Tupperware Brands Corp (TUP) 2008 Q3 法說會逐字稿

I know most of you in this room. This will be hi. How are you this morning, dear? We are web cast and we are live also. So what I would ask, please is that you hold your questions until the end of their presentations and then when there are questions, Herbert we would like to wait. We will have a couple of people to walk around with microphones so the people on the phone or later web cast gets the benefit of your questions, okay? Firstly let me tell you what I am going to do. Am I supposed to change the slide (inaudible)? Okay. I guess. Let me know when you've got those slides ready to go. What I am not going to do is read you slides. You know the drill with regard to forward-looking statements, but our release went out yesterday. We would be happy to answer any of your questions later. I am going to make some introductory remarks and then I am going to turn it over to Simon for about a half hour, so the bulk of what the presentation this morning will really be Simon. Mike will cover some highlights of the earnings release, but we don't want to waste your time reading what you already have read in the earnings release but we'll be happy to get a little bit more granular and help you understand a little bit more. A couple of introductory statements. Generally I don't have Simon at these meetings because Simon is President and COO. He is responsible for running the day-to-day business and you can't do both, run the external piece of the business, the strategy piece and run the business. So these are what I would think mildly calling unique times.

It's funny, I was at one meeting yesterday, excuse me, last week in New York City, and somebody-- it was a financial meeting and somebody's gum popped. We looked around. We didn't know if it was gum or a gun-- it was-- because it has been very, very difficult. That's why, by the way, we made the decision to have this meeting today because we want you to understand just a little bit more of our business and why we believe clear communications are important in the time ahead. I'm, again not going to read you these slides, but what I do want to point out are a couple of things on this slide. Our core business very sound. We are pleased with what's happening there. Most of our people are shocked around the world that this was a stock that earlier this year was over 40. We were in the mid-30s six weeks ago, and for us to be 19 and something yesterday when our fundamental business and our managing directors see what is happening to their business, they say this doesn't make any sense. Many of them entered national markets, never felt Wall Street made any sense anyway.

But, our fundamental business model is sound. Our business model is particularly solid for these kinds of times of economic uncertainty. And as I say that, we would rather have times of robust economy and all of our markets because our average order gets higher with customers. However, we have a great counter-- the counter-cyclical piece of direct selling is that when it is difficult economic times our recruiting pool tends to go up, and so the average order may be under pressure, but we are a go-to business and there's levers that we can push. Simon will comment on those. We have-- this is not a one-trick pony business. I will tell you joining this Company 15 years ago, this Company was basically Germany, and as a Board of Directors, when we spun off the Company, we used to say what's going to happen when there's issues with Germany. Now we've had an improving Germany but even with Germany, probably half of the size it was 15 years ago because of the pressure with now more than $1 trillion, they've had to pump into the reunification, everyone really underestimated the cost of bringing in former East Germany. This Company has continued to grow.

So it is a different business than it was. Simon will get into-- in our emerging markets it is very early days in our emerging markets. We have reached the point of-- we will be finished with our investments in all of those markets by the end of this year. So it really is going to be a time to grow in those. And then finally we are financially sound, as a Company. We've always, even during the period when we were going through radical change in our business in the 90s, we were able to support our dividend and never starve our business. We are now, we are down to the debt to total cap and the EBITDA targets multiples. Michael will take you through what our attitude is there, and we will talk about share repurchase going forward. Nothing has changed about the vision of the Company. By the way this was the vision of the Company prior to the acquisition of Sara Lee's businesses and BeautiControl, to be the premier global direct seller of premium innovative products. And we talk about our three constituencies out there, what we've got to deliver to our consumers, really differentiated products.

We do not sale commodity items. We are not competing with Rubbermaid. Our sales force is key to us. They're our key customer actually out there, and what we provide them is an earning opportunity. Our associates, that's all of us, we've got to give them an opportunity to grow. I will say that's one of our key sources of competitive advantage, we believe we have the strongest global direct sales management team in the industry, and we have it because we have not only attracted talented people. We have developed them. I spend about 40% of my time on leadership development out there, since the beginning of the year, I have been gone 67% of the time working on people development because we are very much a people business. We have now more than 2.2 million people around the world. So, each of these elements is important.

We are now, today, and this is probably the most misunderstood thing about us, what we are. Most people still tend to think we're the old Tupperware Company, milky white burping bowls who basically sold through a party to stay-at-home moms. That's not the business today. By the way, some have suggested well, you wouldn't have that issue if you changed the name of the Company. We have looked at do premier global direct, you do one of those, but it is the brand equity of the name and the respect globally for Tupperware brands with consumers and with governments around the world. It's simply too important to -- we are the second most respected household brand name in the US, number four in Germany. When you sit there and think GE and Sony in this country are number 13 and number 14, why would you want to give up that brand name? We simply have to do a better job of communicating what we are.

To try to do that, I have talked about is-- firstly we are not like Avon. Avon is generally by the way, Simon and I both spent a good deal of time in senior management at Avon all over the world. Avon is a wonderful company but it generally does the same thing everywhere. I say that because I worked at Avon, here at head quarters, in Europe and ran Asia Pacific before coming back as Jim Preston's number two.. They basically had repeater stations. We are much more like news corporation. Now, not in the same industry, the same kind of configuration out there. What they basically are is a conglomerate of these different companies, but all share the same DNA, they're in the communications business, communications and entertainment.

You will take it even from the early days, Rupert Murdoch and his tabloids to taking it through other daily publications, they really dominated that to their-- , not only the purchase of Fox, but the acquisition of Dow Jones, now, have you ever noticed what's happening to the front page of the Wall Street Journal? It is moving more tabloid, type style, that's the influence of news corporation. Finally they bought Facebook, and so you see, they're really getting in even in that for the future. so we sit there and say we are a global portfolio of direct selling companies and Simon will get into how we adapt and adopt those businesses around world. It is interesting, that's what they do at News Corp. In England, no offense, Simon, the Brits like tabloids. If it is sensational, look at a news rack in England some time. That's the kind of-- there's only one sophisticated publication really over there and it is the Financial Times. That's what sells in that market. We know that in Latin America, beauty is what sells down there. Beauty doesn't do well in western Europe in direct sales. That's why it is not our focus there. The same kind of levers we have had at our disposal. I want to read this to you because it was interesting..

This is five days ago, the chairmans of News Corps release for their annual shareholder meeting right here in New York. He said we intend-- by the way, they've had six record years. We intend to stick to our strategy that has brought us success, first diversified assets at various stages of development, second judicious investment in businesses that represent the next generation of growth, and then finally, the flexibility that comes from a strong balance sheet and cash generation. And then further I will take you and he said, this strategy coupled with more than a half century-- we have 60 years-- will help us weather the economic storm. It will also guide our decisions as we look to increase our businesses. Clearly, we are going to expand our role in such places as eastern Europe, Asia, Latin America, India and in these emerging economies we are seeing the creation of a global class of more than two billion people. Interesting.

These people are well educated, well renumerated and increasingly sophisticated in their choices and in the years ahead, their entry into the global marketplace surely means extraordinary new opportunities for our Company. We can put almost these exact words in our annual report. We are going down the same kind of a path. This was our strategy from 1992 to 2007, to get this Company back on track again. You see, we had really four things we had to work on. Refresh the core. I don't know why we put that in such a small space there. That was the heavy lifting. That required a great deal of money, changing a culture, changing behavior, but we went through that. Growing in the emerging markets and finally expanding into beauty. We are largely finished with stage one. We have changed our product line. It doesn't even look the same as what it was in the past. The products are changed, design is now a key function. By the way, new products are a big part of what we do, 25% of our sales are coming from new products on the aboard.

What we try to do is keep going to spaces where there isn't any competition, and then when competition knocks it off out there, we get on to new spaces out there because we have this two million plus sales force. The party has changed it is not for stay-at-home moms. It is a girls night out. It is social simulation and the compensation structure has changed too. Because women today-- she's in the looking for pin money, she's looking for a career, I'll tell you, doesn't care whether it is the US or India, we're seeing the same kind of trends. Our emerging markets. We have made the investment there. We'll be finished with it this year. We are in scale in most of those markets and we have made this big move into beauty as a direct selling company. So, largely we are finished with Phase I. This is our second phase right now, and this is what the management team is working on. We have got three focuses, they're in the green which are a market focus and three focuses which are people in process. Our market focus-- this whole thing is about focus, fix, and grow. It isn't a lot of new and different things. Now it is continue this execution.

