The following is a discussion of the results of operations for the 13 and 26 weeks ended June 27, 2009 compared with the 13 and 26 weeks ended June 28, 2008 and changes in financial condition during the 26 weeks ended June 27, 2009.

The Company's primary means of distributing its product is through independent sales organizations and individuals, which are also its customers in many cases. The majority of the Company's products are in turn sold to end customers who are not members of the 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.

Overview




                                                                                                 Change
                                                     13 weeks ended                            excluding
                                                                                               the impact        Foreign
                                                 June 27,       June 28,                       of foreign       exchange
Dollars in millions, except per share amounts      2009           2008         Change         exchange (a)       impact
Net sales                                       $    524.7      $   583.6         (10 )%                 4 %    $   (78.6 )
Gross margin as a percent of sales                    66.5 %         65.8 %       0.7  pp               na             na
DS&A as percent of sales                              52.3 %         54.3 %      (2.0 ) pp              na             na
Operating income                                $     55.2      $    55.6          (1 )%                40 %    $   (15.9 )
Net income                                            33.1           36.0          (8 )                 42          (12.6 )
Net income per diluted share                          0.52           0.56          (7 )                 42          (0.20 )


                                                                                                 Change
                                                     26 weeks ended                            excluding
                                                                                               the impact        Foreign
                                                 June 27,       June 28,                       of foreign       exchange
Dollars in millions, except per share amounts      2009           2008         Change         exchange (a)       impact
Net sales                                       $    987.5      $ 1,127.0         (12 )%                 2 %    $  (162.9 )
Gross margin as a percent of sales                    66.0 %         65.0 %       1.0  pp               na             na
DS&A as percent of sales                              54.0 %         54.5 %      (0.5 ) pp              na             na
Operating income                                $     96.4      $   104.2          (7 )%                31 %    $   (30.4 )
Net income                                            58.6           68.1         (14 )                 34          (24.2 )
Net income per diluted share                          0.93           1.07         (13 )                 34          (0.38 )

a 2009 actual compared with 2008 translated at 2009 exchange rates.

na not applicable

pp percentage points

Total local currency net sales increased 4 percent in the second quarter of 2009 compared with the same period of 2008. This increase came mainly from Tupperware Brazil, France, Indonesia, Malaysia/Singapore, Mexico, Russia, South Africa and Venezuela, primarily, reflecting higher active sales forces from strong recruiting and successful promotional programs. Partially offsetting the increases in sales in these units were decreases primarily at BeautiControl, China, Fuller Mexico and Germany, reflecting lower and less productive sales forces at least in part in light of the negative external environment. On a local currency basis, operating income and net income increased in the second quarter of 2009 compared with the same period of 2008. The increase in operating and net income reflected improvements in all of the Company's segments, lower interest expense and a gain of $10.1 million from insurance recoveries associated with a 2007 fire in South Carolina, partially offset by higher impairment charges related to the Company's tradenames and goodwill.

Local currency sales for the year-to-date period of 2009 increased 2 percent compared with the same period of 2008. The units and factors impacting the year-to-date sales, operating and net income comparisons were similar to those impacting the second quarter comparisons.

A more detailed discussion of the specific segment results is included in the Segment Results section following.

The Company's balance sheet remained strong with an increase of $62.7 million in working capital as compared with the end of 2008. This reflected an increase in cash of $33.1 million, resulting from strong generation of cash flow from operating activities net of cash flow used in investing activities that was only partially used to pay dividends and reduce debt, along with reductions of accounts payables and accrued compensation reflecting the payout of amounts due at year end 2008 that were higher than comparable amounts due at the end of June 2009. The Company closed the second quarter of 2009 with a debt to total capital ratio of 50 percent as compared with 55 percent at the end of 2008 and 50 percent at the end of 2008's second quarter. Total capital is defined as total debt plus shareholders' equity.

