The following is a discussion of the results of operations for the 13 and 26 weeks ended June 30, 2012 compared with the 13 and 27 weeks ended July 2, 2011 and changes in financial condition during the 26 weeks ended June 30, 2012. The Company's fiscal year ends on the last Saturday of December and, as a result, the 2012 fiscal year will contain 52 weeks as compared with 53 weeks for fiscal 2011.
The Company's primary means of distributing its products is through independent sales organizations and individuals, which in many cases are also its customers. The majority of the Company's products are, in turn, sold to end customers who are not members of its sales force. 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. As exchange rates are an important factor in understanding period-to-period comparisons, the Company believes the presentation of results on a local currency basis, as a supplement to reported results, helps improve readers' ability to understand the Company's operating results and evaluate performance in comparison with prior periods. The Company presents local currency information that compares results between periods as if current period exchange rates had been the exchange rates in the prior period. The Company uses results on a local currency basis as one measure to evaluate performance. The Company generally refers to such amounts as calculated on a "local currency" basis, or "excluding the impact of foreign currency." These results should be considered in addition to, not as a substitute for, results reported in accordance with generally accepted accounting principles in the United States ("GAAP"). Results on a local currency basis may not be comparable to similarly titled measures used by other companies and are not measures of performance presented in accordance with GAAP.

Overview

                              13 weeks ended     13 weeks ended                     Change
                                 June 30,           July 2,                       excluding
                                   2012               2011                        the impact      Foreign
Dollars in millions,                                                              of foreign      exchange
except per share amounts                                             Change       exchange         impact
Net sales                    $       638.9      $       669.9           (5 )%          5  %     $    (63.7 )
Gross margin as percent of
sales                                 67.6 %             67.2 %        0.4    pp      na                na
DS&A as percent of sales              51.4 %             51.4 %          -    pp      na                na
Impairment of goodwill and
intangible assets            $        76.9      $           -            -             -        $        -
Operating income             $        33.2      $       105.7          (69 )%        (63 )%     $    (14.9 )
Net income                            12.7               65.1          (81 )         (76 )           (11.5 )
Net income per diluted
share                                 0.22               1.03          (79 )         (74 )           (0.18 )

                              26 weeks ended     27 weeks ended                     Change
                                 June 30,           July 2,                       excluding
                                   2012               2011                        the impact      Foreign
Dollars in millions,                                                              of foreign      exchange
except per share amounts                                             Change       exchange         impact
Net sales                    $      1,278.4     $      1,306.3          (2 )%          4  %     $    (81.8 )
Gross margin as percent of
sales                                  67.2 %             66.7 %       0.5    pp      na                na
DS&A as percent of sales               52.3 %             52.3 %         -    pp      na                na
Impairment of goodwill and
intangible assets            $         76.9     $            -           -             -        $        -
Operating income             $        119.3     $        186.4         (36 )%        (28 )%     $    (19.7 )
Net income                             71.0              120.9         (41 )         (33 )           (15.0 )
Net income per diluted
share                                  1.25               1.91         (35 )         (25 )           (0.24 )


_________________________
na not applicable
pp percentage points

Reported sales decreased 5 percent in the second quarter of 2012. Excluding the impact of foreign currency exchange rates, sales increased 5 percent. The Company defines its established markets as Western Europe including Scandinavia, Australia, Canada, Japan, New Zealand, and the United States. All other markets are classified as emerging markets. The Company's businesses operating in emerging market economies achieved strong growth in the quarter with a 14 percent increase in sales in local currency. The Company's units that operate in established economy markets, as a group, had a 6 percent decline in sales in local currency compared with 2011.
Among the emerging market units, the main increases were in Brazil, China, India, Indonesia, Malaysia/Singapore, Tupperware Mexico, Turkey and Venezuela. These increases were partially offset by decreases in Fuller Mexico and Tupperware South Africa. Among the established market businesses, there were decreases at BeautiControl, Tupperware France, Tupperware Japan, Nutrimetics Australia and Tupperware United States and Canada, which were partially offset by a strong increase in Germany. Operating income and net income decreased in the second quarter of 2012. The decrease in operating and net income reflected $76.9 million of pretax impairment of goodwill and intangible assets of BeautiControl, NaturCare and Nutrimetics, as well as decreases in the Europe and Beauty North America segments. These were partially offset by improvements in the Company's Asia Pacific, South America and Tupperware North America segments, as well as the benefit of not having the $18.9 million impairment charge associated with interest rate swaps recorded in the second quarter of last year. Reported sales for the year-to-date period decreased 2 percent compared with the same period of 2011. Excluding the impact of foreign currency exchange rates, sales increased 4 percent. The units and factors impacting the year-to-date sales, operating and net income comparisons were similar to those impacting the second quarter comparisons. The year-to-date local currency sales comparison, under the Company's fiscal calendar, was negatively impacted by an estimated 2 to 3 percentage points from one less week in the first quarter of the current year.
The Company's net working capital position increased by $32.2 million compared with the end of 2011. This included local currency increases in accounts receivable and inventory and a decrease in accounts payable, partially offset by a $14 million decrease from changes in foreign exchange rates. The change in the net of cash and cash equivalents and short-term borrowings and current portion of long term debt reduced net working capital during the quarter by $72 million and, together with cash flow from operating activities, funded the cash outflow in the first six months of the year for investing activities, dividends and share repurchases. Net cash provided by operating activities of $50.7 million in the first half of 2012 was about even with the $49.6 million generated in the first half of 2011, as net income without non-cash charges for goodwill and intangible assets and gains on disposal of assets in 2012 was about even with 2011 net income without the non-cash interest rate swap impairments.

