Tupperware Brands Corp (TUP) 2012 Q4 法說會逐字稿

Good morning. My name is Felicia and I will be your conference operator today. At this time, I would like to welcome everyone to the Tupperware Brands Corporation Fourth Quarter 2012 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers remarks, there will be a question and answer session.

(Operator Instructions)

Thank you, Mr. Goings you may begin your conference.

Thank you very much and good morning, everyone. I am speaking to you this morning from Frankfurt, Germany. I am with Teresa Burchfield, our head of investor relations, and in line with our goal to increase our international shareholder base, we've just finished some meetings over here in Europe and we'll have some additional meetings with investors in Frankfurt tomorrow. Frankly, our approach is to get more of our investor base over here. Most of the investor base over here, the kind we like, tend to hold fewer names and hold them longer. This leaves senior management time to work on the business rather than investor relations. You're going to hear more from us here and from in Asia.

I'm also going to take this opportunity to let you hear today from Georges Jaggy, who is with me; he's the President of our German business, which many of you know is our largest in Europe. We've been doing a review of that business this morning. Also, Mike Poteshman, our CFO, and the team is there in Orlando and I would just alert that if we have any kind of problems with the telephone, Mike will pick it up here and we will do our best to reconnect. Also, you all know the drill that discussion will include some forward-looking outlooks, so refer to our Company's position on this. Before I get into the prepared core comments that I have, I would like to informally draw out three that it's my hope you will get from our -- not only our release that you already have, but also the time we spend together this morning; not only our text but also the Q&A.

Firstly, Tupperware Brands is very much an and story and by that, I mean we are a business that both very profitable and has an exciting future in emerging and established markets. That's what will fuel our profits. It's interesting to note that I was just going over the last four quarters where we did earnings releases and I have yet to be in the US for one. Today I am in Frankfurt, last quarter Chennai, India, the quarter before that, Sao Paulo, Brazil and before that Johannesburg, South Africa.

This really does suggest our business isn't reliant on just one part of the world. I say this, too, because the old traditional question, what keeps you up at night in 1996, 60% of our business profits came out of Germany. I'm pleased to say now, we've just added Malaysia, Singapore as our eighth market producing north of $100 million in sales. What's nice to see is, we've got a queue of other countries strong on the way. This means we don't need to hit on all the cylinders to meet our 5% to 7% top line growth targets near-term.

First, we're an and story. Second, we do have confidence in our future and our ability to reach our sales and profits targets or we wouldn't have raised both our -- the leverage level that we're comfortable with, our share repurchase authorization, and this 70% increase in our dividend payoffs. We have confidence. Thirdly, the Tupperware Brands business model, and this is perhaps the most important takeaway, the Tupperware brands business model is a cash-generating machine that provides not only take-awaysenough for us to provide significant levels of cash to our shareholders, but it still provides us enough fuel to power the future growth in sales and profits. As Mike and I were just talking, very strongly, we are a growth company and we'll continue to be one.

Now speaking to our business model, getting into my comments, there are four, really, components that fuel this business model; no matter if I'm talking about Germany or Japan. Number one, it's innovative products. 25% of our sales come from new product innovations and we basically call it new products if they were introduced in the last two years. More of our products these days are to attract younger and working women as the world becomes more urbanized and I'm sitting here looking at just three examples of time-saving products that are recently introduced. One is an incredible microwave method of making omelettes. It's basically you put whatever vegetables you want into it, you put in two eggs; in about two minutes, it's ready. Ditto, I'm looking at one that we that we make for pasta maker and also a rice maker. There's been a litany of products that have been really designed for today's younger women who really doesn't have enough time and is looking for convenience.

Importantly, too, when even in emerging markets of the world like India, they had established market components in places like New Delhi, where there's a growing middle class; she's looking for these same kind of products. I'm looking to countries like Germany to help fuel the new product program for the middle class of even the emerging markets of the world. The second element of our business model is entertaining and informative selling systems and we adapt that based on the kind of market and based on the culture in that market. In Germany, it's traditionally a party, where a group of six to eight women -- two varieties of parties -- one is for the woman we say here, they're the hausfraus in kleines dorfs, the housewives in small towns, it had tends to be in the day or on a weekend. Then we have for the busy working woman who lives on the fringes of Frankfurt or Berlin and for her it happens to be much more social interaction. By the way, because her mother probably worked, she doesn't really know her way much around the kitchen, but she still loves to entertain; time is of the essence. But we had to come up with a party selling situation that she would enjoy.

To a China that now the average apartment there is about 30 square meters and often 1.5 families living in that space, not enough room to do a party. We now have 3,700 little storefronts that she basically has and she can own up to 15 of these and she covers the rent. It's a neighborhood place for them to meet, very much like a sorority house. Third piece of our model is a compelling earning opportunity. Here, I've just reviewed what Germany's done. We've really been pleased to see that the core of our opportunity has to be for the consultant, that she can make a real living. It usually is a supplemental income from her at that level, but it if she moves into a unit manager role or into a team leader, it's a replacement income and it's serious money.

Because of some of the moves we've made on enhancing this earning opportunity with these management levels, we're seeing that we're able to have fewer but bigger distributorships in many of our markets. As a matter of fact, we have a number of distributorships in the world that are north of $20 million in annual sales. When you consider their profits are about 7% to 8%, it's a very serious business opportunity. Lastly, is the skillful knowledge and implementation of direct selling fundamentals. Here, we have very much a student mentality, continuing to learn and refresh those things that drive our business -- contact, competition, recognition, the knowledge of how to train new people coming in, how to give her confidence. I truly believe this is at the core of our real strength. Let me just take a few minutes and go over from the top line.

Sales were up, you read it -- 6% local, emerging markets were 60% of total sales, they were up 11%, established were even with last year. Let me go through our established markets, beginning here with Germany and then Georges will drill down a little bit later. Germany was up 5% for the year, 4% for the quarter; so, very solid top line growth. We've been here 50 years. Also, had quite a number of other markets in Europe that were up in the quarter; Belgium up 6%, Netherlands 9%, Portugal 5%. In spite of all that's going on in Spain, Spain recorded a sales increase and that was good to see. We also had sales increases in the established markets of the United States and the Canada unit and for the first time in a long time, in both of our Australian businesses; that was good.

Turning to the emerging markets, there were a number of really outstanding performers and that contributed to this 11% increase. First, continued momentum in Russia and the Confederation of Independent States businesses; up 13% in the quarter. By the way, that's three consecutive quarters of high single-digit to low teen growth in that market and we're really -- Glenn Drake, our group president over here, just told me we're approaching back to that 100,000 level of the sales force and that's good to see. This signals we've made the right changes. We learned from this. As a matter fact, what we did wrong is we moved from six distributorships, not many more than 10 years ago, to almost 200. But when you got out towards Vladivostok and in the rurals, they were small.

