<PAGE>
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 September 30, 1994
Commission file number 001-11015
THE DIAL CORP
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 36-1169950
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
DIAL TOWER, PHOENIX, ARIZONA 85077
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (602)207-4000
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
--------- ---------
As of September 30, 1994, 92,552,218 shares of Common Stock
($1.50 par value) were outstanding.
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE DIAL CORP
CONSOLIDATED BALANCE SHEET
<CAPTION>
September 30, December 31,
(000 omitted, except number of shares) 1994 1993
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 16,059 $ 10,659
Receivables, less allowance of
$21,668 and $22,597 197,726 199,996
Inventories 217,989 216,837
Deferred income taxes 49,076 46,373
Other current assets 42,927 43,082
---------- ----------
523,777 516,947
Funds and agents' receivables
restricted for payment service
obligations, after eliminating
$75,000 and $65,000 invested
in Dial commercial paper 468,523 535,657
---------- ----------
Total current assets 992,300 1,052,604
Investments restricted for
payment service obligations:
Securities available for sale 400,282 574,094
Securities held to maturity 319,416
Property and equipment 804,123 740,724
Other investments and assets 71,809 59,757
Deferred income taxes 129,673 124,096
Intangibles 810,838 729,813
---------- ----------
$ 3,528,441 $ 3,281,088
========== ==========
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
September 30, December 31,
(000 omitted, except number of shares) 1994 1993
---------- ----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term bank loans $ 467 $ 8,935
Accounts payable 218,497 248,975
Accrued compensation 78,341 69,060
Other current liabilities 249,788 272,430
Current portion of long-term debt 2,264 2,295
---------- ----------
549,357 601,695
Payment service obligations 1,259,462 1,147,063
---------- ----------
Total current liabilities 1,808,819 1,748,758
Long-term debt 732,027 624,662
Pension and other benefits 316,789 295,656
Other deferred items and insurance reserves 94,316 99,834
Minority interests 26,103 35,866
$4.75 Redeemable preferred stock 6,589 6,624
Common stock and other equity:
Common stock, $1.50 par value,
200,000,000 shares authorized,
97,108,724 and 48,554,362
(pre-split) shares issued 145,663 72,832
Additional capital 304,799 378,814
Retained income 372,688 304,481
Cumulative translation adjustments (10,071) (9,889)
Unearned employee benefits related to:
Employee Equity Trust (144,003) (158,429)
Guarantee of ESOP debt (30,236) (31,511)
Unrealized loss on securities
available for sale (17,334)
Common stock in treasury, at cost,
4,556,506 and 2,536,354
(pre-split) shares (77,708) (86,610)
---------- ----------
Total common stock and other equity 543,798 469,688
---------- ----------
$ 3,528,441 $ 3,281,088
========== ==========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
THE DIAL CORP
STATEMENT OF CONSOLIDATED INCOME
<CAPTION>
Quarter ended September 30, 1994 1993
(000 omitted, except per share data) ---------- ----------
<S> <C> <C>
Revenues $ 912,523 $ 770,401
---------- ----------
Costs and expenses:
Costs of sales and services 811,037 687,028
Unallocated corporate expense
and other items, net 12,841 12,401
Interest expense 14,271 12,729
Minority interests 2,638 2,692
---------- ----------
840,787 714,850
---------- ----------
Income before income taxes 71,736 55,551
Income taxes 26,308 18,367
---------- ----------
Income from Continuing Operations 45,428 37,184
Income from discontinued operations 22,354
---------- ----------
Income before extraordinary charge 45,428 59,538
Extraordinary charge for early
retirement of debt, net of
tax benefit of $11,833 (21,908)
---------- ----------
Net Income $ 45,428 $ 37,630
========== ==========
Income Per Common Share:
Continuing operations $ 0.52 $ 0.44
Discontinued operations 0.26
Extraordinary charge (0.26)
---------- ----------
Net Income Per Common Share $ 0.52 $ 0.44
========== ==========
Dividends declared per common share $ 0.15 $ 0.14
========== ==========
Average outstanding common
and equivalent shares 86,888 85,140
========== ==========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE> <PAGE>
<PAGE>
<TABLE>
THE DIAL CORP
STATEMENT OF CONSOLIDATED INCOME
<CAPTION>
Nine months ended September 30, 1994 1993
(000 omitted, except per share data) ---------- ----------
<S> <C> <C>
Revenues $ 2,629,373 $ 2,182,452
---------- ----------
Costs and expenses:
Costs of sales and services 2,379,669 1,976,652
Unallocated corporate expense
and other items, net 37,690 37,863
Interest expense 39,713 39,708
Minority interests 3,041 3,226
---------- ----------
2,460,113 2,057,449
---------- ----------
Income before income taxes 169,260 125,003
Income taxes 63,229 43,281
---------- ----------
Income from Continuing Operations 106,031 81,722
Income from discontinued operations 32,120
---------- ----------
Income before extraordinary charge 106,031 113,842
Extraordinary charge for early