Net Sales
Reported sales decreased 5 percent in the second quarter of 2012. Excluding the impact of foreign currency exchange rates, sales increased 5 percent. The improvement in local currency sales was mainly in the Company's emerging markets, which accounted for 61 percent and 58 percent of the Company's reported sales for the second quarters of 2012 and 2011, respectively. Total sales for the emerging markets increased $5.4 million, or 1 percent, which included a negative $43.8 million impact from foreign currency exchange rate changes. Excluding the impact of foreign currency, sales grew 14 percent in these markets.
The strong increase in local currency sales in the Company's emerging markets in the second quarter of 2012 was primarily in Brazil, China, India, Indonesia, Malaysia/Singapore, Tupperware Mexico, Turkey and Venezuela. This primarily reflected increases in total and active sales forces in most of these markets. The increase in Venezuela primarily reflects higher prices associated with high inflation. The sales growth in these markets was partially offset by decreases in Fuller Mexico and Tupperware South Africa due to smaller and less active sales forces. In South Africa, this continued to reflect the impact on the sales force and activity of counterfeit and knock-off product activity in that market. Total sales for the established markets decreased $36.3 million, or 13 percent, in the second quarter of 2012, which included a negative $19.9 million impact from changes in foreign currency exchange rates. Among these units, there were local currency decreases in BeautiControl, Tupperware France, Tupperware Japan, Nutrimetics Australia and Tupperware United States and Canada, primarily due to smaller, less active and less productive sales forces, though Tupperware France had a small sales force size advantage at the end of June 2012, compared with June 2011, while Tupperware United States and Canada increased the productivity of its sales force. These decreases were partially offset by an increase in Germany, reflecting a larger, more active and productive sales force. On a year-to-date basis, emerging markets accounted for 60 percent and 58 percent of total Company sales for 2012 and 2011, respectively. Total sales on a reported basis in the emerging markets increased $18.5 million, or 2 percent. This reflected a negative impact of changes in foreign currency exchange rates of $59.1 million. Excluding the impact of foreign currency, sales increased in these markets by 11 percent. The year-to-date sales comparison, under the Company's fiscal calendar, was also negatively impacted by an estimated 2 to 3 percentage points from one less week in the first quarter of the current year. Total sales for the established markets decreased $46.4 million, or 8 percent, for the year-to-date period of 2012, compared with the same period of 2011, which included a negative $22.7 million impact from foreign currency exchange rate changes. The sources of the year-to-date fluctuations largely followed those of the quarter.
A more detailed discussion of the sales results for the Company's reporting segments is included in the segment results section below.
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 6 to the Consolidated Financial Statements for a discussion of re-engineering activities and related accruals.
The Company recorded $1.1 million in re-engineering and impairment charges during each of the second quarters of 2012 and 2011 and $2.0 million and $2.5 million for the year-to-date periods. In both years, these charges were primarily related to severance incurred for head count reductions in several of the Company's operations in connection with changes in its management and organizational structures, and in 2012, also included the relocation of the Company's office in Poland.
For the remainder of 2012, the Company expects to incur approximately $8 million of such costs, mainly related to headcount reductions.

