Company Quick10K Filing
Tupperware Brands
Price15.76 EPS2
Shares49 P/E6
MCap771 P/FCF40
Net Debt476 EBIT196
TEV1,247 TEV/EBIT6
TTM 2019-09-28, in MM, except price, ratios
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10-Q 2020-03-28 Filed 2020-04-29
10-K 2019-12-28 Filed 2020-03-12
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10-Q 2019-06-29 Filed 2019-08-01
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10-Q 2018-03-31 Filed 2018-05-01
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8-K 2020-11-11
8-K 2020-11-02
8-K 2020-10-29
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8-K 2020-10-09
8-K 2020-07-29
8-K 2020-07-22
8-K 2020-07-09
8-K 2020-06-24
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8-K 2020-06-10
8-K 2020-05-20
8-K 2020-05-20
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8-K 2019-12-16
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8-K 2019-07-24
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8-K 2019-04-24
8-K 2019-03-29
8-K 2019-02-26
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8-K 2019-01-30
8-K 2019-01-25
8-K 2018-10-24
8-K 2018-10-10
8-K 2018-07-25
8-K 2018-06-14
8-K 2018-05-09
8-K 2018-04-25
8-K 2018-04-09
8-K 2018-02-21
8-K 2018-01-31

TUP 10Q Quarterly Report

Part I - Financial Information
Item 1. Financial Statements.
Note 1: Summary of Significant Accounting Policies
Note 2: Revenue Recognition
Note 3: Distribution Costs
Note 4: Promotional Costs
Note 5: Stock - Based Compensation
Note 6: Re - Engineering Charges
Note 7: Income Taxes
Note 8: Earnings per Share
Note 9: Accumulated Other Comprehensive Loss
Note 10: Cash, Cash Equivalents and Restricted Cash
Note 11: Accounts Receivable
Note 12: Inventories
Note 13: Long - Term Receivables
Note 14: Goodwill, Intangibles and Tradenames
Note 15: Derivative Financial Instruments and Hedging Activities
Note 16: Debt
Note 17: Leases
Note 18: Retirement Benefit Plans
Note 19: Fair Value Measurements
Note 20: Segment Information
Note 21: Guarantor Information
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Item 4. Controls and Procedures.
Part II - Other Information
Item 1. Legal Proceedings.
Item 1A. Risk Factors.
Item 6. Exhibits.
EX-31.1 tup10q09262020ex311.htm
EX-31.2 tup10q09262020ex312.htm
EX-32.1 tup10q09262020ex321.htm
EX-32.2 tup10q09262020ex322.htm

Tupperware Brands Earnings 2020-09-26

Balance SheetIncome StatementCash Flow
4.23.32.41.50.6-0.32012201420172020
Assets, Equity
0.80.60.30.1-0.2-0.42012201420172020
Rev, G Profit, Net Income
0.50.40.20.1-0.1-0.22012201420172020
Ops, Inv, Fin

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_________________________________________________________________
FORM 10-Q
_________________________________________________________________
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the 13 weeks ended September 26, 2020
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition period from               to             

Commission file number 1-11657
_________________________________________________________________
TUPPERWARE BRANDS CORPORATION
(Exact name of registrant as specified in its charter)
_________________________________________________________________
Delaware36-4062333
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
14901 South Orange Blossom Trail
OrlandoFlorida32837
(Address of principal executive offices)     (Zip Code)

(407826-5050
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, $0.01 par valueTUPNew York Stock Exchange

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      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes      No  
Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large Accelerated FilerAccelerated FilerNon-accelerated Filer
Smaller reporting companyEmerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes    No  
As of October 26, 2020, 49,175,029 shares of the common stock, $0.01 par value, of the registrant were outstanding.