Key focus will be on priority markets, not only established but emerging markets and Simon will show you which markets those are. It is a group of about a dozen markets there that produce more than 90%. So it is hold steady on those, grow those that have momentum, fix those that are flat but still very profitable. Two, leverage our brands to grow Latin America. We really are in an attack mode of Latin America starting with our Mexican business and we are really starting to see robust growth leading through Central America, Venezuela, where we have been up more than 25% for three or four years now. Uruguay where we have now have a beauty more than a 50% market share, but we now have accelerating growth in Argentina and we're going to be taking new tacks this year in our Brazilian business. By the way it is the most fertile direct selling area of the world. And then, finally, fix, merge or exit the weaker, smaller businesses. By the way there's only a few of those. We are not going to get into detail on those because what we like to do is do that in an evolutionary nondisruptive way so there are no charges. But simply, it is the old GE approach. We want to be one or two in these markets, have scale or not be there because they're a distraction. On the people in process, we going to continue building this very strong leadership team all over the world.

Simon is later today-- he heads for Mexico. I am off to the Philippines and then the eastern Europe where we are going to be, then it is basically training with our people there to taking that leadership level up to the next level. We are going to be strengthening our sales and marketing teams out there. Those are the big levers of direct selling, and then we've-- Nike has been kind enough to really look over our shoulder and give us great guidance on supply chain out there.

As you may know, Nike really doesn't make anything, but look at the brand they've built. . They really have 502 factories that is are Nike but you don't see a lot of CapEx because there's other people doing it. I often find it interesting when they introduced a golf ball at the same time Callaway spent well more than $100 million building a new golf ball factory in low-cost Southern California to deliver golf balls in a world that already has excess capacity and Tiger lives in my neighborhood and we saw him out there, this was five years ago, testing a precept ball which is made by Bridgestone. And then all of the sudden Nike was in the ball business made by Bridgestone out there. We are learning a lot from what they have shown us at Nike. We have 17 factories out there. We want to have five to seven factories. This is more supply chain about us learning how to do third party sourcing.

At any rate I am going to turn it over to Simon and a little background. Simon and I worked together at Nine West 57th Street at Avon. I was sent to Europe, had businesses over there and then I went to Asia-Pacific. When I come back as Preston's number two, Simon was our marketing chief, and this was, I remember week number one. We had to do $1 billion write off for previous management got us into the health care business and we knew nothing about health care. That was a-- boy talk about a time of fix a business, but it was a good time because we got Avon back on the grow again. Simon has more than 30 years direct sales originally from London where he's had responsibility for many markets in Europe, spent five years living and working in Japan, many years here working in the US, and now he's had 15 year of experience with the Latin America market. So, we work very, very well together, and compliment each other. So Simon I will turn it over to you. Can you see

Oh yeah, I think I will be all right. Thank you, Rick. I'm under strict instructions to keep this to 30 minutes, and so I am going to do that. I don't normally read off a script, but this time I will read off a script because there's a lot of information to impart. I am going to really drill down on the emerging markets. That's really looking forward in terms of why we believe they can grow, and then I will conclude my remarks and tell you what we are doing to really reinvigorate our core businesses. I might add that I actually, I might travel about 40% of my time, but I am very much focused on running the day-to-day operations. I am very focused on making sure we come home with a good fourth quarter and very focused on 2009. But, as I said to someone earlier this morning, in order for corporations to grow, you have to plant the seeds of growth. That's really what we are talking about especially when it comes to the emerging markets.

I have known Rick a long, long time. There have been fun times as well is part of the business. I love the Tupperware business because it has so much potential. I have a marketing background and the potential for the brand I think is fairly substantial. So let's turn to the first slide. There are three items which influence how we structure our business model by market. First of all, the sales force compensation structure to use the product to sell and the actual selling method. All of these can be independently adjusted as needed on a market by market basis. This flexibility allows us to adjust our external forces and change within the markets as well. The flexibility of our business mode enable us to combine the right sale force compensation structure, product line and selling situation to match the needs of each of our markets. So for example, in the US, we use a tiered compensation model utilizing the party approach for both our Tupperware and beauty markets, however each has its own separate sales force. In Europe we primarily utilize our traditional distributer model.

Over the past couple of years we've added an additional manager level which we call team leaders, which has enabled us to provide sales force with the career replacement income opportunity as well as it has enabled the distributors a broader range of control and to allow them to expand more rapidly. Due to the characteristics of the market we focus on selling primarily Tupperware products through a party. In Latin America, it is a single level compensation model, meaning the sales force earns a commission on its own sales but not on those of others, with primarily a beauty focus. Here it is the channel that is key. Half of the population choose to make their purchase through the direct selling channel in Latin America and the sales force will carry more than one brochure as they collect orders every two weeks from their clients. The key is to really incent the sales force to show our brochure over our other direct selling competitors. Other than China, our Asia Pacific segment utilizes both the traditional distributor model as well as the hybrid tiered compensation model similar to the US. We sell both Tupperware and beauty primarily through the party except in China where we have retail outlets and sell through home demonstrations. As Rick has earlier said we are a global portfolio of direct selling companies, our portfolio is one of established and emerging markets. Year-to-date at the end of the third quarter, our emerging markets comprise slightly more than half of our sales, and three-quarters of our sales force.

The (inaudible) size in the emerging markets is really a function of the single level model that we deploy in our Mexico and South American markets. So for example at Fuller Cosmetics Mexico we expect to have in excess of 500,000 independent sellers by the end of 2008. That's quite a number. Oh, sorry. Yes. On this side you can see the countries that currently make the most significant contribution to our sales and profits within our established and emerging markets and incidentally, I might add China, India and Indonesia collectively account for 47% of the world's population. Let me now amplify where we are in the emerging markets. Our business is particularly well suited for the emerging markets and is driven by three primary factors. First of all the environment has a limited earning opportunity for women, and one where our opportunity can be very compelling compared with what can be earned in more traditional ways. Secondly there are generally less of a defined retail infrastructure in these markets, and thirdly, usually the population growth rates are significant meaning many new consumers. We really are in the early stages with penetration in these emerging markets. We do business in over 30 emerging markets around the world and year-to-date, through the third quarter, local currency sales growth is 20%. We generally look for sales force growth to somewhat mirror sales growth. However in the emerging markets, we are not only seeing the size of the sales force rapidly grow but we're also working on achieving strong gains in productivity. Whether it be in order size in our campaign merchandising markets or party average in our markets where we have group sales. We believe we are in the second or third inning of a nine inning game. That's baseball you are talking about; right? Oh cricket. By the way.

Have you ever been to a baseball game is this.

Once, but it was hard for me to follow I have to say.

To illustrate this we are going to drill down a little more detail than we have in the past. We are doing this now to help bring substance to the comments I just made and most likely we will not provide this level of detail every quarter. With that said let's look at Europe and Asia Pacific segments that established an emerging markets. The emerging markets would include countries like Russia, China, India, Indonesia, South Africa, Turkey, just to name some of the larger ones.. The established would include Germany, France, Italy, Spain, Australia and Japan. As you can see, based on distributors, one per million of population. That's the population above the poverty line our established markets are almost twice as penetrated as our emerging markets. If you look at the party average, while we wouldn't say that the emerging markets can quadruple in size due to lower GDP per capita, there is definitely room for growth in our average party sales. Where we might be able to double over the next several years. To give you a point of reference, let me give you an example, looking at the former Soviet Union compared with our largest Tupperware established market, Germany, Germany has two distributors per one million people. The former Soviet Union has 0.9 distributors per one million people. So, there's room to double in size purely by penetration. The former Soviet Union party average with a three year cage of 12% is still less than a quarter of Germany's party average and India is even more telling. With 0.3 distributors per one million above the poverty line and a party average a little over one-tenth the size of Germany's party average. So we have a lot of room for growth even as these economies face challenges because of our low penetration level and potential for future productivity improvements. We believe we will continue to see very strong growth as we move forward.

We continue to foresee significant growth potential in virtually all of the emerging markets that we operate in and there are really four compelling reasons. First of all, there's still plenty of room demonstrated toward geographic growth in all of these markets. Secondly as the middle class grows so does the GDP of these markets. This is particularly relevant to our Tupperware business. Thirdly increasing we are extending our training of the sales force and as they become more sophisticated this improves our overall productivity and this results in enhancement of their earning opportunity. Fourthly, consumers in the emerging markets are very brand aware. While the Tupperware brand is well renown we have spent a great deal of time in building our brands in these markets.

