10-Q 1 tup-20220326.htm 10-Q tup-20220326
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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 March 26, 2022
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 May 2, 2022, 45,845,271 shares of the common stock, $0.01 par value, of the registrant were outstanding.




TABLE OF CONTENTS

2

PART I—FINANCIAL INFORMATION
Item 1. Financial Statements
TUPPERWARE BRANDS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
13 weeks ended
(In millions, except per share amounts)March 26,
2022
March 27,
2021
Net sales$348.1 $413.9 
Cost of products sold126.1 120.3 
Gross profit222.0 293.6 
Selling, general and administrative expense203.4 221.2 
Re-engineering charges1.5 3.1 
(Gain) on disposal of assets(0.4)(7.7)
Operating income17.5 77.0 
Loss on debt extinguishment 2.1 
Interest expense4.6 11.8 
Interest income(0.7)(0.3)
Other expense (income), net4.3 (1.3)
Income from continuing operations before income taxes9.3 64.7 
Provision for income taxes6.8 20.7 
Income from continuing operations2.5 44.0 
Income from operations of discontinued operations before income taxes0.4 0.4 
(Loss) gain on held for sale assets and dispositions(2.6)1.0 
Provision for income taxes0.4 0.1 
(Loss) gain on discontinued operations(2.6)1.3 
Net (loss) income$(0.1)$45.3 
Basic earnings from continuing operations - per share$0.05 $0.89 
Basic (loss) earnings from discontinued operations - per share$(0.05)$0.03 
Basic (loss) earnings per share - Total$ $0.92 
Diluted earnings from continuing operations - per share$0.05 $0.82 
Diluted (loss) earnings from discontinued operations - per share$(0.05)$0.03 
Diluted (loss) earnings per share - Total$ $0.85 
Basic weighted-average shares48.0 49.4 
Diluted weighted-average shares51.3 53.4 

See accompanying notes to Condensed Consolidated Financial Statements.
3

TUPPERWARE BRANDS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
13 weeks ended
(In millions)March 26,
2022
March 27,
2021
Net (loss) income$(0.1)$45.3 
Other comprehensive income
Foreign currency translation adjustments14.9 3.9 
Deferred gain on cash flow hedges, net of tax0.4  
Pension and other post-retirement (costs) benefit, net of tax(1.3)1.4 
Other comprehensive income14.0 5.3 
Total comprehensive income$13.9 $50.6 

See accompanying notes to Condensed Consolidated Financial Statements.
4

TUPPERWARE BRANDS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
As of
(In millions, except share amounts)March 26,
2022
December 25,
2021
Assets  
Cash and cash equivalents$245.6 $267.2 
Accounts receivable, net86.5 86.2 
Inventory, net246.2 232.2 
Non-trade accounts receivable, net31.2 31.9 
Prepaid expenses and other current assets22.5 22.8 
Current assets held for sale7.8 7.9 
Total current assets639.8 648.2 
Deferred tax assets, net198.1 194.9 
Property, plant and equipment, net159.3 160.9 
Operating lease assets74.1 74.7 
Long-term receivables, net4.9 7.7 
Trade names, net9.9 10.6 
Goodwill42.2 42.7 
Other assets, net98.6 97.2 
Assets held for sale16.5 18.5 
Total assets$1,243.4 $1,255.4 
Liabilities And Shareholders' Equity  
Accounts payable$105.3 $123.3 
Current debt and finance lease obligations10.6 8.9 
Accrued liabilities260.1 287.9 
Current liabilities held for sale132.1 135.8 
Total current liabilities508.1 555.9 
Long-term debt and finance lease obligations799.2 700.5 
Operating lease liabilities55.5 57.3 
Other liabilities127.9 131.0 
Liabilities held for sale18.8 17.8 
Total liabilities1,509.5 1,462.5 
Commitments and contingencies (Note 19)
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 capital197.4 216.9 
Retained earnings1,125.3 1,139.4 
Treasury stock, 17,864,659 and 14,726,849 shares, respectively, at cost
(915.5)(876.1)
Accumulated other comprehensive loss(673.9)(687.9)
Total shareholders' equity (deficit)(266.1)(207.1)
Total liabilities and shareholders' equity$1,243.4 $1,255.4 