TABLE OF CONTENTS
 Page

2

Table of contents
PART I—FINANCIAL INFORMATION
Item 1. Financial Statements.
TUPPERWARE BRANDS CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
13 weeks ended39 weeks ended
(In millions, except per share amounts)September 26,
2020
September 28,
2019
September 26,
2020
September 28,
2019
Net sales$477.2 $418.1 $1,250.5 $1,380.7 
Cost of products sold152.1 141.5 415.3 457.3 
Gross margin325.1 276.6 835.2 923.4 
Delivery, sales and administrative expense233.8 241.6 684.8 752.0 
Re-engineering charges3.2 7.5 30.3 15.9 
Impairment of goodwill and intangible assets 19.7  19.7 
Gain (loss) on disposal of assets(32.6)12.1 (18.8)11.1 
Operating income (loss)55.5 19.9 101.3 146.9 
Interest income0.3 0.6 1.0 1.6 
Interest expense8.2 10.4 30.5 31.4 
Other expense (income), net(10.1)(3.8)(60.2)(10.5)
Income (loss) before income taxes57.7 13.9 132.0 127.6 
Provision (benefit) for income taxes23.3 6.1 41.6 43.5 
Net income (loss)$34.4 $7.8 $90.4 $84.1 
Earnings per share:  
Basic$0.70 $0.16 $1.84 $1.73 
Diluted$0.65 $0.16 $1.76 $1.72 
Weighted-average shares outstanding: 
Basic49.1 48.8 49.0 48.7 
Diluted53.1 48.9 51.5 48.9 

See accompanying notes to Consolidated Financial Statements.
3

Table of contents
TUPPERWARE BRANDS CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
13 weeks ended39 weeks ended
(In millions)September 26,
2020
September 28,
2019
September 26,
2020
September 28,
2019
Net income (loss)$34.4 $7.8 $90.4 $84.1 
Other comprehensive income (loss):
Foreign currency translation adjustments1.0 (20.7)(69.8)(6.8)
Deferred gain (loss) on cash flow hedges, net of tax(1.3)0.9 3.2 (1.3)
Pension and other post-retirement benefit (costs), net of tax1.5 0.5 2.6 0.1 
Other comprehensive income (loss)1.2 (19.3)(64.0)(8.0)
Total comprehensive income (loss)$35.6 $(11.5)$26.4 $76.1 

See accompanying notes to Consolidated Financial Statements.
4

Table of contents
TUPPERWARE BRANDS CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In millions, except share amounts)September 26,
2020
December 28,
2019
Assets  
Cash and cash equivalents$148.8 $123.2 
Accounts receivable, net129.0 110.7 
Inventories217.2 245.2 
Non-trade amounts receivable, net27.9 39.1 
Prepaid expenses and other current assets28.7 20.3 
Total current assets551.6 538.5 
Deferred income tax benefits, net184.2 186.1 
Property, plant and equipment, net208.5 267.5 
Operating lease assets75.5 84.1 
Long-term receivables, net10.1 15.0 
Trademarks and tradenames, net22.8 24.6 
Goodwill57.8 59.5 
Other assets, net80.9 87.1 
Total assets$1,191.4 $1,262.4 
Liabilities And Shareholders' Equity  
Accounts payable$96.3 $125.4 
Short-term borrowings and current portion of long-term debt and finance lease obligations765.9 273.2 
Accrued liabilities344.9 290.3 
Total current liabilities1,207.1 688.9 
Long-term debt and finance lease obligations2.2 602.2 
Operating lease liabilities48.5 56.0 
Other liabilities177.6 192.3 
Total liabilities1,435.4 1,539.4 
Shareholders' equity (deficit):  
Preferred stock, $0.01 par value, 200,000,000 shares authorized; none issued
  
Common stock, $0.01 par value, 600,000,000 shares authorized; 63,607,090 shares issued
0.6 0.6 
Paid-in capital216.7 215.0 
Retained earnings1,146.6 1,067.3 
Treasury stock, 14,432,061 and 14,678,742 shares, respectively, at cost
(905.6)(921.6)
Accumulated other comprehensive loss(702.3)(638.3)
Total shareholders' equity (deficit)(244.0)(277.0)
Total liabilities and shareholders' equity$1,191.4 $1,262.4 