retirement of debt, net of
tax benefit of $11,833 (21,908)
---------- ----------
Net Income $ 106,031 $ 91,934
========== ==========
Income Per Common Share:
Continuing operations $ 1.22 $ 0.95
Discontinued operations 0.38
Extraordinary charge (0.26)
---------- ----------
Net Income Per Common Share $ 1.22 $ 1.07
========== ==========
Dividends declared per common share $ 0.44 $ 0.42
========== ==========
Average outstanding common
and equivalent shares 86,488 85,616
========== ==========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
THE DIAL CORP
STATEMENT OF RETAINED INCOME
<CAPTION>
Nine months ended September 30, 1994 1993
(000 omitted) ---------- ----------
<S> <C> <C>
Balance, beginning of year $ 304,481 $ 234,655
Net income 106,031 91,934
Dividends on common and preferred shares (38,246) (36,215)
Other 422 332
---------- ----------
Balance, end of period $ 372,688 $ 290,706
========== ==========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
THE DIAL CORP
STATEMENT OF CONSOLIDATED CASH FLOWS
<CAPTION>
Nine months ended September 30, 1994 1993
(000 omitted) ---------- ----------
<S> <C> <C>
CASH FLOWS PROVIDED (USED) BY
OPERATING ACTIVITIES:
Net income $ 106,031 $ 91,934
Adjustments to reconcile net income to
net cash provided (used) by operations:
Depreciation and amortization 83,841 75,511
Deferred income taxes 7,128 19,916
Income from discontinued operations (32,120)
Extraordinary charge for early
retirement of debt 21,908
Gain on sale of property (2,368) (768)
Other noncash items, net 7,672 29,361
Change in operating assets
and liabilities:
Receivables (258) (50,553)
Inventories 2,624 (11,978)
Funds and agents' receivables and
payment service obligations, net 185,371 78,387
Accounts payable and accrued
compensation (24,640) 35,969
Other assets and liabilities, net (51,670) (38,910)
---------- ----------
Net cash provided by operating activities 313,731 218,657
---------- ----------
CASH FLOWS PROVIDED (USED) BY
INVESTING ACTIVITIES:
Capital expenditures (64,806) (57,869)
Acquisitions of businesses and
other assets, net of cash acquired (146,678) (100,891)
Proceeds from sales and maturities of
investments restricted for payment
service obligations 241,195 450,546
Purchases of investments restricted for
payment service obligations (410,983) (578,962)
Proceeds from sale of shares of the
Transportation Manufacturing and
Service Parts Group 245,700
Proceeds from sale of property 6,770 16,737
Investment in and advances from
discontinued operations, net 35,084
Other, net (89) (55)
---------- ----------
Net cash provided (used) by investing activities (374,591) 10,290
---------- ----------
CASH FLOWS PROVIDED (USED) BY
FINANCING ACTIVITIES:
Proceeds from long-term borrowings 70,000 99,963
Payments on long-term borrowings (2,163) (182,725)
Extraordinary charge for early
retirement of debt (21,908)
Net change in short-term borrowings 31,456 (66,066)
Dividends on common and preferred stock (38,246) (36,215)
Minority portion of subsidiary's special dividend (9,761)
Proceeds from sale of treasury stock 24,291 23,933
Common stock purchased for treasury (38,642)
Net change in receivables sold (18,800)
Cash payments on interest rate swaps (9,317) (23,232)
---------- ----------
Net cash provided (used) by
financing activities 66,260 (263,692)
---------- ----------
Net increase (decrease) in cash
and cash equivalents 5,400 (34,745)
Cash and cash equivalents, beginning of year 10,659 43,917
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 16,059 $ 9,172
========== ==========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
THE DIAL CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A--Basis of Preparation
This information should be read in conjunction with the financial
statements set forth in The Dial Corp Annual Report to
Stockholders for the year ended December 31, 1993.
Accounting policies utilized in the preparation of the financial
information herein presented are the same as set forth in The
Dial Corp's annual financial statements except as discussed in
Note D below and as modified for interim accounting policies
which are within the guidelines set forth in Accounting
Principles Board Opinion No. 28. The interim consolidated
financial information is unaudited. In the opinion of management,
all adjustments, consisting only of normal recurring accruals,
necessary to present fairly Dial's financial position as of
September 30, 1994, and the results of operations for the
quarters and nine months ended September 30, 1994 and 1993, and
the cash flows for the nine months ended September 30, 1994 and
1993 have been included. Interim results of operations are not
necessarily indicative of the results of operations for the full
year.
NOTE B--Stock Split
On May 10, 1994, Dial's Board of Directors declared a two-for-one
stock split which was paid on July 1, 1994, to shareholders of
record as of June 1, 1994. Unless otherwise noted, all
references in the financial statements with regard to number of
shares of common stock and related dividends declared and income
per share amounts have been restated to reflect the stock split.