Net cash flow from operating activities was an inflow of $87.4 million for the first half of 2009 compared with an inflow of $5.4 million for the same period of 2008. The increase most significantly reflected $11.1 million in cash inflow to settle foreign currency hedge contracts and a $7.3 million inflow from the reduction of inventory held, in 2009, compared with outflows of $27.2 million and $37.1 million, respectively in the 2008 period.

Net Sales

Second quarter sales were 4 percent higher in local currency compared with last year. Sales in the Company's emerging markets accounted for the second quarter 2009 increase in local currency sales. These markets, those with a "low" or "medium" GDP per capita as reported by the World Bank, accounted for 51 percent of the Company sales for both the second quarter of 2009 and 2008, respectively. Total sales for the emerging markets decreased $29.7 million or 10 percent as reported, in the second quarter of 2009, compared with the same period of 2008, which included a negative $53.3 million impact from changes in foreign currency exchange rates. Excluding the impact of foreign currency on the sales comparison, the growth in these markets was 10 percent. The substantial increase in local currency sales in the Company's emerging markets was led by Tupperware Brazil, Indonesia, Malaysia/Singapore, Mexico, Russia, South Africa and Venezuela, with a partial offset primarily in China and Fuller Mexico. The Company's established market businesses decreased 10 percent on a reported basis in the second quarter of 2009 compared with last year, although sales were down only 1 percent excluding the impact of weaker foreign currencies on the comparison. The decline largely reflected lower sales by BeautiControl and Germany, with a partial offset by Tupperware France.

The year-to-date fluctuations largely followed the same pattern as those of the quarter with local currency sales growth in all the segments, except Beauty North America, led by the emerging markets. On a year-to-date basis, emerging markets accounted for 50 percent and 49 percent of total Company sales for 2009 and 2008, respectively. Total sales on a reported basis in the emerging markets decreased $63.9 million, or 12 percent in the first half of 2009 compared with 2008. This reflected a negative impact of changes in foreign currency exchange rates of $108.2 million. Excluding the impact of foreign currency, sales increased in these markets by 10 percent. The Company's established market businesses decreased 13 percent on a reported basis for the year-to-date period of 2009 compared with last year, although sales were down only 4 percent excluding the impact of weaker foreign currencies on the comparison.

As discussed in Note 3 to the Consolidated Financial Statements, the Company includes promotional costs in delivery, sales and administrative expense. As a result, the Company's net sales may not be comparable with other companies that treat these costs as a reduction of revenue.

Re-engineering and Impairment Expenses

Refer to Note 7 to the Consolidated Financial Statements for a discussion of re-engineering activities and related accruals.

The Company recorded $1.4 million and $4.1 million in re-engineering and impairment charges during the second quarter and first half of 2009, respectively, primarily related to severance costs incurred in the Company's Argentina, Australia, BeautiControl and Mexico operations, mainly due to implementing changes in the businesses' management structures. Also included was $0.2 million related to relocation of the BeautiControl manufacturing facility and $1.0 million related to software impairment.

The Company recorded $3.5 million and $5.7 million in re-engineering and impairment charges during the second quarter and first half of 2008, respectively, primarily related to severance costs incurred to reduce headcount in the Company's BeautiControl, France, Germany, Italy, Malaysia, Mexico, Netherlands and Philippines operations. Also included was an impairment charge related to software no longer expected to be utilized.

In the last half of 2009, the Company expects to incur approximately $2.6 million of costs related to small scale headcount reductions in several of its operations.

The Company's goodwill and intangible assets relate primarily to the December 2005 acquisition of the direct selling businesses of Sara Lee Corporation and the October 2000 acquisition of BeautiControl. The Company conducts an annual impairment test of goodwill and intangible assets in the third quarter of each year, other than for BeautiControl where the annual valuation is performed in the second quarter, and in other quarters in the event of a change in circumstances that would lead the Company to believe that a triggering event for impairment may have occurred. The impairment assessment is completed by estimating the fair value of the reporting units and intangible assets and comparing these estimates with their carrying values.