See accompanying notes to Condensed Consolidated Financial Statements.
5

TUPPERWARE BRANDS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
Common StockTreasury StockPaid-In CapitalRetained EarningsAccumulated Other Comprehensive LossTotal Shareholders' Equity (Deficit)
(In millions, except per share amounts)SharesDollarsSharesDollars
December 25, 202163.6$0.6 14.7$(876.1)$216.9 $1,139.4 $(687.9)$(207.1)
Net (loss)— — — (0.1)— (0.1)
Other comprehensive income— — — — 14.0 14.0 
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 
March 26, 202263.6$0.6 17.9$(915.5)$197.4 $1,125.3 $(673.9)$(266.1)

See accompanying notes to Condensed Consolidated Financial Statements.
6

TUPPERWARE BRANDS CORPORATION
CONDENSED 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 26, 202063.6$0.6 14.3$(896.5)$215.5 $1,161.6 $(685.9)$(204.7)
Net income45.3 45.3 
Other comprehensive income5.3 5.3 
Stock and options issued for incentive plans— — (0.3)19.1 (0.2)(18.1)— 0.8 
March 27, 202163.6$0.6 14.0$(877.4)$215.3 $1,188.8 $(680.6)$(153.3)

See accompanying notes to Condensed Consolidated Financial Statements.
7

TUPPERWARE BRANDS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
13 weeks ended
(In millions)March 26,
2022
March 27,
2021
Operating Activities
Net (loss) income$(0.1)$45.3 
Less: Loss (income) from discontinued operations2.6 (1.3)
    Income from continuing operations$2.5 $44.0 
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization10.7 9.8 
Unrealized foreign exchange (gain)(3.1) 
Stock-based compensation
2.9 1.8 
Amortization of deferred debt issuance costs
0.5 1.3 
(Gain) on disposal of assets(0.4)(8.7)
Provision for credit losses
3.3 1.0 
Loss on debt extinguishment 2.6 
Write-down of inventories3.6 2.3 
Net change in deferred taxes
4.6 (0.7)
Net cash settlement from hedging activity
(2.5)(3.1)
Other
(0.1)(0.7)
Changes in assets and liabilities:
Accounts receivable
(1.8)(0.4)
Inventories(13.7)(34.0)
Non-trade accounts receivable
(6.3)(11.5)
Prepaid expenses1.0 0.6 
Other assets2.7 (2.5)
Accounts payable and accrued liabilities(27.4)(12.7)
Income taxes payable(14.5)2.5 
Other liabilities(3.3)(3.2)
Net cash (used in) operating activities$(41.3)$(11.6)
Investing Activities
Capital expenditures(6.0)(7.4)
Net proceeds from divestiture 2.4 
Proceeds from disposal of assets
0.5 9.9 
Net cash (used in) provided by investing activities$(5.5)$4.9 
Financing Activities
Term loan repayment (34.0)
Borrowings on revolver facility128.0  
Repayment of revolver facility(23.0) 
Net increase in short-term debt 32.4 
Debt issuance costs payment (0.3)
Finance lease repayments(0.3)(0.3)
Common stock repurchase(75.0) 
Cash payments of employee withholding tax for stock awards(0.8)(1.4)
Proceeds from exercise of stock options 0.5 
Net cash provided by (used in) financing activities$28.9 $(3.1)
8

Discontinued Operations
Cash provided by (used in) operating activities0.1 (2.0)
Cash (used in) provided by investing activities(0.1)28.1 
Cash (used in) provided by discontinued operations$ $26.1 
Effect of exchange rate changes on cash, cash equivalents and restricted cash(2.9)(4.1)
Net change in cash, cash equivalents and restricted cash(20.8)12.2 
Cash, cash equivalents and restricted cash at beginning of year273.8 150.5 
Cash, cash equivalents and restricted cash at end of period (a)$253.0 $162.7 
(a) Includes $0.2 million and $0.2 million of cash on discontinued operations as of March 26, 2022 and March 27, 2021, 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 the “Company” or “Tupperware”, 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.