In our brand recognition can still be improved upon in some of these markets. The consumers in emerging markets are generally younger, which is a good thing, more fashion conscious and brand oriented than their counterparts here in the US and Europe. We have positioned our brands to appeal to the needs of the consumers in these markets. We are not thought of as a plastic company rather our consumers view us as a dynamic brand that caters really to their product needs, environmentally friendly, excellent quality and we're very affordable. They associate strongly with celebrity for example.

On this slide you will see [Lee Ying Ling] who we use in China. He's a well known singer, actor and cooking show host who endorses and uses our Tupperware products on the shows. Across all of our emerging markets as Rick just mentioned, we have gone to great length to make sure we have a strong and experienced management team. Human capital is really at a premium in these markets and we attract the best.. We've also focused on putting in place the best possible local marketing teams and it is paying off as we are segmenting the product lines to build a different consumer groups and this slide really attempts to demonstrate this very clearly.

Now all I am going to do is talk to you about what we are doing in China, what we're doing in India, what we're doing in Indonesia and then what we're doing in Russia. These are four very important markets for us. So now, let me now just discuss China. Looking at geographic expansion possibilities, we are look at our business in China. Due to the uniqueness of the China market and working with the government there, we use retail outlets. We have a little over 2,700 of these outlets in both residential areas as well as in the malls. As we look into each type of outlet, we found that by focusing expansion the commercial or mall outlets that they have much higher productivity due to the higher foot traffic. So. our focus has shifted to opening more commercial outlets. Based upon our own geographic mapping we believe that in China we have potentially-- potential for over 10,000 outlets. Needless to say we'll have to make sure that we continue to strengthen our own management organization to realize this potential. Importantly this business model is working well for us. It is growing, it is profitable and delivers excellent returns. [Vincent Lee Yang], our managing director is not only an excellent leader but he has surrounded himself with a very strong loca,l management team and most especially in our sales and marketing organizations. And we have a very compelling earning opportunity in China. In fact it is very dramatic. An average outlet earner can earn as much as a manager in a hotel or in the health care sector and they-- a top outlet manager you can earn well over $40,000. We have some of our best managers pushing up toward $200,000 a year. That's a sizable amount of money for anyone to earn even in China these days.

There's also great productivity story that we have here which is already beginning to play out. We have been rotating into having a greater share than we've had outlets in commercial versus the residential areas. We see a much higher customer traffic sales here. This works even in light of the higher operating costs for the outlet owners due to the high volume. As well we've had productivity growth by, working with our shop owners to add sales people with an objective going from one on average when we started up to four. These people provide direct service by going to the customer's homes and actually demonstrating our products. Finally we have been training our outlet owners to hold demonstrations in their own stores which have been another terrific productivity builder.. We really are actually right on the leading edge here in China. And we are really building a very, very powerful brand in China. It is an exciting business, just one example is just as Swatch turned watches into fashion accessories so we have turned our ordinary tumbler into a must-have accessory. Look at this collection of multiple uniquely designed tumblers, they're absolutely fantastic. You will see some of these examples around the room, and we have actually also spinning the strategy around the world. By the way, our consumers really like them in China because so far we have sold over 10 million tumblers in China and by the way, the gross margins are just excellent. That really helps us.

So, let me now continue our journey and let's take a look at our business in Indonesia which is one of over fastest growing markets. We have succeeded where others have failed. Avon pulled out of this market, having lost a signigicant among of money because they did not modify their business model. Our model not only works here but we make money in Indonesia. We offer a powerful earning opportunity. Our unit managers have brought a few others into our business, earn about what those in the broader economy do for about 40 hours of work per week. Our top manager team leaders make much more than the average person in the economy. So it is really a great inspirational element for them as well. Even at the general sales force level we are much better than average on an hourly basis as we come ourselves with sales forces that might be spending 10 hours per week on their business versus full time employment in the broader economy. This schedule allows them flexibility to take care of the family. Here again we have an exceptionally strong management team led by [Nining Fanurma] an exceptional manager, just as in China we have our tailored marketing plans to fit the wants and needs of our consumers. Let me give an example of one of these products. This is our [Soyer] line as an example of it actually behind me which is packaged very nicely, that we developed to meet the needs of our Asian consumers. It is just one example of how we are tailoring our products to match the local marketplace. Incidentally we have also been able to export this product line to our European markets where it is also working well. I believe our sales and marketing teams are stronger than many other western blue chip companies operating in Indonesia. We do have a very strong management team on the ground in this market.

Let's now go to India. We are particularly pleased with our progress that we are making in this market which has so much potential for growth for us. As the emerging middle class has started to gain strength, so our business has moved up. We have in place a foundation upon which we can build a very sizable business and a management team which will lead us to growth. [Asia Glupter] is our managing director and she's a very stylish and very capable leader with a great team around her. In this market our earning opportunity is not quite as compelling as we would like it to be, but as we grow our sales and add more sophisticated products that will change. Nevertheless ours unit managers earn $1,800 per annum and the best ones earn almost $10,000 per annum and this is over three times as much as the managers in the manufacturing consumer products or health care sectors make for example. In India our Company growth is outpacing our competitors and we are actually making good money here as well.

As in other markets in India, we tailor our products to meet the needs of our consumers. The availability of clean water is a major challenge in India as it is for most of the emerging markets. So we are developing a range of water containers and water purifiers under our Tupperware brand, Eco, which is a new brand that we're developing. The first product of this range will be Eco water bottle and it will be launched in India. The one liter Eco bottle represents a high quality, durable and reusable alternative which provides a quick sustainable water solution and we will put water purifying tablets with this to go into the water. As a side bar, by the way, the world, and this is a good opportunity for me to have a drink of water, discards 154 billion liter bottles made like this each year. They take 1,000 years to degrade. That is something that we'll do. This will help the environment.

Now let me, now let's go to Russia. Russia has been a fantastic experience for us. Tupperware Russia is our biggest success story among our newer emerging markets as we have grown so far to about half our potential in terms of distributors. We have also done a good job in driving productivity. But, as I've said, still only one third of Western Europe's productivity. We have done this through training to encourage the selling of sets of products, to be able to promote features and benefits of our higher priced products and we have also done a good job of building brand. As you can see on this slide our earning opportunity to all levels of our sales force is very compelling, very compelling. It is certainly helped to enable our sales force to grow. We are exceptionally pleased with the growth and development of our CS markets. These used to be Russia and the old Soviet Union. And one of our strongest and really one of our most passionate leaders, if you ever met her. she just blows you out of the room, is [Elena Putaleni] who leads this market and prior to joining us, by the way, she was a doctor. She barely made enough money to fill up her car each week to travel backwards and forwards to the hospital that she worked at.. This business is really growing strongly and has great, great returns, an excellent business.

I look at this next map and I thought wow. In the former Soviet Union we have deployed the classic Tupperware distributorship model. As of today we have 160 distributors, incidently, most of them are husband and wife teams and are highly educated, have highly educated backgrounds a lot of them used to be doctors, scientists and teachers but they found they can make an awful lot more money by running a distributorship for Tupperware. This map is daunting given the share size of the geography but we know we have plenty of room to grow. Including when we look at the number of distributors we have in relationship to the population size. Our supply lines are also well equipped to deal with this growth. And we are really becoming a household name in Russia. I can tell you that. We have established a strong brand presence. We have been able to accomplish this through sales expansion, sponsoring national TV cooking programs using Tupperware products, press advertising and extensive public relations programs. This has also helped us to attract a high caliber of associates to manage the business.

Now I would like to finish our emerging market tour with South America. And, Rick mentioned how important we view South America for growth. It is a big direct selling market in all sense of the word. We believe we have excellent opportunity to aggressively grow our business in South America where in many of the markets direct selling is a stronger channel of distribution than retail. That's especially true of the beauty segment. Also these markets, the Tupperware brand is well recognized and it is a well desired brand. Significantly the base that we have established in Mexico are combined operations, by the way, are projected to deliver $500 million in sales which makes us. I'm pretty certain, the number one direct seller in Mexico. What that allows us to do is we can share resources out of these operations. We can share our knowledge and we can support our South American expansion. I rather refer to it. I call it project footprint when you duplicate the business model just as if you are putting your foot in the sand. Based on the population and our (inaudible) number of distributors and sales force (inaudible) in these countries we believe we have significant opportunities to grow here. Also, Columbia and Chile are potential future opportunities for us.. While we have been in Brazil with Tupperware for a number of years, we have only just introduced our beauty into Brazil markets in the past six to seven years. We just began really to tap into this beauty potential. I might add that in 2005, the South America we had Company sales of just over $61 million and today we estimate that this will rise to $160 million by the end of 2008 because we are just getting going. We put $100 million worth of Company sales on in a three year period.