With the devaluation of the currencies, they were marginally profitable and some went unprofitable. We've learned from the structural ways we're doing it in Germany, how to get that righted and we won't make that mistake again. Be assured, we'll figure out some new ones. Turkey, by the way, grew over 30%. Our beauty business in South Africa, Avroy Shlain, up again in low teens and in Asia-Pacific, India, Indonesia, Malaysia, Singapore, all of them were up in the mid- 20% top line range. By the way, rounding out with the Americas, up 8% in our Tupperware Mexico business and Brazil and Venezuela were up 30%. We can take a bow for Brazil, because most of that was really from units, Venezuela, about 50% was from pricing.

But I've got to pat our management team on the back in Venezuela, they're doing a wonderful job managing in this hyper-inflationary environment. Moving on, I'm also pleased to see some positive trends in a number of our businesses that are in various stages of implementing strengthening strategies, where we've been having some problems. I'm not going to claim a victory in any of these markets, but we're seeing some positive signs. In Europe, France was down 6% in the quarter; by the way, France is highly profitable for us. We are the biggest direct seller there. We are a culinary company. We were up slightly in the third quarter, but the issue has been there ever since the disruption of the election and now, what kind of new social provisions Hollande and his government is going to implement, there's been a lot of disruption with regard to consumer spending.

We did end the quarter in France with a 4% sales force size advantage after having been down 2% at the end of the third quarter. Structurally, again, the business is sound, great management team, highly profitable, and frankly, we're looking to grow that business again in 2013. In our Asia-Pacific, as far as those that are starting to turn around, I'm pleased to say that for the first time in a long number of quarters, we had an increase in both our Tupperware business and our Nutrimetics Australia business and for those businesses, it's been a couple of years. Now, let me take a few moments to discuss some of the businesses where we still have more work to do -- Tupperware South Africa, Tupperware US and Canada, BeautiControl, and Fuller Mexico.

Let me begin with South Africa. All this started with really the disruption caused by counterfeit and knocked-off products. Coming out of China, I think we've been very effective with regard to getting not only legal support, but government support with regard to confiscating and destroying those products, but it really sent our sales force advantage spinning. We're focusing on getting it back up to the 11% advantage we had in 2011. I believe it's fixed. I'm hoping for some progress in South Africa, but there's a lot of other people. I spent some time at Davos with their current president and a lot of people there think the firming up in South Africa in the government is going to be when they get their next president.

Sales in our US and Canada business were up slightly for the quarter; this is a much better comparison than the down teens we were in the third quarter. Some of this, legitimately, was due to timing in the third and fourth quarter. We're still having a difficult time particularly in that US business. In 2013, we're working to get our sales force advantage back up and I think our greatest opportunity and also the area of greatest lack of progress in 2012 has been in the Hispanic market and we're going to pay extra attention to that.

I just was at BeautiControl and at Fuller in Mexico earlier this month with both management teams. In Fuller, while we were down in the quarter, we have lapped that sales force comparison anomaly from the previous year. They're doing a great job in a couple areas that were the important areas. Firstly, product-wise, and really moving to separate ourselves from the discount beauty company there, rebranding it more with our Armand Dupree line and moving toward higher priced products price products and less discounting. That's going to take time, but we're committed to that strategy. It's the right margin and the right image.

As you grow a middle class, she doesn't aspire for beauty products that are discounted. She aspires to pull out a tube of lipstick and for her friends to see it that say wow, I'm not poor anymore. That's what middle class becomes in these markets. Secondly, they're really focusing in that market on the whole level of local sales manager. After extensive analysis, we've determined our turnover was too high and one of the reasons for that is, she lacked enough compensation, fixed compensation, during the early stages while she was learning the business and we've made a tremendous change there. It doesn't really cost us a lot. Thirdly, we focused a lot more on training in that business again. I think with regard to the sales force, we're going to get more from the sales force that we actually do have.

Finally, BeautiControl, again I spent a day there. I believe we have the right management teams in place. I've got to say, we bought that business in 2000. We tripled the size of it over a matter of about six years and we gave one-third of that back and most of it was what the old saying of Pogo, we have met the enemy and it's us. We made mistakes there -- wrong management teams, wrong incentives to break out directors. We moved away from a Mustang program and basically started giving her jewelry.

Why a Mustang mattered is, it was a trophy in her driveway. We didn't save much money moving away. We've reinstituted a better program. It's now a Mercedes in her driveway and we've got about 500 dynamic people on track for that. Thirdly, we moved too much into exotic products -- really to retard the aging process and I've got to tell you, most women we know from research in their mid-twenties and early thirties, that's not the first thing on her mind. As we do research, we've learned that in our Nutrimetics business, she wants color cosmetics. She wants fragrance and as a matter of fact, we worked it down into she's looking for three categories, work, weekend, and wow about her personal life. I think we're getting it back on track at our BeautiControl business.

Now, as mentioned, we both have a significant presence in emerging and established markets; each kinds of these markets has advantages and disadvantages. Clearly, emerging markets it is population. 85% of the world's population lives in emerging markets. They have an exploding middle class. As a matter of fact, 1.3 billion is expected to be added, 1.3 billion population to the middle class of emerging markets in the next eight years. However, the negative is, it's a low per capita income, but they really spend their sweet spot of money on food, clothing, shelter.

We're really dealing with the right areas. Established markets, on the other hand, don't have the population size advantage nor the growth in population; however, they've got a per capita income up more than 10 times the size. We've learned here and in Germany and France, while 20 years ago we were selling 10-euro products, today we can sell 100-euro products and sell a lot of them. We've got a lot of runway ahead. Also, as you can see, we've learned in Germany, we have a lot of white space because most of our business in the past was very, very rural.

You heard on the third quarter I had Asha Gupta, the president of our India business, chime in. It is a large and significant business for us. By the way, what I wanted that to show was that most significant -- if I put our whole four level or component model aside -- product, selling, method, earning opportunity, and direct sales fundamentals, the single biggest source of competitive advantage, Michael Porter would say, about Tupperware Brands is the quality of our management. Not only there in Orlando, but the real dynamic quality market-by-market, not by only the market heads, but the young people we are bringing along. I saw that with Georges again here this morning going through this business.

By the way, this business here, we've been here 50 years. Georges is an example of it. Georges is not German, he's a Swiss [Luxembourger]. I kid with him there's only five people in the world that speak Luxembourger today. But, Georges had his assignments in his 20 plus years in our company. He came up through marketing, was head of marketing in Switzerland, then was managing director there, was managing director of our business in Austria. He was the one that turned around our French business there and now we've turned over the biggest business to him here. He is not only growing the business, but he's bringing along this next-generation. Anyway, Georges, let me turn it over to you to make a couple comments about Germany.

