SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year Ended December 31, 1993
Commission File Number 001-11015
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THE DIAL CORP (Exact name of registrant as specified in its charter)
Delaware (State or Other Jurisdiction of Incorporation or
Organization)
36-1169950 (I.R.S. Employer Identification No.)
Dial Tower, Phoenix, Arizona (Address of principal executive offices)
85077 (Zip Code)
Registrant's telephone number, including area code: 602-207-4000
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Securities registered pursuant to Section 12(b) of the Act:
Name of each exchange
Title of each class on which registered
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Common Stock, $1.50 par value New York Stock Exchange
Pacific Coast Stock Exchange
$4.75 Preferred Stock (stated New York Stock Exchange
value $100 per share)
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the registrant (1) has filed all
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 [ ]
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not
be contained, to the best of registrant's knowledge, in definitive
proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [X]
As of March 11, 1994, 46,005,354 shares of Common Stock ($1,50 par
value) were outstanding and the aggregate market value of the common
Stock (based on its closing price per share on such date) held by
nonaffiliates was approximately $1.98 billion.
DOCUMENTS INCORPORATED BY REFERENCE
Documents Where Incorporated
--------- ------------------
A portion of Proxy Statement for
Annual Meeting of Shareholders
to be held May 10, 1994 Part III
<PAGE>
PART I
ITEM 1. BUSINESS
The Dial Corp ("Dial" or "Company"), conducts a consumer
products and services business focused on North American markets
producing annual revenues in excess of $3 billion.
Dial's CONSUMER PRODUCTS segment operates through four
divisions, as follows:
PERSONAL CARE, which manufactures and
markets DIAL, TONE, SPIRIT, PURE & NATURAL
and LIQUID DIAL soaps, and other soap and
personal care products;
LAUNDRY, which manufactures and markets
PUREX and PUREX ULTRA dry detergent, PUREX
heavy duty liquid detergent, TREND, PUREX
TOSS 'N SOFT and other laundry products;
HOUSEHOLD, which manufactures and
markets RENUZIT air fresheners, BRILLO
scouring pads, SNO BOL and SNO DROPS toilet
bowl cleaners, PARSONS ammonia, BRUCE floor
care products and other household items; and
FOOD, which processes and markets ARMOUR
STAR chili, beef stew, corned beef hash and
Vienna sausage, TREET luncheon meat and other
shelf- stable canned foods, LUNCH BUCKET
microwaveable meals and other food products.
Dial's SERVICES business operates in three principal
business segments through subsidiary corporations of Dial, as
follows:
AIRLINE CATERING AND OTHER FOOD
SERVICES, which engages in airline catering
operations, providing in-flight meals to more
than 60 domestic and international airlines,
and operates foodservice facilities ranging
from cafeterias in manufacturing plants to
corporate executive dining rooms to the food
and beverage facilities of the America West
Arena in Phoenix, Arizona;
CONVENTION SERVICES, which provides
exhibit design and construction and
exhibition preparation, installation,
electrical, transportation and management
services to major trade shows, manufacturers,
museums and exhibit halls and other
customers; and
TRAVEL AND LEISURE AND PAYMENT SERVICES,
which engages in airplane fueling and ground
handling, cruise line and hotel/resort
operations, recreation and travel services,
Canadian intercity bus transportation, and
operation of duty-free shops on cruise ships
and at international airports, and offers
money orders, official checks and negotiable
instrument clearing services through a
national network of approximately 43,000
retail agents, mid-size bank customers and
over 4,500 credit unions in the United States
and Puerto Rico.
Dial subsidiaries operate service or production facilities
and maintain sales and service offices in the United States,
Canada and Mexico. The Company also conducts business in other
foreign countries.
Dial had approximately 215 employees at its corporate center
at December 31, 1993, providing management, financial and
accounting, tax, administrative, legal and other services to its
operating units and handling residual matters pertaining to
businesses previously discontinued or sold by the Company. Dial
is managed by a Board of Directors comprised of 10 nonemployee
directors and one employee director and has an executive
management team consisting of six Dial officers and seven
principal executives of significant operating divisions or
companies.
Dial's corporate headquarters and certain Consumer Products
division and subsidiary activities are located in Phoenix,
Arizona, in a modern high-rise building. A portion of the
headquarters building is rented to unaffiliated tenants.
A description of each of the Dial business segments and
recent developments in each follows.
CONSUMER PRODUCTS SEGMENT
CONSUMER PRODUCTS is a leading producer and marketer of
personal care, laundry, household and shelf-stable food products.