Direct selling in Latin markets is very much a channel of distribution. In each of these markets we provide the sales force with a Tupperware catalog and a Fuller cosmetics catalog. This is not too dissimilar to what other competitor, Avon does this. But I would lake to think that our Tupperware branded catalog is a much better than the types of products that they offer. The reason being we understand the worth of our brands and the brand has been cultivated over the years. A very big opportunity for us also in these markets and really unlike Europe and other established markets is that the population of Latin America is young. It is a very vibrant population and it's very family oriented. We have expanding our children's category under a sub-brand called Circo which is Tupperkids. This initiative is being led by our Mexican operations and the early sales indicators are very, very positive. Of course, everyone loves to buy products for their children.

And really among our beauty segments our largest emerging markets businesses are in the Philippines and of course our Fuller business in Mexico. In terms of growth tunes among markets we are currently operating in the start up mode. We see the biggest potential in Argentina and Brazil where we are running businesses under the Fuller brand name which is very similar to what we are doing-- in fact it is the same as we are doing in Mexico. Among the countries we are not in with beauty but potentially could decide to enter some day. We think the biggest opportunity would be for us in Russia, we estimated the Russian beauty market would be $6 billion I think by the year 2010 if I recall. Eastern Europe and China where it is estimated to be up to $16 billion by the year 2015 if I recall that number. Then I said a moment ago this is where we have our fastest growing Tupperware emerging market so we can leverage the resources that we have there. I have also already mentioned that South America we are looking at entering Columbia as our first major opportunity.

Now I am going to conclude my remarks very quickly. I would like to with what we are doing in established markets. As Rick said, the core established markets are very important to us. Why we believe that we can continue to grow in these tough economic times. The key to our continued success of course is increasing the size of our sales force. We believe that we can continue to do that. Firstly by we can focus on market segmentation. There are a lot of segments within our established markets that are under served by Tupperware. Secondly, by always staying if tune with the trends, and you have seen the products around. These are products that we have in Europe that are right on the trend and things our consumers really want and also by leveraging the brands that Rick talked about. These brands are very highly regarded in these markets.

I have already mentioned team leaders. Suffice to say that we have put team leaders into some of our established markets in Europe and really the benefit here is that say it reduces the span of control which leads to more effective sales organization They extend the reach of our distributors so it allows us to further penetrate the geography we are already in and it really adds an attainable and aspirational position within the sales force structure. Fourthly, provided we are able to improve our productivity, total earnings and sales force will increase. We have some of our distributorships have team leaders in Germany, and we have experienced a 5% sales increase which may not sound a lot but in Germany year-to-date our sales are flat. So 5% is quite a jump versus the national. One of the other thing we are doing, we are segmented. I was talking to someone here in this room that recently we've launched a new business that we have been test marketing in California, and it is called Armond Dupree beauty business in the US.

Basically we are bringing the Fuller cosmetics line over the Mexican border the to serve the US Hispanic market and we are what we are going to do is this market doesn't have the kind of-- BeautiControl doesn't have this kind of appeal for this kind of market. We can sell Fuller product line at very competitive prices especially when we compare them to Avon. While this business is just getting off the grown, the critical performance indicators are very, very positive in terms of productivity in terms of activity and in terms of the gross margin. Now we have to go out and build a large sales organization. And by the way, in our Tupperware business in our BeautiControl business we are developing segmented strategies for the Hispanic markets here in the US and I can tell you in the third quarter our Tupperware Hispanic market grew by 18%. So we see that there's real potential in this strategy. And one of the things-- Rick alluded this. I have a strong marketing background and I also mention that I really feel that will the Tupperware brand has yet to be fully realized.

It has incredible brand power name, strong as Avon's brand power name. I used to think that was strong. When we talk to most of our consumers they tend to think of it is a plastic containers company. We are much more than that. When you think about it we are closely associated with the kitchen, with cooking and also with outside activities. So you may or may not have observed that our core Tupperware business is undergoing a makeover. In the established market it is really critical we reach new circles of new consumers so we've got to really appeal to these new consumer and actually we have to up our marketing game. And that's what we are doing.

And so part of our contemporization effort is that we have focused our products and our catalogs on being a life style company, more equated to product you might think of when you visit Williams-Sonoma. Not just basic food storage serving lines but high-tech differentiated and demonstrable products that I will be happy to show you some of these products afterwards. And we are also added significantly more color into the product line because the consumer is attracted by our high fashion color. They like all sorts of different colors for their kitchens. I won't go into detail here, but what we have been doing is also linking Tupperware to celebrity chefs. I don't know if you have seen but the power of celebrity chefs around the world is growing. We have done this with considerable success. We have a chef that promotes our products on television and goes to our sales organizations in Germany. His name is Horst Lichter. He's a very funny guy actually. We have an Austrian chef, Erich, he also has a TV cooking show where he promotes our products, and we have a top celebrity chef, [Marie Lowe] who supports our products in Greece. By the way our Greek market has been growing double digits this year. We've been there for a number of years. So, really what we are trying to do is externalize the message and reach new consumers in our established markets. This will take time to get traction but we are on the way.

In beauty we have created product lines that is appeal to a newer, younger consumer. By the way in your product bag you will find a fragrance called [Palea], now Palea is one of the most famous pop stars in Mexico, Latin America, and in actually the Philippines, that broke all records for fragrance sales in our Mexican market. By the way we are the number one fragrance seller in Mexico even when compared to Avon. We sell more fragrance units than any of the competitors in the marketplace. This Palea has so far gone past $3 million in sales and the gross margins, by the way are excellent. So, even after we pay the royalty. By the way, we promote Ms.Uruguay, we promote Ms. Mexico fashion beauty competitions in these markets. So really the intention here is to get us out there in the market place and make sure that people know who we are.

And then the other thing that we have done is really it is terrific is that we have extended our Tupperware line with premier consumables called TupperLiving which includes our Essence line. You will see in the room. In 2008, not because I'm a Brit, we launched Tea Escape which lends itself to a party theme. So, we are having tea parties which is another good reason to come to a party. Everyone likes a cup of tea even here in the States. These are really unique life style collections, premium consumables. They generate incremental sales from the products, and that support the core Tupperware product line. It is another reason to have a party by the way. Importantly, they start to leverage the power, the equity that we do have in our Tupperware brands. And, here in the US, we are spending quite a bit of money on public relations. I try to keep that budget under control I do manage budgets with an eye of steel. But really what we are doing here is to contemporize our image.

We need do that over here, that's what our research tells us and it also helps our sales organization reach new consumers. Just one example is that we have partnered with Brooke Shields for the Chain of Confidence campaign and so far we have generated 135 placements in top tier publications and broadcast and reached 285 million readers and viewers. Brooke also attended our jubilee here in the US and Canada this past August and actually this past weekend, God bless her, she hosted a tea party here in New York. That was a first for Tupperware and I understand it was a terrific success. 70. That's pretty good. I didn't get there. I had to go run the business you know, someone else was there.

Anyway, and then I am just going to conclude with licensing. I like licensing because it is part of the time it makes contemporizes the Company, and it reaches new consumers. So we really expanding our licensing not only here in the US but also around the world and linking up with as soon as a new film is released we generally get the license for our plastic containers but also for our fragrances and cosmetics for the younger end of the consumer. So we are able to spin these and utilize these licenses right around the world. We are seeing considerable success. It really is another way of externalizing and modernizing how people perceive the companies and the brands we operate in. So really that concludes my remarks. There's a lot more I could talk about but I realize we don't have the time. I ran a little bit over time. I apologize for that, but I have only really been able to briefly talk about the transformation that's going on at Tupperware Brands Corporation. I'm really personally-- I love working in the business, it is a great business to lead. We have great management teams and I really do believe we have great potential. I don't like to be part of business that don't grow. I've never been that-- even in the Sara Lee days, we would grow our businesses when they wouldn't and they would look across at us and wonder what it was we were doing. I told them it was about leadership and planting the seeds of growth. You don't grow if you don't have anything to grow with down the road. In the emerging markets we have plenty to grow. I's going to conclude with the first financial chart, the so what.