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 2021 Consolidated Financial Statements included in the Company's Annual Report on Form 10-K for the year ended December 25, 2021. Operating results of any interim period presented herein are not necessarily indicative of the results that may be expected for a full fiscal year.

Discontinued Operations

Discontinued operations include certain key brands of the Company’s beauty business including House of Fuller, Nutrimetics, and Nuvo. Avroy Shlain was sold in the first quarter of 2021. As of the first quarter of 2022, the Company was completing final customary closing arrangements with the buyer for House of Fuller. The sale closed in the second quarter of 2022. For more information, see Note 22: Subsequent Event. The Company is evaluating the non-binding offers received for Nutrimetics with the intent of entering into a definitive agreement in the second quarter of 2022. The Company continues to actively explore strategic alternatives for Nuvo.

In the third quarter of 2021, the Company determined that these dispositions represented a strategic shift that would have a major effect on its results of operations. As such, the results of the beauty businesses are reflected as discontinued operations including all comparative prior period information in these Condensed Consolidated Financial Statements. Certain costs previously allocated to the beauty businesses for segment reporting purposes do not qualify for classification within discontinued operations and have been reallocated to continuing operations. See Note 13: Held for Sale Assets and Discontinued Operations, for additional information.

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.

Economic Uncertainties

For the first quarter ended March 26, 2022, the Company's business activities continue to be impacted by the Coronavirus pandemic (“COVID-19”), most notably in Asia where lockdowns persist and infection rates have increased. In addition, the Company's business activities, particularly in Europe, experienced volatility and were impacted by the Russia/Ukraine conflict. As a result, many of the Company's estimates and assumptions require 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.


10


Since early 2020, the Company has followed guidance from the Centers for Disease Control and Prevention ("CDC") and the World Health Organization ("WHO") on actions required by individuals and businesses following the declaration of COVID-19 as a pandemic. Since 2020 the pandemic has impacted worldwide economic activity and many governments have implemented policies intended to stop or slow the further spread of the disease. These policies, such as shelter-in-place orders, travel restrictions, and quarantine requirements, remained in place for a significant period of time, resulting in the temporary closure of schools and non-essential businesses and restrictions on travel and in-person gatherings. The Company has continued to respond by taking actions to keep employees protected, support the Company's global sales force and their communities, and maintain business continuity.

Equity

On February 28, 2022, the Company entered into a new Accelerated Share Repurchase ("ASR") agreement with Wells Fargo Bank, National Association ("Wells Fargo"), under which the Company paid $75.0 million and received an initial share delivery of 3,438,264 shares of the Company's outstanding common stock, which were immediately retired. The initial number of shares received was calculated as 75% of the $75.0 million divided by the price of the Company's common stock on February 25, 2022 of $16.36. Pursuant to the terms of the ASR agreement, the final number of shares for the remaining 25% of $75.0 million to be repurchased by the Company will be determined upon settlement of the agreement on or before June 28, 2022. Wells Fargo has the right to invoke an accelerated valuation date of May 27, 2022. The final number of shares to be repurchased will be based on the volume-weighted average price of its common stock over the duration of the ASR agreement, less a discount.

New Accounting Pronouncements

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. In addition, the FASB also issued ASU 2021-01, "Reference Rate Reform (Topic 848)" to refine the scope of ASC 848 and ASU 2020-04 in response to Reference Rate Reform in January 2021. ASU 2021-01 adds guidance to clarify which optional expedients in ASC 848 may be applied to derivative instruments that do not reference LIBOR or a reference rate that will be discontinued, but are modified as a result of the discontinuing transition. This guidance was effective upon issuance through December 31, 2022. The Company continues to evaluate the impact of the potential adoption of these amendments and expects that they will not have a material impact on its Consolidated Financial Statements.

