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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 30, 2023
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 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 March 21, 2024, 46,530,613 shares of the common stock, $0.01 par value, of the registrant were outstanding.




TABLE OF CONTENTS

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PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
TUPPERWARE BRANDS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF (LOSS) INCOME
(Unaudited)
13 weeks ended39 weeks ended
Restated
(In millions of U.S. Dollars, except per share amounts)September 30,
2023
September 24,
2022
September 30,
2023
September 24,
2022
Net sales$259.6 $303.6 $828.3 $990.4 
Cost of products sold94.6 107.4 316.8 354.1 
Gross profit165.0 196.2 511.5 636.3 
Selling, general and administrative expense158.9 173.7 487.9 565.7 
Re-engineering and impairment charges (gains)0.3 5.3 (1.3)13.8 
Loss (gain) on disposal of assets0.2 1.1 (3.9)3.3 
Impairment of goodwill and intangible assets 27.7  30.9 
Operating income (loss)5.6 (11.6)28.8 22.6 
Loss on financing transactions48.0  56.5  
Interest expense22.3 8.3 55.6 18.9 
Interest income(2.2)(1.3)(6.7)(3.2)
Other (income) expense, net(16.9)(10.3)20.1 (25.5)
(Loss) income from continuing operations before income taxes(45.6)(8.3)(96.7)32.4 
Provision for income taxes8.1 12.3 26.6 34.9 
Loss from continuing operations(53.7)(20.6)(123.3)(2.5)
Loss from operations of discontinued operations before income taxes(0.2)(0.7)(2.0)(6.2)
(Loss) gain on held for sale assets and dispositions(1.9)22.6 0.2 21.4 
Provision for income taxes 1.3  0.5 
(Loss) income on discontinued operations(2.1)20.6 (1.8)14.7 
Net (loss) income$(55.8)$ $(125.1)$12.2 
Basic loss from continuing operations - per share$(1.16)$(0.46)$(2.70)$(0.05)
Basic (loss) earnings from discontinued operations - per share$(0.05)$0.46 $(0.04)$0.32 
Basic (loss) earnings per share - Total$(1.21)$ $(2.74)$0.27 
Diluted loss from continuing operations - per share$(1.16)$(0.46)$(2.70)$(0.05)
Diluted (loss) earnings from discontinued operations - per share$(0.05)$0.46 $(0.04)$0.30 
Diluted (loss) earnings per share - Total$(1.21)$ $(2.74)$0.25 
Basic weighted-average shares46.3 44.5 45.7 46.0 
Diluted weighted-average shares46.3 44.5 45.7 49.0 

See accompanying notes to Condensed Consolidated Financial Statements.
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TUPPERWARE BRANDS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME
(Unaudited)
13 weeks ended39 weeks ended
RestatedRestated
(In millions of U.S. Dollars)September 30,
2023
September 24,
2022
September 30,
2023
September 24,
2022
Net (loss) income$(55.8)$ $(125.1)$12.2 
Other comprehensive (loss) income
Foreign currency translation adjustments(12.3)(44.9)27.9 54.1 
Deferred gain (loss) on cash flow hedges, net of tax 0.1 (0.1)(0.1)
Pension and other post-retirement (costs) benefit, net of tax(0.2)0.9 0.5 0.8 
Other comprehensive (loss) income(12.5)(43.9)28.3 54.8 
Total comprehensive (loss) income$(68.3)$(43.9)$(96.8)$67.0 

See accompanying notes to Condensed Consolidated Financial Statements.
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TUPPERWARE BRANDS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
As of
(In millions of U.S. Dollars, except share amounts)September 30,
2023
December 31,
2022
Assets  
Cash and cash equivalents$122.7 $110.1 
Accounts receivable, net of an allowance for credit losses of $18.2 million as of September 30, 2023 and $23.8 million as of December 31, 2022
72.1 63.7 
Inventories172.4 217.6 
Non-trade accounts receivable, net of an allowance for credit losses of $1.2 million as of September 30, 2023 and $1.2 million as of December 31, 2022
22.8 16.5 
Short-term restricted cash6.7 4.1 
Prepaid expenses and other current assets29.7 19.6 
Total current assets426.4 431.6 
Property, plant and equipment, net110.6 136.9 
Operating lease assets62.4 69.1 
Long-term receivables, net of an allowance for credit losses of $35.1 million as of September 30, 2023 and $34.5 million as of December 31, 2022
4.4 5.6 
Long-term non-trade accounts receivable, net of an allowance for credit losses of $0.8 million as of September 30, 2023 and $0.8 million as of December 31, 2022
8.1 35.7 
Long-term refundable income taxes45.1 43.1 
Long-term restricted cash8.4 6.0 
Other assets, net13.6 15.6 
Assets held for sale0.5  
Total assets$679.5 $743.6 
Liabilities And Stockholders' Equity  
Accounts payable$49.3 $78.8 
Current debt and finance lease obligations773.4 709.8 
Income taxes payable12.0 12.2 
Accrued liabilities208.7 194.5 
Current liabilities held for sale 6.6 
Total current liabilities1,043.4 1,001.9 
Long-term debt and finance lease obligations3.5 3.1 
Operating lease liabilities47.0 53.7 
Long-term pension liabilities51.1 50.9 
Long-term deferred income taxes27.0 26.4 
Other liabilities31.9 36.4 
Liabilities held for sale 1.0 
Total liabilities1,203.9 1,173.4 
Commitments and contingencies (Note 17)
Stockholders' 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 capital202.3 208.4 
Retained earnings660.9 887.3 
Treasury stock, 17,317,597 and 19,089,764 shares, respectively, at cost
(803.2)(912.8)
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As of
(In millions of U.S. Dollars, except share amounts)September 30,
2023
December 31,
2022
Accumulated other comprehensive loss(585.0)(613.3)
Total stockholders' deficit(524.4)(429.8)
Total liabilities and stockholders' deficit$679.5 $743.6 

See accompanying notes to Condensed Consolidated Financial Statements.
6

TUPPERWARE BRANDS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(Unaudited)
Common StockTreasury StockPaid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Stockholders' Equity (Deficit)
(In millions)SharesDollarsSharesDollars
December 31, 202263.6$0.6 19.1$(912.8)$208.4 $887.3 $(613.3)$(429.8)
Net loss— — — — — (39.5)— (39.5)
Other comprehensive income— — — — — — 18.3 18.3 
Stock and options issued for incentive plans— — (0.9)57.1 (4.2)(52.1)— 0.8 
April 1, 202363.6$0.6 18.2$(855.7)$204.2 $795.7 $(595.0)$(450.2)
Net loss— — — — — (29.8)— (29.8)
Other comprehensive income— — — — — — 22.5 22.5 
Stock and options issued for incentive plans— — (0.9)51.1 (2.3)(48.1)0.7 
July 1, 202363.6$0.6 17.3$(804.6)$201.9 $717.8 $(572.5)$(456.8)
Net loss(55.8)(55.8)
Other comprehensive loss(12.5)(12.5)
Stock and options issued for incentive plans1.40.4(1.1)0.7
September 30, 202363.6$0.6 17.3$(803.2)$202.3 $660.9 $(585.0)$(524.4)