So wrapping this all together, looking at the local range local currency sales outlook by emerging and established markets, in total we expect to grow by 6 to 8% in local currency. Versus our previous long range guidance of 5 to 7% and with established markets at 1 to 2% and emerging markets we're pegging at 12 to 14%. Frankly speaking, and I know I shouldn't probably say this I would be disappointed if we didn't do better than this because of the opportunity that we have. What? Yes. It is -- so I am going to hand over the Mike who probably said I shouldn't have done that. Mike, over to you. Thank you, everyone. Thank you for your attention.

Simon, it's true you shouldn't say that, but you should do it.

(Inaudible) this is an emerging market economy so the dynamic growth there going on for several years.. We are also nicely profitable when you look at those markets over all for sure.

Okay. The top line a few things from the third quarter results you saw that we were up 13% in dollars which was a nice result in really focusing on local currency, how we manage the business we were up 8% which was at the high end of the range we gave in July we said 6 to 8%. We were certainly pleased with that. The emerging markets led the way with a 21% increase for the quarter. EPS we were $0.05 above our range that we gave in July where we said $0.37 to $0.42. In that $0.05 upside was even with lower benefit from foreign exchange than we were seeing in July as the rates moved. Rick, your mic is on. So that was about a $0.04 hit on FX versus where we were in July. So without that we were even better. And you can see there detailed the things that moved the numbers. When we look at our full year forecast we have narrowed the range. You saw that in our release to the high end of what we said before. We were at seven to nine and now we're eight to nine. Again with the lions share or the growth really coming from the emerging markets that is up 17 to 18%.

Simon noted we are 20% year-to-date. So continued good growth going forward. And then the range for diluted EPS excluding the items impacting comparability, the $2.57 to $2.62 does reflect a lot of FX since the last guidance in July where we were saying we would have $0.23 to $0.25 favorable FX now using the rates from Friday it was at even with last year to positive two. A huge swing there. We did add $0.03 to the guidance, up because of the good results in the third quarter. Simon mentioned on the sales where we're going long tern to 6 to 8%. So, 1% up from the 5 to 7% we have been talking about. We have also increased our longer range guidance for pretax profit return on sales by 0.5 point from 9 to 10 to 9.5 to 10.5. The other thing I will mention here. This is in our release as well because of the big moves in the FX rates we noted if those rates from Friday we were to stay the same through next year we would take a nine percentage point hit on our sales comparison purely from the FX, that's before the local currency growth. And the EPS impact would be a negative 37 to 39. So that's versus the $2.57 to $2.62 that we're talking about here.

To give you a frame of reference or how you could think about FX, the guidance we have given this year implies 280 to $285 million or so of segment profit. In 2007 we made 92% of our profit outside the US. A one percentage point move in currency all in the same direction if the foreign currency were to strengthen for example would help us by three, between $0.03 and $0.035. So, that goes in both directions.

I apologize for interrupting -- (inaudible)

Right.

And we have -- your guidance right now is assuming that the FX is going to improve?

No. We are talking about the comparison with that, with 2009 versus 2008.

Okay.

So if the rates were to stay the same from last Friday all the way through next year when we compare 2009, 2008 will have an impact of $0.37 to $0.39.

Thank you.

Okay. Cash flow and liquidity of course take on an even enhanced importance today than it probably did three or six months ago.

The good news on some of our working capital lines inventory, short term receivable, accounts payable the days there are all at or slightly better than where we were last September. From a cash flow forecast point of view we have confirmed today 110 to $120 million that we see of cash flow from operating activities net of investing activities, that's the same we said in July when we actually raised the $10 million from where we were before. That doesn't include a significant fourth quarter insurance recovery from the fire we had in our Hemingway, South Carolina facility last December. It includes 65 to $75 million of capital spending.

We noted in our release as well that we closed the quarter with $100 million of our revolver borrowings, which is above where we would have normally been. We held back on paying down $55 million that we can have with the cash we had available. We had $145 million of cash in total but $55 million we can have used to pay down the revolver. We didn't do that from a liquidity protection point of view. And so we will see what that looks like at year end. Based on the midpoint of the cash flow forecast we have given the 110 to 120 and our other assumption, the full year debt reduction versus where we began the year would be in the $60 million plus range to $535 million or so. We opened the year with $593 million of debt and again, depending on how liquidity situation looks we may or may not decide to actually completely pull that trigger.

We also because of the strength of what we have seen in our business, and where we are with our leverage announced yesterday that our board had approved moving to use not only stock option proceeds to buy back shares which is we had started doing in May 2007 but to also use some of the cash flow from our business operations. So our authorization is $150 million through the end of the third quarter. We had brought back $64 million using stock option exercise proceeds and will continue to use those. But we also expect to spend $10 million in the fourth quarter and at this point, $40 million next year on share buy backs that would be incremental to any stock option proceeds and to give that a frame as well. We paid, will pay this year about $54 million in dividends so it is equivalent to something like a 75% increase in the dividend if you include both. This does reflect we expect to be at the end of the year in our 1.5 to 2 times EBITDA leverage range we have talked about for awhile now. At the end of the third quarter we were at 2.3 times that included not having paid down the debt by the $55 million. If that had been done, we would have been at 2.1 times which inconsistent with where we were at the end of June. We have included now the debt covenant calculation on our web site and there's a link noted at the end of our press release if you are interested in seeing that.

Even with the share buy backs that we are talking about, we do expect to continue to pay down debt going forward. It is worth understanding from that debt covenant point of view, that having stock buy back significantly in excess of what we're talking about here, wouldn't be possible with the current debt covenant. That's one thing to consider. All thing that said we will look at and the Board will look at next year and going forward the possibility of dividend increases so they haven't decided they would or wouldn't but will look at that. Finally some of the things we thought were important to highlight on the value chain before I turn it back over to Rick. Obviously there has been a huge change in oil and gas prices since we last gave our update in July. At that time we said that we thought that there would be a 9 to $10 million negative impact on the cost of the raw materials running through our numbers in 2008.

That really hasn't changed because of the timing of when we buy the resins and when they hit our numbers, so that 9 to $10 million remains but in 2009, last time we gave the guidance, we said we thought we would have another 9 to $10 million hit for next year. We now think that we will make up at least most of that potential down side given where oil and gas prices and resin prices are and where we think that they're going. That's really an update on that. From a value chain point of view, wanted to highlight some of the things we think we will be able to do, look to do and can do in light of the more difficult economic circumstances you see out there. So notwithstanding we continue to grow we were up like we said 8% in local currency in the third quarter, we projected growth going forward.

To the extent we see less than growth and just to tighten things up in general, these are some of the things we have worked on, average order size is very important for us, it's one of the things we need to do under any circumstance in our beauty , other segments where we're operating around break even, we are talking about doing some restructuring within our South American business to improve the value chain there and we recorded some cost in the third quarter for that. Our promotional spending is 17% of sales or it was in 2007, and we will continue to spend a lot promotionally but we are always looking to refine how we are doing that and we will continue to do that and think there are things we can do more wisely still drive the business. But to watch those costs. We do, we have been benefiting from volume leverage on our fixed costs and we are projecting future volume increases so we see further opportunities there. But to the extent that is not happening and also to improve the value chains and the units where we need to do that we are looking very closely and can do things with some of our fixed costs in light of the volume ups and down opportunity that is we have.

Distribution costs are another area in some markets we are above where we think we shall be and so we have been working on projects and will continue to do that that we think can help our value chain over time in some of those markets. And then finally on gross margin management we were at about a 65% gross margin percentage and have been always. As we look at our pricing and mix decisions there, there's always things that we can manage in terms of pricing in line with the consumer inflation in the various markets. But then also, based on the various costs of products, resins and so on, as we promote different items we obviously take into account the various cost structures and how that is going to come out for our sales force and for us. So we will continue to do that but there's opportunities in there and flexibility in there that we will look to be mindful of and maximize. So with that I am going to turn it over to Rick for closing comments and then we will open it up to

Thanks, Mike. Mike, would you flip the next slide I will get into it. By the way before you leave please take one of the bags of sample products just to give you a feeling real quickly because this is where, we have more than two million demonstrators. One of the things in there I have always called this one, the Ferrari of salad spinners, it is an incredible product and very easy to use and then there's a seal, a Tupperware seal on the top. A little effort but really by the way this sells for $50 in Europe. So very, very high-tech. I want you to see that, so some parties will be around healthy eating salad, and this will be the main thing that we sell there. You will see new products we are going into, micro fiber, textiles that we use for table top, that you will see how absorbent this is. This is a very interesting product.

