UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 28, 1997
Commission file number 1-11793
THE DIAL CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 51-0374887
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
15501 NORTH DIAL BOULEVARD
SCOTTSDALE, ARIZONA 85260-1619
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (602) 754-1098
Indicate by check mark whether the registrant (1) has filed all Exchange Act
reports required to be filed by Section 13 or 15 (d) of the Securities
Exchange Act of 1934 during the preceding 12 months, and (2) has been subject
to such filing requirements for the past 90 days.
Yes X No
----------- -----------
The number of shares of Common Stock, $.01 par value, outstanding as the close
of business on June, 28 1997 was 96,036,674.
<PAGE>
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
THE DIAL CORPORATION
CONSOLIDATED BALANCE SHEET
(000 omitted)
<S> <C> <C>
June 28, December 28,
1997 1996
---------- --------------
ASSETS
Current Assets:
Cash and cash equivalents $ 12,180 $ 14,102
Receivables, less allowance of $4,732 and $3,170 37,407 28,689
Inventories 112,950 139,492
Deferred income taxes 56,152 61,379
Other current assets 724 4,119
---------- --------------
Total current assets 219,413 247,781
Property and equipment, net 231,645 226,551
Deferred income taxes 60,142 63,918
Intangibles 321,962 325,739
Other assets 775 2,137
---------- --------------
$ 833,937 $ 866,126
========== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Trade accounts payable $ 69,516 $ 91,341
Income taxes payable 21,619 7,188
Other current liabilities 104,360 108,145
---------- --------------
Total current liabilities 195,495 206,674
Long-term debt 220,695 269,515
Pension and other employee benefits 239,376 233,306
Other liabilities 8,592 15,974
---------- --------------
Total liabilities 664,158 725,469
---------- --------------
Shareholders' Equity
Common stock, $.01 par value, 300,000,000 shares
authorized, 96,102,553 and 95,638,352 shares issued 961 956
Additional capital 257,948 247,209
Retained earnings (deficit) 3,940 (20,308)
Unearned employee benefits (91,524) (87,129)
Cumulative translation adjustment (673) 575
Treasury stock, 65,879 and 49,399 shares held (873) (646)
---------- --------------
Total shareholders' equity 169,779 140,657
---------- --------------
$ 833,937 $ 866,126
========== ==============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
THE DIAL CORPORATION
STATEMENT OF CONSOLIDATED OPERATIONS
(000 omitted, except per share data)
<CAPTION>
<S> <C> <C>
Quarter Ended
-------------------------
June 28, June 29,
1997 1996
-------------- ---------
Net sales $ 349,268 $ 353,758
-------------- ---------
Costs and expenses:
Cost of products sold 183,037 185,472
Selling, general and administrative expenses 126,174 125,289
-------------- ---------
309,211 310,761
-------------- ---------
Operating income 40,057 42,997
-------------- ---------
Spinoff transaction costs 4,000
Interest and other expenses 7,133 5,182
-------------- ---------
7,133 9,182
-------------- ---------
Income before income taxes 32,924 33,815
Income taxes 12,542 14,526
-------------- ---------
NET INCOME $ 20,382 $ 19,289
============== =========
NET INCOME PER SHARE $ 0.22
==============
Average outstanding common and equivalent shares 92,625
==============
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
<TABLE>
THE DIAL CORPORATION
STATEMENT OF CONSOLIDATED OPERATIONS
(000 omitted, except per share data)
<CAPTION>
<S> <C> <C>
Six Months Ended
----------------------------
June 28, June 29,
1997 1996
----------------- ---------
Net sales $ 665,510 $ 706,150
----------------- ---------
Costs and expenses:
Cost of products sold 352,327 358,823
Selling, general and administrative expenses 236,469 267,988
----------------- ---------
588,796 626,811
----------------- ---------
Operating income 76,714 79,339
----------------- ---------
Spinoff transaction costs 4,000
Interest and other expenses 14,799 9,785
----------------- ---------
14,799 13,785
----------------- ---------
Income before income taxes 61,915 65,554
Income taxes 23,210 26,657
----------------- ---------
NET INCOME $ 38,705 $ 38,897
================= =========
NET INCOME PER SHARE $ 0.42
=================
Average outstanding common and equivalent shares 92,261
=================
</TABLE>
See Notes to Consolidated Financial Statements.