See accompanying notes to Consolidated Financial Statements.
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TUPPERWARE BRANDS CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
Accumulated Other Comprehensive LossTotal Shareholders' Equity (Deficit)
Common StockTreasury StockPaid-In CapitalRetained Earnings
(In millions, except per share amounts)SharesDollarsSharesDollars
December 28, 201963.6$0.6 14.7$(921.6)$215.0 $1,067.3 $(638.3)$(277.0)
Net income (loss)— — — (7.8)— (7.8)
Other comprehensive income (loss)— — — — (81.5)(81.5)
Stock and options issued for incentive plans— — (0.1)5.2 1.9 (4.8)— 2.3 
March 28, 202063.60.6 14.6(916.4)216.9 1,054.7 (719.8)(364.0)
Net income (loss)— — — 63.8 — 63.8 
Other comprehensive income (loss)— — — — 16.3 16.3 
Stock and options issued for incentive plans— — (0.1)6.8 (1.7)(3.5)— 1.6 
June 27, 202063.60.6 14.5(909.6)215.2 1,115.0 (703.5)(282.3)
Net income (loss)34.434.4
Other comprehensive income (loss)1.21.2
Stock and options issued for incentive plans— (0.1)4.01.5(2.8)2.7
September 26, 202063.6$0.6 14.4$(905.6)$216.7 $1,146.6 $(702.3)$(244.0)

See accompanying notes to Consolidated Financial Statements.
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TUPPERWARE BRANDS CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
Accumulated Other Comprehensive (Loss) IncomeTotal Shareholders' Equity (Deficit)
Common StockTreasury StockPaid-In CapitalRetained Earnings
(In millions, except per share amounts)SharesDollarsSharesDollars
December 29, 201863.6$0.6 15.0$(939.8)$219.3 $1,086.8 $(602.1)$(235.2)
Net income (loss)36.9 36.9 
Cumulative effect of change in accounting principles12.1 (5.0)7.1 
Other comprehensive income (loss)19.0 19.0 
Cash dividends declared ($0.27 per share)
(12.9)(12.9)
Stock and options issued for incentive plans— — (0.1)5.0 (2.8)(1.1)— 1.1 
March 30, 201963.60.6 14.9(934.8)216.5 1,121.8 (588.1)(184.0)
Net income (loss)39.4 39.4 
Other comprehensive income (loss)(7.7)(7.7)
Cash dividends declared ($0.27 per share)
(13.2)(13.2)
Stock and options issued for incentive plans— — (0.1)3.7 (0.2)(1.1)— 2.4 
June 29, 201963.60.6 14.8(931.1)216.3 1,146.9 (595.8)(163.1)
Net income (loss)7.8 7.8 
Other comprehensive income (loss)(19.3)(19.3)
Cash dividends declared ($0.27 per share)
(13.3)(13.3)
Stock and options issued for incentive plans0.22.9 (0.2)2.9 
September 28, 201963.6$0.6 14.8$(930.9)$219.2 $1,141.2 $(615.1)$(185.0)