NOTE C--Acquisitions of Businesses and Other Assets
During the first nine months of 1994, Dial completed its
acquisition of fifteen flight catering kitchens from United
Airlines ("UAL") and also acquired several small companies. All
acquisitions were accounted for as purchases. The purchase
prices, including acquisition costs, were allocated to the net
tangible and intangible assets acquired based on estimated fair
values at the dates of the respective acquisitions. The
difference between the purchase prices and the related fair
values of net assets acquired represents goodwill which is being
amortized on a straight-line basis over 40 years. The fair value
of patents and other intangible assets purchased in the
acquisitions is amortized over their estimated useful lives.
The results of the acquired operations have been included in the
Statement of Consolidated Income from the dates of acquisition.
The net cash paid, assets acquired and debt and other liabilities
assumed in all acquisitions made during the first nine months of
1994 were as follows:
<TABLE>
<CAPTION>
UAL
Flight
Kitchens Other Total
(000 omitted) ----------- ----------- -----------
<S> <C> <C> <C>
(000 omitted)
Assets acquired:
Property and equipment $ 62,553 $ 10,997 $ 73,550
Intangibles, primarily goodwill 61,940 11,919 73,859
Other assets 2,689 2,448 5,137
Debt and other liabilities
assumed (5,868) (5,868)
----------- ----------- -----------
Net cash paid $ 127,182 $ 19,496 $ 146,678
=========== =========== ===========
</TABLE>
NOTE D--Investments Restricted for Payment Service Obligations
On January 1, 1994, The Dial Corp adopted Statement of Financial
Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." SFAS No. 115
requires the classification of securities at acquisition into one
of three categories: available for sale, held to maturity or
trading. Dial has no securities classified in the trading
category.
Securities Available for Sale--Securities that are being held for
indefinite periods of time, including those securities which may
be sold in response to needs for liquidity or changes in interest
rates are classified as securities available for sale and are
carried at fair value, with the net, after-tax, unrealized
holding gain or loss reported as a separate component of common
stock and other equity, with no effect on current results of
operations. The change in the unrealized loss on securities
available for sale for the nine months ended September 30, 1994
is as follows: <PAGE>
<TABLE>
<CAPTION>
(000 omitted)
<S> <C>
Unrealized loss on securities available
for sale at January 1, 1994, the date of
adoption of SFAS No. 115 $ (1,369)
Net increase in unrealized loss, due
principally to increases in interest rates (15,965)
-----------
Unrealized loss on securities available
for sale, September 30, 1994 $ (17,334)
===========
</TABLE>
A summary of securities available for sale at September 30, 1994
is as follows:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized
(000 omitted) Cost Gains Losses Fair Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
U. S Government
Agencies $ 5,197 $ $ 28 $ 5,169
Obligations of states
and political
subdivisions 247,157 14,438 232,719
Corporate debt
securities 63,383 5,190 58,193
Mortgage-backed and
other asset-backed
securities 96,415 45 7,802 88,658
Other securities 16,191 648 15,543
----------- ----------- ----------- -----------
$ 428,343 $ 45 $ 28,106 $ 400,282
=========== =========== =========== ===========
</TABLE>
Maturities of securities available for sale at September 30, 1994
are as follows:
<TABLE>
<CAPTION>
Amortized
(000 omitted) Cost Fair Value
----------- -----------
<S> <C> <C>
Due in
1995-1998 $ 123,523 $ 113,700
1999-2003 139,783 130,372
2004 and later 165,037 156,210
</TABLE>
Actual maturities may differ from contractual maturities because
the borrowers have the right to call or prepay certain
obligations, sometimes without penalties. Mortgage-backed and
other asset-backed securities not due at a single maturity date
are included in the table above based on their expected maturity.
Proceeds from the sale of securities during the nine months ended
September 30, 1994 were approximately $231.8 million. Gross
realized gains and losses on those sales were $1.6 million and
$500,000, respectively, based on the specific identification
method of determining cost.
Securities Held to Maturity--Securities classified as held to
maturity consist of securities that management has the ability
and intent to hold to maturity, are carried at amortized cost,
and are summarized as follows at September 30, 1994:
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized
(000 omitted) Cost Gains Losses Fair Value
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
U. S Government
Agencies $ 59,587 $ $ 2,826 $ 56,761
Obligations of states
and political
subdivisions 54,590 3,320 51,270
Corporate debt
securities 128,369 10,125 118,244
Other securities 76,870 971 75,899
----------- ----------- ----------- -----------
$ 319,416 $ $ 17,242 $ 302,174
=========== =========== =========== ===========
</TABLE>
Maturities of securities held to maturity at September 30, 1994
are as follows:
<TABLE>
<CAPTION>
Amortized
(000 omitted) Cost Fair
Value
----------- -----------
<S> <C> <C>
Due in
1995-1998 $ 180,794 $ 174,700
1999-2003 87,277 79,210
2004 and later 51,345 48,264
</TABLE>
Actual maturities may differ from contractual maturities because
the borrowers have the right to call or prepay certain
obligations, sometimes without penalties. There were no sales or
transfers of securities held to maturity to another category of
securities during the nine months ended September 30, 1994.