<TABLE>
THE DIAL CORPORATION
STATEMENT OF CONSOLIDATED CASH FLOWS
(000 omitted)
<CAPTION>
<S> <C> <C>
Six Months Ended
-----------------------------
June 28, June 29,
1997 1996
------------------ ----------
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
Net income $ 38,705 $ 38,897
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 15,464 14,722
Deferred income taxes 9,003 7,735
Change in operating assets and liabilities:
Receivables 2,482 (10,462)
Inventories 26,542 (1,774)
Trade accounts payable (21,825) (13,436)
Other assets and liabilities, net 14,498 (21,969)
------------------ ----------
Net cash provided by operating activities 84,869 13,713
------------------ ----------
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:
Capital expenditures (17,484) (22,583)
------------------ ----------
Net cash (used) by investing activities (17,484) (22,583)
------------------ ----------
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
Net payments on long-term borrowings (48,820) (3,003)
Net change in short-term bank loans (226)
Dividends paid on common stock (14,457)
Cash proceeds from stock options 5,170
Net change in receivables sold (11,200) (4,997)
Cash transfers (to) from parent, net 15,653
------------------ ----------
Net cash provided (used) by financing activities (69,307) 7,427
------------------ ----------
Net decrease in cash and cash equivalents (1,922) (1,443)
Cash and cash equivalents, beginning of year 14,102 5,884
------------------ ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 12,180 $ 4,441
================== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
<PAGE>
THE DIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A. BASIS OF PREPARATION
On July 25, 1996, the Board of Directors of The Dial Corp ("the Former
Parent") declared a dividend (the "Distribution" or "the spinoff") to effect
the spinoff of its Consumer Products Business. The dividend was paid on
August 15, 1996, to shareholders of record as of August 5, 1996. Each Dial
shareholder received a dividend of one share of common stock of The Dial
Corporation ("the Company"), which, after the Distribution, owns and operates
the Consumer Products Business previously conducted by the Former Parent.
Concurrently with the Distribution, the name of the Former Parent was changed
to Viad Corp.
The Consolidated Financial Statements present the financial position, results
of operations and cash flows of the divisions and subsidiaries comprising The
Dial Corporation, as if it had been formed as a separate entity for all
periods presented. The Former Parent's historical cost basis of the assets
and liabilities have been carried over to the new company. All material
intercompany balances and transactions among the entities comprising the
Company have been eliminated.
Accounting policies utilized in the preparation of these financial statements
are the same as set forth in the Company's annual financial statements except
as modified for interim accounting policies, which are within the guidelines
set forth in Accounting Principles Board Opinion No. 28, "Interim Financial
Reporting."
Net income per common share is computed by dividing net income by the weighted
average number of common shares outstanding during the year after giving
effect to stock options considered to be dilutive common stock equivalents.
Fully diluted net income per common share is not materially different from
primary net income per common share. The average outstanding and
equivalent shares do not include shares held by the Employee Equity Trust (the
"Trust"). Shares held by the Trust are not considered outstanding for net
income per share calculations until the shares are released from the Trust.
Per share information is not presented for the quarter or six months ended
June 29, 1996 because the Company was not a publicly held company during such
period. Income per share is presented for 1997, as the Company's common
shares were issued on August 15, 1996.
At June 28, 1997, there were 96,102,553 shares of common stock issued and
96,036,674 shares outstanding. At June 28, 1997, a total of 5,574,321 of the
outstanding shares were held by the Trust. In addition, 65,879 shares were
held in treasury by the Company.