This segment is the outgrowth of the Dial personal care and
shelf-stable canned meats unit of Armour and Company, expanded in
recent years to include PUREX household and laundry products,
BORAXO household and industrial specialty products, BRECK hair
care products and RENUZIT air fresheners. The segment
manufactures and markets a variety of products, including bar and
liquid soaps, liquid and powdered detergents, antiperspirants,
hairsprays, shampoos, hair conditioners, bleaches, fabric
softeners, soap pads, air fresheners, floor care products,
household cleaners, fabric sizing, laundry starch products, borax
and industrial specialties products, microwaveable food products
and canned meats.
PERSONAL CARE
Personal Care products are marketed under a number of brand
names, including DIAL, MOUNTAIN FRESH DIAL, TONE, PURE & NATURAL,
SPIRIT and FELS NAPTHA soaps, LIQUID DIAL antibacterial soap,
BORAXO powdered hand soap and DIAL antiperspirant. Personal Care
also markets the BRECK line of hair care products, including hair
sprays, shampoos and hair conditioners. DIAL bar soap is the
nation's leading deodorant soap and LIQUID DIAL soap is the
nation's leading antibacterial liquid soap. SPIRIT bar soap, a
three-in-one combination bar soap that cleans, moisturizes and
provides deodorant protection, is now available nationally. In
late 1993, DIAL PLUS soap, an antibacterial skin care bar soap
with moisturizing ingredients was introduced nationally.
Personal Care also markets hotel amenity products, including
personal-size bar soaps under the DIAL, TONE and PURE & NATURAL
labels, and industrial specialties products, including hand soaps
and soap dispensers, sold under the BORAXO and LURON trademarks,
hand and body surface cleaners for the medical market and hand
cleaners for the automotive market.
LAUNDRY
Laundry products include brands such as PUREX liquid,
powdered and ultra laundry detergents, TREND and ULTRA TREND dry
detergents, DUTCH detergents, PUREX TOSS 'N SOFT and STA PUF
fabric softeners, MAGIC sizing and starch, BORATEEM dry bleach,
STA-FLO starch, and 20 MULE TEAM borax.
In 1993, Laundry introduced several new products and line
extensions, including PUREX liquid detergent with bleach, RINSE
'N SOFT fabric softener, ULTRA TREND detergent and CLASSIC PUREX
detergent and TREND detergent with bleach.
HOUSEHOLD
Household products include brands such as RENUZIT air
fresheners, BRILLO soap pads, SNO BOL and SNO DROPS toilet bowl
cleaners, CAMEO powdered cleanser, PARSONS and BO-PEEP ammonia
and BRUCE floor care products.
The RENUZIT air freshener brand was acquired in the second
quarter of 1993. RENUZIT, a leading brand in the air freshener
category, currently offers products for the continuous-action and
aerosol segments of the air freshener market, including RENUZIT
Adjustable, RENUZIT Aerosol and ROOMMATE products and has
completed its rollout of RENUZIT LONGLAST ELECTRIC product, the
brand's entry into the electric subsegment of the air freshener
category.
In 1993, Household introduced SNO BOL thick toilet bowl
cleaner and a larger DOBIE scouring pad.
FOOD
In the shelf-stable food category, CONSUMER PRODUCTS
processes and markets ARMOUR STAR and TREET canned meats, LUNCH
BUCKET microwaveable meals, APPIAN WAY pizza mix, SUNRISE syrup
and CREAM corn starch. ARMOUR STAR products maintain a leading
market position in the canned meats category. ARMOUR STAR Vienna
sausage, potted meat and dried beef lead their respective
segments on a national basis. ARMOUR STAR canned meats now
account for nearly one-fifth of all canned meat sales in the
United States. During 1993, CONSUMER PRODUCTS introduced ARMOUR
hot dog chili sauce, ARMOUR meatless sloppy joe sauce and ARMOUR
western-style chili, and began test marketing VILLA LORENZO PASTA
FOR ONE microwaveable meals, a seven item line of single-serving
dry pastas with sauce pouches.
CUSTOMERS
CONSUMER PRODUCTS sells to over 15,000 customers, primarily
in the United States, including supermarkets, drug stores,
wholesalers, mass merchandisers, membership club stores and other
outlets. These customers are served by a national sales
organization of approximately 370 employees organized into 6
individual sales regions plus specialized sales operations which
sell to large mass merchandisers, membership club stores, chain
drug stores, vending and military customers.
RAW MATERIALS
Ample sources of raw materials are available with respect to
all major products of the CONSUMER PRODUCTS segment.