Thank you, Rick. Actually, the core of our strategy in Germany is not too different from the actions we have been developing in France when I was responsible in that market and what my colleagues did over there. Tupperware, as he just mentioned, has been in Germany for over 50 years; so, just as in France, the brand is well-known and highly respected. What is particularly respected in Germany is the quality of the product and the quality of the service. I'll been talking about the quality of the service little bit later more in detail.

Randomly, 74% of the German households have at least one piece of Tupperware; this shows about penetration. There have been three primary levels in our business transformation here. First, the dramatic innovation of the product line, which you just highlighted, Rick, the contemporization of our selling methods, and thirdly, the enhancement in our sales force structure and the opportunity we offer to them. I will give a brief comment on each of these three points.

Let me start with the product innovation. Historically, the business was built here on the food storage category -- containers/bowls. While that still matters, the launch of new categories of products like food preparation, for microwave or UltraPlus, which goes into the oven, has provided us opportunity to sell more to the existing customers as well as to attract new and younger working women, whose lifestyle demand are quite different from the traditional stay-at-home mom. Next, the contemporization of our selling method has enabled us to shift our focus to showing what can be created with our products; not only simply show and demonstrate the product, but show the end result of it, show the recipe, what can you do with the product? Now she, our customer, sees, she can taste, and she buys. It's much more interactive and it's an experience as well.

Our services, which I just highlighted before, is what we deliver on top of the party and nowadays, even movie recipes, which can be shown on our Chef iPhone option on smartphones, which makes this service offer even live after the party has been held. Finally, we have enhanced the sales force opportunity with iTup which is a brand-new, interactive, online training internet-based so our new demonstrators gets better training when she starts and a new level of opportunity which enables more our high potential sales manager to earn more income, but also enables distributorships to manage large sales force and increase our penetration in the areas they cover; that's extremely important. I might add, in closing, that Germany has been experiencing the same urban spread that's happening in so many countries. Those three strategies are helping us to attract more working women who live in the populated areas that surround most cities. We are actually following the people where they go. Also, with these strategies, we believe that, here in Germany, we will remain a growth story. Rick?

Thank you very much, Georges. As I was saying to them this morning, not only are they helping us to penetrate more the white space where we've missed in Germany, but a lot of the strategies that we developed here in this established market, we translate those to these emerging markets of the world. You don't have, when people ask me the question, well, what about when Walmart gets to India? We've already been through that. We've already had now, a new way of doing different products, products that they might be able to have somebody make, but they certainly couldn't -- you don't sell EUR100 products on the shelf of a Walmart. People don't understand how they work. They can't do a party and this earning opportunity. Here is not only a great business, very profitable, but it's one of the research laboratories where we're creating new pillars for these four pillars for our model as we go forward. Georges, thank you very much and you'll be available for some Q&A at the end.

Let me now turn it over to Mike. I want to say, though, that 1996, Germany is what used to keep me up at night, because we were pretty much a one-trick pony. But it's good to see us -- we've harvested a lot of the German business. We let the ROS get almost to 40% here. I've got to say, I'd do it again, though, because we used those incremental profit dollars in Germany. That's what fueled our ability to establish all these beach heads in the emerging markets and now we can get back to investing a little bit more in Germany. I'm looking forward to that. Mike, please take it over.

Thank you, Rick. First, as we've said, on sales, we were at the midpoint of our external range with our 6% local currency growth in the fourth quarter. Top lining the main variations we had versus the 7% high-end of our range, we did quite a bit better in Malaysia, Singapore with the offsets coming most significantly at Tupperware South Africa and to a lesser extent at BeautiControl and in China. Rick talked about our businesses in South Africa and at BeautiControl. In China, while things didn't run as well as we had anticipated, particularly early in the quarter; we were also negatively impacted by ordering patterns and that our sell-through to end consumers was up over last year into double-digits, even though our company sales were not. On EPS without items, our $1.71 in the quarter was in line with the high end of our external range. Here, in addition to overcoming the impact of the sales being 1 percentage point in growth below the high-end of our range, we had more spending than originally anticipated at Fuller Mexico.

Some of our newer programs paid off more than we had expected and we'll make some modifications here going forward. There was also some under-leveraging of our programs, meaning they didn't generate the sales that we expected. Going forward in 2013, we think we'll start to see a positive contribution margin on higher sales; although, likely not in the beginning of the year. In terms of positive items in the EPS comparison versus the high-end of our outlook, we had a better than foreseen return on sales in the Tupperware North America segment and our tax rate was 2 points lower than included in the forecast. The impact of changes in FX rates on the year over year comparison at negative $0.03 was $0.01 worse than we had included in our outlook.

Turning now to our go-forward outlook, for the full-year we're reiterating today the local currency sales increase guidance of plus 5% to 7% that we gave in our previous earnings release. This includes small increases in Europe and Tupperware North America, up a low double-digit percentage in Asia-Pacific, about even with 2012 in Beauty North America, and up by a mid- teen percentage in South America. On EPS without items, you've seen in our release that we put out a range for the year of $5.62 to $5.77. This would be up 12% to 14% in local currency and 13% to 16% in dollars. There's a $0.05 positive impact from foreign exchange rates on the comparison with 2012 and the outlook. Underneath this, on top of our 5% to 7% local currency sales increase, we're looking for a 50 basis point improvement in our return on sales at the operating margin line, but are taking a partial offset from higher interest expense due to higher borrowings and rates to execute our increased leverage strategy announced today. This is hitting us by bringing our forecast net interest expense for 2013 up over 2012 by $7 million to $8 million and therefore, our outlook for pretax return on sales to be up 15 to 25 basis points over 2012 to 14.3% to 14.4%.

We've included in our outlook a tax rate excluding items of 24.5% or a bit less than the 25% we talked about in our October call. We continue to see eventually getting to a tax rate excluding items a few points higher than what we're expecting for 2013. Taking the 2013 forecast elements together brings our net income increase range excluding items in local currency to plus 4% to 7% and to get to our 12% to 14% EPS increase range, we've included an 8 point impact from less diluted shares outstanding. In terms of profitability of the segment level, we see small improvements coming from all of our segments. I'll also add a short comment now on our larger than previous EPS range to say that this relates to our having a larger base of earnings than in the past. A $0.10 range is only about 2% of our earnings, which is equal to our sales outlook range. The $0.15 earning range that we've given allows for some variability in our return on sales, tax rate and number of shares.

Finally, I'll point out here that we haven't assumed in our outlook any change versus 2012 in the Venezuelan bolivar to US dollar exchange rate. But if the rate had gone to 17 bolivars to the dollar as of the beginning of 2013, a rate we've seen some quote, we estimate we would have had a full-year pretax hit on earnings of $28 million, of which about $19 million would relate to amounts already on the balance sheet at the end of 2012 and the rest to the translation of 2013 activity at the lower rate. We'll have to see what happens with this rate and when. Looking at the first quarter similar to the year, we've included a local currency sales increase range of 5% to 7% and our EPS range without items is $1.09 to $1.14, which would be up 13% at the high-end in local currency and 11% in dollars. A couple of words on our balance sheet and cash flow, our 2012 cash flow was good at $234 million of cash flow from operating activities net of investing activities, which was above the $220 million high-end of our outlook range, as we managed working capital well and ended up with $76 million in capital spending for the year.