See accompanying notes to Consolidated Financial Statements.
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TUPPERWARE BRANDS CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
39 weeks ended
(In millions)September 26,
2020
September 28,
2019
Operating Activities
Net income (loss)$90.4 $84.1 
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization33.9 41.4 
Unrealized foreign exchange loss (gain)0.7 (0.6)
Stock-based compensation
6.8 7.5 
Amortization of deferred debt issuance costs
1.4 0.5 
(Gain) loss on disposal of assets18.8 (11.1)
Provision for bad debts11.9 24.0 
(Gain) on debt extinguishment(49.9) 
Write-down of inventories9.4 8.3 
Non-cash impact of impairment costs
 19.7 
Net change in deferred income taxes(7.8)3.6 
Net cash impact from hedging activity(0.6)(1.5)
Other0.2  
Changes in assets and liabilities:
Accounts receivable
(32.1)(15.4)
Inventories5.3 (16.5)
Non-trade amounts receivable2.0 (5.2)
Prepaid expenses(6.4)(6.6)
Other assets(2.4)(9.0)
Accounts payable and accrued liabilities30.9 (49.8)
Income taxes payable3.7 (50.5)
Other liabilities(4.4)(3.4)
Net cash provided by (used in) operating activities111.8 19.5 
Investing Activities
Capital expenditures(20.7)(44.0)
Proceeds from disposal of property, plant and equipment16.7 20.4 
Net cash provided by (used in) investing activities(4.0)(23.6)
Financing Activities
Common stock cash dividends paid (60.5)
Common stock repurchase(0.2)(0.8)
Senior notes repayment(163.9) 
Finance lease repayments(0.3)(1.3)
Net increase (decrease) in short-term debt100.3 46.7 
Debt issuance costs(2.0)(2.2)
Net cash provided by (used in) financing activities(66.1)(18.1)
Effect of exchange rate changes on cash, cash equivalents and restricted cash(6.5)(3.3)
Net change in cash, cash equivalents and restricted cash35.2 (25.5)
Cash, cash equivalents and restricted cash at beginning of year126.1 151.9 
Cash, cash equivalents and restricted cash at end of period$161.3 $126.4 

