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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT: SEPTEMBER 25, 1996
THE DIAL CORPORATION
(Exact Name of registrant as specified in its charter)
DELAWARE 1-11793 51-0374887
(State or Other Jurisdiction of (Commission (I.R.S. Employer
Incorporation or Organization) File Number) Identification No.)
1850 NORTH CENTRAL AVENUE
PHOENIX, ARIZONA 85004-4525
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (602) 207-2800
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ITEM 5. OTHER EVENTS.
In a press release dated September 25, 1996, The Dial Corporation ("Dial")
announced that it is planning restructuring charges in the third quarter to
streamline its management and administrative organization, eliminate
approximately 250 positions and sell or discontinue a number of
underperforming brands and related assets. Dial expects to take a one-time
write-off of about $31 million after-tax (equal to $.34 per share)in the third
quarter of 1996 to cover all costs associated with the streamlining. Final
determination of the charges will be completed in the third quarter closing.
A copy of the press release issued by Dial is attached as Exhibit 20 to this
report.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibit.
(20) Press Release
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
THE DIAL CORPORATION
By: /s/ Lowell L. Robertson
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Lowell L. Robertson
(Vice President and Controller)
DATE: October 3, 1996
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EXHIBIT 20 PRESS RELEASE
THE DIAL CORPORATION STREAMLINES ORGANIZATION
STREAMLINING EXPECTED TO RESULT IN ANNUAL PRETAX SAVINGS OF $40 MILLION
ADMINISTRATIVE STAFF TRIMMED, UNDERPERFORMING BRANDS CULLED, WRITE-OFF SLATED
1996 EARNINGS TO FALL BELOW CONSENSUS
PHOENIX, Ariz., Sept. 25, 1996 -- The Dial Corporation (NYSE: DL), the
consumer products company that was created in an Aug. 15 spin-off, announced
today that its board of directors has approved a plan to streamline its
management and administrative organization, eliminate approximately 250
positions and sell or discontinue a number of underperforming brands and
related assets. The result will be an annual pretax savings of $40 million.
Malcolm Jozoff, Dial's chairman, president and chief executive officer,
said that approximately one-half of the $40 million annual pretax savings will
be targeted to improve short-term profitability (earnings per share), while
the balance will be invested to enhance Dial's long-term profitability through
investments in brand equity and technology efficiencies.
"These actions are essential to improve Dial's profitability and
earnings," Jozoff said.
The company expects to take a one-time write-off of about $50 million in
the third quarter of 1996 to cover all costs associated with the streamlining.
"We are determined to structure The Dial Corporation for success," Jozoff
said. "We are realists. If a company our size doesn't take the difficult
steps necessary to achieve profitable growth, some bigger company just might
come along and show us how to do it. We know what we have to do, and we are
doing it.
"Other companies have faced similar problems and have taken similar
actions. Each and every one of our competitors has already streamlined staff,
shed nonproductive assets and reduced costs. For Dial, these actions are
essential."
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Further, Jozoff said that it has become clear that the company's 1996
earnings are likely to be about 15 percent lower than the consensus of
security analysts' forecasts, which were formulated prior to the spin-off.
Slowness in new-product acceptance and selected detergent and personal care
programs has impacted results.
"The streamlining will let us work on these problems quickly as a way to
rebuild Dial's profitability and strength," Jozoff said.
Following are key elements of the streamlining:
* Centralize management and reduce overhead: Dial is centralizing its
management functions to eliminate redundancy, increase flexibility and provide
better focus and clearer lines of accountability. For example, Dial will
generate greater buying clout with suppliers by combining its six purchasing
locations into one and will reach a critical mass in research and development
by combining laboratories and functions. Overall, Dial expects to reduce its
overhead expenses by 20 percent.
As a step in the new corporate strategy, Dial announced today that Scott
McHenry has joined the company as senior vice president, marketing and sales.
McHenry was formerly a partner at McKinsey & Company, where he co-headed the
North American consumer packaged goods practice.
* Trim the workforce: Approximately 250 positions will be eliminated,
with more than 80 percent of the reductions coming from management and
administration. The workforce reduction will drop Dial's total number of
employees to 2,800, down 33 percent from 4,200 in 1990. Affected employees
are being notified today.
"We deeply regret the need to reduce our workforce," Jozoff said, "but it
is absolutely essential if the company is to achieve its financial goals. We
aren't adjusting our secretary-to-manager ratio by eliminating secretaries.
We're adjusting it by eliminating managers."
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* Cull underperforming brands: Dial will trim its SKUs (stock-keeping
units) by about 50 percent. These underperforming SKUs represent less than 10
percent of Dial's total sales volume. Most will be discontinued, but some may
be sold.
"This will free resources to build other products faster," Jozoff said.
He noted that one-third of Dial's total product line had been introduced
in just the past five years, a rate that could not be supported adequately by
the company's limited resources.
"It's time to retrench and refocus on our key brands," he said. "I'm
talking about Dial soaps, Purex detergents, Armour Star food products, Renuzit
air fresheners and others that are major market competitors. We are going to
be disciplined in our approach to new product development and the targeting of
acquisitions."
* Move the corporate headquarters: Dial plans to vacate its present
headquarters space in a Phoenix office tower, a facility that it shares with
its former parent company. Jozoff noted that the current headquarters
location is too large and too costly for the streamlined company. The company
is considering several metropolitan areas, including Phoenix, and expects to
reach a decision by year end.
In 1995, Dial (then the consumer products division of what is now Viad
Corp) announced the closing of six of its U.S. manufacturing plants and the
elimination of nearly 700 jobs, principally at the production facilities.
Management and corporate staff positions were virtually untouched during that
cutback.
"Last year's restructuring was the first step," Jozoff said. "It reset
the asset base and plant enrollment. Now, we are taking the critical steps to
reduce overhead, cull unproductive SKUs and finish the write-off of fixed
assets. Once done, we'll have the ability to improve earnings per share, to
set the right prices for our detergents and bar soaps, to increase consumer
advertising and to invest in selected new products. We are completing the
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streamlining job by reducing management overhead to a level that's appropiate
for our new, smaller, more cost-conscious company."
The Dial Corporation -- which has one of the strongest consumer
franchises in the industry -- manufactures and markets personal care,
household and laundry products and shelf-stable food. Its products have been
in the American marketplace for more than 100 years and are found in nine out
of every 10 U.S. homes.