NOTE E--Other Matters
At September 30, 1994 and December 31, 1993, Dial classified as
long-term debt $265 million and $225 million, respectively, of
short-term borrowings supported by unused commitments under long-
term revolving credit agreements.
NOTE F--Income Taxes
A reconciliation of the provision for income taxes and the amount
that would be computed using statutory federal income tax rates
on income before income taxes for the nine months ended September
30, is as follows:
<TABLE>
<CAPTION>
1994 1993
(000 omitted) ------------ ------------
<S> <C> <C>
Computed income taxes
at statutory federal income
tax rate of 35% $ 59,241 $ 43,751
Nondeductible goodwill amortization 3,189 2,433
Minority interests 1,064 1,129
State income taxes 5,227 5,110
Foreign tax differences (538) 1,229
Tax-exempt income (3,453) (1,627)
Adjustment of deferred tax assets
at January 1, 1993 for enacted
change in tax rate (4,386)
Adjustment to estimated annual
effective rate (1,000) (3,000)
Other, net (501) (1,358)
----------- -----------
Provision for income taxes $ 63,229 $ 43,281
=========== ===========
</TABLE>
NOTE G--Discontinued Operations
The caption "Income from discontinued operations" in the
Statement of Consolidated Income includes the following:<PAGE>
<TABLE>
<CAPTION>
Periods ended
September 30, 1993
--------------------------
Quarter Nine months
(000 omitted) ------------ ------------
<S> <C> <C>
Transportation Manufacturing and
Service Parts Group, income from
operations (sold August 12, 1993) $ 427 $ 10,193
Gain on sale of segment, net of
taxes of $47,393 40,151 40,151
Additional provisions for previously
discontinued operations, net
of tax benefit of $7,776 (18,224) (18,224)
------------ ------------
$ 22,354 $ 32,120
============ ============
</TABLE>
NOTE H--Supplementary Information--Revenues and Operating Income
<TABLE>
<CAPTION>
Quarter ended Nine months ended
September 30, September 30,
------------------------- --------------------------
1994 1993 1994 1993
(000 omitted) ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Consumer Products $ 363,399 $ 345,260 $ 1,101,854 $ 1,023,583
Services:
Airline Catering
and Other Food
Services 235,570 152,522 633,188 441,526
Convention Services 124,097 89,944 387,504 239,639
Travel and Leisure
and Payment
Services (1) 189,457 182,675 506,827 477,704
----------- ----------- ----------- -----------
Total Services (1) 549,124 425,141 1,527,519 1,158,869
----------- ----------- ----------- -----------
$ 912,523 $ 770,401 $ 2,629,373 $ 2,182,452
=========== =========== =========== ===========
Operating Income:
Consumer Products $ 40,427 $ 35,442 $ 120,557 $ 104,544
Services:
Airline Catering
and Other Food
Services 20,359 13,584 43,442 30,669
Convention Services 11,539 4,972 38,888 18,379
Travel and Leisure
and Payment
Services (1) 29,161 29,375 46,817 52,208
----------- ----------- ----------- -----------
Total Services (1) 61,059 47,931 129,147 101,256
----------- ----------- ----------- -----------
Total principal
business segments 101,486 83,373 249,704 205,800
Unallocated
corporate expense
and other
items, net (12,841) (12,401) (37,690) (37,863)
----------- ----------- ----------- -----------
$ 88,645 $ 70,972 $ 212,014 $ 167,937
=========== =========== =========== ===========
<FN>
(1) Dial's payment services subsidiary is investing increasing amounts in tax
exempt securities. On a fully taxable equivalent basis, revenues and operating
income are higher by $2,376,000 for the 1994 quarter and $985,000 for the 1993
quarter and by $5,312,000 and $2,503,000, respectively, for the 1994 and 1993
nine month periods.
</TABLE>
<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Results:
There were no material changes in the nature of Dial's business,
nor were there any other changes in the general characteristics
of its operations as described and discussed in the first
paragraph of the results section of Management's Discussion and
Analysis of Results of Operations and Financial Condition
presented in The Dial Corp Annual Report to Stockholders for the
year ended December 31, 1993.
Comparison of Third Quarter of 1994 with Third Quarter of 1993:
In the third quarter of 1994, revenues increased 18 percent to
$912.5 million, up from $770.4 million in the 1993 quarter.
Third quarter income from continuing operations and net income
was $45.4 million or $0.52 per share, up 18 percent on a per
share basis from both 1993's income from continuing operations of
$37.2 million or $0.44 per share, and net income of $37.6
million, also $0.44 per share. Excluding the $3.8 million or
$0.04 per share one-time net benefit in the 1993 quarter from the
1 percent increase in the U.S. corporate income tax rate (signed
into law during the 1993 third quarter but effective as of
January 1, 1993), income from continuing operations and net
income were up 30 percent on a per share basis in the quarter.