We have launched this. BeautiControl is our business for really high-tech skin care. And by the say, if you just IBIS Research Firm just came out with predictions for the next couple of years in the beauty industry and expect beauty sales to continue particularly in skin care to be 4 to 5% up even in this time of economic turmoil. The last big product Simon and I introduced when we were at Avon was called Anew, Morgan Hare was our head of skin care at that time She's head of skin care at our BeautiControl business. This is a new product, it's called Nekara outside the US but tight firm and fill. It is one of those products that goes to the second layer of the skin and by the way over 90% of, in the tests had remarkable results within the three days. What it does is just like Anew was the filled alpha hydroxy, that acid that filled in crows feet here, you will see results, 97% of the respondents saw results in three days. So I have tried to since we did the test phase of this, to bathe in this stuff. So you will, but it is a great product you will see.

By the way, our new, this is an example of our new corkscrew that works even with plastic corks out there. We've had two things at financial meeting we have sitting around the tables our corkscrew and our ice cream scoop get stolen. You have people in there making six and seven figures and they're stealing our ice cream scoops and corkscrews so if you want more write us. We will get you one but you will start seeing them . This is a $30 ice cream scoop. This is like a surgical instrument. You dip it in hot water it retains the heat or cold and the water then-- excuse me, the ice cream is like soft butter. This is a kind of way for brand wise we differentiate. We don't sale $5 ice cream scoops. It is high-tech stuff out there.

Last slide though, this is the why invest, and I am not going to read this slide, really you do believe because if you look at this we have lots of sources of sustainable competitive advantage. We are very clearly, this portfolio of global direct sales companies. There's a lot of things we don't know but we know direct sales and we know different kinds of models. We know the beauty side of the business and the durables side of the business. By the way our management team-- if you met our operating management committee, we are from all over the world. Most speak at least two languages some as many as five, unless you're English and generally they have a hard time with just one language. But no, it really does represent a lot of strength for us. We believe we are going to have a lot of growth going forward, as you see we have upped our estimates with regard to top line growth.

We've been saying 10 to 12 for emerging market, I think we just moved that to 12 to 14 and year-to-date we are up 20% By the way our numbers going forward with projections of share repurchase et cetera we don't even need to get to these levels to do that. So we are are-- I think we are being very realistic out there as far as our capability. We are going to continue to support this dividend. We are committed to it, and we are not starving the business. The business is getting all of the cash it needs. I think our multiple right now is what? Eight or I mean it is just. Yes. We are used to these kinds of businesses with these kinds of brands having in the high teens or low 20s. I know a lot of people are singing that song right now. And I think the most important thing is we don't know what's going to happen in this economic environment but we have a very flexible business model that we can adapt to the shifting tides out there. Anyway I'd like to open it for any questions. I know we have got a couple of people on the line. Could I ask, too, that Doug, Amy, you guys are on the line. We will take your question before we go to the room and then in the room, Herbert if you would pay attention to who we call on so you can bring the microphone.

Yeah, can you hear me okay.

Yeah, I can.

I guess I have to ask about the beauty business, I saw the average actives across your beauty portfolio was up 2% in the third quarter which is a sharp deceleration from being up 9% in the second quarter can you talk about your global beauty business and the slowing there?

Doug, I think in the beauty North America business a lot of f that was BeautiControl and that reflected the recruiting environment and what we were doing with our program. So we did talk about in our release that we've gone to a more attractively priced hit for the fourth quarter and we think that can really help move the needle there as we look to get that business doing what we would like it to. When we look at the beauty other segment, we've seen a lot of good productivity there which is one of the things I was talking about what we need to do with the average order size. There I think the story is relatively healthy in terms of getting the KCIs really more in line where they should be.

And I would comment on the-- if you do a comparison to the Tupperware business in the US and Q3 to the BeautiControl business, Doug, it clearly is a sales management issue in our BeautiControl business and we have are addressing that, firstly with a more attractive kit and some management changes. If you will look if contrast to our Tupperware business we have really kicked into gear with regard to very, very strong recruiting. So we believe that you are going to see in 2009, the trend change at BeautiControl.

One other thing I should mention in Beauty other, is we combined our businesses in the Philippines by putting our Tupperware business in with our beauty business and that had a big impact on the sales force numbers.

That's right.

By the way, the business did very well in the Philippines compared to where it has been. We think that's confirming we made the right move.

Okay. Thank you.

Can we go to any questions in the room, please? Dara, please?

Thanks. You highlighted the flexibility in your business model if you do see an impact from the macro economic environment. Can you talk specifically about return on sales, if you were to see a big hit pr the macro environment and do you have flexibility to pull back on some of your promotional spending or is there leverage if you do see a big macro economic impact or do you need to actually invest more behind the business to try to drive sales if you see an impact there?

We spend on promotions 18%. So we have, that's our heaviest area right there of investment spending and what you generally have the opportunity to do is-- when this are changes in that macro economic environment, shift where you put that 18%. Generally what you start to do is move more of that money on the mix of where you are spending it because you could be spending that to, for the sale force, to recruit, to get active. You could be spending it to get people to come to parties and consumers. You start to direct that more at sales (inaudible) for recruiting kinds of incentives.. The first button you press isn't spend more money it is to push it more on the recruiting side. The average order may be under pressure, but we will have a larger sales force. That's what.

Now if it continues the only place we have ever seen most of these cycles only last 18 months to two years of the higher unemployment in the higher context markets. The only place we have seen a difference there is in Germany, we have now had 18 years of $100 billion a year they've been spending, $80 billion a year they've been spending in Germany on reunification. So it has been unemployment north of 10% for almost 20 years. So there it's -- you kind of fizzle out. So we really had to then go beyond the normal investment level. Would you add anything?

I think that's right. When you look at our leverage, and things like that within our fixed cost, on the Tupperware side on a manufacturing basis about 40% of our cost is the raw material. So the other 06% are the buildings, machinery and equipment. So there's leverage both directions on that. Of course we look to match our capacity over time with the size of our business.

On the beauty side in manufacturing, it is much more weighted toward raw materials and components in terms of the cost of the products. So it would be, it shall be less of an issue there, other than any kind of a rebalancing. And then when we look at our marketing offices and so on. Of course we are always try to go have the right investment in terms of people and resources given the size of the business and trend. So, we grow as we grow the business, and if things change we look at that.

Simon.

I will also add that in 2009 planning process, that we are asking each of our operating companies to build a contingency over and above what they have or what they agreed the plan would be so there's a safety net there. Very strong about managing the gross margins and I review these operations along with Mike on a monthly basis and we know just how the sales developing on a weekly basis. And then the other thing that's going be a high priority for us is to make sure any excess inventory gets turned into cash and we are going to take a close look at the size of the product lines and we're going to take a close look at making sure that the new products we introduce deliver what they're expected to do. So, we are tightly managing the business and as we steer our way through all of this. So it will be good prudent management because we do want to protect our returns for sure.

It is interesting this new plan we are calling vigilance plan, 2009. The naval ship I was on before you work out it said vigilance, the price of safety and success. We are sitting there saying we don't think it is business as usual out there. What we understand is don't cut the things that is are the muscle of the business, the revenue generation side of the business. But look at everything that has to do with regard to fixed and variable costs and we are expecting contingency plans coming out of that. And then, with regard to the balance sheet items, things like the accounts receivable and inventory we are even working on incentive plans to insure our people turn that stuff into cash. Not because we have issues. We don't want to have issues, there going forward. So you go in with almost the positive assumption of a negative result.

I am just wondering if I could maybe get a more near term outlook on how some of your non-US geographies are doing, from my standpoint. China is slowing down, Russia looks like it is if a lot of trouble. I am wondering if you can comment on how your non-US geographies are currently doing in terms of profits.

I can say you know we are only into our third week of the fourth quarter but we are not seeing any slowing in our businesses in the emerging markets of any substantial nature. That includes China, Indonesia, India, CIS as we call it which is the former Russia. And we saw a little bit of slowing in Australia. I don't know if that was a promotional change or whether it was a, something the world has talked when was it, about three weeks ago, you remember. And but, certainly the emerging markets we have yet to feel any substantial impact as sitting here in week three of the fourth quarter.

When you look at our guidance we called the fourth quarter of 46%, we were up 8% in local currency in the third quarter. The emerging markets in Europe were up 30% in the quarter, third quarter. Asia Pacific 40% so a lot of the markets that Simon was talking about. We did call for more moderate pace in the fourth quarter than the third quarter and we were up 10% in each of the first and second quarter in local currency.

