely continue for a number of years. The Company's credit agreement requires it to remit certain proceeds received for the disposition of excess property to its lenders in repayment of the debt. The Company also has a contract to sell certain assets in Australia which is expected to close in 2009 with expected proceeds of $4.6 million.

In 2008, operating results were positively impacted by $22.7 million of gains in connection with the disposal of assets including insurance recoveries, net. The Company recorded $22.2 million of pre-tax gains from insurance recoveries on the South Carolina facility fire that occurred in 2007. The remaining net gains were from smaller insurance recoveries, partially offset by costs related to disposing of an asset.

The 2007, operating results were positively impacted by the sale of excess land in Australia, resulting in a $2.1 million pretax gain and a pretax gain of $1.6 million recognized from the sale of the Company's Philippines manufacturing facility.

Additionally in 2006, the Company recorded a pretax loss of $1.2 million as a result of a fire at its former manufacturing facility in Halls, Tennessee. The amount was recorded based on the Company's best estimate as of December 30, 2006. In 2007 a pretax gain of $2.5 million was recognized upon the settlement of the related insurance claim.

Re-engineering Costs

As the Company continuously evaluates its operating structure in light of current business conditions and strives to maintain the most efficient possible structure, it periodically implements actions designed to reduce costs and improve operating efficiency. These actions may result in re-engineering costs related to facility downsizing and closure as well as related asset write downs and other costs that may be necessary in light of the revised operating landscape. In addition, the Company may recognize gains upon disposal of closed facilities or other activities directly related to its re-engineering efforts. Over the past three years, the Company has incurred such costs as detailed below that were included in the following income statement captions (in millions):

                                                         2008    2007    2006
           Re-engineering and impairment charges        $  9.0   $ 9.0   $ 7.6
           Delivery, sales and administrative expense      1.1      -       -
           Cost of products sold                           1.8      -       -

           Total pretax re-engineering costs            $ 11.9   $ 9.0   $ 7.6

In 2008, the Company recorded $7.1 million in severance cost related to headcount reductions primarily in Germany, BeautiControl and France. The Company incurred re-engineering costs of $0.8 million for moving the Company's BeautiControl North America and Belgian manufacturing facilities to new locations. The Company also recorded costs of $0.9 million for impairment charges for obsolete software in the South Africa beauty business, as well as various machinery and equipment in other manufacturing units. In 2008, the Company reached a decision to begin selling beauty products in Brazil through the Tupperware sales force and cease operating the beauty business in Brazil. As a result of this decision, the Company recorded a $3.1 million charge relating to the write off of inventory, prepaid assets, accounts receivables and property, plant and equipment.

In 2007, the Company recorded $3.4 million in severance cost related to headcount reductions totaling 80 positions in Australia, France, Japan, Mexico, the Netherlands, the Philippines, Switzerland, Thailand and Uruguay. The majority of the severance costs were from the consolidation of certain operations in Australia, France, Japan and the Netherlands. In 2007, $1.2 million in re-engineering charges were also recorded associated with moving the Company's BeautiControl North America manufacturing facility in Texas into a new facility located nearby. The purpose of the move was to provide a more efficient manufacturing layout, as well as capacity for continued growth to ultimately allow the consolidation with distribution. Lease and related costs, which were still due on the former BeautiControl manufacturing facility were also included in the re-engineering charge. In 2007, the Company also incurred re-engineering costs of $0.8 million in relocating its Belgian manufacturing operation to a newly built facility and recorded $3.6 million in impairment charges related to assets primarily in its South Carolina, BeautiControl and Japanese manufacturing and distribution operations.

In 2006, re-engineering and impairment charges of $7.6 million included $7.5 million primarily related to severance costs incurred to reduce headcount in the Company's Canada, Belgium, Philippines, Australia and Europe operations. The remaining $0.1 million was to write down the value of certain assets of the Company's former Philippines manufacturing facility.

For further details of the re-engineering actions, refer to Note 2 to the Consolidated Financial Statements.

Net Interest Expense

The Company incurred $36.9 million of net interest expense in 2008 compared with $49.2 million in 2007. In September 2007, the Company entered into an $800 million five-year senior secured credit agreement consisting of a $200 million revolving credit facility and $600 million in term loans ("2007 Credit Agreement"). Proceeds from the 2007 Credit Agreement were used to repay the Company's previous credit agreement dated December 5, 2005, which was obtained in conjunction with the closing of the Acquisition. The previous agreement was then terminated. As a result, $6.1 million in deferred debt fees were written off and included in net interest expense for the year ended December 29, 2007. At the same time, the Company settled certain floating-to-fixed interest rate swaps that were hedging the borrowings under the previous credit agreement, resulting in a termination payment of $3.5 million that was also included in net interest expense for 2007. The 2007 Credit Agreement provides for a lower interest rate margin spread and commitment fee compared with the Company's previous agreement, contributing to the overall decrease in net interest expense for 2008. The margin spread on the 2007 Credit Agreement has been about 50 to 75 basis points lower in 2008 compared with 2007.