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 impairment test 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. Impairment assessments are completed by estimating the fair value of the reporting units and intangible assets and comparing these estimates with their carrying values.
During the second quarter, the Company completed its annual impairment test of the BeautiControl reporting units, resulting in an impairment charge of $38.9 million related to the goodwill in the BeautiControl United States and Canada business as a result of the rates of growth of sales, profit and cash flow and expectations for future performance which were below the Company's projections. Also in the second quarter, the financial performance of the Nutrimetics reporting units fell below their normal trend line and it became apparent that they would fall significantly short of expectations for the year. Additionally, reductions in the forecasted operating trends of NaturCare relating to the decline in the rates of growth of sales, profits and cash flows in the Japanese market led interim impairment testing in both these businesses as of the end of May and June 2012, respectively. The result of these tests was to record tradename impairments of $13.8 million for Nutrimetics and $9.0 million for NaturCare, primarily due to the use of lower estimated royalty rates in light of lower sales and profits forecasts for these units as well as macroeconomic factors which increased the discount rates used in the valuations. In addition, the Company wrote off the $7.2 million and $7.7 million carrying value of the goodwill of Nutrimetics Asia Pacific and Nutrimetics Europe reporting units, respectively, in light of current operating trends and expected future results as well as the macroeconomic factors which increased the discount rates used in the valuations.
Gross Margin
Gross margin as a percentage of sales was 67.6 percent and 67.2 percent in the second quarters of 2012 and 2011, respectively. The increase of 0.4 percentage points reflected favorable product mix and pricing (0.5 pp), lower resin costs (0.1 pp), improved sales mix from a higher sales volume in certain markets with higher than average margins (0.2 pp), partially offset by higher product costs due to lower volume in certain markets (0.2 pp) and higher inventory obsolescence (0.2 pp).
For the year-to-date periods, gross margin as a percentage of sales was 67.2 percent in 2012 compared with 66.7 percent for the same period of 2011. The 0.5 percentage point increase resulted primarily from the favorable product mix as well as higher sales volume in certain markets with higher than average margins. 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 (DS&A). 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
DS&A was the same, as a percentage of sales, at 51.4 percent for the second quarter of both 2012 and 2011. For the year-to-date periods, DS&A as a percentage of sales was also the same in both years at 52.3 percent. Specific segment impacts are discussed in the segment results section. Net Interest Expense
Net interest expense was $8.1 million for the second quarter of 2012, compared with $24.8 million in 2011. For the year-to-date periods, net interest expense was $17.2 million for 2012, compared with $31.4 million in 2011. Excluding the impact of the non-cash interest rate swap impairment charge recorded in the second quarter of 2011 for $18.9 million and the write-off of deferred debt issuance costs of $0.9 million, interest expense increased for each of the year over year comparisons, reflecting higher borrowing levels and higher interest rates as a portion of the 2012 borrowings under the Company's revolving credit agreement were denominated in euro.
For a discussion of forward points, which are considered to be a component of interest expense, refer to Note 10 to the Consolidated Financial Statements.

Tax Rate
The effective tax rate for the second quarter of 2012 was 48.6 percent, compared with 19.8 percent for the comparable 2011 period. The increase was due to intangible impairment charges recorded in the second quarter of 2012, for which limited tax benefits were available as compared with tax benefits derived from refinancing costs incurred during the comparable period in 2011. The effective tax rate for the year-to-date period ended June 30, 2012 was 30.4 percent, compared with 22.1 percent for the comparable 2011 period, with the change also primarily related to the amount of tax benefit associated with the impairment charges and the tax benefits from refinancing costs.
As discussed in Note 13 to the Consolidated Financial Statements, the Company's uncertain tax positions increase the potential for volatility in its tax rate. As such, it is reasonably possible that the effective tax rates in any individual quarter will vary from the full year expectation. At this time, the Company is unable to estimate what impact that may have on any individual quarter.
Net Income
Net income in the second quarter of 2012 decreased 81 percent compared with 2011, mainly related to the impairment of the goodwill and intangible assets related to Beauticontrol, NaturCare and Nutrimetics, partially offset by the benefit of not having the $18.9 million impairment charge associated with interest rate swaps recorded in the second quarter of last year as well as the gain on the sale of an old manufacturing facility in Belgium for $7.5 million. In addition, net income was negatively impacted by changes in foreign currency exchange rates by 5 percent. The local currency net income comparison benefited from strong sales growth in the Asia Pacific and South America segments, along with a higher return on sales in the Asia Pacific and Tupperware North America segments, that reflected improved value chains through leveraging of fixed costs in Asia Pacific and improved gross margin from a favorable sales mix and operating cost containment by Tupperware United States and Canada. Partially offsetting these factors were profit declines in Beauty North America and Europe, reflecting lower sales and lower gross margins, respectively. Net income for the year-to-date period of 2012 decreased 41 percent compared with the same period of 2011, including a negative foreign currency impact. Excluding the impact from foreign currencies, net income decreased 33 percent. The factors impacting the year-to-date net income comparison were similar to those impacting the second quarter comparison.
International operations generated 90 and 89 percent of sales, respectively, in both the second quarter and the first half of 2012 and 2011. They accounted for 97 percent of net segment profit in both years in the second quarter and 98 and 99 percent, respectively, of net segment profit in the first half of 2012 and 2011.
The sale of beauty products generated 23 percent of sales for both the second quarter and year-to-date periods of 2012, compared with 26 percent of sales for both the second quarter and year-to-date periods of 2011. Segment Results
Europe