By the way I might add, in Mexico our Fuller business there, the only place we are really feeling it is the [Makila Dores] area just, at the border and that's the impact of some what's going on here. We are very-- some might ask by the way why are you using the name Armond Dupre to move that business cross the border. We don't own the rights to the Fuller name here. Armond Dupre is the highest quality of our Fuller product line. So, all Mexicans know the name, Armond Dupre. That was our Bentley brand name down there. So we think that will come across.

It is highly recognized among the Mexicans near the US.

One other question that usually comes up is that why are you use thing model in China. The reason we are using this, by the way we have no investment in these neighborhood store fronts in China. She does, it is our signage but she does and she can own up to 15 of these. Simply stated with the average apartment being 3 to 4-hundred square feet, there isn't any room to do parties in homes there. So you go into one of these and it is a big, kind of an island area like you see in many kitchens, that's there. In the neighborhood it is like a little sorority house in the neighborhood where they do parties and her mother basically works so she's learning kitchen skills. There are almost you know 2700 we think we can triple the size of those. That's why we use that model there.

Yes. David.

Recognizing the long term story of the emerging global consumer, the level of income is pretty low in a lot of these markets that you serve. Just asking the same question that was asked earlier a little differently, if we are tabbing about $20 items or $10 items it is a material number for a lot of those consumers. So, how do you, is your growth coming from new buyers more than it is selling more product to existing or is that something you would expect to shift in 2009.

Let me comment first if I may on that. David a couple of things are happening there in these markets. Firstly, the lower per capita GDP markets, India, Indonesia, China, they a mass loves hierarchy of needs, food, clothing shelter, they clearly spend a higher percentage of their investment spending or of their disposable income is spent on those things. This is a very important category for them. They pay a lot of attention, if we can show them through food storage, through the ability to show how to bulk cook, it frees her for other activities. They pay a lot of f attention to it .

As a matter of fact, in the Philippines you can take Tupperware to a pawnshop and that's why the value perception is very strong. Secondly, we tend to, in those markets, we have over, in today's replacement value, over $800 million worth of fully amortized molds. We write our molds off over four years. So, as Simon used the example of the Tups in China. That's a 1964 mold, fully amortized. We go in and use a less engineered resin. So, we have great margins there, but it is a very low cost product. However, if we would sell that kind of a product in a Europe for example we would use a [lexan], which is two to three times the price and a different kind of a mold to do it. That's another way that we target.

In fact to the other part of your question, in many of these markets these are first time consumers and you have in many of them population growth rates as Simon said north of 2%, household formation and you will have in many of them, the almost half of the population less than 30 years old. So, there's a huge pentup demand for western goods. Would you add

The other thing I would say is that we actually tailor our product lines to meet the not only the needs of the consumers but what they can actually afford. If you look at the line say in China or India it is quite a bit different to that we offer in Germany. So we don't offer something like the speedy chef and we also merchandise it in a different way. You know, a lot of it is targeted for children going to school. The eccobottle that I mentioned in my presentation I can do a lot more about this. It is a classic India product that goes into the fridge. We have seen it in the marketplace except ours is a lot better than that of the competition. It is very affordable product.

So we are very, we are very conscious of the consumer and tracking what it is the consumer needs. Also I think one reason we got traction in India is that the middle class has really started to emerge quite rapidly and I forget what the number is but the number of people having an income of over $30,000 a year-- don't quote me on this but I know it is high about $36 million. We look at these big populations but what we are doing is zeroing in on segments of the population, they themselves are like countries in some of these markets. So, it is very much making sure we tailor our product programs to meet the needs of the consumers and we are pretty good at doing that. Please. Let --

Your cash from operations down significantly 7 million versus 6 million a year ago?

Yeah, the two biggest factors in there, we paid-- made a VAT payment which was sort of a balance between the two years at the beginning of the year. So that was $20 million payment and there's even comparison wise a bigger difference there. So that will have worked its way through this year. We also had a large payment related to hedges about $28 million I think through the third quarter. Most of that was in the first quarter. And that related to having some of our debt in other currencies previously as those hedges closed. So we don't have nearly as much of an exposure to currencies from a hedging point of view at this point. Those are the two big factors.

And, to clarify on your input cost assumption, you were stating the 9 to $10 million hit you were expecting to see in 2009 you think will reverse or will it be a 9 to $10 million positive oil price where it is?

It is more reversed. So it is kind of, it is around trip if you think about where oil prices have been.

So if oil continues to stay down or go down you should expect a benefit for input costs in '09.

Yeah, the resin markets move a little bit differently. Always been the crude oil markets and about 40% of our resins are more highly engineered and even more differently than the crude oil and natural gas market but directionally, that's right. Yes. In the back?

Part of my question was the hedging and all but what about the cost in two different types of resins and molds and your products in different countries. And emerging markets and Russia a different type of quality than you use in , say in China or Indonesia. What is the strategy there? It doesn't make

Want to comment?

I'm not sure I really.

The quality of the product.

The core quality of the product, return on the purchase.

There's no different if quality. There's difference in other words, the product performs very well. It's a question of if you use a more highly engineered resin to get a different effect or something that's microwavable, those kinds of things, it costs more and from a place point of view that's going to be more interesting to people in higher GDP per capita market, so it's certainly not a difference in the quality of the product.

This is a Lexan polycarbon, this is anything used again on fighter planes on the windshields. Or on commercial aircraft. You'll see. Very expensive. This is a polypropylene. Both high quality. This has a wonderful seal on it, but very different. This is what we sell in China, this is what we sell in Europe.

And it's the same mold that we would have used in the US when we introduced the product as Rick was saying, 50 years ago. So it's no difference in quality.

A follow up on the currency question. What do you have, who does currency management and how well is it hedged? How much, how much fluctuation (inaudible) would that give us going forward. Considering the way the markets are today going all over the place everyday.

We don't hedge the translation, and that's the $0.37 to $0.39 based on the Friday rates that we were talking about, 2009 versus 2008. What we hedge is are things on the balance sheet. So actually FX exposures or cases where we are going to buy across borders and we want to protect our gross margin. So as an example we don't produce for third party stores products in Australia. We make some of those ourselves or make most of those ourselves in different places. So we've hedged a high percentage of that to protect the gross margin (inaudible) dollar. So we are not hedging the translation.

And our Treasurer manages that. He thinks he's a profit center-- our head of tax thinks he's a profit center too. So there's a lot of attention. The only time we've ever hedged translation, it was a disaster. We said hey we have natural market basket out there. By the way we did an analysis one time in the 90s. We focus on managing our businesses in local currency, because over an eight year period of time it smooths out. You are going to have some years benefit some years it will go against you. That's why we always report out too local currency and that;s what-- we always incent our management teams are always driving their businesses in local currency. Because there we have our factories in 17 different locations, we buy our raw materials all over the world. We are fairly naturally hedged there.

What about going into this generic a little bit. What kind of sales do you do in eastern Europe, Russia, Poland, Hungary, Czechoslovakia and how are you managing that business just doing the parties or do you have some retail outlets, let's say in Moscow or St. Petersburg.

No its our traditional distributorship model. We have a huge distribution center in Alts, Belgium and that's where we do the distribution out of. We have got how many distributors in CIS?

160.

160 would go there and we have got a lot of distributors.. By the way it is a husband and wife, they have a physical property. It can be a-- probably be two to three times the size of this room here, they have their warehouse and then their meeting room there. They would probably have relatives that work in there filling orders. When the people come to a Monday assembly sales meeting, they turn in their orders for what they sold the week before as they come in they go to their two hour assembly and pick them up as they leave and then they distribute-- very effectively locally distribution costs are low. That's pretty much the model throughout Europe. Next. Yes.

Yeah, just staying on currency for a second, you said 37 to 39 is purely translational. What about any gross margin impact just because you're making a product in the wrong geography and selling it in the wrong geography or maybe even the benefit vice versa.

By and large, we produce close to where we sell. So we don't make 30% of our product in China and ship it to Europe or something like that. So there's not a big currency exposure in that sense between China and the Euro. There are some promotional products at that we source and so on. We have been able to manage that over time. At the end of 65% plus range.

And just a different topic, China, has Avon's recent stumble in China created an opportunity for you?