In prior periods, the Company recorded impairments related to its Nutrimetics and NaturCare businesses, in part, due to the fact that current and forecasted future results of operations were below its prior projections. This resulted from benefits related to strategies implemented since the acquisition of these businesses in 2005 not occurring as quickly or significantly as had been projected. Also contributing to the previous impairments was an overall increase to the assumed discount rates used in the valuations. Although some improvements have been made in these businesses, the rate of growth of sales, profit and cash flow of the Nutrimetics and NaturCare businesses in the second quarter of 2009 were below the Company's projections used in its previous valuations, as was the forecast for growth in future periods. In the second quarter of 2009, the Company also noted that financial results of the South African beauty business was not meeting the projections used in the 2008 valuation. Given the sensitivity of the valuations to changes in cash flows for these reporting units, the Company performed interim impairment tests of tradenames and reporting units, reflecting reduced future forecasts in these markets, including the impact of the external environment. The result of the interim impairment tests was to record tradename impairments of $10.1 million for Nutrimetics, $4.2 million for NaturCare and $2.0 million for Avroy Shlain in the second quarter of 2009. In addition to the impairment of tradenames, the Company also impaired goodwill by $8.6 million and $3.2 million relating to the Nutrimetics and South African beauty reporting units, respectively. Refer to Note 8 to the Consolidated Financial Statements for further discussion of goodwill and tradename impairments.

In the second quarter of 2008, the Company recorded impairments of the tradenames of Nutrimetics of $6.5 million and NaturCare of $2.5 million.

Gross Margin

Gross margin as a percentage of sales was 66.5 percent in the second quarter of 2009 and 65.8 percent in the second quarter of 2008. For the year-to-date periods, gross margin as a percentage of sales was 66.0 percent in 2009 compared with 65.0 percent in 2008. The increase was due mainly to sales of a favorable product mix in most of the segments and the benefit of lower resin prices and freight costs.

As discussed in Note 2 to the Consolidated Financial Statements, the Company includes costs related to the distribution of its products in delivery, sales and administrative expense. As a result, the Company's gross margin may not be comparable with other companies that include these costs in costs of products sold.

Costs and Expenses

Delivery, sales and administrative expense (DS&A) declined as a percentage of sales to 52.3 percent for the second quarter of 2009, compared with 54.3 percent in 2008. For the year-to-date periods, DS&A as a percentage of sales was 54.0 percent for 2009 compared with 54.5 percent in 2008. Contributing to the improvements in DS&A was lower promotional spending, a decrease in distribution costs due to lower fuel costs compared with the same periods last year and the benefits of expense savings action plans. In the first quarter 2009, the Company began selling beauty products in Brazil through its Tupperware sales force rather than through the separate beauty business it had been operating. This former business had a high ratio of costs to sales.

Also contributing to this decrease was less amortization expense related to definite-lived intangible assets acquired with the direct selling businesses of Sara Lee Corporation in December 2005. These intangible assets are primarily the value of independent sales forces. The amortization is recorded to reflect the estimated turnover rates of the sales forces and was $1.3 million in the second quarter of 2009 as compared with $2.4 million in the same period of 2008. For the full year of 2009, the amortization is expected to be $5.0 million versus $9.0 million in 2008.

Net Interest Expense

Net interest expense was $6.2 million for the second quarter of 2009 compared with $8.7 million for the same period of 2008. For the first half of 2009 net interest expense was $13.6 million compared with $16.3 million for the same period of 2008. The decreases were mainly related to a lower average debt level and lower U.S. interest rates in 2009 compared with 2008.

Tax Rate

The effective tax rate for the second quarter was 32.5 percent compared with 22.1 percent for the comparable 2008 period. The increase was mainly due to the lack of a tax benefit associated with a large portion of the intangible impairment charges in the second quarter of 2009. In addition, there was a benefit recorded in the second quarter of 2008 related to the utilization of foreign losses, offset in part by costs incurred in concluding foreign audits. The effective rate for the first half of 2009 was 27.8 percent compared with 20.6 percent for the comparable 2008 period, due mainly to the same items impacting the quarterly comparison. The effective tax rates are below the U.S. statutory rate reflecting the availability of foreign tax credits as well as lower foreign effective tax rates.