In addition to common stock, the Company is authorized to issue 10,000,000
shares of preferred stock, par value $.01 per share, none of which has been
issued.
In March 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 128, "Earnings Per Share"
("SFAS No. 128"), which is effective for financial statements for both interim
and annual periods ending after December 15, 1997. Early adoption of the
statement is not permitted. This new standard requires dual presentation of
"basic" and "diluted" earnings per share ("EPS") on the face of the earnings
statement and requires a reconciliation of the numerators and denominators of
basic and diluted EPS calculations. The Company's current EPS calculation
conforms to SFAS No. 128's diluted EPS. Basic EPS, which excludes the effects
of dilutive stock options, is not materially different from diluted EPS for
the Company.
In June 1996, FASB issued Statement of Financial Accounting Standards No. 125,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" ("SFAS No. 125"). SFAS No. 125 permits sale
accounting treatment for transfers of financial assets in which the transferor
surrenders control over those assets and consideration other than beneficial
interests in the transferred assets is received in exchange. SFAS No. 125
defines the conditions under which a transferor has surrendered control.
The Company adopted SFAS No. 125 on January 1, 1997, as required. Sale of
trade accounts receivable entered into in 1997 are structured in a manner
that qualifies for sale accounting under SFAS No. 125. The adoption of SFAS
No. 125 will not have a material effect on the Company's financial position or
results of operations.
In June 1997, the FASB issued Statements of Financial Accounting Standards
("SFAS") No. 130 "Reporting Comprehensive Income" and No. 131 "Disclosures
About Segments of an Enterprise and Related Information". SFAS 130 requires
that an enterprise (a) classify items of other comprehensive income by their
nature in a financial statement and (b) display the accumulated balance of
other comprehensive income separately from retained earnings and additional
capital in the equity section of a statement of financial position. SFAS 131
establishes standards for the way that public enterprises report information
about operating segments in annual financial statements and requires that
those enterprises report selected information about operating segments in
interim financial reports issued to shareholders. It also establishes
standards for disclosures about products and services, geographic areas and
major customers. Both statements are effective for financial statements for
periods beginning after December 15, 1997. The Company has not completed
evaluating the impact of implementing the provisions of SFAS Nos. 130 and 131.
The interim consolidated financial statements are unaudited. In the opinion
of management, all adjustments, consisting only of normal recurring accruals,
necessary to present fairly the financial position as of June 28, 1997 and the
results of operations and cash flows for the quarters and six months ended
June 28, 1997 and June 29, 1996 have been included. Interim results of
operations are not necessarily indicative of the results of operations for the
full year.
Certain reclassifications have been made to 1996 balances to conform with 1997
presentations.
This information should be read in conjunction with the financial statements
set forth in the Company's Annual Report to Shareholders for the year ended
December 28, 1996.
NOTE B. INVENTORIES
Inventories consisted of the following:
<TABLE>
<CAPTION>
June 28, December 28,
1997 1996
-------------- --------------
(000 omitted)
<S> <C> <C>
Raw materials and supplies $ 28,804 $ 37,744
Work in process 9,720 10,939
Finished goods 74,426 90,809
-------------- --------------
$ 112,950 $ 139,492
============== ==============
</TABLE>
NOTE C. INCOME TAXES
Reconciliations between the statutory federal income tax rate of 35% and the
Company's consolidated effective income tax rate for the six months ended June
28, 1997 and June 29, 1996 are as follows:
<TABLE>
<CAPTION>
June 28, June 29,
1997 1996
--------- ---------
<S> <C> <C>
Federal statutory rate 35.0% 35.0%
Nondeductible goodwill amortization 0.5 0.3
FSC exclusion (benefit) (0.6) (0.4)
State income taxes 4.0 4.0
Impact of lower foreign tax rate (benefit) (0.7) (0.4)
Other, net (benefit) (0.7) 2.2
--------- ---------
Effective income tax rate 37.5% 40.7%
========= =========
</TABLE>
NOTE D. RESTRUCTURING CHARGES AND INVENTORY AND ASSET WRITE-DOWNS
In the third quarter of 1996, the Company announced an administrative and line
of business reorganization to streamline its management and administrative
organization, eliminate approximately 250 positions, sell or discontinue a
number of underperforming brands and exit the current corporate headquarters.