The Company incurred $49.2 million in net interest expense in 2007 compared with $47.0 million in 2006. The 2007 amount included the costs associated with entering into the 2007 Credit Agreement totaling $9.6 million. This impact was partially offset by a reduction in net interest expense incurred on the Company's outstanding borrowings during 2007 reflecting a lower average debt level of $685.7 million in 2007 compared with $776.6 million in 2006. Additionally, in the first quarter, the Company entered into euro net equity hedges for the equivalent of $300 million expiring at various points in 2007 and 2008 and a smaller amount of similar contracts denominated in Japanese yen expiring in 2008. In addition to hedging the Company's equity exposure to the euro and Japanese yen falling in value versus the U.S. dollar, the contracts also effectively converted this amount of the Company's outstanding term debt from U.S. dollars to the euro and Japanese yen where the Company generates cash flows. The euro net hedge position was reduced by half in the third quarter of 2007 and

the Japanese yen hedge position was also reduced at that time. These positions were further reduced in 2008. As a result of relative interest rates among Europe, Japan and the United States in 2007, these contracts had a positive impact on net interest expense of about $4.0 million for the year ended December 29, 2007.

Also contributing to the increase in net interest expense during 2007 was lower interest income compared with 2006. Interest income during 2007 was $3.8 million compared with $8.1 million in 2006, which included $3.6 million earned from an escrow account funded in December 2005 at the time of the Acquisition. In order to discharge the Company's $100.0 million 7.25 percent Notes due in October 2006, the Company funded an escrow account with cash in December 2005. Since the notes were paid off from the escrowed funds at the due date, the escrow account was closed and no further interest income has been earned.

Tax Rate

The effective tax rates for 2008, 2007, and 2006 were 20.0, 17.3 and 9.2 percent, respectively. The increase in the 2008 rate largely reflected a shift in income towards jurisdictions with higher statutory tax rates. Notably, U.S. federal taxable income increased by approximately $36.0 million compared with 2007 due to insurance gains recorded in 2008, as well as a one-time deduction recognized in 2007 relating to an advance payment agreement entered into by the Company with one of its foreign subsidiaries. The increase in the rate in 2007 largely reflected a lower level of foreign tax credit benefits, along with higher provisions for tax exposures. The effective tax rates for 2008, 2007 and 2006 are below the U.S. statutory rate reflecting the availability of excess foreign tax credits as well as lower foreign effective tax rates.

The Company has recognized deferred tax assets based upon its analysis of the likelihood of realizing the benefits inherent in them. The Company does not record a valuation allowance where it has concluded that it is more likely than not that the benefits would ultimately be realized. This assessment was based upon expectations of improving domestic operating results as well as anticipated gains related to the Company's future sales of land held for development near its Orlando, Florida headquarters. In addition, certain tax planning transactions may be entered into to facilitate realization of these benefits. Refer to the critical accounting policies section and Note 12 to the Consolidated Financial Statements for additional discussions of the Company's methodology for evaluating deferred tax assets. Based on expected revenue and profit contributions of the Company's various operations, management expects a tax rate several percentage points higher in 2009 compared with 2008.

As discussed in Note 12 to the Consolidated Financial Statements, the requirements of FIN 48 and FSP FIN 48-1, which the Company implemented at the beginning of 2007, has clarified guidance surrounding the recognition and derecognition of uncertain tax positions, including the timing and effective settlement of those adjustments. As of December 27, 2008 and December 29, 2007, the Company's gross unrecognized tax benefit was $46.9 million and $41.1 million, respectively. As of the end of 2008 and 2007, the Company classified approximately $1.2 million and $5.6 million of unrecognized tax benefits as a current liability, representing potential settlement of tax positions in several jurisdictions, respectively. It is reasonably possible that the amount of uncertain tax positions could materially change within the next 12 months based on the results of tax examinations, expiration of statutes of limitations in various jurisdictions and additions due to ongoing transactions and activity. However, the Company is unable to estimate the impact of such events.

Net Income

For 2008, operating income increased 26 percent compared with 2007, due to strong improvements in the Company's Tupperware segments and significant improvements in the Beauty Other segment resulting from higher sales volume, partially offset by a decrease in Beauty North America. Also contributing to the increase in operating income was lower amortization expense of definite-lived intangible assets and lower incentive costs. The Company also recorded a $24.9 million gain from disposal of assets and insurance recoveries, which mainly

related to the 2007 fire in South Carolina and flood damage in France and Indonesia. Partially offsetting these gains, was a $9.0 million impairment recorded on the Company's Nutrimetics and NaturCare tradenames. Net income increased 38 percent, and was also positively impacted by lower interest expense during 2008 compared with 2007 as a result of entering into the 2007 Credit Agreement.

For 2007, operating income showed substantial growth of 28 percent compared with 2006, due to improvements in all the Company's segments led by significant increases by the Tupperware brand segments, reflecting higher sales volume and improved capacity utilization, as well as $10.1 million in lower amortization expense of definite-lived intangibles recorded in connection with the Acquisition. The Company was also positively impacted by foreign currency changes primarily due to a stronger euro, Australian dollar and Russian ruble. The higher profit from the segments also led to a $22.7 million or 24 percent, increase in net income versus 2006. This was despite an $11.3 million impairment of goodwill and intangible assets and higher interest expense as a result of implementing the 2007 Credit Agreement, which triggered $9.6 million of one-time costs.

As outlined previously, the Company had various dispositions of property, plant and equipment and re-engineering charges in 2007, which in total were not significantly different in amount than similar items in 2006.

International operations accounted for 86, 83 and 84 percent of the Company's sales in 2008, 2007 and 2006, respectively. They accounted for 95, 92 and 90 percent of the Company's net segment profit in 2008, 2007 and 2006, respectively.

Segment Results 2008 vs. 2007




                                                                                  (a)
                                                                                Change
. . .