Consumer Products
The Consumer Products Group's revenues were up $18.1 million or 5
percent from those of the 1993 quarter. Operating income
increased $5 million or 14 percent from that of the 1993
quarter. Operating margins improved to 11.1 percent from 10.3
percent in the 1993 quarter.
Skin Care division's revenues and operating income declined $4.5
million and $2.6 million, respectively, from those of 1993's
quarter. While soap market share was up from that of last year,
reflecting consumer takeaway, actual sales volumes to
distributors were down, causing the revenue and operating
declines. Lower marketing expenses and lower raw material and
process costs partially offset the decline in revenue.
The Food division's revenues and operating income increased $3.7
million and $932,000 respectively, from those of the 1993
quarter. Sales of most food products except microwaveables were
up from last year's quarter, while lower meat costs also
contributed to increased operating income.
The Household division's third quarter revenues were up slightly
while operating income increased $2 million, due mostly to lower
marketing expenses and manufacturing costs.
Laundry division revenues for the quarter were up $16.4 million
while operating income was up $2.9 million, led by sales volume
increases in Purex liquid detergents. Lower raw material costs
also helped increase operating income.
International division's revenues increased $2.2 million for the
quarter, driven by substantially higher sales in Mexico, Canada,
and Germany. Operating income was up $1.7 million due to these
sales increases and to lower costs.
Services
Combined Services revenues were $549.1 million, $124 million (29
percent) greater than the 1993 quarter's amounts, while operating
income of $61.1 million was up $13.1 million (27 percent). Both
continue to be aided by the 1993 acquisitions of convention
services businesses and the 1994 addition of the United Airlines
flight kitchens.
Airline Catering and Other Food Services. These companies'
revenues and operating income of $235.6 million and $20.4
million, respectively, were up $83 million (54 percent) and $6.8
million (50 percent) from those of 1993's quarter, as this year's
quarter benefited from having all recently acquired flight
kitchens operational. Operating margins for the segment were 8.6
percent in the quarter, down slightly from 8.9 percent in last
year's third quarter, as several of the new flight kitchens were
still in their start-up phase and had not reached full
efficiency.
Convention Services. The Convention Services companies'
revenues and operating income of $124.1 million and $11.5
million, respectively, were $34.2 million (38 percent) and $6.6
million (132 percent) greater than the 1993 quarter's levels.
Operating margins were 9.3 percent, up from 5.5 percent in 1993's
third quarter. This year's quarter benefited from the 1993
(United Exposition Service Co., Inc. and Andrews, Bartlett and
Associates, Incorporated) and other recent smaller acquisitions.
In addition, the achievement of planned operating efficiencies
for the merged operations contributed to 1994's operating income,
while last year's quarter included only the United Exposition
acquisition. The 1994 quarter also benefited from World Cup
business.
Travel and Leisure and Payment Services. Revenues of these
companies were up $8.2 million (4 percent) to $191.8 million,
while operating income was up $1.2 million (4 percent), both on a
fully taxable equivalent basis. Operating margins declined very
slightly to 16.4 percent from 16.5 percent in 1993, also on a
fully taxable equivalent basis. Most of Dial's travel and
leisure companies experience their highest level of activity in
the third quarter.
Canadian transportation companies' revenue and earnings increased
about 6 percent during the third quarter, but that translated
into flat results in U.S. dollars, as the Canadian dollar's
exchange rate fell 5 percent from that of the 1993 quarter. U.S.
dollar revenue increased $916,000 while operating income was
unchanged. Revenue from newly purchased routes and higher
Courier Express and sightseeing, charter, and snowfield revenues
were partially offset by lower passenger ridership. Passenger
traffic continues to be affected by general economic
uncertainties and by low airfares on medium and long haul
destinations.
Duty Free and shipboard concession revenues were up $3.9 million
due to substantially more passenger days than last year, offset
partially by lower concession revenues due to the loss of a major
airport contract at Dulles International Airport this spring.
Operating income was up only slightly due to an increase in the
sales of lower margin items.
Cruise revenues were down $4.4 million from 1993's quarter due to
fewer passenger days and lower passenger yields. Operating
results were down $3.9 million due primarily to the lower
revenues and increased marketing expenses.
Aircraft services revenues were up $4 million from last year's
quarter, with operating income up $709,000. Both increases were
due to revenues generated by four new airport contracts.
On a fully taxable equivalent basis, payment services revenue
decreased $1.6 million for the quarter due principally to
cancellation of certain money order agents who presented undue
credit risk. In spite of lower revenue, operating income
increased $2.1 million due to lower operating costs.
Interest Expense
Interest expense increased $1.5 million from 1993's quarter, as
short-term rates and average outstanding debt were higher in
1994's quarter. In last year's third quarter, proceeds from the
sale of Dial's transportation manufacturing and service parts
group were used initially to reduce short-term debt, but since
that time, Dial has borrowed to make acquisitions to replace the
manufacturing business.