The Company recorded restructuring charges and asset write-downs of $55
million ($33.6 million after tax) in the third quarter of 1996 for severance
costs, discontinuance of product lines and building exit costs. Approximately
$7.5 million in reserves for such costs remained at June 28, 1997. These
reserves are believed to be adequate and such expenses will be paid utilizing
cash flow from operations.
Based upon the discontinuation and product rationalization analysis completed,
the related assets and intangibles were determined to be impaired and were
written down to their net realizable value. Severance pay and benefits and
exit costs have been recognized in accordance with Emerging Issues Task Force
Issue No. 94-3 ("EITF No. 94-3"), "Liability Recognition for Certain Employee
Termination Benefits and Other Costs to Exit an Activity (including Certain
Costs Incurred in a Restructuring)." Restructure costs charged against such
reserves in the first half of 1997 amounted to $7.5 million, of which $1.9
million was severance and exit costs.
In the third quarter of 1995, the Company recorded restructuring charges and
asset write-downs totaling $156 million ($94.9 million after tax) to provide
for a business-based reorganization through plant closings, work force
reductions and elimination of certain products. The charges provided for the
closing of six plants and the reduction of the work force by approximately 700
people, substantially all of whom were based in the plants that were closed.
All six plants have been closed. Approximately $15.1 million in reserves for
environmental costs and other plant post-closing expenses remained at June 28,
1997. Such reserves are believed to be adequate and such expenses are expected
to be paid utilizing cash flow from operations. Severance pay and benefits
and exit costs, primarily facility closure costs, were also recognized in
accordance with EITF No. 94-3 and are included in the restructuring reserve
described above. Restructure costs charged against such reserves in the first
half of 1997 amounted to $4.9 million, of which $2.5 million was severance and
exit costs.
NOTE E. DISPOSITION OF ASSETS
In line with the corporate restructure charges in the third quarter of 1996,
the Company has entered into an agreement for the sale of certain of its
household cleaning brands. The Company will sell to Church & Dwight Co.,
Inc. for approximately $30 million the following brands and related
inventories: Brillo soap pads and related products, Parsons ammonia, Bo Peep
ammonia, Sno Bol toilet bowl cleaner, Cameo metal cleaner and Rain Drops water
softener. The Company's London, Ohio plant, where Brillo is manufactured,
will also be part of the sale. The Company has sold its Bruce floor care
product trademark and has agreed to sell its Magic Sizing/Starch brand and
related inventories.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Basis of Management's Discussion and Analysis
In the line of business reorganization undertaken in the third quarter of
1996, the Company identified certain brands and lines of business upon which
it intends to dedicate the resources of the Company. These businesses are the
retail branded products which the Company markets under its Dial, Purex,
Renuzit and Armour franchises and the Company's international line of
business. The Dial franchise includes not only the Dial and Liquid Dial brands
but also the Tone, Nature's Accents, Pure & Natural, Fels Naptha, Boraxo and
Breck brands. The Purex franchise includes the Trend, Dutch, Borateem, Vano,
Sta-Flo, 20 Mule Team and La France brands in addition to the Purex brand.
The Renuzit franchise includes only products that bear the Renuzit name.
The Armour franchise includes the Armour, Armour Star and Cream brands. These
brands and lines of business were identified on the basis of their
profitability, strength in the marketplace and potential growth. Accordingly,
all products and lines of business outside of the identified franchises
(the "noncore businesses") have been discontinued or sold.