See accompanying notes to Condensed Consolidated Financial Statements.
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TUPPERWARE BRANDS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
(Unaudited)
Accumulated Other Comprehensive LossTotal Stockholders' Equity (Deficit)
Common StockTreasury StockPaid-In CapitalRetained Earnings
(In millions)SharesDollarsSharesDollars
Restated, December 25, 2021
63.6$0.6 14.7$(876.1)$216.9 $1,145.5 $(705.6)$(218.7)
Net income3.9 3.9 
Other comprehensive income7.6 7.6 
Repurchase of common stock3.4(56.2)(18.8)(75.0)
Stock and options issued for incentive plans— — (0.2)16.8 (0.7)(14.0)— 2.1 
Restated, March 26, 2022
63.6 0.6 17.9 (915.5)197.4 1,135.4 (698.0)(280.1)
Net income— — — — — 8.3 — 8.3 
Other comprehensive income— — — — — — 91.1 91.1 
Repurchase of common stock— — 1.5 (9.9)9.9 — —  
Stock and options issued for incentive plans— — (0.3)10.6 1.4 (9.9)— 2.1 
Restated, June 25, 2022
63.6 0.6 19.1 (914.8)208.7 1,202.1 (606.9)(178.6)
Net loss  
Other comprehensive loss(43.9)(43.9)
Stock and options issued for incentive plans— —  0.9 (1.3)(0.8)— (1.2)
Restated, September 24, 2022
63.60.6 19.1$(913.9)$207.4 $1,133.0 $(650.8)$(223.7)

See accompanying notes to Condensed Consolidated Financial Statements.
8

TUPPERWARE BRANDS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
39 weeks ended
Restated
(In millions of U.S. Dollars)September 30,
2023
September 24,
2022
Operating Activities
Net cash used in operating activities(5.2)(58.4)
Investing Activities
Capital expenditures(8.8)(25.9)
Proceeds from disposal of assets
13.9 1.9 
Net cash settlement from net investment hedges (4.9)
Net cash provided by (used in) in investing activities5.1 (28.9)
Financing Activities
Term loan repayment(5.3)(7.1)
Borrowings on Revolver Facility56.3 186.0 
Repayment of Revolver Facility(9.0)(165.2)
Net increase in short-term debt 2.0 
Debt issuance costs payment(5.6)(1.4)
Finance lease repayments(0.1)(1.7)
Common stock repurchase (75.0)
Cash payments of employee withholding tax for stock awards(1.4)(1.9)
Net cash provided by (used in) financing activities34.9 (64.3)
Discontinued Operations
Cash used in operating activities(2.2)(4.4)
Cash provided by investing activities 5.8 
Cash (used in) provided by discontinued operations(2.2)1.4 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(15.0)(12.2)
Net change in cash, cash equivalents and restricted cash17.6 (162.4)
Cash, cash equivalents and restricted cash at beginning of year120.2 274.0 
Cash, cash equivalents and restricted cash at end of period (a) (b)
$137.8 $111.6 
Supplemental disclosures:
Cash paid for:
Interest, net of amounts capitalized$20.6 $17.8 
Income taxes paid, net20.7 49.3 

(a) Includes $0.0 million and $0.0 million of cash on discontinued operations as of September 30, 2023 and September 24, 2022, respectively.
(b) Includes Short-term restricted cash of $6.7 million and $2.8 million as of September 30, 2023 and September 24, 2022, respectively, and Long-term restricted cash of $8.4 million and $5.9 million as of September 30, 2023 and September 24, 2022, respectively.

See accompanying notes to Condensed Consolidated Financial Statements.
9

TUPPERWARE BRANDS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1: Summary of Significant Accounting Policies

Basis of Presentation

The Condensed 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. The Company prepared the unaudited Condensed Consolidated Financial Statements in accordance with United States generally accepted accounting principles (“GAAP”) and the rules and regulations of the United States Securities and Exchange Commission (“SEC”) and, in the Company’s opinion, reflect all adjustments, including normal recurring items that are necessary for a fair statement of results of operations, comprehensive income, financial position, equity and cash flows for the periods presented.

Certain information and note disclosures normally included in the financial statements prepared in conformity with GAAP for complete financial statements have been condensed or omitted as permitted by such rules and regulations. As such, the accompanying unaudited Condensed Consolidated Financial Statements and related notes should be read in conjunction with the audited 2022 Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K (“2022 10-K”) for the year ended December 31, 2022. Operating results of any interim period presented herein are not necessarily indicative of the results that may be expected for a full fiscal year.

Fiscal Quarter

The Company’s quarterly periods are the 13 weeks ending on the Saturday closest to March 30, June 30, September 30, and December 31. The third quarter in fiscal year 2023 and 2022 ended on September 30, 2023 and September 24, 2022, respectively.

Restatement of Previously Issued Financial Statements

As previously disclosed in the Company's 2022 10-K filed with the SEC on October 16, 2023, the Company restated its previously issued unaudited interim Condensed Consolidated Financial Information for the first three quarters of 2022 and all quarters of 2021 and its 2021 and 2020 annual Consolidated Financial Statements due to multiple prior period misstatements. The accompanying 2022 Condensed Consolidated Interim Financial Statements have been restated in this Quarterly Report on Form 10-Q. In addition, the Company has corrected the accompanying footnotes in connection with the restatement see Note 21: Restated Previously Issued 2022 Financial Statements.

Reclassifications

Certain prior period amounts in the Condensed Consolidated Financial Statements and accompanying notes have been reclassified to conform with the current period presentation and are not the result of an error in classification, but are separately presented on the face of the Condensed Consolidated Balance Sheets for additional visibility.

For the quarter ended September 30, 2023, Short-term restricted cash and Long-term restricted cash, which were reported as a component of Prepaid expenses and other current assets and Other assets, net, respectively, in the 2022 10-K, are now separately presented. In the 2022 10-K, Trade name, net was presented separately, but is presented as a component of Other assets, net at the quarter ended September 30, 2023. Additionally, for the quarter ended September 30, 2023, Income taxes payable and Long-term deferred income taxes, which were reported as a component of Accrued liabilities and Other liabilities, respectively, in the 2022 10-K, are now separately presented.

The reclassifications had no impact on the Condensed Consolidated Statements of (Loss) Income, Condensed Consolidated Statements of Comprehensive (Loss) Income, Condensed Consolidated Balance Sheets, or Condensed Consolidated Statements of Stockholders’ Deficit.

Going Concern and Liquidity

In accordance with Accounting Standards Codification (“ASC”) Topic 205-40, Going Concern, the Company evaluates whether there are certain conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern. This evaluation includes considerations related to financial and other covenants contained in the Company’s Amended Credit Agreement (as defined below) as well as the Company’s forecasted liquidity.
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The Company has concluded that there is substantial doubt about its ability to continue as a going concern for at least one year from the issuance date of these financial statements. The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business. The financial statements do not include any adjustments that might be necessary should the Company be unable to continue as a going concern.

As described in Note 7: Debt, the Company and certain of its wholly owned subsidiaries entered into the Credit Agreement Amendments (as defined below), many of which were to address, among other things, expected non-compliance by the Company with the financial covenants under its Credit Agreement given that the Company was forecasting that it would not meet such financial covenants absent such modifications.

The Company classified $709.3 million of borrowings under its Amended Credit Agreement as of December 31, 2022 as a current obligation in its 2022 Consolidated Balance Sheet, as a result of the continued expectation that it would not meet certain of its financial and non-financial covenants under its Amended Credit Agreement absent additional modifications.