Reiterating what we've said before, we expect 2013 capital spending to be in the $70 million to $80 million range. Looking at 2013 cash flow, our outlook range is for $240 million to $250 million. I'll also mention here that, in the fourth quarter, we repurchased $100 million worth of shares in the open market, which is what we said we would do in October. This brought in 1.6 million shares or close to 3% of our outstanding shares at an average cost of $63.60 per share. In terms of unallocated expenses, we've included $64 million in our full-year outlook for 2013, which is up 3% from 2012 actual and local currency, slower growth in our sales.

On resin expenses, there hasn't been a lot of movement. We ended up including in cost of sales $161 million in 2012, which in local currency was up $1 million in cost over 2011. Both of these amounts were in line with what we said in October. Looking out through 2013, we've included in our outlook and cost of sales for resin for products we produce about the same amount as we had in 2012, with an impact of cost changes of just $1 million favorable.

Before we turn it over for questions, I'm going to talk about the changes we announced today to increase our leverage profile and how we'll send available cash to our shareholders. You've seen that based on our confidence in how we'll perform going forward that we're increasing our leverage target 0.25 turn to [1.75] (corrected by company after the call) times EBITDA, as defined in our credit agreement. The EBITDA calculation is laid out in an attachment to our release. We expect to get to this target leverage level in 2013 and our full-year outlook includes $400 million of share repurchases, about 50% of which relates to the 0.25 turn increase our leverage target. The other half reflects expected EBITDA growth in 2013 and we're also taking out much of the time lag we've had in the past between when our EBITDA increases and when we repurchase shares. We closed 2012 with an actual EBITDA leverage multiple of 1.34 times debt.

Of the $400 million of 2013 share repurchases in our outlook, $100 million is included in the first quarter. For the rest of the year, the assumption is that the repurchases will be fairly even by quarter, with a little bit more weighting to the fourth quarter. You saw, as well in our release, that our Board raised our authorization for open market share repurchases that have been running since 2007 by $800 million to $2 billion. Of the $2 billion authorization, $828 million had been used by the end of 2012. The authorization's timeframe was also extended today by two years until February 1, 2017.

The other big change we've made is to increase in our payout ratio for dividends from about one-third of trailing diluted earnings per share without items to 50% and this, along with our 2012 increase in EPS, led to our $0.62 per share dividend declaration today, which was up 72% from the $0.36 per share we were paying on a quarterly basis. On a full-year run rate basis, our new dividend would be $2.48 per share and on the $70 share price that we closed at yesterday, provide the yield of 3.5%. We expect to continue to ask our Board to reset our quarterly dividend rate with our declaration in the first quarter of each year. I mentioned, when I was speaking to our outlook, that we expect higher interest expense in 2013 than in 2012. This reflects our assumptions as to how we'll change our short-term and long-term borrowings in order to implement the approach we've laid out.

In taking all this in, it is important for you to keep a few things in mind. First, we've said we don't expect to be acquisitive and we have major organic growth opportunities that we're going to continue to capitalize on and as a result, grow our local currency sales by 6% to 8% per year and the intermediate term in 2014 and beyond. Based on our business model, the investment that we need to do this is modest and is captured in extending out the trends we've already had that include continuing to grow our pretax return on sales by 50 basis points per year in 2014 forward into the mid to high teens and to spend the $70 million to $80 million on capital that we've reconfirmed today. We have been a growth company and we can and will continue to be going forward, while throwing out significant amounts of cash for the benefit of our shareholders. In considering whether to raise our dividend payout ratio in steps to the 50% ratio that we've announced today, our Board concluded that going to 50% immediately was the right thing to do, including our belief that we have adequate coverage through our metrics to be able to continue to payout our dividend that we've raised, even if we have some unforeseen disruption of our business. For example, while the share repurchases we've included in our 2013 outlook includes some catch-ups, for us to go from the 1.34 times leverage with which we entered the year to our 1.75 times target to include about $200 million of so-called regular repurchases, that in the event of an operating stumble can be thought of as a cushion on top of the approximate $150 million in dividends that we'll payout in 2013. I think that covers it and we will turn the call over to questions.

(Operator Instructions) Olivia Tong, Bank of America Merrill Lynch.

My first question I just wanted to ask and I know you've been asked this a couple of times in the past, but why is 6% to 8% still the right long-term target on the top line? You mentioned a couple of markets that are tough and that hasn't changed very much, South Africa, Tupperware US, BeautiControl Fuller and those continue be pretty tough for you. What are you seeing that will accelerate that growth after this year? Thank you.

Yes, and good morning Olivia. Firstly, the top end of that, the 8% would really be a 10% if you looked at our emerging markets of the world. What's driving that is, historically, we've been a nice double-digit growth with some of these emerging markets, Brazil, Indonesia, India, continuing to be high double-digit growth. This has, and by the way, as you heard on our last earnings release call, when asked about the runway ahead in India, we felt even as large as our business is getting there, only 10% to 15% of the population has access to our business. I would say the A piece of this as far as strong, double-digit emerging market, that's going to exist, I believe, until after I'm retired. There's a lot of white space and we're going to have to grow and you can only grow at a certain rate; particularly, let's keep in mind these are 85% of the world's population are in these markets.

Secondly, it is really caused more, Olivia, by the drag of some of the markets that have either been in a negative situation or have been flattish. What's going to change that is, as Georges was talking about, the kind of things we did in France. We had about a flat 10 years in France. These programs got implemented and the profit level of France is with a level that this company has never seen. Now, he's done the same things in our German business, getting it back and getting this back to a growth business again. I'll tell you, one of the things I see, we were looking at it this morning, again, more of the distributors that we're bringing in; now remember, distributors are -- there's only 131 of those and that's the crest here. You're assigned -- you become a distributor when an area opens.

It's almost like getting a McDonald's master franchisees. We have them coming in now -- I saw -- they took me through one this morning who's 27 years old. This was a business, when I joined the company, that the typical German distributor was 60 years old. Now she recruits like kinds of people. Now we're seeing it cascading down to bringing younger and working women into the business and women who are looking for a career. What we're going to have to have to do, Olivia, is we've got to get this BeautiControl business back on track again and by the way, that's our problem of our own making. Yes, the US consumer environment has been tough, but we exacerbated that by dumb decisions and I'm included on those.

Put the wrong management over a period of time and place at various levels, A; B, took away the fueling program of that Mustang program and replaced it with something that had no traction and impact. And then C, we got too exotic in the product line and we were recruiting younger women but giving her products that a 50 plus-year-old woman would like. Daisy's got to get all -- that wasn't a problem of our own making, but it's been the challenge she's been assigned to fix. She's done it in multiple markets. She will. We get BeautiControl back on track. We get South Africa on track.