I don't know that, by the way, I opened China for them when I lived over there. I, they went with a-- their whole focus was initially doing these boutiques and then they got their license and then there was, the boutique owners were upset by that. They had some real tension. I don't know where that's played out but we don't consider them competition there. We are, that's what is really interesting you will go into a space like Simon alluded to. We are considering what do we do many the former Soviet Union in beauty. The reason we haven't done anything there, it is too crowded right now with direct sellers, Mary Kay, Avon, [Uraplane] doing it. By the way, if somebody asks us who is your competitor in direct selling, we don have any competitor with Tupperware in direct selling. And, by the way what we're learning in Latin America, if we put the panache of the brand Tupperware, and we put beauty in there it acts as a lead right into that customer and we knock Avon off the shelf because they can't get Tupperware from Avon. So it gives us when you put these, by the way that's really what we have seen in you might comment,on [Nuvo] where we've got about a 50% market share.

Oh yeah, Nuvo drives a relatively small market but certainly we have pushed Avon out of the market because with the Tupperware brand coming in some very well known brand, and you put it together with the beauty brand, you really get a, , a real cache , people want us. People want us in Argentina,

We get a larger average order and she makes more money.

That's important of course in South America. That's why Avon in South America, sells what I call stuff because otherwise you can't run a business with just the average order on the beauty side of the business. So you have to have the two. That's why they have two catalogs. We have a branded catalog, our second catalog, much stronger consumer proposition, much stronger.

We used to be in a cycle back then, our former life, what you would see is the cosmetic, fragrance and toiletry business in Latin America and then you'd start, we'd call the channel leverage in the early days at Avon and we'd add-- and we would add it started with fragrance decanters at Christmas time and then other kind of stuff. Intimate apparel, lingere, et cetera, and then you would find that every two or three years you would have to write off all kinds of inventory, but then, you needed to grow sales again, they would relaunch it again.

Yeah. That's true.

So he's been very disciplined, Simon with our business in Mexico, don't get into just stuff. It has to be something branded. It can't undermine our core brand names there, and we don't want to do inventory write offs in the future. You know just to gain sales today.

One of the things we are actually doing is in a number of our markets we're cleaning up the number of SKUs because there are products there that I don't think they should be in. So we will get benefit from that as well. It is really want to be focused.

On Mexico, have you seen any impact from the slowdown in the US trickling into Mexico and what are your expectations the next six months? I can answer that question.

Certainly in the north with the manufacturing a lot of the manufacturing for the US and then with the remittence of the US dollar which very important to the Mexican economy we did see a slow down but we are seeing now, is we've gone out and we're recruiting like crazy. So we are building toward getting the double digit sales force advantage which sets us up for 2009. This is another strong message to the operations is that we have to go into 2009 with strong sales force advantage. You I don't know, it is probably one of our number one priorities.

(Inaudible).

No, no, I don't like to slow down anything. No, I am going down there straight afterwards and one of the first things we going to do is how is the sales force sides going. That's one of the first things I look at. Well, I look at it every week, actually.

Every Monday morning at 10:00 he runs a meeting called a stand up meeting we report in the last weeks recruiting, gaps and variances. By the way it is 10:00 Monday morning I don't care if it is a Holiday here in the US we have it. We are a global business. Every calls in, they get it. It is done within an hour and we know, they know what they have to do that week and once a month, they do the monthly progress reviews. We have some people on the phone. Yes. Yes, please. Question, we will take a couple more questions. Anyone on the phone have a question? I have a note here that someone did. Nope. Okay. Any other -- yeah, we will take another question or two and then wrap it up.

Yeah. I'm an equity guy so I always love share repurchase programs. I'm delighted with them. But at what point do you have to consider hoarding your cash. You have already, wisely I think delayed a pay down, some of your debt you were just talking about accelerating the conversion of your noncash working capital into cash . What kinds of business conditions would we have to see where maybe it is just good business sense to keep as much cash on the balance sheet as possible, if for no other reason than you don't see the credit markets opening up for

Mike, let me comment first piece of that and Mike will take it down more granular. Firstly we can have gone forward. There was a consideration today of do we announce a five year program, share repurchase program. A lot of smart people on our board. We didn't push the idea. We said what's best. One of reasons we took off the table the idea of a dividend increase you are locked into that right there. The worst thing flexibility wise is to reduce the dividend.

Frankly we don't know what's ahead here. We have been through similar times in many markets of the world. So we know how to react to, when the consumer environment slows down, we know how to do that. How long will it last? We don't know. So the second decision was okay, share repurchase, that makes the thought of doing both but don't go out anymore than a year right now, and I have a strong feeling that by the end of June we will have a better lay of the land, but that's where if you go to every one of our businesses right now. When I talk about vigilance they have banners if you go into our headquarters business that says mobilize, mobilize, mobilize. We started doing that six weeks before all of this meltdown on Wall Street because our instincts were this isn't going to be business as usual. Our people have been leaning into it. Mike, you might carry it beyond that then.

Sure. So we talk about having a 1.5 to 2 times EBITDA leverage kind of a target and being in that range at the end of this year. We'll continue to look at that. And, obviously that's impacted by EBITDA so if for some reason it goes down, that would be built in, I would say to our thought process. When we gave the guidance this year for 110 to $120 million cash flow from operating activities not of investing activities, that's below last year, the same measure was 152 million even though we're making a lot more on income and that's because of the factors I mentioned primarily the DHE timing and the hedging. Hopefully that goes back to more normalized next year and what needs to come out of that number, the 110 to $120 million are the dividend payments which run around $54 million and then any share buy backs we do, but hopefully a recovery in the amount of cash flow.. So the rest, and that's why we say that we still perceive being able to pay down debt. If those metrics start to change then we'll need to think about doing something differently. I don't think even today aiming at 1.5 to 2 times EBITDA leverage, I don't think is real aggressive in terms of being over leveraged.d So, We'll keep our eye on that.

And we're looking at too the things you can monetize too. That's why the big focus on inventory out there, focus on our accounts receivable, We've still got $75 million worth of land. By the way the anchors are all in. The Lowes, the BJs, et cetera that are--- by the way, one person, our general counsel manages that and we've already brought in $75 million on that. Good news on our banking relationship, JPMorgan has been our lead banker, we have a lot of strong banking relationships because we are 85% outside the US and known as the nationalty and we are not known as an American company, we're known as ["Tuppawier"] if you're going to Austria, we are just known as part of that local economy. So there are a lot of relationships there we could leverage. But we started talking about that several months ago too. Yes. One more.

I was wondering about the past.

Can you speak up just a little.

I will put the mike closer.

I slept under gun mount, in the Navy, okay?.

I am not going to say anything. I will get myself in trouble. Anyway, was that acquisitions or buying up some brand names or with the market doing what it is there's a lot of opportunity there. If you were to do that. I know we talked about it last week when I saw you, which is the past which is stock which is stock share buy back, wouldn't have to over leverage yourself. What would you to in that sense and would you go in Europe, where would you go?

First we don't need. We've got into cutlery, cookware et cetera. We don't need to buy someone else's brand name. We wouldn't do it. We would do very much like what Nike does. When we got into higher tech products, they're called tupper chef, a third party source makes it for us and they want to become a Tupperware factory for us. We built these strategic alliances out there. Never say never, but I don't see the need for us to do any acquisitions down the road. By the way, most of the companies that say they are in direct selling that are public, other than Avon, they are fine traditional direct seller, the Herbal Life, Nuskin, all of those, those are multilevel marketing companies, those are mostly wholesale buying clubs and we, by the way, don't believe they're a very good model for public markets because they're episodic. They're recruiting machines boom, bust, the one right now, [Arbon] that is we would hear about a couple of years ago they were a billion in sales and I have had three or four phone calls about do we want to buy them. They're in trouble because those things run out of steam. That isn't the kind of business we are. There are real customers out there, real hostesses that have Tupperware parties, real customers that love Tupperware and we just don't sell-- we only recruit people who really want to sell. If you want to buy our products at wholesale we don't encourage people to get involved in our business. We want people who sell. So it is our use of cash going forward-- I see no-- we want to get it down to 5 to 7 factories and yet we want to evolve to that. So, don't expect us to have any big reengineering program. I think what we put 10 to 12 million a year away for--

We have been running at about a 10 million a year pace, we have 11 million in (inaudible) this year.

And what we have been looking for those opportunities where we can keep in Europe, move machines further south and further east, molding machines and then you are left with real estate and don't have all of these huge social costs for severance. So we are, I mean we are managing like private company that way. We don't want to, I mean that's spending shareholder money. So I think in the future, the number one thing you are going to see is we are going to be a cash flow machine and it is going be buy in shares, raise dividend. Okey Dokey. Thank you very much for your time today.

Thank you.

Simon, thank you.

Thank you.

By the way don't forget to get this as you leave.