COMPETITION
CONSUMER PRODUCTS competes primarily on the basis of price,
brand advertising, customer service, product performance, and
product identity and quality. Its operations must compete with
numerous well-established local, regional and national companies,
some of which are very large and act aggressively in obtaining
and defending their products' market shares and brands.
Principal competitors, in one or more categories, are Procter &
Gamble, Colgate-Palmolive, Lever Brothers Co., American Home Food
Products, G. A. Hormel & Co., The Clorox Company, Church & Dwight
and S.C. Johnson & Son, Inc.
SERVICES SEGMENTS
SERVICES is built around several company groups which are
leading competitors in their businesses, including companies
engaged in airline catering (Dobbs International), contract
foodservices (Restaura), convention services (GES Exposition
Services and Exhibitgroup), payment services (Travelers Express),
airplane fueling and ground handling (Aircraft Service
International), Canadian intercity bus service (Greyhound Lines
of Canada), family cruises (Premier Cruise Lines), airport and
cruise ship duty-free businesses (Greyhound Leisure Services),
and travel services (Jetsave and Crystal Holidays).
SERVICES provides specialized services to both the business
and consumer markets, increasingly in the airline travel and
leisure services areas. Its money order business, travel and
tour operations, restaurants, fast food outlets, gift shops,
national park hotel facilities, cruise ships, and duty-free shops
located at airports and on cruise ships are directed primarily to
the consumer market. Primarily for the business market, in major
cities throughout the United States, SERVICES provides airline
in-flight catering operations as well as contract foodservices in
the form of cafeteria-style operations, private dining rooms,
group catering and machine-vended services; performs services as
decorating contractor at various convention and trade show sites;
designs, fabricates, ships and warehouses displays and exhibits
for trade shows, conventions and other exhibitions; and engages
in aircraft ground-handling services such as aircraft fueling,
cleaning and baggage handling.
AIRLINE CATERING AND OTHER FOOD SERVICES
SERVICES conducts airline catering operations under the
"Dobbs" name through the Dobbs International group of companies.
Dobbs International, which has been conducting airline catering
operations since 1941, will become the nation's largest domestic
in-flight caterer as a result of its agreement made in November
1993 to acquire from United Airlines 15 in-flight catering
kitchens at 12 domestic airports. The acquisition will be
phased-in over a period ending in May 1994. Dobbs International
will be United's exclusive in-flight caterer at the 12 locations
where the kitchens are located. The company also recently
expanded its presence in the United Kingdom by the acquisition in
February 1994 of 4 catering kitchens in England and Scotland. In
1993, Dobbs International's in-flight catering operations
provided in-flight meals to more than 60 domestic and
international airlines at 44 airports in the United States plus
Heathrow Airport, London, England, and Glasgow Airport, Scotland,
and in 1994, as a result of the recent acquisitions, will provide
in-flight meals to more than 60 domestic and international
airlines at 51 airports. Dobbs International has been involved
in a "Quality Improvement Process" for many years and has been
recognized for its innovations by its customers and suppliers.
Other food services are provided through the Restaura group
of companies. The contract foodservice division of Restaura
serves meals to employees at approximately 200 locations,
including employees of major companies such as General Motors,
IBM and Ford, through cafeteria, executive dining rooms and
vending operations. Restaura also acts as the prime
concessionaire for all food and beverage services at the America
West Arena in Phoenix, Arizona, and operates 7 historic lodges in
and around Glacier National Park in Montana and Canada.
CONVENTION SERVICES
Convention services are provided by the Company's GES
Exposition and Exhibitgroup companies. GES Exposition, the
nation's leading supplier of convention services, provides
decorating, exhibit preparation, installation, electrical,
transportation and management services for conventions and
tradeshows. During 1993 Convention services acquired United
Exposition Services Co., Inc., a general-service convention
contractor serving locations primarily in the eastern United
States; Andrews, Bartlett & Associates, Inc., which has major
operations in Chicago, Cleveland, Orlando, New Orleans,
Washington, D.C. and Atlanta; and Gelco Convention Services,
Inc., which operates principally in the southeastern United
States. Exhibitgroup is a leading designer and builder of custom
and rental convention exhibits and displays.
TRAVEL AND LEISURE AND PAYMENT SERVICES
Travel and leisure services directed to the consumer market
are provided by the Premier Cruise Lines, Greyhound Leisure
Services, Jetsave, Crystal Holidays and Greyhound Lines of Canada
business units.