Income Taxes
The provision for income taxes for the 1993 third quarter
includes a net benefit of approximately $3.8 million, or $0.04
per share, from accounting for the effects of a 1 percent
increase in the U.S. corporate income tax rate effective as of
January 1, 1993, which was signed into law on August 10, 1993
(Omnibus Budget Reconciliation Act of 1993). The net benefit
represents the favorable impact of the increase on deferred tax
assets at January 1, 1993 ($4.4 million), less the increased tax
expense on 1993 income through June 30, 1993 ($600,000).
Comparison of First Nine Months of 1994 to the
First Nine Months of 1993:
Revenues for the first nine months of 1994 increased 20 percent
to $2.6 billion from $2.2 billion in the same period of 1993.
For the first nine months of 1994, income from continuing
operations and net income was $106 million, up from 1993's income
from continuing operations of $81.7 million. On a per share
basis, the 1994 period's income from continuing operations of
$1.22 per share was 28 percent higher than 1993's $0.95.
Excluding the $4.4 million, or $0.05 per share, one-time benefit
in the 1993 period from the effects of the 1 percent increase in
the U.S. corporate income tax rate on January 1, 1993 deferred
tax assets, income per share from continuing operations for the
nine months was up 36 percent.
Consumer Products
For the first nine months of 1994, the Consumer Products Group's
revenues of $1.1 billion were up $78.3 million or 8 percent from
those of the 1993 period. Operating income of $120.6 million was
$16 million or 15 percent higher than that of the 1993 period.
Operating margins improved to 10.9 percent from 10.2 percent in
the 1993 period.
Skin Care division's revenues and operating income declined $24.9
million and $6.8 million, respectively, from those of 1993's
first nine months. In spite of lower soap sales to distributors,
causing the revenue and operating income declines, market share
of Dial soap was up from period to period, reflecting continuing
healthy consumer acceptance. Lower marketing expenses partially
offset the decline in operating income.
The Food division revenues and operating income increased $4
million and $2.2 million, respectively, from those of the 1993
nine months. Sales of most food products except microwaveables
were up from last year's period, while lower meat costs also
contributed to increased operating income.
The Household division's first nine months' revenues were up $46
million while operating income increased $10.4 million. The 1994
period includes $44 million more revenue and $9 million more
operating income from the Renuzit product line acquired in May of
1993, accounting for most of the improvement.
Laundry division revenues for the nine months of 1994 were up $48
million while operating income was up $5.9 million, led by sales
volume increases in Purex liquid detergents. Lower raw material
costs also helped increase operating income.
International division's revenues increased $5 million for the
nine months, driven by substantially higher sales in Mexico,
Canada, and Germany. Operating income was up $4.2 million due to
these sales increases and to lower costs.
Services
Combined Services revenues for the first nine months of 1994 were
$1.5 billion, $369 million (32 percent) greater that of the 1993
period. Operating income of $129.1 million was $27.9 million (28
percent) higher. Both continue to be aided by 1993 acquisitions
of convention services businesses and the 1994 addition of the
United Airlines flight kitchens.
Airline Catering and Other Food Services. These companies'
revenues and operating income of $633.2 million and $43.4
million, respectively, were up $191.7 million (30 percent) and
$12.8 million (29 percent) from those of 1993's first nine
months. Operating margins for both periods were 6.9 percent. As
discussed previously, several recently acquired kitchens were
still in their start-up phase and had not reached full
efficiency.
Convention Services. The Convention Services companies'
revenues and operating income of $387.5 million and $38.9
million, respectively, were $147.9 million (62 percent) and $20.5
million (112 percent) greater than those of the 1993 period.
Operating margins were 10.0 percent, up from 7.7 percent in the
1993 period. This year benefited from the 1993 (United Exposition
Service Co., Inc. and Andrews, Bartlett and Associates,
Incorporated) and other recent smaller acquisitions as well as
the achievement of planned operating efficiencies for the merged
operations. Last year's period included only the United
Exposition acquisition from May of 1993. The 1994 period also
benefited from World Cup business.
Travel and Leisure and Payment Services. For the first nine
months of 1994, revenues of these companies were $512.1 million,
up $31.9 million (7 percent) while operating income of $52.1
million was down 5 percent, compared with the same period of
1993, all on a fully taxable equivalent basis. Operating margins
were 10.2 percent (on a fully taxable equivalent basis), down
from the 1993 period's 11.4 percent.
Canadian transportation companies' revenue decreased $5.9 million
while operating income was down $660,000 in U. S. dollars. In
Canadian dollars, revenue increased about $2.6 million as revenue
from newly purchased routes and higher Courier Express and
sightseeing, charter, and snowfield revenues more than offset
decreases in passenger ridership. Passenger traffic continues to
be affected by general economic uncertainties and low airfares on
medium and long haul destinations. Operating income in Canadian
dollars was up slightly due mostly to the revenue increases. As
discussed previously, the Canadian-to-U.S. exchange rate worsened
this year almost 7 percent compared to 1993's first nine months.