See accompanying notes to Consolidated Financial Statements.
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TUPPERWARE BRANDS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1: Summary of Significant Accounting Policies
Basis of Presentation
The Consolidated Financial Statements include the accounts of Tupperware Brands Corporation and its subsidiaries, collectively “Tupperware” or the “Company”, with all intercompany transactions and balances having been eliminated. These Consolidated Financial Statements are unaudited and have been prepared following the rules and regulations of the United States Securities and Exchange Commission and, in the Company's opinion, reflect all adjustments, including normal recurring items that are necessary for a fair statement of the results for the interim periods.
Certain information and note disclosures normally included in the financial statements prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) for complete financial statements have been condensed or omitted as permitted by such rules and regulations. As such, these Consolidated Financial Statements and related notes should be read in conjunction with the audited 2019 Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 28, 2019. Operating results of any interim period presented herein are not necessarily indicative of the results that may be expected for a full fiscal year.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements, as well as the reported amounts of sales and expenses during the reporting period. Actual results could differ materially from these estimates.
For the third quarter ended September 26, 2020, the impact of the decline in business activity brought about by the Coronavirus pandemic (“COVID-19”) continues to evolve. As a result, many of the Company's estimates and assumptions required increased judgment and carry a higher degree of variability and volatility. As events continue to evolve and additional information becomes available, the Company's estimates may change materially in future periods.
Liquidity and COVID-19
COVID-19 has been declared by the World Health Organization to be a “pandemic,” has spread to many countries and is impacting worldwide economic activity. Many governments have implemented policies intended to stop or slow the further spread of the disease, such as shelter-in-place orders, resulting in the temporary closure of schools and non-essential businesses, and these measures may remain in place for a significant period of time. A top priority for the Company as it navigates through the global COVID-19 pandemic is the safety of its employees and their families, sales force and consumers, and to mitigate the impact of the pandemic on its operations and financial results. The Company will continue to proactively respond to the situation and may take further actions that alter the Company’s business operations as may be required by governmental authorities, or that the Company determines are in the best interests of its employees, sales force and consumers. In order to ensure safety and protect the health of the employees, and to comply with applicable government directives, the Company has modified its business practices to allow its employees to work remotely from home wherever possible, incorporate virtual meetings and restrict all non-essential employee travel.
Pursuant to ASC 205, Presentation of Financial Statements, the Company is required to and does evaluate at each annual and interim period whether there are conditions or events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date that the Consolidated Financial Statements are issued. As of September 26, 2020 the Company has $380.2 million of Senior Notes that will mature on June 1, 2021, which is within one year of the date that the Consolidated Financial Statements are issued for the third quarter ended September 26, 2020. Based on the definitions in the relevant accounting standards, management has determined that this condition raises substantial doubt about the Company’s ability to continue as a going concern. This evaluation does not consider the potential mitigating effect of management’s plans that have not been fully implemented. Management may evaluate the mitigating effect of its plans to determine if it is probable that (1) the plans will be effectively implemented within one year after the date the financial statements are issued, and (2) when implemented, the plans will mitigate the relevant conditions or events that raise substantial doubt about the entity’s ability to continue as a going concern.
The Company expects to continue to address its outstanding current indebtedness through open-market purchases, tender offers, exchange offers of debt for debt, cash or equity, refinancing transactions or otherwise (“debt refinancing”). The Company has successfully retired $98.7 million and $121.1 million of Senior Notes at a discount to par during the second and third quarters of 2020, respectively. In addition to the expected debt refinancing, the Company believes that its improved profitability and revenue growth through the Turnaround Plan (as defined in Note 6: Re-engineering Charges), together with the anticipated proceeds from the sale of real estate and other non-core assets, and its forecasted availability under its Credit Agreement, will enable the Company to meet its future debt obligations. However, as the debt refinancing and sale of non-core assets is conditional upon the execution of agreements
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with new or existing investors or the execution of sales agreements with third parties, which are considered outside of the Company’s control, the debt refinancing and sales of assets are not considered probable until such time as they are completed. The Consolidated Financial Statements have been prepared assuming the Company will continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. During the third quarter ended September 26, 2020, the Company generated $60.7 million of cash flows from operating activities, net of investing activities, through reductions in discretionary spending, revisiting investment strategies, improvements in working capital including inventory reductions, and reducing payroll costs, including through organizational redesign, employee furloughs, and permanent reductions in employee headcount. As of September 26, 2020, the Company is in compliance with its financial covenants under its Credit Agreement, and the Company believes that it will continue to be in compliance with its financial covenants under its Credit Agreement. If the impact of COVID-19 is more severe than currently forecasted this may impact the Company’s compliance with its financial covenants which could have a material adverse effect on the Company. See Note 16: Debt to the Consolidated Financial Statements for further discussion of the impact of an Event of Default.
New Accounting Pronouncements
Standards Recently Adopted
In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes”, a new standard to simplify the accounting for income taxes. The guidance eliminates certain exceptions related to the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The guidance also simplifies aspects of accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. This guidance is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company adopted this guidance at the beginning of the second quarter of 2020 and the adoption did not have a material impact on its Consolidated Financial Statements.
In August 2018, the FASB issued Accounting Standards Update (“ASU”) 2018-15, “Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40): Customer's Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract”, an amendment to existing guidance on the accounting for implementation, setup, and other upfront costs incurred in a cloud computing arrangement that is hosted by the vendor that is a service contract. Under the amendment, the requirement for capitalizing implementation costs incurred in a hosting environment that is a service contract is aligned with the requirements for capitalizing implementation costs incurred for an internal-use software license. This guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company adopted this guidance at the beginning of the first quarter of 2020 and the adoption did not have a material impact on its Consolidated Financial Statements.