As previously disclosed, the Company had no ability to borrow further under its revolving credit facility (the “Revolver Facility”) until August 2, 2023, when it entered into the Debt Restructuring Agreement (the “DRA”), which enabled immediate access to up to $21.0 million on the Revolver Facility subject to liquidity and other cash covenants. While the Company believed when entering into the DRA that it would provide additional flexibility to fund its operations and satisfy its obligations as then anticipated in the near term, it also imposed new covenants, including liquidity covenants requiring the use of excess cash for debt reduction. On February 13, 2024, the Company entered into the Forbearance Agreement (the “Forbearance Agreement”), amending, modifying, and otherwise affecting the Amended Credit Agreement pursuant to which the Lenders party thereto have agreed to forbear from exercising any of their respective rights and remedies, and from directing the Administrative Agent to exercise any of the rights and remedies available to the Administrative Agent and the Lenders, and the Administrative Agent has agreed to forbear from unilaterally exercising any of its rights and remedies, in each case, arising under the Credit Agreement and applicable law as a result of the occurrence and continuance of certain specified existing and anticipated defaults and events of default (the “Specified Defaults”) until the earlier of (a) June 30, 2024 at 11:59 p.m. Eastern time and (b) the date and time on which the Administrative Agent (at the direction of the majority Lenders) elects to terminate such forbearance after the occurrence and during the continuance of certain other defaults and/or events of default or breaches of certain representations and warranties (the “Forbearance Period”). The Forbearance Agreement, among other things, (a) required, as a condition to effectiveness, the Borrowers to make a principal payment in respect of the USD Term A Loans in an aggregate amount equal to approximately $10.9 million, (b) permits the Borrowers to continue to access the revolving credit facility under the Credit Agreement, subject to the terms and conditions set forth therein, during the Forbearance Period, notwithstanding the existence of the Specified Defaults, but limits availability thereunder to approximately $36.4 million, (c) alleviates and/or otherwise modifies certain of the mandatory prepayment requirements in respect of asset sales and tax refunds set forth in the Credit Agreement during the Forbearance Period, (d) reduces the Company’s weekly minimum U.S. liquidity requirement under the Credit Agreement from $15.0 million to $10.0 million during the Forbearance Period, (e) modifies certain of the Company’s financial and other reporting obligations under the Credit Agreement, and (f) requires the Company to comply with certain specified milestones with respect to business planning and repayment transactions during the Forbearance Period. Given the uncertainties around the Company’s liquidity, ability to execute its revised business plan, and ability to comply (and current non-compliance) with covenants under its Credit Agreement, the Company has concluded that there is substantial doubt about its ability to continue as a going concern for at least one year from the date of issuance of these Consolidated Financial Statements. Refer to Note 2: Turnaround Plan.

The Company’s Board of Directors (the “Board”) is actively engaged with management and financial advisors to further explore strategic alternatives and advise on potential means to improve the Company’s liquidity and capital structure. If the Company raises funds in the future by issuing equity securities, such as warrants issued under the DRA or through the future sale of the Company’s common stock, it is highly likely that existing stockholders will be diluted. Any equity securities issued may also provide for rights, preferences, or privileges senior to those of holders of common stock. If the Company raises funds in the future by issuing additional debt securities, these debt securities will likely have rights, preferences, and privileges senior to those of stockholders. The ability to raise additional debt is subject to the limitations, conditions and preferences of the Amended Credit Agreement and anticipated future increases in federal fund rates set by the Federal Reserve, which serve as a benchmark for rates on borrowing, which will continue to impact the cost of debt financing. In addition, the Company is reviewing its real property portfolio for real estate available for potential dispositions, or sale-leaseback transactions, and is exploring right-sizing efforts, monetization of fixed assets, enhancing cash management, and marketing and channel optimization, to deliver additional liquidity, within this calendar year; however the timing, amount and ability to effect such dispositions is uncertain. As the aforementioned actions are conditional upon the receipt of offers and execution of agreements with new or existing investors or the execution of sales agreements with third parties, which are considered outside of the Company’s control, there is no assurance of the timing or outcome of these actions, and as a result they are not considered probable of occurring until such time as they are completed.

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As a result of the volatility of the Company’s earnings and ability to generate cash from operations, coupled with the increased levels and cost of borrowings under its Revolver Facility, the Company forecasts that it will not have adequate liquidity to fund its operations and meet its financial obligations in the near term.

As mentioned above, the Company is also in violation of certain non-financial covenants under the Amended Credit Agreement as of the date of the filing of these financial statements, which has resulted in certain defaults and/or events of default under the Amended Credit Agreement. In particular, the report of the Independent Registered Public Accounting Firm accompanying the consolidated financial statements for the year ended December 31, 2022 contains an explanatory paragraph expressing substantial doubt about the Company’s ability to continue as a going concern.

If the Company is unable to execute its revised business plan it would require management to modify its operations to reduce spending to a sustainable level by, among other things, delaying, scaling back or eliminating some or all of the Company’s ongoing or planned investments in corporate infrastructure, business development, sales and marketing, research and development and other activities, which would have a material impact on the Company’s operations, or it may be forced to file for bankruptcy protection.

Use of Estimates

The preparation of Condensed Consolidated Financial Statements in conformity with GAAP 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 Condensed Consolidated Financial Statements, as well as the reported amounts of net sales and expenses during the reporting period. Actual results could differ materially from these estimates.

New Accounting Pronouncements

Standards Recently Adopted

In March 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2022-02, “Financial Instruments - Credit Losses” (Topic 326) (“ASU 2022-02”), which eliminates the troubled debt restructuring (“TDR”) accounting model for creditors that have adopted Topic 326. All other creditors must continue to apply the TDR accounting model until they adopt Topic 326. Due to the removal of the TDR accounting model, all loan modifications will now be accounted for under the general loan modification guidance in Subtopic ASC 310-20, “Nonrefundable Fees and Other Costs”. In addition, on a prospective basis, entities will be subject to new disclosure requirements covering modifications of receivables to borrowers experiencing financial difficulty. The guidance was effective for reporting periods beginning after December 15, 2022. The Company adopted this guidance during the first quarter of 2023 and the adoption did not have any material impact on its Consolidated Financial Statements.

In September 2022, the FASB issued ASU No. 2022-04, “Liabilities – Supplier Finance Programs” (Subtopic 405—50) giving guidance to enhance the transparency of supplier finance programs to allow financial statement users to understand the effect on working capital, liquidity, and cash flows. The new guidance requires disclosure of key terms of the program, including a description of the payment terms, payment timing and assets pledged as security or other forms of guarantees provided to the finance provider or intermediary. Other requirements include the disclosure of the amount that remains unpaid as of the end of the reporting period, a description of where these obligations are presented in the balance sheet and a rollforward of the obligation during the annual period. The guidance is effective for fiscal years beginning after December 15, 2022, except for the rollforward, which is effective in 2024. The Company adopted this guidance during the first quarter of 2023 and the adoption did not have any material impact on its Consolidated Financial Statements.

In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform” (Topic 848), and in December 2022 subsequently issued ASU 2022-06, to temporarily ease the potential burden in accounting for reference rate reform. The ASU provides optional expedients and exceptions for applying accounting principles generally accepted in the United States to existing contracts, hedging relationships, and other transactions affected by reference rate reform. The amendments apply only to contracts and hedging relationships that reference the London Interbank Offered Rate (“LIBOR”) or another reference rate to be discontinued because of reference rate reform. The guidance was effective upon issuance and can generally be applied through December 31, 2024. The Company adopted this guidance during the first quarter of 2023 and the adoption did not have any material impact on its Consolidated Financial Statements.

Standards Not Yet Adopted

In October 2023, the FASB issued ASU 2023-06, “Disclosure Improvements”, Codification Amendments in Response to the. SEC’s Disclosure Update and Simplification Initiative. In the SEC’s Release No. 33-10532, “Disclosure Update and Simplification,” issued August 17, 2018, the SEC referred certain of its disclosure requirements that overlap with, but require incremental information to, GAAP to the FASB for potential incorporation into the Codification. ASU 2023-06 incorporates into the Codification 14 of the 27
12

disclosures referred by the SEC which modify the disclosure or presentation requirements of a variety of Topics in the Codification. The effective date for each amendment will be the date on which the SEC’s removal of that related disclosure from Regulation S-X or Regulation S-K becomes effective, with early adoption prohibited. The Company does not expect the adoption to have a material impact on the Consolidated Financial Statements.