Note 2: 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 the selling, general and administrative expense line item. 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 ended
(In millions)March 26,
2022
March 27,
2021
Distribution costs$32.9 $40.0 

11

Note 3: 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. These activities are 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.

Programs are generally designed to recognize Sales Force members for achieving a primary objective. An example is holding a certain number of product demonstrations. In this situation, the Company offers a prize to Sales Force members that achieve the targeted number of product demonstrations over a specified period. The period runs from a couple of weeks to several months. The prizes are generally graded, in that meeting one level may result in receiving a piece of jewelry, with higher achievement resulting in more valuable prizes such as a television or a trip. Similar programs are designed to reward current Sales Force members who reach certain goals by promoting them to a higher level in the organization where their earning opportunity would be expanded, and they would take on additional responsibilities for adding new Sales Force members and providing training and motivation to new and existing Sales Force members. Other business drivers, such as scheduling product demonstrations, increasing the number of Sales Force members, holding product demonstrations, or increasing end consumer attendance at product demonstrations, may also be the focus of a program.

The Company also offers commissions for achieving targeted sales levels. These types of awards are generally based upon the sales achievement of at least a mid-level member of the Sales Force, and her or his down-line members. The down-line consists of those Sales Force members that have been directly added to the Sales Force by a given Sales Force member, as well as those added by her or his down-line member. In this manner, Sales Force members can build an extensive organization over time if they are committed to adding and developing their units. In addition to the commission, the positive performance of a unit may also entitle its leader to the use of a Company-provided vehicle and in some cases, the permanent awarding of a vehicle. Similar to the prize programs noted earlier, these programs generally offer varying levels of vehicles that are dependent upon performance.

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 selling, general 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 ended
(In millions)March 26,
2022
March 27,
2021
Promotional costs$52.0 $63.2 

Note 4: Incentive Compensation Plans

Stock Options

Stock option activity for 2022, under all of the Company's incentive plans, is summarized in the following table:

Stock OptionsWeighted Average 
Exercise Price Per Share
Aggregate Intrinsic Value
(in millions)
Outstanding at December 25, 20213,233,672 $40.41 $12.6 
Expired / Forfeited(62,951)61.23 — 
Outstanding at March 26, 20223,170,721 $39.99 $16.2 
Exercisable at March 26, 20222,170,721 $57.22 $ 
12



Market and Performance Awards, Restricted Stock and Restricted Stock Units

The Company also grants restricted stock, restricted stock units, performance-vested awards, and market-vested awards to employees and directors, which typically have initial vesting periods ranging from one year to three years. The activity for such awards in 2022 is summarized in the following table:

Shares
outstanding
Weighted 
average grant date 
fair value
Outstanding at December 25, 20214,500,211 $5.71 
Time-vested shares granted566,437 16.36 
Performance and market shares granted481,332 16.36 
Performance and market share adjustments(18,689)5.20 
Vested(307,896)11.59 
Forfeited(24,908)15.60 
Outstanding at March 26, 20225,196,487 $7.47 

Stock-based compensation expense was:
13 weeks ended
(In millions)March 26,
2022
March 27,
2021
Stock options$0.1 $0.1 
Time, performance, and market vested share awards$2.9 $1.7 

Unrecognized stock-based compensation expense and the weighted average years to recognize the unrecognized stock-based compensation was as follows:
As of
(In millions)March 26,
2022
Unrecognized stock-based compensation expense$29.7 
Weighted average years to recognize the unrecognized stock-based compensation2.6 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:

13 weeks ended
(In millions, except share amounts)March 26,
2022
March 27,
2021
Shares retained to fund withholding taxes42,986 44,999 
Value of shares retained to fund withholding taxes$0.8 $1.4 
13

Note 5: Re-engineering Charges

Re-engineering charges are mainly related to the “Turnaround Plan” which launched in mid-2020 with the new leadership. The key elements of the Turnaround Plan include: increasing 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. Re-engineering charges are primarily related to severance costs, outside consulting services, and facility costs. The Company expects re-engineering expenses to continue this year and next year related to the Turnaround Plan. Total charges incurred to date related to the Turnaround Plan are approximately $44.5 million, $37.7 million related to severance charges, and $6.8 million related to other charges, primarily consulting costs. The Company expects to incur $15.0 million to $20.0 million of Turnaround Plan charges in 2022.