COMPARISON OF THE SECOND QUARTER OF 1997 WITH THE SECOND QUARTER OF 1996
Revenues for the second quarter of 1997 were $349.3 million, a decrease of
$4.5 million (or 1.3%) from the second quarter of 1996 revenues of $353.8
million. Operating income for the second quarter of 1997 was $40.1 million
which was $2.9 million (or 6.8%) less than the second quarter of 1996
operating income of $43.0 million. Net income for the second quarter of 1997
was $20.4 million, an increase of approximately $1.1 million (5.7%) above the
second quarter of 1996 net income of $19.3 million.
The Company's core business experienced a revenue increase of approximately
$19 million (or 6.3%) from the second quarter of 1996 to the second quarter of
1997. This increase was driven primarily by an increase in Dial revenues
(up 8.2%), an increase in Renuzit revenues (up 17.8%), and an increase in
Armour revenues (up 10.9%). These increases were offset by Purex revenues
which remained relatively constant from the second quarter of 1996 to the
second quarter of 1997.
Noncore revenues in the second quarter of 1997 of $21.2 million declined $24
million (or 53.1%) from the second quarter 1996 levels. The Company expects
that revenues from noncore businesses will continue to decline during 1997 as
the Company completes its initiative of discontinuing and divesting certain
brands.
Gross profits decreased $2.0 million, from $168.3 million in the second
quarter of 1996 to $166.2 million in the second quarter of 1997. Gross profit
margins remained stable from the second quarter of 1996 to the second quarter
of 1997 at 47.6%.
Selling, general and administrative expenses were $126.1 million in the second
quarter of 1997, an increase of approximately $.9 million (or less than 1%)
above the second quarter of 1996 levels.
Interest and other expenses increased approximately $2.0 million from the
second quarter of 1996 to the second quarter of 1997 as a result of $1.9
million in accretion costs related to Armour employee benefit liabilities
assumed from the Former Parent company in the spinoff.
The effective tax rate for the quarter ended June 28, 1997 was approximately
38.1%, down from 43% for the comparable period in 1996. The net decrease of
approximately 4.9% is due to an increase in income eligible for the Foreign
Sales Corporation exclusion, an increase in state income taxes, an increase in
foreign income subject to lower income tax rates and a decrease in other
miscellaneous permanent differences.
COMPARISON OF THE FIRST SIX MONTHS OF 1997 WITH THE FIRST SIX MONTHS 1996
Revenues for the first six months ended June 28, 1997 were $665.5 million, a
decrease of $40.7 million (or 5.7%) from the first half of 1996 revenues of
$706.2 million. Operating income for the first half of 1997 was $76.7
million which was $2.6 million (or 3.3%) less than the first half of 1996
operating income of $79.3 million. Net income for the six months ended June
28, 1997 was $38.7 million, which was slightly less than the first half of
1996 net income of $38.9 million.
The Company's core business experienced a revenue increase of approximately $2
million (or less than 1%) from the first half of 1996 to the first half of
1997. This increase was driven primarily by revenue growth from new product
introductions in the Renuzit business (up 16.2%), an increase in Armour
revenues (up 13.0%), and an increase in International revenues (up 11.7%).
The increases described above were offset by a decline in Dial revenues ( down
2.8%) as a result of a "Buy three, get one free" promotional program executed
in the first quarter of 1996 that was not repeated in the first quarter of
1997. In addition Purex revenues declined 8.3% as a result of the 15% price
reduction on detergent products initiated late in the first quarter of 1996.
After adjustment for the Purex price reduction, core business revenues
increased 4.2% in the first half of 1997 as compared to the same period in
1996.
Noncore revenues for the six months ended June 28, 1997 were approximately $46
million a decline of approximately $43 million (or 47.9%) from the six months
ended June 29, 1996. The Company expects that revenues from noncore businesses
will continue to decline during 1997 as the Company completes its initiative
of discontinuing and divesting certain brands.
Gross profits declined $34.1 million, from $347.3 million for the six months
ended June 29, 1996 to $313.2 million for the first six months ended June 28,
1997. Gross profit margins decreased from 49.2% in the first half of 1996 to
47.1% in the first half of 1997. The decline in the gross profit margin is
largely the result of the price reduction initiative on detergent products
to move to a modified everyday low pricing ("EDLP") for both Purex and Trend.