As discussed in Note 15 to the Consolidated Financial Statements, the requirements of FIN 48 result in the potential for volatility surrounding the recognition and derecognition of uncertain tax positions, including the timing of those adjustments. At this time, the Company is unable to estimate what impact this may have on any individual quarter. As such, it is reasonably possible that the effective tax rates in any individual quarter will vary from the full year expectation.

Net Income

Net income in the second quarter of 2009 decreased by 8 percent compared to the same period of 2008, resulting from the negative impact of weaker foreign currencies. Excluding the impact of these currencies, net income increased 42 percent in the second quarter compared with last year.

Net income for the year-to-date period of 2009 was negatively impacted by weaker foreign currencies resulting in lower net income of 14 percent. Excluding the impact of these currencies, net income increased 34 percent for the year-to-date period of 2009 compared with the same period of 2008. The factors impacting the year-to-date net income comparisons were similar to those impacting the second quarter comparisons. The net increases in local currency reflect the items described above.

International operations in the second quarter generated 85 percent and 86 percent of sales respectively in 2009 and 2008 and accounted for 91 percent and 93 percent of net segment profit. For the year-to-date periods, international operations generated 85 percent and 86 percent of sales and 93 percent and 94 percent of net segment profit in 2009 and 2008, respectively.

The Company generated 30 percent of its second quarter and year-to-date 2009 sales from beauty products, as compared with 34 percent in the second quarter of 2008 and 33 percent for the year-to-date period.

Segment Results

Europe



                                                                                     Change
                                                                                   excluding
                                                                                   the impact         Foreign
                                                                                   of foreign         exchange
                                           2009         2008        Change        exchange (a)       impact (a)         Percent of total
dollars in millions                                                                                                     2009        2008
Second Quarter
Net sales                                 $ 176.1      $ 203.3         (13 )%                2 %    $      (30.7 )          34          35
Segment profit                               30.6         29.9           2                  25              (5.7 )          36          39

Segment profit as percentage of sales        17.4 %       14.7 %       2.7  pp              na                na            na          na




                                                                                     Change
                                                                                   excluding
                                                                                   the impact         Foreign
                                                                                   of foreign         exchange
                                           2009         2008        Change        exchange (a)       impact (a)         Percent of total
dollars in millions                                                                                                     2009        2008
Year-to-Date
Net sales                                 $ 357.2      $ 423.5         (16 )%                1 %    $      (69.4 )          36          37
Segment profit                               61.4         68.0         (10 )                11             (12.8 )          44          50

Segment profit as percentage of sales        17.2 %       16.1 %       1.1  pp              na                na            na          na

a 2009 actual compared with 2008 translated at 2009 exchange rates.

na not applicable

pp percentage points

Local currency sales in the second quarter of 2009 increased slightly compared with the same period of 2008. The segment continues to achieve growth through its emerging markets with a significant increase in South Africa and modest improvements in Turkey and Russia. Emerging markets, those with a "low" or "medium" GDP per capita as reported by the World Bank, accounted for 34 percent of reported net sales in this segment for both the second quarter of 2009 and 2008. The overall improvement in sales in these markets was due to continued growth in the total sales force, achieved through further geographic expansion and successful recruiting of new sellers. Although sales increased in Russia in the second quarter of 2009, the increase was significantly lower compared with the first quarter of 2009 as a result of fewer promotional sales periods and a decline in consumer purchasing power leading to lower average orders.