Re-engineering charges were:

13 weeks ended
(In millions)March 26,
2022
March 27,
2021
Turnaround plan$1.5 $1.6 
Other 1.5 
Total re-engineering charges$1.5 $3.1 

Total re-engineering charges by segments

Total re-engineering charges by segment were:

13 weeks ended
(In millions)March 26,
2022
March 27,
2021
Asia Pacific0.2 0.1 
Europe0.5 1.1 
North America 1.6 
South America 0.3 
Corporate0.8  
Total re-engineering charges by segment$1.5 $3.1 

The balance included in accrued liabilities related to the Turnaround Plan was:

As of
(In millions)March 26,
2022
December 25,
2021
Beginning balance$12.9 $18.7 
Provision1.5 14.8 
Currency translation adjustment(0.1)(0.4)
Cash expenditures:
Severance(1.3)(12.7)
Other(1.0)(7.5)
Ending balance$12.0 $12.9 




14

Note 6: Income Taxes

The effective tax rate was:

13 weeks ended
March 26,
2022
March 27,
2021
Effective tax rate73.1 %32.0 %

The change in the effective tax rate for the first quarter of 2022 as compared to first quarter of 2021, was primarily due to:

negative impact of the Global Intangible Low Taxed Income (GILTI) regime, which results in no benefit for any losses incurred in the U.S.
unfavorable mix of income between our U.S. and Non U.S. operations that drive the Company’s tax expense
additional valuation allowance on disallowed interest expense due to the change in 163j rules from EBIDTA to EBIT. The Company maintains a full valuation allowance on deferred tax assets for interest carryforwards.

Uncertain tax positions and related interest and penalties were:

As of
(In millions)March 26,
2022
December 25,
2021
Accrual for uncertain tax positions
$31.0 $31.0 
Uncertain tax positions impacting effective tax rate if recognized
$25.4 $25.4 
Interest and penalties related to uncertain tax positions
$3.3 $3.3 

There was no change in the first quarter of 2022 to the uncertain tax position reserves. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world. The Company is currently under examination or contesting proposed adjustments by various state and international tax authorities for fiscal years ranging from 2004 through 2020. It is reasonably possible that there could be a significant decrease or increase to the unrecognized tax benefit balance during the course of the next twelve months as these examinations continue, other tax examinations commence or various statutes of limitations expire. While the Company does not currently expect material changes, it is possible that the amount of unrecognized benefit with respect to the uncertain tax positions will significantly increase or decrease related to audits in various foreign jurisdictions that may conclude during that period or new developments that could also, in turn, impact the Company's assessment relative to the establishment of valuation allowances against certain existing deferred tax assets. An estimate of the range of possible changes cannot be made for remaining unrecognized tax benefits because of the significant number of jurisdictions in which the Company does business and the number of open tax periods.

Note 7: Earnings (Loss) Per Share
Basic (loss) earnings per share - Total is calculated by dividing net loss by the basic weighted-average shares. Diluted (loss) earnings per share - Total is calculated by also considering the impact of dilutive securities such as stock options, restricted shares, restricted stock units and performance share units on both net loss and the basic weighted-average shares.
15

The elements of the earnings per share computations were as follows:

13 weeks ended
 (In millions, except per share amounts)March 26,
2022
March 27,
2021
Income from continuing operations$2.5 $44.0 
(Loss) Income on discontinued operations$(2.6)$1.3 
Net (loss) income$(0.1)$45.3 
Basic weighted-average shares48.0 49.4 
Effect of dilutive securities3.3 4.0 
Diluted weighted-average shares51.3 53.4 
Basic earnings from continuing operations - per share$0.05 $0.89 
Basic (loss) earnings from discontinued operations - per share$(0.05)$0.03 
Basic (loss) earnings per share - Total$ $0.92 
Diluted earnings from continuing operations - per share$0.05 $0.82 
Diluted (loss) earnings from discontinued operations - per share$(0.05)$0.03 
Diluted (loss) earnings per share - Total$ $0.85 
Excluded anti-dilutive shares2.7 2.9 
16