These decreases were offset by improvements in cost of products sold driven
by lower costs from improved distribution practices instituted in the
second quarter of 1996 and lower manufacturing costs.
Selling, general and administrative expenses were $236.5 million for the first
half of 1997, a decrease of approximately $31 million (or 11.8%) below the
first half 1996 levels. The decrease was the result of decreases in
marketing expenses of approximately $28 million and decreases in selling and
administrative expenses of approximately $3 million.
The decreases in marketing expenses in the first half of 1997 from the first
half of 1996 resulted from lower trade promotion expenditures of
approximately $15 million on Purex which were no longer necessary as a
result of the price reduction taken in the first quarter of 1996, offset by
additional trade spending in the second quarter of approximately $8 million on
Dial, Purex and Renuzit. Additionally, there were favorable consumer
promotion expenses of approximately $13 million in the first half of 1997
versus the first half of 1996 as a result of not repeating the "Buy three, get
one free" promotion on Dial in 1997, as well as a reduction of marketing
expenses on products that are being discontinued or divested.
The decrease in selling and administrative expenses of approximately $3
million in the first half of 1996 versus the first half of 1997 is comprised
of administrative savings as a result of the administrative and business
reorganization undertaken in 1996, partially offset by the incremental costs
associated with being a public company.
Interest and other expenses increased approximately $5 million from the six
months ended June 29, 1996 to the six months ended June 28, 1997. This
increase was the result of a $3.8 million increase in accretion costs related
to Armour employee benefit liabilities assumed from the Former Parent company
in the spinoff and additional sale of accounts receivable expenses of $2.2
million, offset by an interest expense savings of $1 million in the first half
of 1997 versus the first half of 1996.
The effective tax rate for the six months ended June 28, 1997 was
approximately 37.5%, down from 40.7% for the comparable period in 1996. The
net decrease of approximately 3.2% was due to an increase in income eligible
for the Foreign Sales Corporation exclusion, an increase in foreign income
subject to lower income tax rates and other miscellaneous permanent
differences, offset by slightly higher nondeductible goodwill amortization.
LIQUIDITY AND CAPITAL RESOURCES
The Company generated cash from operations of $84.9 million during the first
six months of 1997, an increase of $71.2 million from the comparable period in
1996. The increase was attributable primarily to decreases in receivables and
inventories. Capital expenditures for the first half of 1997 (net of asset
dispositions) were $17.5 million. Capital expenditures for the second half of
1997 are expected to approximate $40 million. The increase over first half
expenditures is attributable to spending on the new corporate headquarters and
investments in new information systems. The Company's financing plan includes
the sale of accounts receivable to accelerate cash flow. Accounts receivable
sold but not yet collected under this plan at June 28, 1997 and June 29, 1996
were $63.7 million and $71.7 million, respectively. Under, the terms of the
plan, the Company retains substantially the same risk of credit loss as it
would bear if the receivables had not been sold since the Company is obligated
to replace uncollectible receivables with new accounts receivable.
The Company is also party to a $350 million revolving credit agreement (the
"Credit Agreement") with various banks. The Credit Agreement, which will
terminate on August 15, 2001 unless extended, contains certain covenants which
impose limitations on the Company with respect to, among other things, its
ability to place liens on property, its ability to merge, consolidate or
transfer substantially all its assets, its minimum net worth and the
incurrence of certain indebtedness. The Company, from time to time, makes
short-term borrowings that are supported by the Credit Agreement. As of June
28, 1997, the Company had $220.7 million aggregate principal amount of such
short-term borrowings outstanding and, at such date, the Company had $129.3
million available under the Credit Agreement. Such short-term borrowings are
classified as long-term debt because they are supported by the long-term
Credit Agreement.