In November 2023, the FASB issued ASU 2023-07, “Segment Reporting - Improvements to Reportable Segment Disclosures” which is an update to FASB Statement No. 131, “Disclosures about Segments of an Enterprise and Related Information,” issued in 2012. ASU 2023-07 requires disclosure of incremental segment information on an annual and interim basis for all public entities to enable investors to develop more decision-useful financial analyses. The amendments in ASU 2023-07 require, among other things, enhanced disclosures about significant segment expenses. The annual and interim disclosures are: the significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss; an amount for other segment items by reportable segment and a description of its composition; and the reportable segment’s profit or loss and assets currently required by Topic 280. Additionally, the update allows for the reporting of additional measures of a segment’s profit or loss, requires the disclosure of the chief operating decision maker’s title and position, and an explanation of how the chief operating decision maker uses the reported measure in assessing segment performance and deciding how to allocate resources. Adoption should apply retrospectively to all prior periods presented in the financial statements. Upon transition, the segment expense categories and amounts disclosed in the prior periods should be based on the significant segment expense categories identified and disclosed in the period of adoption. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company does not expect the adoption to have a material impact on the Consolidated Financial Statements.

In December 2023, the FASB issued ASU 2023-09, “Income Taxes (Topic 740) - improvements to Income Tax Disclosures” to enhance the transparency and decision usefulness of income tax disclosures, and provide information to better assess how an entity’s operations and related tax risks and tax planning and operational opportunities affect its tax rate and prospects for future cash flows. ASU 2023-09 requires that public business entities on an annual basis disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold (if the effect of those reconciling items is equal to or greater than 5 percent of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate). Additionally ASU 2023-09 requires that all entities disclose on an annual basis information about income taxes paid, income (or loss) from continuing operations before income tax expense (or benefit) disaggregated between domestic and foreign, and income tax expense (or benefit) from continuing operations disaggregated by federal (national), state, and foreign. The guidance is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company does not expect the adoption to have a material impact on the Consolidated Financial Statements.

The Company does not believe other recently issued but not yet effective accounting standards, if currently adopted, would have a material effect on the Consolidated Financial Statements.

Note 2: Turnaround Plan

The Company has continued to execute on a turnaround plan originally developed in 2020 (the “Turnaround Plan”), one that was developed in order to leverage consumer acceptance of the iconic Tupperware brand, and which was expected to give the Company the ability to expand into new product categories, increase consumer access points, and grow distribution channels, all while strengthening the Company’s core direct selling business.

A deteriorating macroeconomic environment, which included increasing inflationary pressures, sharply rising interest rates, and the strengthening of the U.S. Dollar against most major currencies, coupled with increasing geopolitical tensions and deteriorating consumer confidence, further eroded the Company’s underlying business economics and liquidity in 2022. The Company took additional restructuring actions, which pushed out the Turnaround Plan timeline, and evolved the Turnaround Plan into a new Transformation Plan, as further described below.

The key elements of the Turnaround Plan include:
the Company’s right-sizing plans to improve profitability,
accelerating the divestiture of non-core assets to strengthen the balance sheet,
restructuring the Company’s debt to enhance liquidity, and
structurally fixing the Company’s core business to create a more sustainable business model.

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As part of the Turnaround Plan, the Company embarked on the following actions:
engaged a financial advisor to assist in securing supplemental financing,
appointed a Chief Restructuring Officer,
appointed three new directors to its Board with significant restructuring experience,
entered into the DRA with its bank group (see Note 7: Debt),
reviewing its real property portfolio for potential monetization opportunities (see Note 4: Sale-Leaseback Transactions),
deferring certain growth capital spending with payback of more than a year, and
prioritizing re-engineering actions with short-term return.

In line with the Turnaround Plan, the Company decided to dispose of the operations of certain key brands of the Company’s beauty business to better focus on the core business. The Company completed this aspect of the Turnaround Plan with the sale of 100% of its shares in Nuvo on August 7, 2023. See Note 3: Held for Sale Assets and Discontinued Operations and Note 4: Sale-Leaseback Transactions.

While the DRA (as amended) provides additional flexibility to fund operations and satisfy obligations, it also imposes new covenants, including liquidity covenants requiring the use of excess cash for debt reduction. See Note 7: Debt. The provisions of the DRA required the Company to provide a revised transformation plan to its creditors, which was provided in 2024 (the “Transformation Plan”). This Transformation Plan was developed by the reconstituted Board and Executive leadership team described above. The Transformation Plan focuses on steps to further simplify the Company’s core business with digital transformation and global exchange of best-selling practices supporting growing revenues. The Company expects to continue shifting from a distributor push model to a consumer pull model to capture the needs of today’s customer sets; opening up access to Tupperware products in channels where today’s consumers want to shop as part of its omnichannel evolution; and expanding into new product categories to bring more innovative solutions to the market. The timing and investment in support of the Transformation Plan could most likely be constrained by the Company’s liquidity.
The key elements of the Transformation Plan include continuation of the following actions begun under the Turnaround Plan:
prioritization of re-engineering actions with short-term return,
supply chain rationalization,
the Company’s right-sizing plans to improve profitability, and
restructuring the Company’s debt to enhance liquidity.

As part of the Transformation Plan, the Company has embarked on the following incremental actions:
engaging in discussions with potential investors or financing partners, with respect to potential financing transactions, such as issuing equity securities where dilution to stockholders is highly likely to occur,
optimization of the Company’s distribution network,
expansion of retail sales through new outlets such as further online sales and social media, and
driving digital transformation within the Company.

Re-engineering and impairment charges relate to headcount reductions and facility downsizing and closures. See Note 15: Re-engineering and Impairment Charges.


Note 3: Held for Sale Assets and Discontinued Operations

One of the key elements of the Turnaround Plan was the divestiture of non-core assets such as the Company’s beauty business. The dispositions of the Company’s beauty business included the sale of Avroy Shlain in 2021, House of Fuller in the second quarter of 2022, and Nutrimetics in the third quarter of 2022. The Company completed this aspect of the Turnaround Plan with the sale of 100%
14

of its shares in Nuvo on August 7, 2023. Accordingly, as of September 30, 2023, the Company no longer has any assets or liabilities classified as held for sale.

As these dispositions represented a strategic shift that had a major effect on its results of operations, the Company has reflected the results of the beauty businesses as discontinued operations including all comparative prior period information in these Condensed Consolidated Financial Statements. Certain costs previously allocated to the beauty business for segment reporting purposes do not qualify for classification within discontinued operations and have been reallocated to continuing operations.

Approximately $132.7 million of currency translation losses and $30.1 million of currency translation gains in accumulated other comprehensive income and the equivalent amount of the contra-asset and liability were derecognized and removed from the balance sheet in the second quarter of 2022 and third quarter of 2022 upon the completion of the sale of House of Fuller Mexico and Nutrimetics, respectively. Upon the completion of the sale of Nuvo, $7.4 million of currency translation gains in accumulated other comprehensive income were derecognized from the balance sheet in the third quarter of 2023, and offset the gain(loss) on held for sale assets and dispositions on the income statement.

Another key element of the Turnaround Plan was reviewing the Company’s real property portfolio for potential monetization opportunities. In the first quarter of 2023, the Indonesia warehouse and office, with a carrying value of $5.8 million, was reclassified from Property, plant and equipment, net to Long-term assets held for sale. This Long-term assets held for sale was subsequently derecognized in the second quarter of 2023 in accordance with the Indonesia warehouse and office sale lease-back transaction further described in Note 4: Sale-Leaseback Transactions:

Financial Information of Discontinued Operations

The results of operations are presented as discontinued operations as summarized below:

13 weeks ended39 weeks ended
(In millions of U.S. Dollars)September 30,
2023
September 24,
2022
September 30,
2023
September 24,
2022
Net sales$0.6 $3.1 $5.2 $62.7 
Cost of products sold0.3 1.2 2.5 24.4 
Gross profit$0.3 $1.9 2.7 38.3 
Selling and administrative expenses0.5 2.6 4.6 43.6 
Re-engineering charges   0.4 
Other expense, net  0.1 0.5 
Loss from operations of discontinued operations before income taxes$(0.2)$(0.7)(2.0)(6.2)
(Loss) gain on held for sale assets and dispositions(1.9)22.6 0.2 21.4 
(Loss) income from discontinued operations before income taxes$(2.1)$21.9 (1.8)15.2 
Provision for income taxes 1.3  0.5 
Net (Loss) income from discontinued operations$(2.1)$20.6 $(1.8)$14.7 

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The carrying amount of major classes of assets and liabilities classified as held for sale that were included in discontinued operations at September 30, 2023 and December 31, 2022 are shown in the table below.