You're already starting to see us get back on track in both our Australian businesses. Japan is a large direct selling market. That wasn't helped by all the natural disasters there. Olivia, if we can get our established markets -- before I leave I want to see them growing 3% to 5 %. Now, I've committed to eight years. Will it take eight years or will it take five years, I don't know. But if we can get those growing at 3% to 5% and we can get these emerging markets to continue at a double-digit level, then you've got even more exciting growth.

We've decided, Mike and I, though, and with the group presidents looking at the business right now and a couple of the problem children we have that the proper range near-term is this 5% to 7%, longer-term 6% to 8%. If you ask me what's the longer-term, I say three to five years. Beyond that, I think we can go higher than that. Forgive the long answer, Olivia.

No, understandable. Can I follow-up with just a question about Tupperware North America? Can you talk about some of the things that you're doing to get that market back on track? I understand that you restated some of the ways that you measure the sales force, but how do you get to 2% sales growth with that kind of decline in the active sales force?

Firstly, what you have is more qualitative sales force there. You saw a classic example of the opposite in Fuller Mexico third quarter 2011 where you had dramatic growth of the sales force, but then we have a sales decline next quarter. Simply stated, that's a good signal to us that you're not just selling kits, that you're not just bringing warm bodies in the business. That it's qualitative. But I will tell you one of the issues that -- this is going to be a hill for us to climb in the US, we are a high-quality product and a brand. Why do we do better in Europe than we do in the US? Take a look at the average brand of cab that you get in New York City; they're filthy, they're junk, get in a cab over here, it is a Mercedes or an Audi.

The USA is basically a Walmart market. Our top-tier products like the microsteamer or the UltraPlus that are EUR100 products, hard to sell them in the US because it's a discount market over there. I found this out, my former time in the beauty business, you cannot staff -- the US and the UK are boots markets, they buy price. Europe buys quality. Japan, quality. Our issue is, how do we find the right product mix for the US to make it happen there? I've got to tell you, Olivia, it is challenging.

Got it. Lastly, on the leverage, how did you guys decide to go to 1.75 and is there a potential to even move higher from that target?

I would tell you, in essence being a smart butt on it, Mike won. I would have no leverage and no debt. Mike's the gunslinger on this. No, everybody -- we do the models on the cost of equity and debt and you really -- Mike, why don't you add to that? Because I think it s the right decision, too, but it took him about four years to pound on me. Mike?

Yes, Olivia, what we looked at, as we have in the past, is the benefit of maintaining the investment grade rating that we have. It's a balance and we've looked closely at what the rating agencies have said and we feel comfortable that this posture is the right place to go. We do view it as our running rules, now. It doesn't mean something couldn't change in the future, but it's not meant to be a step along some kind of a road. We think, also, from all of our point of view, notwithstanding the rating agencies, that it's a good balance in terms of the debt side of the equation and what we should do as we manage the business going forward for flexibility.

Great, thanks so much.

Dara Mohsenian, Morgan Stanley.

In both Q4 and in your 2013 guidance, your incremental margins on organic sales growth are clearly slowly versus trends from the last two years and it sounds like Fuller Mexico drove some of that in Q4, the spending there and you're happy with the payback. But I just wanted to get more detail on why the incremental margins are slowing, particularly in a benign commodity environment and if we should expect that to continue longer-term beyond 2013?

Michael?

Yes, Dara, as we've seen, we've had a real strong run going really all the way back to 2003 when we had about a 5% pre-tax ROS without items up to the 14% range that we're in now. Clearly, there was some low-hanging fruit there and as we've said going forward, in order to balance the investment that we take it make sense to make, we expect ourselves to grow our pre-tax ROS 50 basis points a year up into this mid- to high teens target level. We're really on that path, including in 2013, other than for the bump in the interest expense that we had because of the change that -- the way that we're managing our leverage and our debt. Really, we think we're on track with what we've said in the past and it's a matter of balancing the picture between dropping things to the bottom line, but really going to the growth. We think with 50 basis points a year on ROS that we can do this 6% to 8% growth in sales in local currency in 2014 forward and that's how we've look at it.

Okay. On the active sales force number, it continues to be weak. How big a concern is that? I know there's some tougher standards and the disproportionate beauty impact depressing the result, but it still doesn't look great on an underlying basis. I'd just like to get your perspective on the underlying health of the active sales force number ex some of those variances. As you look out to 2013, what's driving your sales growth in terms of productivity versus pricing versus sales force growth, et cetera.

I think that in most places, the comparisons on a market-by-market basis are pretty good. If you look at the picture overall, we made a note on one of the attachments to our press release if anybody wants to have a closer look, but about 0.75 of this discrepancy between being up 6% in local currency sales and down 7% in actives, has to do with the mix of where we're getting the sales. If you look at the picture by segment, we were up 4% in actives in Europe, which was actually a little bit ahead of the sales increase, 3% in Asia, which did reflect some better productivity in places like Indonesia and Malaysia a bit where we've done very well. We think that's a healthy kind of relationship. Tupperware North America, yes, we were down 14%, but that had do in a big way towards the change in how we were measuring things in Tupperware US and Canada. We should get more actives in Tupperware US and Canada, so that one is a concern. We have a lower total sales force size there and as Rick has already talked about, that's one of the big things we're working on.

When we look at Beauty North America debt, that certainly is the one where we were down 16% in the actives, only quote unquote 6% on sales. Clearly, that is a place, as well, where we need to get more active sellers. We have a small sales force (inaudible) deficit in both of the units there -- BeautiControl and Fuller Mexico and clearly, that's an area of focus and something that we need to improve and seek better results going forward. In South America, we continue to see a shift there between -- we were down 8% in actives but up 26% sales were stated. We do continue to see a shift there away from Argentina, primarily, which is a more beauty-focused market and has had too small of an order size.

We, on purpose, have been changing standards and so on to get more structure into that business and it's actually working. We were profitable in Argentina in the fourth quarter and we haven't been a lot of the time. We're actually pleased with things there, so we don't see an issue in South America. But really in the North American segments, that's where the concern is where our total sales force sizes aren't where we want; particularly and where we need to get more active sellers and that's how we see the overall picture.

Dara, Rick. I think that was an important question, too, and I want to just encourage you and whoever else wants to, the danger of looking at a consolidated number on either total sales force or active sales force. These are individual business units and you will see that sometimes different things that are happening, flushing the sales force, changing standards, or new laws in Brazil can have a distortion and that's why we've added that texture to the bottom. But if you guys, if you need more than that, seek it out, because we talk about that stuff. Simon and Mike and the group presidents every single Monday morning when they have an executive committee meeting, it's the first thing we look at and we are very happy to explain.