Note 8: Accumulated Other Comprehensive Income (Loss)

The change in accumulated other comprehensive income (loss) was as follows:

(In millions, net of tax)Foreign Currency Items (a) (d)
Cash Flow Hedges (b)
Pension and Other Post-retirement Items (c)
Total
Balance at December 25, 2021$(664.5)$0.2 $(23.6)$(687.9)
Other comprehensive income (loss) before reclassifications14.9 0.4 (1.3)14.0 
Other comprehensive income (loss)14.9 0.4 (1.3)14.0 
Balance at March 26, 2022$(649.6)$0.6 $(24.9)$(673.9)
____________________
(a)    Foreign currency item amounts reclassified from accumulated other comprehensive income (loss) impact the other (income) expense, net line item in the Condensed Consolidated Statements of Income (Loss).
(b) Cash flow hedge amounts reclassified from accumulated other comprehensive income (loss) impact the cost of products sold line item in the Condensed Consolidated Statements of Income (Loss). See additional information for cash flow hedges at Note 14: Derivative Financial Instruments and Hedging Activities.
(c)     See additional information for pension and other post-retirement items at Note 18: Retirement Benefit Plans.
(d)    Included in the ending balance as of March 26, 2022 is $140.4 million of accumulated foreign currency losses that have been included in the calculation of the loss on assets held for sale recorded in 2021 and will reduce the accumulated foreign currency losses upon completion of the sale of the disposal group.

(In millions, net of tax)Foreign Currency Items (a)
Cash Flow Hedges (b)
Pension and Other Post-retirement Items (c)
Total
Balance at December 26, 2020$(648.4)$0.2 $(37.7)$(685.9)
Other comprehensive income (loss) before reclassifications3.9  1.0 4.9 
Amounts reclassified from accumulated other comprehensive income (loss)  0.4 0.4 
Other comprehensive income (loss)3.9  1.4 5.3 
Balance at March 27, 2021$(644.5)$0.2 $(36.3)$(680.6)
____________________
(a)    Foreign currency item amounts reclassified from accumulated other comprehensive income (loss) impact the other (income) expense, net line item in the Condensed Consolidated Statements of Income (Loss).
(b) Cash flow hedge amounts reclassified from accumulated other comprehensive income (loss) impact the cost of products sold line item in the Condensed Consolidated Statements of Income (Loss). See additional information for cash flow hedges at Note 14: Derivative Financial Instruments and Hedging Activities.
(c)    See additional information for pension and other post-retirement items at Note 18: Retirement Benefit Plans.


Amounts reclassified from accumulated other comprehensive loss that related to cash flow hedges consisted of:

13 weeks ended
(In millions)March 26,
2022
March 27,
2021
Cash flow hedges (gain) losses$ $ 
Tax (benefit) provision  
Amounts reclassified from accumulated other comprehensive income (loss) for cash flow hedges$ $ 

17

Amounts reclassified from accumulated other comprehensive income (loss) related to pension and other post-retirement items consisted of:

13 weeks ended
(In millions)March 26,
2022
March 27,
2021
Prior service costs (benefit)$0.2 $(0.1)
Actuarial (gains) losses(0.3)0.6 
Tax provision (benefit)0.1 (0.1)
Amounts reclassified from accumulated other comprehensive income (loss) related to pension and other post-retirement items$ $0.4 

Note 9: Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents include time deposits, certificates of deposit, or similar instruments. Any funds that the Company is legally restricted to withdraw, including compensating balances, are classified as restricted cash. Restricted cash is recorded in prepaid expenses and other current assets and in the other assets, net line items in the Condensed Consolidated Balance Sheet. A reconciliation of the Company’s cash and cash equivalents in the Condensed Consolidated Balance Sheet to cash, cash equivalents, and restricted cash at end of period in the Condensed Consolidated Statement of Cash Flows is as follows:

As of
(In millions)March 26,
2022
December 25,
2021
Cash and cash equivalents$245.6 $267.2 
Restricted cash7.4 6.6 
Cash, cash equivalents and restricted cash at end of period$253.0 $273.8 

Note 10: Accounts Receivable

The accounts receivable and allowance for credit losses balance was:
As of
(In millions)March 26,
2022
December 25,
2021
Account receivable$118.2 $117.3 
Allowance for credit losses(31.7)(31.1)
Accounts receivable, net
$86.5 $86.2 

Note 11: Inventories

Inventories balance net of any inventory allowance was:
As of
(In millions)March 26,
2022
December 25,
2021
Finished goods$179.3 $181.2 
Work in process35.8 28.4 
Raw materials and supplies31.1 22.6 
     Inventory, net $246.2 $232.2 
18

Note 12: Long-Term Receivables

The long-term receivables and allowance for long-term receivables balance was as follows:

As of
(In millions)March 26,
2022
Long-term receivables, gross$32.0 
Beginning balance for allowance for long-term receivables$(25.6)
Write-offs 
Recoveries0.1 
Provision(2.3)
Currency translation adjustment0.7 
Allowance for long-term receivables$(27.1)
Long-term receivables, net$4.9 


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. Long-term receivables, gross that were past due were:

As of
(In millions)March 26,
2022
December 25,
2021
Long-term receivables past due$28.2 $29.2 

As of December 25, 2021, gross long-term receivables was $33.3 million and the associated allowance was $25.6 million.


Note 13: Held for Sale Assets and Discontinued Operations

Discontinued operations include certain key brands of the Company’s beauty business including House of Fuller, Nutrimetics, and Nuvo. Avroy Shlain was sold in the first quarter of 2021. As of the first quarter of 2022, the Company was completing final customary closing arrangements with the buyer for House of Fuller. The sale closed in the second quarter of 2022. For more information, see Note 22: Subsequent Event. The Company is evaluating the non-binding offers received for Nutrimetics with the intent of entering into a definitive agreement in the second quarter of 2022. The Company continues to actively explore strategic alternatives for Nuvo.

The Company has determined that these dispositions represent a strategic shift that will have a major effect on its results of operations. As such, reflected below are 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 businesses for segment reporting purposes do not qualify for classification within discontinued operations and have been reallocated to continuing operations. In 2021, the Company recognized a loss on the classification of held for sale assets of House Fuller, Nutrimetics, and Nuvo of $133.5 million based on total expected proceeds less costs to sell. The loss primarily relates to currency translation losses of $140.4 million which remain in accumulated other comprehensive income. In connection with the loss, the Company recorded a contra-asset and liability on the balance sheet which will be derecognized and the related currency translation removed from accumulated other comprehensive income upon completion of the sales.



19

Financial Information of Discontinued Operations

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


13 weeks ended
(In millions)March 26,
2022
March 27,
2021
Net sales$38.5 $46.4 
Cost of products sold14.5 16.7 
Gross profit$24.0 $29.7 
Selling and administrative expenses22.9 28.2 
Re-engineering charges0.3  
Other expense, net0.4 1.1 
Income from operations of discontinued operations before income taxes$0.4 $0.4 
Loss (gain) on disposal of assets2.6 (1.0)
  (Loss) income from discontinued operations before income taxes$(2.2)$1.4 
Provision for income taxes0.4 0.1 
   Net (loss) income from discontinued operations$(2.6)$1.3 

The carrying amount of major classes of assets and liabilities classified as held for sale that were included in discontinued operations at March 26, 2022 and December 25, 2021 are shown in the table below.