In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement”, an amendment to existing guidance on disclosure requirements on fair value measurement as part of its broader disclosure framework project, which aims to improve the effectiveness of disclosures in the notes to the financial statements. Under this amendment, certain disclosure requirements for fair value measurement were eliminated, modified and added. This guidance is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company adopted this guidance at the beginning of the first quarter of 2020 and the adoption did not have any impact on its Consolidated Financial Statements.
In June 2016, the FASB issued ASU 2016-13, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”, an amendment to existing guidance for the measurement of credit losses on financial instruments and subsequent updates to that amendment. This guidance replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information when recording credit loss estimates. The new standard is effective for fiscal years and interim periods beginning after December 15, 2019. The Company adopted this guidance at the beginning of the first quarter of 2020 and the adoption did not have a material impact on its Consolidated Financial Statements.
Standards Not Yet Adopted
In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting”, an optional guidance for a limited period of time to ease the transition from the London interbank offered rate (“LIBOR”) to an alternative reference rate. The ASU intends to address certain concerns relating to accounting for contract modifications and hedge accounting. These optional expedients and exceptions to applying GAAP, assuming certain criteria are met, are allowed through December 31, 2022. The amendments should be applied on a prospective basis. The Company continues to evaluate the impact of the potential adoption of this amendment on its Consolidated Financial Statements.
In August 2018, the FASB issued ASU 2018-14, “Compensation - Retirement Benefits - Defined Benefit Plans - General (Subtopic 715-20): Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans”, an amendment to existing guidance on disclosure requirements for employers that sponsor defined benefit pension or other post-retirement plans. Under the amendment, the entity is required to disclose the weighted-average interest crediting rates used, reasons for significant gains and
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losses affecting the benefit obligation and an explanation of any other significant changes in the benefit obligation or plan assets. The amendment also removed certain required disclosures that no longer are considered cost beneficial. This guidance is effective for fiscal years beginning after December 15, 2020. Early adoption is permitted. The Company has evaluated the impact of adoption of this amendment and does not expect any impact on its Consolidated Financial Statements.
Note 2: Revenue Recognition
The Company defines a contract, for revenue recognition purposes, as the order received from the Company’s customer who, in most cases, is one of the Company’s independent distributors or a member of its independent sales force. Revenue is recognized when control of the product passes to the customer, which is upon shipment, and is recognized at the amount that reflects the consideration the Company expects to receive for the products sold, including various forms of discounts and net of expected returns which is estimated using historical return patterns and current expectation of future returns. The Company elected to account for shipping and handling activities that occur after the customer has obtained control of the product as an activity to fulfill the promise to transfer the product rather than as an additional promised service. Generally, payment is either received in advance or in a relatively short period of time following shipment. When revenue is recorded, estimates of returns are made and recorded as a reduction of revenue. Contracts with customers are evaluated to determine if there are separate performance obligations that are not yet met. These obligations generally relate to product awards to be subsequently fulfilled. When that is the case, revenue is deferred until each performance obligation is met. Deferred revenue is recorded in the accrued liabilities line item in the Consolidated Balance Sheets.
Deferred revenue balance which was primarily related to payments received in advance for orders not yet shipped was as follows:
(In millions)September 26,
2020
December 28,
2019
Deferred revenue$36.1 $3.2 
Note 3: Distribution Costs
The cost of products sold line item includes costs related to the purchase and manufacture of goods sold by the Company. Among these costs are inbound freight charges, duties, purchasing and receiving costs, inspection costs, depreciation expense, internal transfer costs and warehousing costs of raw material, work in process and packing materials. The warehousing and distribution costs of finished goods are included in delivery, sales and administrative expenses. Distribution costs are comprised of outbound freight and associated labor costs. Fees billed to customers associated with the distribution of products are classified as revenue.
Distribution costs were:
13 weeks ended39 weeks ended
(In millions)September 26,
2020
September 28,
2019
September 26,
2020
September 28,
2019
Distribution costs$41.0 $30.1 $103.5 $95.7 
Note 4: Promotional Costs
The Company frequently makes promotional offers to members of its independent sales force to encourage them to fulfill specific goals or targets for other activities, ancillary to the Company’s business, but considered separate and distinct services from sales, which are measured by defined group/team sales levels, party attendance, addition of new sales force members or other business-critical functions. The awards offered are in the form of product awards, special prizes or trips.
The Company accrues for the costs of these awards during the period over which the sales force qualifies for the award and reports these costs primarily as a component of delivery, sales and administrative expense. These accruals require estimates as to the cost of the awards, based upon estimates of achievement and actual cost to be incurred. During the qualification period, actual results are monitored, and changes to the original estimates are made when known.
Promotional costs were:
13 weeks ended39 weeks ended
(In millions)September 26,
2020
September 28,
2019
September 26,
2020
September 28,
2019
Promotional costs$68.6 $64.7 $181.1 $214.9 
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Note 5: Stock-based Compensation
Stock option activity for 2020 is summarized in the following table:
Shares 
subject to
option
Weighted
average 
exercise price
per share
Aggregate intrinsic value (in millions)
Outstanding at December 28, 20193,340,739 $56.28 
Granted1,000,000 2.61 
Expired / Forfeited(94,186)45.73 
Outstanding at September 26, 20204,246,553 $43.88 $20.0 
Exercisable at September 26, 20202,877,162 $57.82 $ 
The Company also has time-vested, performance-vested and market-vested share awards. The activity for such awards in 2020 is summarized in the following table:
Shares
outstanding
Weighted 
average grant date 
fair value
December 28, 2019528,289 $28.82 
Time-vested shares granted2,740,985 4.46 
Market-vested shares granted1,715,566 1.70 
Performance shares granted743,770 3.01 
Performance share adjustments305,094 2.38 
Vested(134,543)19.75 
Forfeited(716,377)12.65 
September 26, 20205,182,784 $4.17 
Stock-based compensation for the third quarter ended September 26, 2020 and September 28, 2019 were as follows:
13 weeks ended39 weeks ended
(In millions)September 26,
2020
September 28,
2019
September 26,
2020
September 28,
2019
Stock options$0.3 $0.6 $0.8 $1.8 
Time, performance and market vested share awards2.7 2.4 6.0 5.7 
Unrecognized stock-based compensation expense and the weighted average years to recognize the unrecognized stock-based compensation was as follows:
(In millions)September 26,
2020
Unrecognized stock-based compensation expense$16.0 
Weighted average years to recognize the unrecognized stock-based compensation2.2 years