Okay, thanks. You and Mike touched on this with the earlier question and I applaud the cash to shareholders. We've certainly been advocating it. But it is a large boost to both dividends and repurchases at the same time. What's really changed here versus your thought process historically or what's giving you greater confidence at this point to make a move?

Firstly, the biggest piece of this is confidence moving forward that on these four pieces of our business model that we're going to get it more of the time right than wrong. Dara, and I think what hope you all appreciate is we're not perfect. This business has many elements that are a science to it, but when you look at our sales force, we have almost 2.8 million out there, less than 20,000 employees, so it's largely a voluntary sales organization. That's why you've got to know direct selling fundamentals. What I'm getting at is, some of these soft pieces of it are more art than they are science and sometimes we get it wrong and sometimes we get a promotion wrong. Sometimes we put the wrong person in a market. I've got to tell you what I feel good about is, most of the time we get it right, so that we have a business model that when we do make these mistakes or there's some internal force that comes out us, we more and more have the confidence that we know what to do.

It's going to happen, A, less and B, when it does happen, we know what to do about that. As I look forward, Dara, I'm sitting there saying, I'm comfortable with that level of leverage. At the same time, when we look through our allocation and what our businesses need to grow, I see more and more times where we have excess cash. We've said have the normal usual suspects, we have no interest in acquisitions. We don't need to invest any more money. If somebody said, if you invest $100 million more in your business right now, will it grow faster? I would tell you, no, it would be a waste of resources to do that.

That leaves us, do you return it to shareholders in the form of pure buyback or do you do raise the dividend? Here is an interesting question itself. If you talk to some, they say just do buy back. Let me take you what, and then we'll end up having more people holding our stock who turnover the stock more frequently. I want big pension funds who want to come, park their money with us. I'd like to have 15 shareholders that own our stock, because then I wouldn't have to spend -- I've done 1,040 IR meetings since 1996. What if those would've been Tupperware meetings?

How much better, I don't know, maybe the company wouldn't have been better off, but we don't -- the Company adds no value to our business when I'm doing an IR meeting at there. I want to get more shareholders out there that also want a dividend. We decided what to do, she got on the phone with 25, Teresa, 25 of our top shareholders and what we heard was enough of a balance that we said, let's move on both of these. Excuse, again, the long answer, Dara, but this was a lot of soul-searching and a lot of discussion and a lot of evaluation, but the biggest takeaway was, and we have confidence in our business. It's just a question, it's a high-class problem, what we do with it?

Okay, thanks.

Jason Gere, RBC Capital Markets.

Just following up on the last question, so if we think about where you are in the leverage, the 1.75 and the increase to $800 million, if fundamentals stay as positive as you think going into 2014, we should see a similar type of buyback there as well? That's just the first follow-up question.

Michael?

Yes, I think it will be structured similarly, Jason, but what we do, this year, in 2013, have this catch-up to go to go from coming into the year with a 1.34 times leverage and going up to that target, which is about to 1.75, which is about half of the $400 million. We wouldn't have another catch-up, but based on where we are with EBITDA and that 1.75 times target and what we're going to do with generating cash flow in 2014, we would be somewhere between.

Okay, no, that's fair. Second question, just about the Q1 guidance and I think you said the return on sales would be a little bit lighter and expand further in the year. Two things there -- one, is that because of the FX or is that two because there are some markets maybe that you're looking to step up some of the investing just dealing with some of the declines in active reps where you're trying to get that back in place? I was just wondering if you could provide a little color on the Q1 guidance?

Sure, Jason, yes, the high end of our guidance would say that our pre-tax ROS without items does go up a little bit. The comment in the prepared remarks about later in the year was relative specifically to Fuller Mexico and so that is an element that we would see the first quarter. The other place where we're having a little bit of a drag is in really South America and in Venezuela where there are these inflation effects, to some extent, are hitting us on the cost side as well, so that's little bit of a drag. But again, if we look out over the full year, so in the first quarter, we're seeing a little bit of an improvement in the pre-tax ROS. If we look at the full year, on the high end, we're going for this 50 basis point improvement on an operating margin basis with the 25 basis point offset from the higher interest.

Okay. Just speaking in Venezuela, so you have no change in the bolivar in your guidance. A lot of your peers out there have built-in some sort of I guess risk with Venezuela this year. If we do see a change there, do you believe that the EPS guidance is at risk or do you think there are other offsets along the way that could come in and offset some of that pressure?

Clearly, we're always looking to improve everywhere, so we would always look to do better everywhere than what we've guided to, but we think the guidance is in the right place. To give you a frame of reference on Venezuela, the 17 bolivar to the dollar rate is one that's out there quoted by some, which obviously is very extreme. It's about a 70% devaluation versus the 5.3 rate that everybody uses. As we said in the prepared remarks, if we did take that hit as of the beginning of the year, it would be pretty dramatic, $28 million on income was our estimate, pre-tax income, which $19 million is just based on things already on the balance sheet and $9 million on an operating basis. You'd have to make some guess as to what the rate was really going to do, if it was going to be somewhere in between the 5 and the 17 and when during the year to see how much of that $9 million you might think could come through. It's pretty hard to forecast that.

Okay. Rick, make sure you continue to do the conference calls out of the US. You have a nice streak going.

Thank you very much, Jason. Mike, you might comment, too, from a GAAP standpoint, we're doing what we have to do with the bolivar. We couldn't do it any other way that we're doing it other than leave it at what that rate is and talk about what it would be if it went to this real punitive rate. Am I correct?

Yes, that is right. The rules are clear on the rates that you need to use and when things would change.

Thanks, Michael.

Michael Swartz, SunTrust.

I just wanted to touch on the Fuller Mexico business and I think, Rick, you had mentioned that it will take some time for the new product strategy to really bear itself out. When we talk about, it will take time, are we talking a couple of quarters, a couple of years? How should we look at that? Just a second piece of that, with some of the investments it sounds like you're making in training and compensation in the near-term, can we look for that business to get back to a mid-teens EBIT margin anytime soon?

I think right now, Michael, I think we're at a mid-teen, aren't we? I'm not sitting there with that data in front of me. Mike?

Yes, we are. When you look at the segment overall, Mike, what you're seeing is that BeautiControl is in a small loss and that's why it's blending to 8.5% or something like that for the whole segment.

Let me, then, finish, then, answering that question, Michael, that I think it's 14 and change or 15 where we are at Fuller and again, I just spent a day down there with them. We operated when right after we did the acquisition at a run rate their ROS north of 20%. Evaluating the plans there, I think it's going to take two to three years to get back to that low twenties again. We could get there quicker, but I want to see more top line growth from them. I don't want to turn it too quickly and they're going to be moving to shift -- they're going to be doing firstly, starting from a product line is more to this Armand Dupree skin care, fragrance, which are really high-margin products and offer her a better earning opportunity. I will tell you top line, I think we'll get a sales increase out of Fuller this year and we'll start to claw our way back on this margin. But the other big pieces that are driving it, it is not a one trick act, it is number one, product piece.