20

As of
(In millions)March 26,
2022
December 25,
2021
Assets 
Cash and cash equivalents$0.2 $0.2 
Accounts receivable, net14.5 14.9 
Inventory, net26.4 25.8 
Non-trade accounts receivable, net2.8 2.2 
Prepaid expenses and other current assets1.7 1.5 
Accumulated translation adjustment losses, current(37.8)(36.7)
Total assets of discontinued operations - current$7.8 $7.9 
Deferred tax assets, net4.2 6.2 
Property, plant and equipment, net8.1 7.8 
Operating lease assets11.7 11.1 
Trade names, net6.9 6.7 
Goodwill1.8 1.7 
Other assets, net3.5 2.7 
Accumulated translation adjustment losses(19.7)(17.7)
Assets held for sale$16.5 $18.5 
Total assets of discontinued operations$24.3 $26.4 
Liabilities
Accounts payable$13.3 $17.0 
Accrued liabilities30.9 30.5 
Accumulated translation adjustment losses, current87.9 88.3 
Total liabilities of discontinued operations - current$132.1 $135.8 
Operating lease liabilities9.0 8.6 
Other liabilities9.8 9.2 
Liabilities held for sale$18.8 $17.8 
Total liabilities of discontinued operations$150.9 $153.6 


21

Note 14: 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. In response, the Company uses 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 is designated as a fair value, cash flow, or net investment hedge.

Fair Value Hedges

Fair value hedges are entered into with financial instruments such as forward contracts, with the objective of limiting exposure to certain foreign exchange risks primarily associated with accounts payable and non-permanent intercompany transactions. For derivative instruments that are designated and qualify as fair value hedges, the gain or loss on the derivative, as well as the offsetting gain or loss on the hedged item attributable to the hedged risk, are recognized in current earnings. The change in fair value of hedged items results in adjustments to their carrying amounts.

13 weeks ended
(In millions)March 26,
2022
March 27,
2021
(Loss) gain on fair value hedges$(1.5)$1.0 

Cash Flow Hedges

The Company also uses derivative financial instruments to hedge foreign currency exposures resulting from certain forecasted transactions or purchases and classifies these as cash flow hedges. The majority of cash flow hedge contracts that the Company enters into relate to inventory purchases or intercompany dividends. At initiation, the Company’s cash flow hedge contracts are generally for periods ranging from one month to fifteen months. The portion of the gain or loss included in the assessment of hedge effectiveness is recorded in other comprehensive income (loss) and is reclassified into earnings through the same line item as the transaction being hedged at the time the hedged transaction impacts earnings. As such, the balance at the end of the current reporting period in other comprehensive income (loss), related to cash flow hedges, will generally be reclassified within the next twelve months. The associated asset or liability on the open hedges is recorded in other current assets or accrued liabilities, as applicable.

13 weeks ended
(In millions)March 26,
2022
March 27,
2021
Pre-tax gain recorded in other comprehensive income$0.5 $0.2 

Net Investment Hedges

The Company uses derivative financial instruments, such as forward contracts and certain Euro denominated borrowings under its Credit Agreement, to hedge a portion of its net equity investment in international operations and designates these as net investment hedges. Changes in the value of these financial instruments are included in foreign currency translation adjustments within accumulated other comprehensive income (loss). Due to the permanent nature of the investments, the Company does not anticipate reclassifying any portion of these amounts to the income statement in the next twelve months. Changes in fair value, net of tax, recorded in other comprehensive income (loss) and the pretax income on forward points was as follows:

13 weeks ended
(In millions)March 26,
2022
March 27,
2021
Pre-tax (loss) gain recorded in other comprehensive income$(2.4)$1.8 

22

Notional Value

The Company considers the total notional value of its forward contracts as the best measure of the volume of derivative transactions. The notional value of forward contracts to purchase and sell currencies was:

As of
(In millions)March 26,
2022
December 25, 2021
Notional value of forward contracts to purchase currencies$52.4 $96.4 
Notional value of forward contracts to sell currencies$52.2 $99.2 

The notional value of largest outstanding positions to purchase and sell currencies was:

As of
(In millions)March 26,
2022
Sell Chinese Renminbi$34.2 
Sell Korean Won$11.6 
Purchase Euros$29.1 
Purchase United States Dollars$23.3