Premier Cruise Lines provides three and four-day BIG RED
BOAT cruises from Port Canaveral, Florida, to the Bahamas and,
commencing in April 1994, from Port Tampa, Florida, to Mexico and
Key West, and offers a seven-day package which combines a cruise
with a three or four-day vacation at Walt Disney World or
Universal Studios and Sea World. Premier operates three cruise
ships, the Star/Ship Oceanic, the Star/Ship Atlantic and the
Star/Ship Majestic. Cruise destinations offer various underwater
diving and snorkeling attractions, historical tours, sandy
beaches and shopping opportunities. Premier has contracted with
Warner Bros. for the right to use Warner Bros.' famous LOONEY
TUNES characters (Bugs Bunny and others) commencing in April 1994
for entertainment on board Premier Cruise Lines' ships.
Premier's status as Official Cruise Line of Walt Disney World
will expire March 31, 1994.
Greyhound Leisure Services operates duty-free shipboard
concessions on 56 cruise ships and also operates duty-free shops
at the Chicago, Miami and Fort Lauderdale/Hollywood Florida
international airports, and in Washington, D.C. Other recreation
and travel services are provided under the Jetsave and Crystal
Holidays names. Jetsave and Crystal Holidays are leading United
Kingdom operators of tour packages and specialty tours throughout
Europe, and from Europe to the United States, Canada and the
Bahamas.
Greyhound Lines of Canada Ltd. ("GLOC"), a Canadian publicly
traded company, is a 69%-owned subsidiary which operates the
largest intercity bus transportation system for passengers,
charter service and courier express in Canada. Routes connect
with those of other intercity bus carriers, providing
interconnecting service to areas of the United States and Canada
not served directly by GLOC. GLOC owns and operates 465
intercity coaches. Brewster Transport Company, Ltd., a
subsidiary of GLOC, operates tour and charter buses in the
Canadian Rockies, engages in travel agency, hotel and snocoach
tour operations and holds a joint venture interest in the Mt.
Norquay ski attraction in Banff, Canada. Brewster owns and
operates 87 intercity coaches, and 13 snocoaches which transport
sightseers on tours of the Columbia Icefield.
The Aircraft Service International group of companies
provides aircraft ground-handling services such as aircraft
fueling, aircraft cleaning and baggage handling for major
domestic and foreign airlines at 28 airports throughout the
United States and in Freeport, Bahamas and London, England.
The Travelers Express group of companies engages in the sale
of money orders to the public through approximately 43,000 agent
locations in the United States and Puerto Rico. Travelers
Express is the nation's leading issuer of money orders, issuing
approximately 236 million money orders in 1993. The United
States Postal Service, which is the second largest issuer, issued
approximately 180 million money orders in 1993. Travelers
Express also provides processing services for more than 4,500
credit unions and other financial institutions which offer share
drafts (the credit union industry's version of a personal check)
or official checks (used by financial institutions in place of
their own bank check or teller check). Republic Money Order
Company, a Travelers Express unit, is a leader in the issuance of
money orders through chain convenience and supermarket stores and
in money order-issuance technology.
Virtually all airport concessions operated by the Company,
other than certain concessions at Hartsfield Atlanta
International Airport, which are scheduled to expire September
30, 1994, were sold to Host International, Inc., during the
second half of 1992.
COMPETITION
SERVICES companies generally compete on the basis of price,
quality, convenience and service, and encounter substantial
competition from a large number of providers of similar services,
including numerous well-known local, regional and national
companies, cruise lines, private money order companies and the
U.S. Postal Service (money orders), many of which have greater
resources than the Company. Dobbs International also competes on
the basis of reliability, appearance of kitchen facilities,
quality of truck fleet and on-time record. Caterair
International Corporation, Sky Chefs, Inc., and Ogden Corporation
are the principal competitors of Dobbs International. Freeman
Decorating Company is the principal competitor of GES Exposition.
GLOC competes primarily on the basis of price and service.
Principal competitors include airlines, private automobiles and
other intercity bus lines.
PATENTS AND TRADEMARKS
United States trademark registrations are for a term of 10
years, renewable every 10 years so long as the trademarks are
used in the regular course of trade; patents are granted for a
term of 17 years. The Dial companies maintain a portfolio of
trademarks representing substantial goodwill in the businesses
using the marks, and own many patents which give them competitive
advantages in the marketplace.