Duty Free and shipboard concession revenues were up $19 million
due to a 30 percent increase in passenger days, offset partially
by lower concession revenues due to the loss of a major airport
contract at Dulles International Airport this spring and
reduction of international flights at two other airports.
Operating income was up $1.8 million due primarily to higher
sales.
Cruise revenues were down $4.9 million from 1993's first nine
months due to fewer passenger days and lower passenger yields.
Operating results were down $9.7 million due primarily to the
revenue decrease and increased marketing expenses.
Aircraft services revenues were up $5.6 million from that of last
year's nine months, with operating income up $1.1 million. Both
increases were due to revenue generated by six new airport
contracts.
On a fully taxable equivalent basis, payment services revenue
increased $5.4 million due to higher dispenser fee and service
charge revenue, offset somewhat by cancellation of certain money
order agents who presented undue credit risks. Operating income
increased $3.5 million due to revenue increases and lower
operating costs including lower provisions for credit losses.
Interest Expense
Interest expense for the first nine months of 1994 was about even
with that of 1993's period. The reduction in interest expense
this year resulting from the prepayment of certain high-coupon,
fixed-rate debt at the end of 1993's third quarter was offset by
the combination of higher debt levels related to expenditures for
acquisitions in the consumer products, airline catering and
convention services businesses (starting in May of 1993 and
continuing throughout the last quarter of 1993 and the first nine
months of 1994) and higher short-term interest rates during 1994.
Income Taxes
Income taxes for the 1993 nine months includes the $4.4 million,
or $0.05 per share, favorable impact of the increase on the
deferred tax assets at January 1, 1993 from accounting for the
effects of a 1 percent increase in the U.S. corporate income tax
rate discussed previously.
Liquidity and Capital Resources:
The Dial Corp's total debt at September 30, 1994 was $734.8
million compared with $635.9 million at December 31, 1993. The
debt-to-capital ratios at September 30, 1994 and December 31,
1993 were 0.56 to 1 and 0.55 to 1, respectively. The increase in
debt was attributable primarily to expenditures for acquisitions
made during the first nine months of 1994 and to an increase in
working capital requirements.
In July, 1994 a Shelf Registration filed with the Securities and
Exchange Commission became effective. Under the Shelf
Registration, Dial can issue up to an aggregate $500 million of
debt and/or equity securities. No debt has been issued and there
is no intention to issue any equity securities at the present
time. The filing increases Dial's financing flexibility in the
future.
As discussed further in Note C of Notes to Consolidated Financial
Statements, during the first nine months of 1994 Dial completed
the acquisition of the United Airlines flight catering kitchens
and acquired several small companies. The combined purchase
price for all 1994 acquisitions was $147 million. Property and
equipment and intangibles increased as a result of these
acquisitions which were financed through cash flow from
operations and additional long-term debt.
Dial's payment service operations generate funds from the sale of
money orders and other payment instruments. The proceeds of such
sales are invested, in accordance with applicable state laws, in
highly liquid debt instruments (classified, along with cash in
transit from agents, as "Funds and agents' receivables restricted
for payment service obligations") and in a portfolio of high-
quality investments (more than 97 percent have ratings of A- or
above or are collateralized by federal agency securities),
including federal, state and municipal obligations, asset-backed
securities and corporate debt securities (classified as
"Investments restricted for payment service obligations"). These
funds are ultimately used to satisfy the liability to pay, upon
presentment, the face amount of such money orders and other
payment instruments. Fluctuations in the balances of payment
service assets and obligations result from varying levels of
sales of money orders and other payment instruments, the timing
of the collections of agents' receivables and the timing of the
presentment of such instruments.
There were no other material changes in The Dial Corp's financial
condition nor were there any substantive changes relative to
matters discussed in the Liquidity and Capital Resources section
of Management's Discussion and Analysis of Results of Operations
and Financial Condition as presented in The Dial Corp Annual
Report to Stockholders for the year ended December 31, 1993.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit No. 11 - Statement Re Computation of
Per Share Earnings.
Exhibit No. 27 - Financial Data Schedule
(b) No Reports on Form 8-K have been filed by
the registrant during the quarter for which
this report is filed.