As of
(In millions of U.S. Dollars)September 30,
2023
December 31,
2022
Assets 
Accounts receivable, net 2.9 
Inventory, net 3.6 
Prepaid expenses and other current assets 0.5 
Accumulated translation adjustment losses, current (7.0)
Total assets of discontinued operations - current  
Property, plant and equipment, net 0.8 
Operating lease assets 1.8 
Goodwill 2.0 
Other assets, net 0.3 
Accumulated translation adjustment losses (4.9)
Total assets of discontinued operations$ $ 
Liabilities
Accounts payable$ $1.0 
Accrued liabilities 1.6 
Accumulated translation adjustment losses, current 4.0 
Total liabilities of discontinued operations - current 6.6 
Operating lease liabilities 1.0 
Liabilities held for sale 1.0 
Total liabilities of discontinued operations$ $7.6 


Note 4: Sale-leaseback Transactions

As described in Note 2: Turnaround Plan, the Company executed on accelerating the divestiture of non-core assets to strengthen the balance sheet which included the sale of certain owned properties. Accordingly, the properties described below have been sold. The Company determined that the sale of the two properties described below did not represent a strategic shift and will not have a major effect on its results of operations as the Company will leaseback most of the facilities on these properties. The sales proceeds from certain of these sales are required to be applied to pay down the term loans under the Amended Credit Agreement and will generally not be available for working capital purposes. In addition, once the Company determines that management has committed to a disposal plan that is unlikely to change, the property is available for sale in its immediate condition, the sale is probable and it is being actively marketed at a price that makes it likely to conclude within twelve months, then the property meets the criteria in ASC 360-10-45 which requires that the property be reclassified as held for sale and depreciation ceases. As both of these were actively being marketed in the first quarter of 2023 and the preceding conditions were met, the Company determined that the properties should be classified as held for sale. See Note 3: Held for Sale Assets and Discontinued Operations for material properties that were recorded as long-term assets held for sale.

ASC 842-40-30 requires sale-leaseback transactions to be accounted for at fair value, based on the fair value of the property sold or the rents agreed to, whichever is more reliably determinable. Generally the Company has determined the fair value of the property sold is more reliably determinable as in material transactions the Company receives an independent valuation while in the marketing phase. Accordingly, the cash terms of a sale-leaseback may not correspond with the final accounting determination. Any incremental fair value in excess of the sale is deemed to be an increase in the sale price received resulting in an increase to the gain with an incremental right of use asset to be amortized over the determined lease term.

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In 2023, the following property sales were completed ($ millions):

Facility
Date Sold
Cash Sale Price
Net Proceeds
Gain on sale
Initial lease term
Hemingway, SC manufacturing facility
October, 2023$15.0 $14.0 $21.0 
14 months
Indonesia warehouse and office
June, 2023$12.2 $11.3 $5.6 
3 years (warehouse) /
2 years (office)


In October 2023, the Company sold its Hemingway, South Carolina manufacturing plant for a cash purchase price of $15.0 million while the fair value of the property was determined to be $22.0 million based on a market assessment. The incremental fair value of $7.0 million was reflected pursuant to the accounting set forth above as additional gain on sale and was deferred as additional right of use asset which will be amortized over the leaseback term. In connection with the closing of the transaction, the Company also entered into a leaseback agreement for an initial lease term of 14 months, an additional renewal option of 6 months, and the further ability to extend upon mutual agreement. A cash prepayment of rent in the amount of $3.0 million for the initial 12 months was made concurrent with the sale-leaseback transaction.

In the second quarter of 2023, the Company sold its Indonesia warehouse and office for a cash purchase price of $12.2 million. The $5.8 million carrying value of the properties approximated the fair value based on an assessment of the sublease rental rate. In connection with the closing of the transaction, the Company agreed to leaseback its warehouse for an initial lease term of three years. The Company also entered into a lease agreement for new office space with an initial term of two years.


Note 5: Inventories

Inventories balance was:
As of
(In millions of U.S. Dollars)September 30,
2023
December 31,
2022
Finished goods$115.5 $161.8 
Work in process35.8 29.9 
Raw materials and supplies21.1 25.9 
     Inventories$172.4 $217.6 
As of September 30, 2023 and December 31, 2022, the Company’s inventories are carried at their net realizable value.

Note 6: Long-Term Receivables

The long-term receivables and the related allowance for credit losses balance and activity were as follows:

As of
(In millions of U.S. Dollars)September 30,
2023
Long-term receivables, gross$39.5 
Allowance for credit losses - long-term receivables, beginning balance$(34.5)
Write-offs0.7 
Recoveries 
Provision(1.2)
Currency translation adjustment(0.1)
Allowance for long-term receivables$(35.1)
Long-term receivables, net$4.4 


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Majority of long-term receivables from both active and inactive customers that are past due were reserved through the Company's allowance for credit losses.

Note 7: Debt
Credit Agreement

On November 23, 2021, the Company and its wholly owned subsidiaries Tupperware Products AG, Administradora Dart, S. de R.L. de C.V., and Tupperware Brands Asia Pacific Pte. Ltd. entered into a credit agreement (the “Credit Agreement”) with Wells Fargo Bank, N.A. as administrative agent (the “Administrative Agent”), and each of the lenders from time to time party thereto. The Company subsequently entered into the following amendments to the Credit Agreement:

the First Amendment to Credit Agreement dated as of August 1, 2022 (the “First Amendment”),
the Second Amendment to Credit Agreement dated as of December 21, 2022 (the “Second Amendment”),
the Third Amendment to Credit Agreement dated as of February 22, 2023 (the “Third Amendment”),
the Fourth Amendment to Credit Agreement and Limited Waiver of Borrowing Conditions dated as of May 5, 2023 (the “Fourth Amendment”),
the Limited Waiver of Mandatory Prepayment and Payment Deferral Agreement dated as of June 30, 2023 (the “Waiver”),
the Debt Restructuring Agreement dated as of August 2, 2023 (the “DRA”),
the Fifth Amendment to Credit Agreement dated as of October 5, 2023 (the “Fifth Amendment”),
the Sixth Amendment to Credit Agreement dated as of December 22, 2023 (the “Sixth Amendment”), and
the Forbearance Agreement dated as of February 13, 2024 (the “Forbearance Agreement”).
Collectively the First Amendment, the Second Amendment, the Third Amendment, the Fourth Amendment, the Waiver, the DRA, the Fifth Amendment, the Sixth Amendment, and the Forbearance Agreement are referred to as the “Credit Agreement Amendments” and the Credit Agreement as amended by the Credit Agreement Amendments, the “Amended Credit Agreement.”

Each of the Credit Agreement Amendments affected the terms of our Credit Agreement as set forth in more detail in our 2022 10-K or, in case of the Sixth Amendment, and the Forbearance Agreement as otherwise disclosed. As of the date hereof and after giving effect to the Credit Agreement Amendments, the Amended Credit Agreement provides for:
global tranche revolving commitments (“Global Tranche Revolving Commitments” and the loans made pursuant thereto “Global Tranche Revolving Loans”) in an aggregate amount equal to $38.4 million (provided that global tranche revolving credit exposure may not exceed $36.4 million during the forbearance period contemplated by the Forbearance Agreement), which includes a sub-facility for letter of credit issuances in the amount of $22.3 million, maturing July 31, 2025,
term loans in an aggregate principal amount equal to $425.0 million (“USD Term A Loans”) maturing July 31, 2025,
term loans in an aggregate principal amount equal to $156.4 million (“USD Term C Loans”) maturing July 31, 2027, and
term loans in an aggregate principal amount equal to €173.4 million (“EUR Term D Loans”) maturing July 31, 2027.