Many trademarks used by CONSUMER PRODUCTS, including DIAL,
PURE & NATURAL, ARMOUR STAR, TONE, TREET, PARSONS, BRUCE, PUREX,
DUTCH, RENUZIT, BRILLO, SNO BOL, BRECK, TREND, PUREX
TOSS N' SOFT, STA PUF, FLEECY WHITE, 20 MULE TEAM, BORAXO, LUNCH
BUCKET, and MAGIC trademarks, and by SERVICES, including the
DOBBS, PREMIER CRUISE LINES, BIG RED BOAT and TRAVELERS EXPRESS
service marks, have substantial importance and value. Use of the
ARMOUR and ARMOUR STAR trademarks by CONSUMER PRODUCTS is
permitted by a license expiring in 2043 granted by ConAgra, Inc.
and use of the 20 MULE TEAM trademark is permitted by a perpetual
license granted by U.S. Borax, Inc. In addition, certain
subsidiaries within SERVICES use the Greyhound and the Image of
the Running Dog marks in connection with their businesses.
CONSUMER PRODUCTS also has the right, pursuant to license
agreements, to operate under certain third-party patents covering
specific technologies.
GOVERNMENT REGULATION
Substantially all of the operations of CONSUMER PRODUCTS and
many of the operations of SERVICES are subject to various federal
laws and agency regulation, in particular, the Food, Drug and
Cosmetic Act, the Food and Drug Administration, the Department of
Agriculture, the Federal Maritime Commission, and various state
laws and regulatory agencies. In addition, other subsidiaries of
Dial are subject to similar laws and regulations imposed by
foreign jurisdictions. Both rates and routes of GLOC are
regulated by federal and provincial authorities of Canada.
ENVIRONMENTAL
Dial and its subsidiaries are subject to various
environmental laws and regulations in the United States, Canada
and other foreign countries where they have operations or own
real estate. Dial cannot accurately predict future expenses or
liability which might be incurred as a result of such laws and
regulations. However, Dial believes that any liabilities
resulting therefrom, after taking into consideration Dial's
insurance coverage and amounts previously provided, should not
have any material adverse effect on Dial's financial position or
results of operations.
EMPLOYEES
EMPLOYMENT AT DECEMBER 31, 1993
EMPLOYEES COVERED BY
APPROXIMATE NUMBER COLLECTIVE BARGAINING
SEGMENT OF EMPLOYEES AGREEMENTS
- ------- ------------------ ---------------------
Consumer Products 4,000 2,100
Airline Catering and
Other Food Services 11,900 5,800
Convention Services 2,500 1,100
Travel and Leisure and
Payment Services 7,600 3,200
Dial believes that relations with its employees are
satisfactory and that collective bargaining agreements expiring
in 1994 will be renegotiated in the ordinary course without
adverse effect on Dial's operations.
SEASONALITY
The first quarter is normally the slowest quarter of the
year for Dial. Consumption patterns, current marketing practices
and competition cause CONSUMER PRODUCTS' revenues and operating
income to be highest in the second and fourth quarters. Due to
increased leisure travel during the summer and year-end holidays,
Dial's airline catering, cruise ship and intercity bus travel
operations experience peak activity at these times. Convention
service companies generally experience increased activity during
the first half of the year.
RESTRUCTURING MATTERS
On August 5, 1993, Dial completed the initial public
offering of 20 million shares of common stock of Motor Coach
Industries International, Inc. (NYSE:MCO), its transportation
manufacturing and service parts subsidiary. The transaction
followed the March 1992 spin-off of GFC Financial Corporation
(NYSE:GFC), a corporation which comprised substantially all of
the financial services and insurance businesses of Dial, and was
the final step in Dial's restructuring plan to focus its
financial and management resources on its consumer products and
services business.
See Note D of Notes to Consolidated Financial Statements for
further information concerning the sale of the Company's
transportation manufacturing and service parts segment and the
spin-off of GFC Financial Corporation.
REINCORPORATION MERGER
At a special meeting of shareholders of The Dial Corp, an
Arizona Corporation ("Arizona Dial"), held on March 3, 1992,
shareholders of Arizona Dial approved a reincorporation merger
proposal to change Arizona Dial's state of incorporation from
Arizona to Delaware by means of a merger in which Arizona Dial
would be merged with and into Dial. The merger was effected on
March 3, 1992.
BUSINESS SEGMENTS
Principal business segment information is set forth in Annex
A attached hereto and made a part hereof.
ITEM 2. PROPERTIES
During December 1993, a subsidiary of Dial acquired the
corporation which owned the remaining 49% interest in a joint
venture which owns Dial's headquarters building.
Dial owns a 200,000-square-foot facility in Scottsdale,
Arizona, which is used by the CONSUMER PRODUCTS segment to
conduct much of its research and certain other activities.