                         13 weeks ended     13 weeks ended                  Change                     Percent of total
                            June 30,           July 2,                     excluding
                              2012               2011                     the impact     Foreign
                                                                          of foreign     exchange
dollars in millions                                            Change      exchange      impact        2012        2011
Net sales               $       194.2      $       223.5        (13 )%         -  %     $  (29.4 )         30          33
Segment profit                   32.1               42.2        (24 )        (12 )          (5.9 )         27          36

Segment profit as
percent of sales                 16.5 %             18.9 %     (2.4 )  pp     na              na           na          na

                         26 weeks ended     27 weeks ended                   Change                     Percent of total
                            June 30,           July 2,                     excluding
                              2012               2011                      the impact     Foreign
                                                                           of foreign     exchange
dollars in millions                                            Change       exchange      impact        2012        2011
Net Sales               $       412.4      $       454.8         (9 )%        (1 )%      $  (39.5 )         32          35
Segment profit                   68.2               81.9        (17 )         (8 )           (7.9 )         31          38

Segment profit as
percent of sales                 16.5 %             18.0 %     (1.5 )  pp     na               na           na          na


_________________________
na not applicable
pp percentage points

Reported sales decreased 13 percent compared with the second quarter of 2011. Excluding the impact of foreign currency exchange rates, sales in the second quarter were even with 2011. On a local currency basis, the established market units' sales did not change, reflecting strong growth in Germany, due to a slightly larger and more productive sales force, as well as smaller contributions in the Netherlands and Scandinavian units. These increases were offset primarily by a decrease in Tupperware France due to a less active and productive sales force in part due to the social and political environment in that market during the period. The emerging market units' sales were also even with 2011 in local currency in the quarter. This primarily reflected significant growth in Turkey due to a higher activity rate by the sales force that was offset by a decrease by Tupperware South Africa, reflecting a smaller and less active sales force mainly due to the impact of the counterfeit and knocked off product issue in the market.
Segment profit decreased $10.1 million, or 24 percent during the second quarter of 2012, and excluding the impact of foreign currency, was 12 percent lower. The decrease primarily reflected the decline in sales, lower gross margin due to low production volume and increased discounting in Tupperware South Africa, as well as overall increased operating expenses. These impacts were partially offset by increased profit from higher sales in Germany and Turkey, as well as increases in Russia due to lower operating costs.
The year-to-date sales and segment profit variances largely mirrored those of the quarter, except for the impact of the extra week in the 2011 year-to-date period.
The euro and South African rand were the main currencies that impacted the comparison for the quarter.
Asia Pacific

                         13 weeks ended     13 weeks ended                  Change                      Percent of total
                            June 30,           July 2,                    excluding
                              2012               2011                     the impact      Foreign
                                                                          of foreign     exchange
dollars in millions                                           Change      exchange        impact        2012        2011
Net sales               $       186.2      $       175.5          6 %         12 %      $    (8.9 )         29          26
Segment profit                   40.8               33.3         22           32             (2.6 )         35          28

Segment profit as
percent of sales                 21.9 %             19.0 %      2.9   pp      na               na           na          na

                         26 weeks ended     27 weeks ended                  Change                      Percent of total
                            June 30,           July 2,                    excluding
                              2012               2011                     the impact      Foreign
                                                                          of foreign     exchange
dollars in millions                                           Change      exchange        impact        2012        2011
Net Sales               $       364.0      $       335.6          8 %         11 %      $    (7.9 )         28          26
Segment profit                   74.7               61.4         22           28             (3.1 )         35          29

Segment profit as
percent of sales                 20.5 %             18.3 %      2.2   pp      na               na           na          na


__________________________
na not applicable
pp percentage points

Reported sales increased 6 percent compared with the second quarter of 2011. Excluding the impact of foreign currency exchange rates, sales increased 12 percent. Emerging markets accounted for $140.1 million and $120.2 million, or 75 and 68 percent, of the reported sales in the segment in the second quarters of 2012 and 2011, respectively. Versus 2011, the emerging market sales were negatively impacted by $7.2 million from changes in foreign currency rates. Excluding the impact of changes in foreign currency rates, sales increased 24 percent in these markets. The most significant contributions to the overall increase were in China, India, Indonesia and Malaysia/Singapore, as a result of leveraging larger, more active sales forces. This reflected the impact of brand building activities and successful promotional activities with strong recruiting and retention in India and Indonesia. China ended the quarter with about 3,600 outlets, which was 12 percent more than at the end of the second quarter of 2011.
The improvements achieved in the emerging market businesses were partially offset by a decline in reported sales in the established markets. Tupperware Japan and Nutrimetics Australia showed substantial decreases in sales for the second quarter due to smaller, less active sales forces. In addition, consumer spending continues to impact the average order sizes in these markets, and in Japan, there was very heavy promotional support in the second quarter of 2011. . . .