The segment's local currency sales in the second quarter of 2009 in the established markets were about even compared with the same period of 2008. The performance in the established markets was driven by significant improvements in Austria and strong growth in France and Italy, resulting from higher and more productive sales forces in addition to higher business-to-business sales in Italy. While the Company actively pursues business-to-business opportunities, sales from this channel are based on reaching agreements with business partners and their product needs, along with consideration of how the arrangements will be integrated with the party-plan channel. Consequently, activity in one period may not be indicative of future trends. Offsetting these improvements in the established markets was a single digit decline in local currency sales in Germany and double digit declines in Switzerland, Portugal and the Nordics. The decline in Germany was mainly driven by a lower sales force as well as a lower activity rate. In Germany, the Company has implemented some of the approaches that have worked successfully in France and has recently put in place a program designed to increase the number of sales force leaders developed. The markets in Switzerland, Portugal and the Nordics were negatively impact by low recruiting results and an overall decline in sales force.

The year-to-date sales variances, were similar to those of the quarter, except that local currency sales in Russia in the first quarter increased significantly versus 2008.

Segment profit was up slightly during the second quarter of 2009 compared with the same period of 2008, although up significantly excluding the negative impact on the comparison of exchange rate fluctuations. The local currency increase in segment profit was mainly driven by higher margins from better resin prices and a better mix of products sold, as well as lower promotional spending resulting from improved structures in promotional offers and cost controls implemented by management. On a year-to-date basis segment profit decreased $6.6 million as reported, which was negatively impacted by changes in foreign currencies. Excluding the impact of exchange rates on the year-to-date period, segment profit increased 11 percent compared with the same period of 2008. The main reasons for the improvement in segment profit were similar to those of the quarter.

The euro and Russian ruble were the main currencies that led to the negative impact from exchange rates on the quarter and year-over-year sales and segment profit comparisons.

Asia Pacific



                                                                                    Change
                                                                                  excluding
                                                                                  the impact         Foreign
                                                                                  of foreign        exchange
                                           2009        2008       Change         exchange (a)      impact (a)         Percent of total
dollars in millions                                                                                                   2009        2008
Second Quarter
Net sales                                 $ 91.3      $ 85.6           7 %                 15 %    $      (6.3 )          17          15
Segment profit                              17.4        17.2           2                   19             (2.5 )          20          23

Segment profit as percentage of sales       19.1 %      20.1 %      (1.0 ) pp              na               na            na          na




                                                                                      Change
                                                                                    excluding
                                                                                    the impact         Foreign
                                                                                    of foreign         exchange
                                           2009         2008        Change         exchange (a)       impact (a)         Percent of total
dollars in millions                                                                                                      2009        2008
Year-to-Date
Net sales                                 $ 163.2      $ 155.8           5 %                 14 %    $      (12.9 )          17          14
Segment profit                               27.4         27.1           1                   21              (4.3 )          19          20

Segment profit as percentage of sales        16.8 %       17.4 %      (0.6 ) pp              na                na            na          na

a 2009 actual compared with 2008 translated at 2009 exchange rates.

na not applicable

pp percentage points

Asia Pacific had a strong second quarter with a 15 percent increase in local currency sales, led mainly by the emerging markets in this segment. Emerging markets accounted for $49.4 million and $40.9 million, or 54 and 48 percent, of the reported sales in this segment for the second quarters of 2009 and 2008, respectively. The emerging market sales were negatively impacted due to changes in foreign currency by $3.6 million. Excluding the impact of foreign currencies, sales increased 32 percent in these markets. The significant improvement was primarily in Indonesia, India, Korea and Malaysia/Singapore. The sales growth in these markets was the result of larger and more active sales forces from strong recruiting and retention, successful promotional activities and brand building initiatives, attractive consumer offers and positive response to new product launches. Partially offsetting the increase in these emerging markets was a decrease in sales in China. Although there was a modest increase in sales by the outlets to end consumers, the lower company sales resulted from fewer active outlets and the fact they ordered less as there is still uncertainty in the external environment. Despite the decrease in China sales year-over-year, sales did increase in the second quarter by 30 percent compared with the first quarter . . .