The Company (the “Parent Borrower”) and Tupperware Products AG (the “Subsidiary Borrower”) are the only borrowers under the Amended Credit Agreement. The obligations under the Amended Credit Agreement are (a) guaranteed by (i) with respect to the Subsidiary Borrower, the Parent Borrower and (ii) with respect to both the Parent Borrower and the Subsidiary Borrower, each existing and subsequently acquired or organized direct or indirect material wholly-owned U.S. subsidiary of the Parent Borrower (each a “Guarantor”) and (b) secured by substantially all tangible and intangible personal property and Material Real Property (as defined in the Amended Credit Agreement) of the Parent Borrower and each Guarantor and all products, profits and proceeds of the foregoing, in each case, subject to certain exceptions.

Beginning with the DRA in the third quarter as disclosed (above), the Global Tranche Revolving Loans and the USD Term A Loans (the “2025 Maturity Date Loans”) accrue interest at either (depending on the Company’s election from time to time) (a) the Adjusted Term SOFR, Adjusted Eurocurrency Rate, or Daily Simple Sterling Overnight Interbank Average (“SONIA”) plus 6.00% per annum or (b) the Base Rate plus 5.00% per annum (in each case, subject to increase as described below) and the Company incurs a commitment fee of 0.925% on the unfunded portion of the Global Tranche Revolving Commitments, all of which is payable in cash. The USD Term C Loans and the EUR Term D Loans (the “2027 Maturity Date Loans”) accrue interest at a per annum rate of 14.00%, which is payable in kind, and thus capitalized thereon and increasing the principal balance thereof, on a quarterly basis.
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On February 13, 2024, the Company entered into the Forbearance Agreement (the “Forbearance Agreement”), amending, modifying, and otherwise affecting the Amended Credit Agreement pursuant to which the Lenders party thereto have agreed to forbear from exercising any of their respective rights and remedies, and from directing the Administrative Agent to exercise any of the rights and remedies available to the Administrative Agent and the Lenders, and the Administrative Agent has agreed to forbear from unilaterally exercising any of its rights and remedies, in each case, arising under the Credit Agreement and applicable law as a result of the occurrence and continuance of certain specified existing and anticipated defaults and events of default (the “Specified Defaults”) until the earlier of (a) June 30, 2024 at 11:59 p.m. Eastern time and (b) the date and time on which the Administrative Agent (at the direction of the majority Lenders) elects to terminate such forbearance after the occurrence and during the continuance of certain other defaults and/or events of default or breaches of certain representations and warranties (the “Forbearance Period”).

The Forbearance Agreement, among other things, (a) required, as a condition to effectiveness, the Borrowers to make a principal payment in respect of the USD Term A Loans in an aggregate amount equal to approximately $10.9 million, (b) permits the Borrowers to continue to access the revolving credit facility under the Credit Agreement, subject to the terms and conditions set forth therein, during the Forbearance Period, notwithstanding the existence of the Specified Defaults, but limits availability thereunder to approximately $36.4 million, (c) alleviates and/or otherwise modifies certain of the mandatory prepayment requirements in respect of asset sales and tax refunds set forth in the Credit Agreement during the Forbearance Period, (d) reduces the Company’s weekly minimum U.S. liquidity requirement under the Credit Agreement from $15.0 million to $10.0 million during the Forbearance Period, (e) modifies certain of the Company’s financial and other reporting obligations under the Credit Agreement, and (f) requires the Company to comply with certain specified milestones with respect to business planning and repayment transactions during the Forbearance Period. Given the uncertainties around the Company’s liquidity, ability to execute its revised business plan, and ability to comply (and current non-compliance) with covenants under its Amended Credit Agreement, the Company has concluded that there is substantial doubt about its ability to continue as a going concern for at least one year from the date of issuance of these Condensed Consolidated Financial Statements. Refer to Note 2: Turnaround Plan.

The Amended Credit Agreement provides for, subject to the terms of, and the modifications and other matters provided in, the Forbearance Agreement:
mandatory amortization payments:
on the USD Term A Loans in an amount equal to (a) $1.8 million on the last day of each calendar quarter during calendar year 2024 and (b) $3.5 million on the last day of each of the first two calendar quarters during calendar year 2025, and
in respect of (a) the USD Term C Loans in an amount equal to $1.8 million and (b) the EUR Term D Loans in an amount equal to €1.6 million, in each case, on the last day of each calendar quarter, commencing December 31, 2025,
mandatory prepayments with net cash proceeds from certain equity issuances and extraordinary receipts in excess of $2.5 million and from certain tax refunds in excess of $3.0 million, in each case, in the aggregate during any fiscal year, and
mandatory prepayments of borrowings of the Revolving Facility with unrestricted cash and cash equivalents of the U.S. Loan Parties in excess of $7.0 million.

The Amended Credit Agreement also provides, subject to the terms of the Forbearance Agreement, for the payment of:
an approximately $16.2 million restructuring fee (the “Restructuring Fee”), which was originally due and payable in 2027 but has, subject to the Forbearance Agreement, become due and payable due to certain payment events of default, and
a $10.0 million facility fee (the “Facility Fee”), which was originally due and payable in 2025 and was previously able to be waived in whole or in part based on the Company’s satisfaction of certain Repayment Incentive Milestones (as defined in the Amended Credit Agreement) but has, subject to the Forbearance Agreement, become due and payable due to certain payment events of default.

In light of the Facility Fee having become due and payable as described above, waivers of the Facility Fee are no longer permitted under the Amended Credit Agreement. On the date immediately following the date any Repayment Incentive Milestone is not satisfied, the following will occur, (i) the Company will incur a 0.50% increase in interest rates for the 2025 Maturity Date Loans; provided that if the Company thereafter satisfies a Repayment Incentive Milestone, such interest rates will be automatically reduced, on the date immediately following such Repayment Incentive Milestone Date, by the aggregate amount of increases thereto effectuated pursuant to the failure to satisfy any Repayment Incentive Milestone (and that are still in effect) and (ii) certain warrants issued to the lenders under the Amended Credit Agreement for a fixed number of shares of common stock of the Company representing in total an aggregate of approximately 2.00% of the total issued and outstanding shares of common stock of the Company as of the grant date will become exercisable. The matters described in the immediately preceding clauses (i) and (ii) have occurred as a result of, and with respect to, the Company’s failure to fully satisfy the January 31, 2024 Repayment Incentive Milestone.
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The Amended Credit Agreement contains covenants that include a maximum capital expenditure covenant, a minimum liquidity covenant, a minimum earnings before interest, income taxes, depreciation and amortization (“EBITDA”) covenant, a minimum interest coverage ratio covenant, a maximum net leverage ratio covenant, an anti-cash hoarding covenant and a covenant restricting cash held by subsidiaries of the Company that are not U.S. Loan Parties as well as affirmative and negative covenants, including, among other things, compliance with laws, delivery of monthly, quarterly and annual financial statements, the delivery of weekly account balance reports and account lists, the delivery of weekly 13-week cash flow forecasts and variance reports, the continued retention of a chief restructuring officer until the CRO Release Date (as defined in the Amended Credit Agreement), restrictions on the incurrence of liens, indebtedness, asset dispositions, fundamental changes, restricted payments and other customary covenants. The Amended Credit Agreement also includes events of default relating to customary matters (and customary notice and cure periods), including, among other things, nonpayment of principal, interest or other amounts; violation of covenants; incorrectness of representations and warranties in any material respect; cross-payment default and cross acceleration with respect to material indebtedness; bankruptcy; material judgments; and certain ERISA events. However, as previously disclosed on February 13, 2024, the Lenders party to the Forbearance Agreement agreed, during the Forbearance Period, to forbear from exercising any of their respective rights and remedies arising under the Amended Credit Agreement and applicable law as a result of the occurrence and continuance of certain specified existing and anticipated breaches of certain of the foregoing covenants.