The Company is planning an equity offering of at least $100 million during
the second half of 1997. The Company anticipates the net proceeds will be
used to repay long-term debt. The equity offering is required to preserve the
status of the tax ruling received by the Former Parent and the Company from
the IRS in connection with the Distribution. This ruling was issued on the
basis of certain representations made by the Former Parent and the Company,
including a representation that the Company would issue at least $100 million
in additional equity securities by the first anniversary of the Distribution
(August 15, 1997). The Company petitioned the IRS to permit it to extend the
deadline for the issuance of such equity securities until December 31, 1997.
The IRS has granted the Company's petition.
The Company moved its corporate headquarters in the Viad Tower to office space
in Scottsdale, Arizona, in August 1997. The Company has approximately nine
years remaining on the lease for the Viad Tower space, which commits the
Company to payments of approximately $2,676,000 annually through 2006. The
Company is actively marketing the space for sublease. Estimated losses on
this lease were provided for in the restructuring charges and asset
write-downs recorded in the third quarter of 1996.
As of June 28, 1997, the Company had approximately $116.3 million in net
deferred tax benefits, which the Company believes are fully realizable in
future years. The realization of such benefits will require average annual
taxable income of approximately $19.4 million over the next 15 years. The
Company's average income before income taxes over the last three years was
approximately $47.6 million.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Company's Annual Meeting of Shareholders, held on May 29, 1997 (the
"1997 Annual Meeting"), the following nominees were elected as directors of
the Company (the number of votes cast for, against or withheld, as well as the
number of abstentions and broker non-votes, being indicated below with respect
to each such nominee):
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C> <C>
VOTES
-----------------------------------------------------------------
Name of Term Broker
Nominee Expiration For Against Withheld Abstentions Non-Votes
- ------------------ ---------- ---------- ------- -------- ----------- ---------
Thomas L. Gossage 2000 83,140,736 -- 844,746 -- --
Joy A. Amundson 2000 83,583,417 -- 402,065 -- --
Michael T. Riordan 2000 83,586,935 -- 398,547 -- --
</TABLE>
The names of the other directors of the Company whose terms of office
continued after the meeting are as follows:
<TABLE>
<CAPTION>
<S> <C>
Name of Director Term Expiration
- ------------------ ---------------
Joe T. Ford 1998
A. Thomas Young 1998
Dennis C. Stanfill 1998
Barbara S. Thomas 1998
Donald E. Guinn 1999
Malcolm Jozoff 1999
Herbert M. Baum 1999
</TABLE>
Other matters voted upon at the 1997 Annual Meeting included the following
(the number of votes cast for, against or withheld, as well as the number of
abstentions and broker non-votes, being indicated below):
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
VOTES
-------------------------------------------------------
Broker
Matter For Against Withheld Abstentions Non-Votes
- --------------------------------------------- ---------- --------- -------- ----------- ---------
Approvals of performance 79,052,607 3,898,810 -- 1,034,065 --
goals and certain other terms under The Dial
Corporation 1996 Stock
Incentive Plan for purposes
of I.R.S. Code Section
162(m)
</TABLE>
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C> <C>
VOTES
-------------------------------------------------------
Broker
Matter For Against Withheld Abstentions Non-Votes
- ---------------------------- ---------- --------- -------- ----------- ---------
Approval of performance 80,206,720 3,137,367 -- 641,455 --
goals and certain other
terms under The Dial
Corporation Annual
Incentive Plan for purposes
of I.R.S. Code Section
162(m)