Under the Company's stock incentive programs, in certain jurisdictions, employees are allowed to use shares retained by the Company to satisfy minimum statutorily required withholding taxes. Shares retained to fund withholding taxes and the value of shares retained to fund withholding taxes was as follows:
39 weeks ended
(In millions)September 26,
2020
September 28,
2019
Shares retained to fund withholding taxes11,187 25,947 
Value of shares retained to fund withholding taxes$0.2 $0.8 
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Note 6: Re-engineering Charges
Re-engineering charges are mainly related to the transformation program, which was announced in January 2019 and re-assessed in December 2019 (collectively the “Turnaround Plan”) and the July 2017 revitalization program (“2017 program”). The Company continually reviews its business models and operating methods for opportunities to increase efficiencies and/or align costs with business performance. The Turnaround Plan charges primarily related to severance costs and outside consulting services. The 2017 program charges primarily related to severance and other costs.
The re-engineering charges were:
13 weeks ended39 weeks ended
(In millions)September 26,
2020
September 28,
2019
September 26,
2020
September 28,
2019
Turnaround plan$2.7 $4.6 $28.4 $10.0 
2017 program0.5 1.1 1.9 3.3 
Other 1.8  2.6 
Total re-engineering charges$3.2 $7.5 $30.3 $15.9 

Turnaround Plan
Re-engineering charges in the third quarter of 2020 for the Turnaround Plan were $2.7 million, primarily related to the South America segment. In the third quarters of 2019 the charges were $1.4 million and $3.2 million, for the Asia Pacific and Europe segment, respectively. Charges for the year-to-date periods were:
39 weeks ended
(In millions)September 26,
2020
September 28,
2019
Asia Pacific$4.0 $3.9 
Europe12.1 6.1 
North America1.4