Debt Restructuring Agreement Modification
As the Company entered into certain of the Credit Agreement Amendments within the preceding twelve months, the Company compared the terms of each of the most recent modification(s) to the terms of its Credit Agreement that existed as of the last extinguishment, or the terms twelve months prior, whichever was applicable. The DRA did not provide a concession in terms affecting cash flows and the effective interest rate increased accordingly, the Company accounted for the DRA under ASC Subtopic 470-50. The DRA was considered not substantially different from the original debt arrangement, resulting in this being considered a modification, because cash flows were not changed by greater than 10.0% under the testing methodology set forth in ASC Subtopic 470-50.

Under modification accounting, the related fees to lenders are deferred and amortized as an adjustment to the effective interest rate and previous fees are written off while fees to third parties are expensed as incurred. Accordingly, the Restructuring Fee totaling $16.2 million and the Facility Fee totaling $10.0 million were initially deferred in the third quarter of 2023, along with the fair value of the warrants, which totaled $9.3 million. However, as all previously deferred fees were written off in 2022 due to the Company’s forecasted noncompliance with its covenants, no previously deferred fees were expensed in this modification. The Restructuring Fee, Facility Fee, conversion of accrued interest, and conversion of accrued fees of $16.2 million, $10.0 million, $18.2 million, and $4.0 million, respectively represent non-cash financing activities in the third quarter of 2023 statement of cash flows. In addition the conversion of the outstanding revolver balances of $200.0 million and $171.6 million to loan principal in the first and third quarters of 2023, respectively represent non-cash financing activities in the statement of cash flows. Further, as the Company continues to forecast noncompliance absent receiving additional waivers, all fees related to the DRA totaling $35.5 million were charged to Loss on financing transactions in this modification immediately after the initial deferral.

The DRA warrants were determined to be detachable and separately exercisable from the host debt instrument but were not considered indexed to the Company’s common stock due to contingent provisions outside the Company’s control which could result in their cash settlement in certain circumstances. As a result, these were treated as incremental fees on the related debt and the liability included in Accrued liabilities with future changes in their fair value being reflected in earnings. These fees were treated consistent with other fees associated with the DRA as described in the preceding paragraph.

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Debt portfolio balances

The debt portfolio consisted of:
As of
(In millions of U.S. Dollars)September 30,
2023
December 31, 2022
Term loans denominated in USD$581.4 $195.0 
Term loan denominated in Euros183.9 182.0 
Revolver Facility8.0 332.3 
Finance leases0.3 0.5 
Other lease financing obligations3.3 3.1 
Total debt$776.9 $712.9 
Current debt and finance lease obligations$773.4 $709.8 
Long-term debt and finance lease obligations3.5 3.1 
Total debt$776.9 $712.9 

At September 30, 2023, the Company had $14.6 million of unused lines of credit, including $13.6 million under the committed, secured Amended Credit Agreement, and $1.0 million available under various uncommitted lines around the world. As a result of the Third Amendment, the Global Tranche Revolving Commitments were reduced by $30.0 million. Between May and August 2023, the Company had no availability to borrow further under its Revolver Facility until it entered into the DRA, which provided availability of up to $21.0 million in Global Tranche Revolving Commitments, subject to liquidity and other covenants. In addition, upon entering into the DRA, $18.2 million of interest and $4.0 million of accrued fees were converted to outstanding debt. During the fourth quarter of 2023, $20.0 million of interest was converted to outstanding debt. The Forbearance Agreement, among other things, required a principal payment of the USD Term A Loans of $10.9 million, permitted continued access to the Revolver Facility but limited availability to $36.4 million, and extended the deadline for delivery of the 2022 10-K and the 2023 Forms 10-Q.

As of December 31, 2022, the Company had $120.1 million of unused lines of credit, including $106.3 million under the committed, secured Amended Credit Agreement, and $13.8 million available under various uncommitted lines around the world.

Long-term debt and other lease financing obligations includes a $3.3 million and $3.1 million financing liability as of September 30, 2023 and December 31, 2022, respectively, associated with the lease of the Company’s headquarters in Orlando, Florida. The obligation originated on October 30, 2020 with the commencement of the sale-leaseback agreement for the facility that matures in the fourth quarter of 2031.

As of September 30, 2023, the Company had a weighted average interest rate of 12.60% with a base rate spread of 600 basis points on SOFR-based borrowings under the Amended Credit Agreement. Interest is payable in arrears and at maturity. As of September 30, 2023, the Company had a Consolidated Net Leverage Ratio of 7.20x resulting from trailing twelve months EBITDA, as defined in the Amended Credit Agreement of $94.0 million and a Consolidated Interest Coverage Ratio of 1.21x.

As of December 31, 2022, the Company had a weighted-average interest rate of 7.52% with a base rate spread of 375 basis points on SOFR-based borrowings under the Amended Credit Agreement. Interest is payable in arrears and at maturity. As of December 31, 2022, the Company had a Consolidated Net Leverage Ratio of 4.73x resulting from trailing twelve months EBITDA, as defined in the Amended Credit Agreement, of $129.7 million, and a Consolidated Interest Coverage Ratio of 3.19x. The Company was in compliance with the financial covenants under its Amended Credit Agreement, as of December 31, 2022 but was forecasting non-compliance with covenants in subsequent quarters. See Note 1: Summary of Significant Accounting Policies - Going Concern and Liquidity.


Note 8: Fair Value Measurements

The Company applies the applicable accounting guidance for fair value measurements. This guidance provides the definition of fair value, describes the method used to appropriately measure fair value in accordance with generally accepted accounting principles, and outlines fair value disclosure requirements. The fair value hierarchy established under this guidance prioritizes the inputs used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

21

Due to their short maturities or their insignificance, the carrying amounts of Cash and cash equivalents, restricted cash, Accounts receivable, net, Accounts payable, Accrued liabilities, leased assets and liabilities, and short-term borrowings approximated their fair values at September 30, 2023 and December 31, 2022.

The fair values of the Term Loans and Revolver Facility are measured using a market approach whose fair value inputs are considered Level 2 inputs within the fair value hierarchy.

The carrying amounts of the Term Loans and Revolver Facility were as follows:

As of
(In millions of U.S. Dollars)September 30, 2023December 31, 2022
Term loans
$765.3 $377.0 
Revolver Facility8.0 332.3 
Total$773.3 $709.3 

The Company estimates the fair value of debt to be $462.0 million and $669.6 million as of September 30, 2023 and December 31, 2022, respectively. The Company does not have any recurring Level 3 fair value measurements.

See Note 9: Derivative Financial Instruments and Hedging Activities for discussion of the Company’s derivative financial instruments and related fair value measurements.


Note 9: Derivative Financial Instruments and Hedging Activities

The Company is exposed to fluctuations in foreign currency exchange rates on the earnings, cash flows, and financial position of its international operations. Although this currency risk is partially mitigated by the natural hedge arising from the Company’s local manufacturing in many markets, a strengthening United States Dollar generally has a negative impact on the Company’s financial results. In response, the Company previously used financial instruments to hedge certain of its exposures and to manage the foreign exchange impact to its financial statements. At its inception, a derivative financial instrument was designated as an economic, cash flow, or net investment hedge.

In the first quarter of 2023, the Company engaged only in new economic hedge transactions resulting in foreign exchange volatility impacting the Company’s results. Ultimately, the Company’s going concern status became a barrier to engaging in any new hedging transaction.

Economic Hedges

The Company previously determined certain foreign currency derivatives, primarily comprised of foreign currency forward contracts, were freestanding derivatives that the Company did not designate as hedges and therefore hedge accounting did not apply and changes in the fair market value were recognized in Other income, net in the Consolidated Statements of (Loss) Income. The Company primarily used these instruments to hedge foreign currency-denominated intercompany transactions and to partially mitigate the impact of foreign currency fluctuations. The Company’s foreign currency derivative contracts are generally executed on a monthly basis. The fair value of the freestanding foreign currency derivatives is based on third party quotes.