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) Exhibits
11. Statement Re: Computation of Per Share Earnings.
27. Financial Data Schedule.
(B) Reports filed on Form 8-K
1. A report on Form 8-K, dated July 17, 1997, was filed by the Company during
the quarter for which this report is filed. The Form 8-K reported under Item
2 that the Company anticipated selling certain of its household cleaning
brands. The sale price was approximately $30 million against annualized sales
for such brands of approximately $50 million. Proceeds of the sale will be
used to pay down debt.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
The Dial Corporation
(Registrant)
August 5, 1997
\s\ Lowell L. Robertson
Lowell L Robertson
Senior Vice President, Finance
(Chief Accounting Officer and Authorized Officer)
<TABLE>
<CAPTION>
<S> <C>
THE DIAL CORPORATION
EXHIBIT 11-COMPUTATION OF EARNINGS PER SHARE*
(000 omitted, except per share data)
Quarter ended
June 28,
1997
--------------
PRIMARY:
Income before cumulative effect of accounting changes $ 20,382
Cumulative effect of accounting changes
--------------
Net Income $ 20,382
--------------
Weighted average shares outstanding 92,625
Primary earnings per share:
Income before cumulative effect of accounting change $ 0.22
Cumulative effect of accounting changes
--------------
Net Income per share $ 0.22
--------------
FULLY DILUTED:
Income before cumulative effect of accounting changes $ 20,382
Cumulative effect of accounting changes
--------------
Net Income $ 20,382
--------------
Weighted average shares outstanding 92,625
Incremental shares under stock option plans 2
--------------
Adjusted weighted average shares outstanding 92,627
--------------
Fully diluted earnings per share:
Income before cumulative effect of accounting changes $ 0.22
Cumulative effect of accounting changes
--------------
Net Income per share $ 0.22
--------------
</TABLE>
*Per share information is not presented for June 29, 1996 because the Company
was not a publicly held company during such period. Income per share is
presented for 1997, as the Company's common shares were issued on August 15,
1996.
<TABLE>
<CAPTION>
<S> <C>
THE DIAL CORPORATION
EXHIBIT 11-COMPUTATION OF EARNINGS PER SHARE*
(000 omitted, except per share data)
Six months ended
June 28,
1997
-----------------
PRIMARY:
Income before cumulative effect of accounting changes $ 38,705
Cumulative effect of accounting changes
-----------------
Net Income $ 38,705
-----------------
Weighted average shares outstanding 92,261
Primary earnings per share:
Income before cumulative effect of accounting change $ 0.42
Cumulative effect of accounting changes
-----------------
Net Income per share $ 0.42
-----------------
FULLY DILUTED:
Income before cumulative effect of accounting changes $ 38,705
Cumulative effect of accounting changes
-----------------
Net Income $ 38,705
-----------------
Weighted average shares outstanding 92,261
Incremental shares under stock option plans 73
-----------------
Adjusted weighted average shares outstanding 92,334
-----------------
Fully diluted earnings per share:
Income before cumulative effect of accounting changes $ 0.42
Cumulative effect of accounting changes
-----------------
Net Income per share $ 0.42
-----------------
</TABLE>
*Per share information is not presented for June 29, 1996 because the Company
was not a publicly held company during such period. Income per share is
presented for 1997, as the Company's common shares were issued on August 15,
1996.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE DIAL
CORPORATION'S FORM 10-Q FOR THE SIX MONTHS ENDED JUNE 28, 1997 AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JAN-03-1998
<PERIOD-END> JUN-28-1997
<CASH> 12,180
<SECURITIES> 0
<RECEIVABLES> 37,407
<ALLOWANCES> 4,732
<INVENTORY> 112,950
<CURRENT-ASSETS> 219,413
<PP&E> 231,645
<DEPRECIATION> 12,390
<TOTAL-ASSETS> 833,937
<CURRENT-LIABILITIES> 195,495
<BONDS> 220,695
0
0
<COMMON> 961
<OTHER-SE> 168,818
<TOTAL-LIABILITY-AND-EQUITY> 833,937
<SALES> 665,510
<TOTAL-REVENUES> 665,510
<CGS> 352,327
<TOTAL-COSTS> 352,327
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 14,799
<INCOME-PRETAX> 61,915
<INCOME-TAX> 23,210
<INCOME-CONTINUING> 38,705
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,705
<EPS-PRIMARY> .42
<EPS-DILUTED> .42
</TABLE>