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 CORP
(Registrant)
November 10, 1994 By /s/Richard C. Stephan
------------------------
Richard C. Stephan
Vice President-Controller
(Chief Accounting Officer
and Authorized Officer)
<PAGE>
<TABLE>
Exhibit 11
Page 1 of 2
THE DIAL CORP
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(000 omitted)
<CAPTION>
Quarter ended September 30,
----------------------------
Primary: 1994 1993
------------ ------------
<S> <C> <C>
Net income $ 45,428 $ 37,630
Less: Preferred stock dividends (281) (280)
Subsidiary dilutive securities (17)
------------ ------------
$ 45,130 $ 37,350
============ ============
Average common shares outstanding (1)
before common equivalents 85,275 84,012
Common equivalent stock options 1,613 1,128
------------ ------------
86,888 85,140
============ ============
Net income per share (dollars) $ 0.52 $ 0.44
============ ============
<FN>
(1) The average outstanding common and equivalent shares does not
include 6,898 shares held by the Employee Equity Trust (the "Trust")
at September 30, 1994. Shares held by the Trust are not considered
outstanding for net income per share calculations until the shares
are released from the Trust.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Quarter ended September 30,
-------------------------------------------------------
1994 1993
-------------------------- ----------------------------
Common Common
Fully Diluted: Shares Income Shares Income
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Average common and
equivalent shares
and net income
per above 86,888 $ 45,130 85,140 $ 37,350
Common equivalent
stock options
------------ ------------ ------------ ------------
86,888 $ 45,130 85,140 $ 37,350
============ ============ ============ ============
Net income per
share (dollars) $ 0.52 $ 0.44
============ ============
</TABLE>
<PAGE>
<PAGE>
<TABLE>
Exhibit 11
Page 2 of 2
THE DIAL CORP
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(000 omitted)
<CAPTION>
Nine months ended
September 30,
----------------------------
Primary: 1994 1993
------------ ------------
<S> <C> <C>
Net income $ 106,031 $ 91,934
Less: Preferred stock dividends (842) (841)
Subsidiary dilutive securities (17)
------------ ------------
$ 105,172 $ 91,093
============ ============
Average common shares outstanding (1)
before common equivalents 84,833 84,144
Common equivalent stock options 1,655 1,472
------------ ------------
86,488 85,616
============ ============
Net income per share (dollars) $ 1.22 $ 1.07
============ ============
<FN>
(1) The average outstanding common and equivalent shares does not
include 6,898 shares held by the Employee Equity Trust (the "Trust")
at September 30, 1994. Shares held by the Trust are not considered
outstanding for net income per share calculations until the shares
are released from the Trust.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Nine months ended September 30,
-------------------------------------------------------
1994 1993
-------------------------- ----------------------------
Common Common
Fully Diluted: Shares Income Shares Income
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Average common and
equivalent shares
and net income
per above 86,488 $ 105,172 85,616 $ 91,093
Common equivalent
stock options
------------ ------------ ------------ ------------
86,488 $ 105,172 85,616 $ 91,093
============ ============ ============ ============
Net income per
share (dollars) $ 1.22 $ 1.07
============ ============
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY
FINANCIAL INFORMATION EXTRACTED
FROM THE DIAL CORP'S FORM 10-Q FOR
THE QUARTERLY PERIOD ENDED
SEPTEMBER 30, 1994 AND FROM THE
DIAL CORP'S FORM 10-K FOR THE
FISCAL YEAR ENDED DECEMBER 31, 1993
AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL
STATEMENTS.
<MULTIPLIER> 1,000
<CAPTION>
Exhibit 27
Page 1 of 2
THE DIAL CORP
FINANCIAL DATA SCHEDULE
<S> <C> <C>
<FISCAL-YEAR-END> DEC-31-1994 DEC-31-1993
<PERIOD-END> SEP-30-1994 DEC-31-1993
<PERIOD-TYPE> 9-MOS YEAR
<CASH> 16,059 10,659
<SECURITIES> 0 0
<RECEIVABLES> 197,726 199,996
<ALLOWANCES> 21,668 22,597
<INVENTORY> 217,989 216,837
<CURRENT-ASSETS> 992,300 1,052,604
<PP&E> 1,420,718 1,307,729
<DEPRECIATION> 616,595 567,005
<TOTAL-ASSETS> 3,528,441 3,281,088
<PAGE>
<CAPTION>
Exhibit 27
Page 2 of 2
<S> <C> <C>
<CURRENT-LIABILITIES> 1,808,819 1,748,758
<BONDS> 732,027 624,662
<COMMON> 145,663 72,832
6,589 6,624
0 0
<OTHER-SE> 398,135 396,856
<TOTAL-LIABILITY-AND-EQUITY> 3,528,441 3,281,088
<SALES> 1,101,854 1,420,173
<TOTAL-REVENUES> 2,629,373 3,000,342
<CGS> 981,297 1,280,960
<TOTAL-COSTS> 2,379,669 2,725,049
<OTHER-EXPENSES> 37,690 50,061
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 39,713 49,965
<INCOME-PRETAX> 169,260 171,649
<INCOME-TAX> 63,229 61,376
<INCOME-CONTINUING> 106,031 110,273
<DISCONTINUED> 0 32,120
<EXTRAORDINARY> 0 (21,908)
<CHANGES> 0 0
<NET-INCOME> 106,031 120,485
<EPS-PRIMARY> 1.22 1.40
<EPS-DILUTED> 1.22 1.40
</TABLE>