CONSUMER PRODUCTS operates 13 plants in the United States, 1
plant in Mexico, and 7 offices in 7 foreign countries. All of
the plants are owned; 6 of the offices are leased. Principal
manufacturing plants are as follows:
LOCATION SQ. FEET PRODUCTS MANUFACTURED
- -------- -------- ---------------------
Aurora, IL 425,000 Bar Soaps
Fort Madison, IA 453,000 Canned Meats, Microwaveable
Meals
St. Louis, MO 475,000 Bleach, Ammonia, Fabric
Softener, Laundry Detergents
Bristol, PA 253,700 Dry Detergents and Cleansers
Hazelton, PA 232,000 Liquid Detergents, Ammonia,
Scouring Pads, Fabric Softener
Auburndale, FL 208,000 Bleach, Ammonia, Fabric
Softener, Dishwashing
Detergents
Memphis, TN 130,000 Dial Liquid Soap,
Antiperspirants, Shampoos and
Conditioners, Hotel Amenities
(shampoos, conditioners and
hand lotions)
AIRLINE CATERING AND OTHER FOOD SERVICES operates 14
offices, 53 catering kitchens, 37 foodservice facilities and 7
lodges with ancillary foodservice and recreational facilities.
All of the properties are in the United States, except for 2
catering kitchens, 1 foodservice facility and 1 lodge which are
located in foreign countries. Ten of the catering kitchens, 2
hotels and 3 of the foodservice facilities are owned; all other
properties are leased. Five of the hotels are operated pursuant
to a concessionaire agreement.
CONVENTION SERVICES operates 29 offices and 26 exhibit
construction and warehouse facilities. All of the properties are
in the United States. One of the offices and one of the
warehouses are owned; all other properties are leased.
TRAVEL AND LEISURE AND PAYMENT SERVICES operates 54 offices,
191 duty-free shops, 3 cruise ships and 6 hotels with ancillary
foodservice and recreational facilities. All of the properties
are in the United States, except for 9 offices and 3 hotels,
which are located in foreign countries. Travel and Leisure and
Payment Services owns 2 of the hotels, leases 1 of the hotels,
has a partial interest in the other hotel for which it is also
the lessee and operator, and operates 2 of the hotels under
management contract. One of the cruise ships is owned; all other
properties are leased. Approximate passenger capacity of the
cruise ships is 1600, 1500 and 1000 persons, respectively. This
segment also operates certain airport concessions which, as
discussed earlier, are scheduled to expire September 30, 1994.
GLOC operates 10 terminals and 7 garages in Canada. Five
terminals and 6 garages are owned; the other properties are
leased. In addition, bus stop facilities at approximately 600
locations in Canada are provided by commission agents. Principal
properties of GLOC are as follows:
LOCATION SQ. FEET FUNCTION
- -------- -------- --------
Calgary, Alberta 179,000 Terminal and Headquarters
Office
Edmonton, Alberta 63,000 Terminal
London, Ontario 12,000 Terminal
Vancouver, British
Columbia 23,000 Terminal
Winnipeg, Manitoba 21,000 Terminal
Edmonton, Alberta 23,000 Garage
Winnipeg, Manitoba 39,000 Garage
Toronto, Ontario 46,000 Garage
Vancouver, British
Columbia 16,000 Garage
Calgary, Alberta 135,000 Maintenance and Overhaul
Center
Of the property owned by Dial, only the facility in
Auburndale, Florida, is subject to a mortgage with $3,989,000
outstanding at December 31, 1993.
Management believes that Dial's facilities in the aggregate
are adequate and suitable for their purposes and that capacity is
sufficient for current needs.
ITEM 3. LEGAL PROCEEDINGS
During the fourth quarter of 1993, the Company settled the
matter of John E. Washburn, Director of Insurance for the State
of Illinois, as Liquidator of Pine Top Insurance Company vs.
Ralph C. Batastini, et al. The net cost of the settlement is not
material to the Company and is being charged against a previously
provided reserve. The lawsuit was instituted June 20, 1988, in
Circuit Court of Cook County, Illinois. Plaintiff alleged
negligent management on the part of certain directors and
officers of Pine Top Insurance Company ("PTIC"), a discontinued
insurance operation.
On February 14, 1992, Transportation Manufacturing
Corporation, a former subsidiary of Dial ("TMC"), filed a lawsuit
against Chicago Transit Authority ("CTA") in the United States
District Court for the District of New Mexico. The lawsuit
arises from a contract between TMC and CTA for the manufacture
and delivery of 491 wheelchair-lift transit buses. In addition
to relief from any liquidated damages for late deliveries, TMC is
seeking reimbursement for increased costs due to changes, delays
and interferences TMC alleges were caused by CTA. TMC is also
seeking treble damages under the New Mexico Unfair Trade
Practices Act, alleging that CTA breached its covenant of good
faith and fair dealing in the handling of this contract with TMC.