Second piece is we made a huge decision with regard to these 3,000 field sales managers. We basically doubled their starting comp, which by the way, in Mexico, this isn't very much of what she made her first 12 weeks in the business, because what we noticed is, that's where all the churn was on the business. To go in there and then we enhanced it with more training for her. Next, we went at this whole concept of training the Fuller reps better. I've got to tell you the final ingredient, we took one of our hard-charging young managers, who is an Argentine, who we had there working in the business. We put him up to run our Tupperware business in Mexico and took our Tupperware president, who used to be CFO of the Fuller business and who the sales organization, the management team loved, who is 41, we moved him to the Fuller business and I can already see the effects.

We have got two MDs running our business. They're both 41 years old, both MBAs, both 12, 13 years experience in multiple markets and dynamic people. I think leadership, product, and training give me a lot of confidence that I'll be grossly disappointed if we don't get a sales increase in Fuller Mexico this year. Again, Michael, I don't know how to answer that in two minutes, but it's an important business to us and I think we're on the right track.

Great, thanks for the color, you guys.

Sofya Tsinis, JPMorgan.

I have two questions, the first one has to do with China. You've made some comments about what happened in Q4, can you talk about your outlook for next year and what kind of growth you think you can deliver going forward?

Mike, would you answer, you were on that entire call on Monday?

Sure, Sofya, we certainly expect ourselves to be in double-digit growth in China in 2013.

Okay, and then moving on. In terms of Russia, you've had nice turnaround in that business. We've been hearing that the taxes on self-employed entrepreneurs could go up this year significantly, which could cause a lot of people to fall out of the system. Have you heard anything on that front and what do you think that could mean for your business in Russia? Thanks.

We have heard about that, Sofya, and the way that it interacts with our business is on a slice of our managers. It's a social tax and so we don't think that there's going to be any significant impact. They could decide, these lower-level managers, to operate as regular consultants or we might lose a few, but we don't expect it to be disruptive.

By the way, Sofya, I think it's an important question, too, because in a never-ending country-by-country, them looking for revenue generation sources there, we have been through this, I can't count how many times, country-by-country, but we've never had a country where we didn't figure out how to do it. It even got to the point that in our French business, more than a dozen years ago, Georges, what they made, we had to make employees at which level?

At the unit manager level.

Unit manager.

It was '96.

Everybody said it would kill direct selling; what we figured out was a legitimate way to have it work. That caused us -- we talk about flexibility. Had it happen in Austria, modified the business there. Had it happen now -- it just happened recently in Brazil. They keep booking. We've become adept to how to do this and we're not always going to get it right, but I can't think of the single market where it had more than about a two-year tail on it that we didn't adjust.

Okay, thank you.

Frank Camma, Sidoti & Company.

Most of my questions have been answered, but I did have one quick question on a follow-up to what you said, Rick, about your beauty products, specifically. You said some of the problem was you moved too much into exotic projects and I think you said anti-aging. Can you just give us a little more color on that? Was that because of your customer base or do you think there's just too much crowding in that space?

No, I think it was led from inside the Company that we had -- it's the fun thing to work on. What do you want to work on? A Ferrari or a Ford? I think we lost track of the meat and potatoes of our business that if you were the consultant, my job is to provide you with an array of products that you can go sell on a regular basis to 30 clients, let's say. If I move only into the fringe, exotic products, the exotic products isn't the things she first puts on every day. Firstly, you give up on hair care, because it's hard to make any margin on that. But color cosmetics, you do that.

Why do you do color cosmetics? Firstly, she is less dedicated to her color brands, lip and nail, and she will trial those. She'll trial new and different ones. Go into most any woman's drawer or lip and nail and even by the way you are seeing a return to even purchasing nail again because Vietnam salons, basically took over that business. It's starting to shift the other direction.

You start off with that. Those are easy purchase decisions on it. Then next, you get into daily needs kind of items, creams, lotions, things like that, spa kind of products. Then the hardest one to change her on is her skin care regimen on it. Then you have the treatment skin care. We got too much into treatment skin care and it's a shame on us.

Okay. Great, that's all I had.

Linda Bolton-Weiser, Caris & Company.

I just had a follow-up question on the BeautiControl business. I'm a little unclear what your thoughts are, because I think the new management, Daisy, has been in there for a while and yet, it did seem to worsen. I think the sales here were down 8% in the quarter and last quarter, it was flat, I think, in BeautiControl. Now you say it is loss-making. Are you going to give it another year or do you expect a loss-making situation to improve or what is really the plan? Because it may be not a management issue but it may be just very difficult to compete in beauty and direct selling in the US. Rick, can you just give your longer-term views on that?

Firstly, Daisy has only been there just little less than two years. She had a lot of momentum to change and a lot of things to fix. I would tell you, if BeautiControl was for sale today, we would acquire it again. It is a very good business with a very good sales force and it's still double the size when we did it. I think we can get back to this business profitability fast. Linda, I think what happens is, once you get this thing back to positive again, it really then starts to make some money. We were double-digit ROS in BeautiControl.

What happened here is that Daisy stayed the course. We basically agreed we were not going to basically have cheap kits. We were going to return to building leadership teams, to good incentives there. They had to attend training so that Beauty University training and we wouldn't offer easy ways to get in, which would get low-quality people. What was off in the fourth quarter was the recruiting.

It was a business that's used to having inexpensive kits to come into the business. She stayed the course and we told her, Daisy, stay the course on this. We are committed to this business for the future. Linda, if we can get this back to a skin care business, this is the kind of business that ought to offer us 15%, 16%, 17% ROS and it's a great spawning ground for us to train new leaders for us to have in other markets out there. Again, if we didn't have it, I'd get it again.

Okay, thanks. I'd like to hear some of these specific numbers, if you're willing to give them. Can you give what Italy was in the fourth quarter and also Indonesia and India? I don't know if you gave the China number specifically for the fourth quarter sales growth.

Michael, I don't have that in front of me and here in Frankfurt.

Okay. Italy --

The way he said okay meant he's going to, but he doesn't want to on that. Quarterly, we're not going to give you out every country in the world, but big major markets from time to time, we'll be willing to go into that. Because we track it, Linda, every single week. Michael?

Okay, so Italy was about even. We were up in the mid-twenties in Indonesia and in India. What was the fourth one you said, Linda?

China. I don't know if you gave the exact number.

China was about even in company sales, up double-digit in sales due to consumers by the outlets.

Okay, great. Thanks very much.

Linda, I'll hear from Mike later on that, Rick why did you say that? I do take guidance from him.

Thanks.

Bill Leach, CREF.

As one of your boring pension shareholders, I'd like to say I really appreciate the dividend increase.

Bill, do you remember a conversation we had?

Yes, I do.

And a chart you showed me?

Yep.

I am always a student.