The (loss) gain recorded to current earnings related to derivative financial instruments not designated as hedging instruments was as follows:
13 weeks ended39 weeks ended
(In millions of U.S. Dollars)September 30,
2023
September 24,
2022
September 30,
2023
September 24,
2022
(Loss) gain on foreign exchange currency contracts$ $(0.2)$2.4 $(1.8)

Cash Flow Hedges

The Company previously designated as cash flow hedges foreign currency forward contracts entered into for the purpose of hedging forecasted inventory purchases and intercompany dividends that were subject to foreign currency exposures for periods up to twelve months. Changes in the fair value of these forward contracts designated as cash flow hedges were recorded as a component of Accumulated other comprehensive loss within Total stockholders’ deficit and reclassified into earnings through the same line item as
22

the transaction being hedged at the time the hedged transaction impacted earnings. As such, the balance at the end of the current reporting period in Accumulated other comprehensive loss related to cash flow hedges would generally be reclassified to earnings within the next twelve months. As of September 30, 2023 there were no open cash flow hedges and therefore no amount remaining in Accumulated other comprehensive loss to be reclassified into earnings within the next twelve months.

The pre-tax gains (losses) recorded in and reclassified from Other comprehensive income (loss) related to derivative financial instruments designated as cash flow hedges were as follows:
13 weeks ended39 weeks ended
(In millions of U.S. Dollars)September 30,
2023
September 24,
2022
September 30,
2023
September 24,
2022
Pre-tax gain from foreign exchange currency contracts recorded in Other comprehensive income (loss)$ $(0.5)$ $1.1 
Reclassified from Other comprehensive income (loss) into Other income, net(0.2)(0.7)(0.1)0.9 
Net change in Accumulated other comprehensive income (loss)$(0.2)$(1.2)$(0.1)$2.0 

Net Investment Hedges

The Company previously designated as net investment hedges those foreign currency forward contracts it entered into to hedge the currency risk associated with a portion of its net equity investment in international operations. Changes in the fair value of these forward contracts designated as net investment hedges were recorded as a component of Accumulated other comprehensive loss within Total stockholders’ deficit. Due to the permanent nature of the investments at the time of designation, the amounts previously recorded as a component of Accumulated other comprehensive loss were reclassified to earnings if the hedged investment was sold, substantially liquidated, or control was lost. As of September 30, 2023 there were no open net investment hedges and therefore no amount remaining in Accumulated other comprehensive loss to be reclassified into earnings within the next twelve months.

The pre-tax gains (losses) recorded in Other comprehensive income (loss) related to derivative financial instruments designated as net investment hedges were as follows:

13 weeks ended39 weeks ended
(In millions of U.S. Dollars)September 30,
2023
September 24,
2022
September 30,
2023
September 24,
2022
Pre-tax gain (loss) recorded in other comprehensive income (loss)$ $11.7 $ $23.2 

Notional Value

The Company considers the total notional value of its forward contracts as the best measure of the volume of derivative transactions. These forward contracts matured on or before June 30, 2023. The notional value of forward contracts to purchase and sell currencies was:

As of
(In millions of U.S. Dollars)September 30,
2023
December 31, 2022
Notional value of forward contracts to purchase currencies$ $128.3 
Notional value of forward contracts to sell currencies$ $132.7 

There were no outstanding positions as of September 30, 2023. The notional value of largest outstanding positions to purchase and sell currencies as of December 31, 2022 was:
As of
(In millions of U.S. Dollars)December 31, 2022
Purchase Indonesian Rupiah$60.7 
Sell Swiss Francs$60.4 
Purchase Euros$35.7 
Purchase Mexican Pesos$19.0 

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Fair Value Measurement

Fair values of the Company’s derivative positions were determined based on third party quotations (Level 2 fair value measurement). The following table summarizes the Company’s derivative positions, which are the only assets and liabilities recorded at fair value on a recurring basis:

As of
Hedging instruments (in millions of U.S. Dollars)
Balance sheet locationSeptember 30,
2023
December 31, 2022
Economic hedges (non-designated):
Foreign currency exchange contractsNon-trade accounts receivable, net$ $0.4 
Foreign currency exchange contractsAccrued liabilities$ $(4.9)
Cash Flow hedges (designated):
Foreign currency exchange contractsNon-trade accounts receivable, net$ $0.1 
Foreign currency exchange contractsAccrued liabilities$ $ 

The Company’s theoretical credit risk for each foreign exchange contract is its replacement cost, but management believes that the risk of incurring credit losses is remote and such losses, if any, would not be material. The Company is also exposed to market risk on its derivative instruments due to potential changes in foreign exchange rates; however, such market risk would be fully offset by changes in the valuation of the underlying items being hedged. For all outstanding derivative instruments, the net accrued gain or loss was recorded either in non-trade Accounts receivable, net or Accrued liabilities, depending upon the net position of the individual contracts. The gain or loss amounts change based upon the Company’s outstanding exposure to fair value fluctuations. The Company has an accounting policy to present derivative assets and derivative liabilities on a gross basis.

Including the effect of master netting arrangements that provide a right of offset upon default of the counterparty, the Company’s net derivative position amounts were:
As of
(In millions of U.S. Dollars)September 30,
2023
December 31, 2022
Net economic hedge liability$ $(4.5)
Net designated hedge asset$ $0.1 

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Note 10: Accrued Liabilities

Significant components of Accrued liabilities were:

As of
(In millions of U.S. Dollars)September 30,
2023
December 31,
2022
Compensation and employee benefits$43.9 $37.2 
Operating lease liabilities18.1 18.6 
Advertising and promotion17.0 16.3 
Accrued interest16.6 0.9 
Restructuring Fee16.2  
Taxes other than income taxes17.5 18.1 
Facility Fee10.0  
Unbilled goods and services8.5 10.2 
Accrued commissions7.7 8.7 
Re-engineering charges3.8 22.6 
Accrued sales incentives and returns6.0 8.2 
Accrued freight and duties4.6 6.3 
Deferred revenue4.3 6.9 
Accrued legal and audit fees3.8 4.1 
Warrants3.6  
Accrued legal reserves3.5 2.2 
Pensions and other post-retirement benefits2.2 2.6 
Accrued consulting fees1.8 2.4 
Foreign currency contracts 4.9 
Other19.6 24.3 
Accrued liabilities$208.7 $194.5 


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Note 11: Retirement Benefit Plans

Components of net periodic cost (benefit) for the third quarters ended September 30, 2023 and September 24, 2022 were as follows:
 Pension benefitsPost-retirement benefits
13 weeks ended13 weeks ended
(In millions of U.S. Dollars)September 30,
2023
September 24,
2022
September 30,
2023
September 24,
2022
Service cost$0.7 $1.0 $ $ 
Interest cost1.3 0.6 0.1 0.1 
Return on plan assets(0.7)(0.5)  
Settlement/curtailment    
Net amortization 0.5 (0.2)(0.2)
Net periodic cost (benefit)$1.3 $1.6 $(0.1)$(0.1)
Pension benefitsPost-retirement benefits
39 weeks ended39 weeks ended
(In millions of U.S. Dollars)September 30,
2023
September 24,
2022
September 30,
2023
September 24,
2022
Service cost$2.2 $3.3 $ $ 
Interest cost3.8 2.0 0.3 0.2 
Return on plan assets(2.3)(1.5)  
Settlement/curtailment(0.1)   
Net amortization1.0 1.2 (0.6)(0.5)
Net periodic cost (benefit)$4.6 $5.0 $(0.3)$(0.3)

During the year-to-date periods ended September 30, 2023 and September 24, 2022, respectively, approximately $