TMC was divested by the Company in connection with its sale of
MCII in August 1993, but the Company retained rights to certain
recoveries, indemnified MCII against certain costs and damages
and continued to direct the litigation pursuant to a Litigation
Cooperation Agreement. On January 12, 1994, TMC and CTA agreed
on a tentative settlement under which the Company would realize
certain recoveries. Settlement documents are being finalized.
The Company and certain subsidiaries are parties either as
plaintiffs or defendants to various other actions, proceedings
and pending claims, certain of which are or purport to be class
actions. The pending cases range from claims for additional
employment benefits to cases involving accidents, injuries,
product liability or business contract disputes, certain of which
involve claims for compensatory, punitive or other damages in
material amounts. Litigation is subject to many uncertainties
and it is possible that some of the legal actions, proceedings or
claims referred to above could be decided against Dial. Although
the amount of liability at December 31, 1993, with respect to
matters where Dial is defendant is not ascertainable, Dial
believes that any resulting liability should not materially
affect Dial's financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITYHOLDERS.
No matters were submitted to a vote of securityholders
during the fourth quarter of 1993.
OPTIONAL ITEM. EXECUTIVE OFFICERS OF REGISTRANT.
The names, ages and positions of the executive officers of
the Company as of March 15, 1994, are listed below:
EXECUTIVE
POSITION
NAME AGE OFFICE HELD SINCE
- ---- --- ------ ----------
John W. Teets 60 Chairman, President and 1982
Chief Executive Officer
and Director and
Chairman of Executive
Committee of Registrant
Frederick G. 60 Vice President and 1977
Emerson Secretary of Registrant
Joan F. Ingalls 45 Vice President-Human 1991
Resources of Registrant
F. Edward Lake 59 Vice President-Finance 1987
of Registrant
L. Gene Lemon 53 Vice President and 1979
General Counsel of
Registrant
Richard C. Stephan 54 Vice President- 1980
Controller of Registrant
William L. Anthony 51 Executive Vice 1987
President-Administration
and Controller, Consumer
Products Group of
Registrant
Robert H. Bohannon 49 President and Chief 1993
Executive Officer of
Travelers Express
Company, Inc., a
subsidiary of Registrant
Mark R. Shook 39 Executive Vice 1994
President-General Manager,
Laundry and International
Divisions, Consumer
Products Group of
Registrant
Karen L. Hendricks 46 Executive Vice 1992
President-General Manager,
Personal Care Division,
Consumer Products Group
of Registrant
Frederick J. Martin 59 President of Dobbs 1985
International Services,
Inc., a subsidiary of
Registrant
Andrew S. Patti 53 President and Chief 1986
Operating Officer of the
Consumer Products Group
of Registrant
Norton D. 59 Chairman and Chief 1983
Rittmaster Executive Officer of
GES Exposition
Services, Inc., a
subsidiary of Registrant
Position currently Executive Vice President-
vacant General Manager, Food
Division, Consumer
Products Group of
Registrant
Each of the foregoing officers, with the exceptions set
forth below, has served in the same, similar or other executive
positions with Dial or its subsidiaries for more than the past
five (5) years.
Ms. Ingalls has served in her current, or a similar,
position since 1990, and prior thereto as Executive Director of
Compensation and Benefits of the Registrant.
Mr. Bohannon was elected as President and Chief Executive
Officer of Travelers Express Company, Inc. effective March 15,
1993. Prior thereto, he was a senior officer at Marine Midland
Bank of Buffalo, New York.
Prior to 1992, Ms. Hendricks was employed at Procter &
Gamble as Manager, Worldwide Strategic Planning, Health and
Beauty Aids, and prior thereto, as General Manager, US Vidal
Sassoon Hair Care Company.
Prior to March 1994, Mr. Shook was Executive Vice President-
General Manager, Food and International Divisions, and prior
thereto was Vice President and General Manager of the commercial
markets business unit of Registrant's Consumer Products Group.
The term of office of the executive officers is until the
next annual organization meetings of the Boards of Directors of
Dial or appropriate subsidiaries, all of which are scheduled for
April or May of this year.
The Directors of Dial are divided into three classes, with
the terms of one class of Directors to expire at each Annual
Meeting of Stockholders. The current term of office of John W.