One thing I just wanted to get clear, your guidance for Beauty North America, are we thinking flat profits this year or are we looking at another decline possibly?

Michael?

BeautiControl you said?

The Beauty North America segment overall.

Beauty North America, we're expecting to do a little bit better in the ROS and we said that we would be flattish in sales for the full-year. It'd be just up a little bit.

Okay. The tax rate, you said 24.5% on a non-GAAP basis?

Right.

Okay. Thanks very much.

Gregg Hillman, First Wilshire Securities.

I had a couple of questions. The first thing was, 10 years ago versus today, what was food storage as a percentage of sales in Tupperware versus non-food storage products such as food prep, cooking for let's say the established markets, the emerging markets, and Germany?

Greg, I don't know what that number is here, but we can find it. I was tell you what distorts it is the bigger -- just look at cultures out there and you and I have talked India and refrigerators in cultures. What we were headed toward more in markets like Europe is all these other categories, as you get to these younger working women, who really don't want to cook. On that, you move away from food storage to food prep to these other kitchen tools and gadgets et cetera so it comes around there. Okay.

The moment you go into an Indonesia or an India and you really expand in those markets, Maslow's hierarchy of needs, food, clothing, and shelter, so it distorts of the other way. I believe we are south of 30% as a total company with regard to food storage. But I'll tell you, again, you have 85% of the people of the population in emerging markets of the world, the faster we grow there, the harder it's going to be to get it in any lower than that, because that's their entry point. That's like in the beauty business, that's the lip and nail, the color cosmetics for them.

Okay, great. Two other follow-ups -- is Pampered Chef growing in the United States?

I didn't hear that?

Is Pampered Chef growing in the United States?

I haven't heard about Pampered Chef in two or three years and we keep track of most every organization out there. I haven't heard a thing about them. No knowledge.

Okay. Finally that filter thing you introduced in India, what's going on with that? You had a new innovative filter thing that you did a press release on.

What we do in India, we have -- this is what I was speaking to earlier. We have an Ultimo line in India, if I understand you correctly. So that if I'm going to typical India which has a very low per capita income throughout the country, I sell the basic Tupperware product line. But, you go to upper class Delhi, there is a very serious cash system there. They are well-off, they want Western brands, and she's paying $300 for a TupperChef stainless steel item. They're selling all the top end products that Germany has, they're selling them there. We've learned to segment the market.

I asked about the water filter, that new water filter product you introduced in India.

Okay. That's still early days on that product.

Okay. Okay, thank you.

Georges, let me ask you, what have you heard about Pampered Chef?

I didn't want to make a comment about Pampered Chef, but Greg asked about food storage. Actually, we also improved our containers in the last 10 years. Food storage 20 years ago was just a kind of container, nowadays we have vent smart containers. This means, according to the food you want to store, you put a certain ventilation in there or you have CheeSmart, which is also storage of cheese, which has a filter, actually, which maintains the smell of the cheese inside the container, not in the fridge. Also, here we have tremendous development in terms of product innovation, which also leads to the fact that we don't sell less food storage products, but they are new. They are technically new and just new state-of-the-art products where we have no competition, so to say.

Okay, thanks, that is very helpful.

Important point, thanks, Georges.

Ian Gordon, S&P Capital.

I just wanted to ask about the guidance for South America for this year. It looks like a pretty meaningful deceleration for the local currency sales growth to, I think, mid-teens you said versus 29% in 2012, even higher before. Is that more a function of the longer-term development of a retail infrastructure, for example, in Brazil, giving more competition or just more of a short-term cyclical little bit of a slowdown in some of the markets there?

Michael, let me -- Ian, I will answer the first part of that. Firstly, we have been lapping in Brazil, our biggest market down there, a CAGR that's probably 45% per year for the last, I think, it's five years or so. Venezuela has been operating at that kind of a level. Nuvo, much less, but it's also it's only Uruguay and there are not that many people. I know that's one of the elements. Mike, would you add a little bit more color?

I think that really basically sums it up. We were up in the mid-twenties in Brazil in the fourth quarter or sorry, a little over 30 in the fourth quarter. It's recognizing that's a very large market for us and looking at where we are with the sales force and looking at that more in the mid-teens kind of area. Obviously, if we continue to exceed our expectations, than that could be an area of upside. But we felt the right place to call it, looking at it altogether, was in the mid-teens for that segment.

Okay, that's helpful.

Ian, I would add, too, though, that for markets like Brazil and looking at our penetration level, it's still very, very early days for us and I would expect that very strong double-digit growth to continue, at least for the next five years of that market. It's growing, it's extremely profitable, but as you know, it's got a landmass the size of North America, so we've got a lot of runway left.

Okay, good. Can I just ask for a little clarification on Tupperware South Africa? You talked about the counterfeit issues there, I thought those were more related to Avroy Shlain or does that get lumped in or was there something else going on?

No, it had nothing to do with Avroy Shlain. Avroy Shlain is cooking, it's growing at very nicely double-digit, that business there. By the way, going back to Linda's question earlier, the Avroy Shlain business is very similar to our BeautiControl business; when you get it right, it's a great business to be in. These are much more high-class product lines than the Fuller business for example. They're nice crown jewels to have if you run them right. No, the whole problem in counterfeiting was at the Tupperware line. They basically took about a dozen of our top-selling products and a Chinese counterfeiter knocked off the products.

They were sold at the equivalent of little bodegas and I'll tell you what it did is, we lost a lot of sales force initially. Not that they started selling that, they started having a very difficult time selling our products. Now these by the way, we had lab work done, these things were made out of such shoddy resin products that somebody would put in an oven one of these products or in a microwave and it would melt around the chicken. It was just terrible -- these were dangerous products. The police were very aggressive in helping us. We not only raided those, these were almost guns blazing these warehouses, but then they watched as these products were destroyed. That's South Africa. You get outside of Cape Town, Johannesburg, and Durbin, it is the Wild West.

Yes, was there an issue with the lipstick color at one point or am I thinking of something else?

Yes, no, we had no problem with that.

Okay, my bad. Thanks

At this time, I'd like to hand the call back over to Mr. Goings for any further comments or closing remarks.

Thank you, everybody, for all this time. Georges, I want to thank you for being here. What I'd really like is what I should hope you could see is, I'm answering the question on food storage and Georges has a more comprehensive really understanding of it; how we've really moved from food storage. We didn't abandon food storage, we just went to high ground on food storage. But what I would like to come across with that is, just the incredible, knowledgeable, dynamic level of management that we have all over the world.

We'll do this from another market somewhere else and I think what you'll see is another general manager that really knows this business. Last closing comments were my first opening comments, we're an and story. We have confidence in the future and our focus is going to be continuing to be a cash generation machine and keeping this growth going. Thank you all for the interest and the time.

Thank you. This concludes the Tupperware Brands Corporation Fourth Quarter 2012 Earnings Conference Call. You may now disconnect.