Teets is scheduled to expire at the 1994 Annual Meeting of
Stockholders. Mr. Teets has been nominated for reelection at
that meeting for a term expiring in May 1997.
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
The principal market on which the common stock of Dial is
traded is the New York Stock Exchange. The common stock is also
listed for trading on the Pacific Exchange, and admitted for
trading on the Midwest, Philadelphia and Cincinnati Exchanges.
The following tables summarize the high and low market prices as
reported on the New York Stock Exchange Composite Tape and the
cash dividends declared for the two years ended December 31,
1993:
SALES PRICE RANGE OF COMMON STOCK
---------------------------------
CALENDAR 1993 1992
QUARTERS HIGH LOW HIGH LOW
- -------- ------------------- -------------------
First $44 1/2 $39 $50 5/8(1) $37 3/8(1)
Second 43 7/8 36 7/8 39 3/8 33 3/8
Third 41 1/8 35 7/8 39 1/2 35 1/2
Fourth 42 1/4 36 3/4 42 37
DIVIDENDS DECLARED ON COMMON STOCK
----------------------------------
CALENDAR QUARTERS 1993 1992(2)
- ----------------- ----- -----
February $ .28 $ .35
May .28 .28
August .28 .28
November .28 .28
----- -----
TOTAL $1.12 $1.19
(1) On March 18, 1992, the spin-off of GFC Financial
Corporation to the Company's stockholders became
effective. The closing price of Dial's shares
immediately prior to the spin-off was $49 and
immediately after the spin-off was $40, as a result of
the special distribution. The high and low prices for
the period January 1 through March 17, 1992, were $50
5/8 and $45 3/8, respectively. The high and low prices
for the period March 18 through March 31, 1992, were
$40 1/4 and $37 3/8, respectively.
(2) The decline in dividends declared per common share in
1992 and 1993 reflects the spin-off of GFC Financial
Corporation.
Regular quarterly dividends have been paid on the first
business day of January, April, July and October.
As of March 11, 1994, there were 49,576 holders of record of
Dial's common stock.
ITEM 6. SELECTED FINANCIAL DATA.
Applicable information is included in Annex A.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION.
Applicable information is included in Annex A.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
1. Financial Statements--See Item 14 hereof.
2. Supplementary Data--See Condensed Consolidated
Quarterly Results in Annex A.
ITEM 9. DISAGREEMENTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.
None.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The information regarding Directors of the Registrant is
included in Dial's Proxy Statement for Annual Meeting of
Shareholders to be held on May 10, 1994 ("Proxy Statement"), and
is incorporated herein and made a part hereof. The information
regarding executive officers of the Registrant is found as an
Optional Item in Part I hereof.
ITEM 11. EXECUTIVE COMPENSATION.
The information is contained in the Proxy Statement and is
incorporated herein and made a part hereof.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT.
The information is contained in the Proxy Statement and is
incorporated herein and made a part hereof.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
None.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON
FORM 8-K.
(a) List the following documents filed as a part of the
report:
1. FINANCIAL STATEMENTS. The following are included
in Annex A: Independent Auditors' Report and consolidated
financial statements (Balance Sheet, Income, Cash Flows,
Common Stock and Other Equity, and Notes to Financial
Statements).
2. FINANCIAL STATEMENT SCHEDULES.
Independent Auditors' Report on Schedules
to Consolidated Financial Statements of The
Dial Corp is found on page F-1 of Annex A.
Schedule I--Marketable Securities
--Other Security Investments is found on
page F-2 of Annex A.
Schedule IX--Short-term Borrowings.
This information is included in
Management's Discussion and Analysis
of Results of Operations and
Financial Condition and Note G--
Short-Term Debt in Annex A and
is incorporated herein by
reference.
Schedule X--Supplementary Income Statement
Information is found on page F-3 of Annex A.
3. EXHIBITS.
3.A Copy of Restated Certificate of Incorporation of Dial,
as amended through March 3, 1992, filed as Exhibit
(3)(A) to Dial's 1991 Form 10-K, is hereby incorporated
by reference.
3.B Copy of Bylaws of Dial, as amended through February 21,
1992, filed as Exhibit (3)(B) to Dial's 1991 Form 10-K,
is hereby incorporated by reference.
4.A Instruments with respect to issues of long-term debt
have not been filed as exhibits to this Annual Report
on Form 10-K if the authorized principal amount of any
one of such issues does not exceed 10% of total assets
of the Company and its subsidiaries on a consolidated
basis. The Company agrees to furnish a copy of each
such instrument to the Securities and Exchange
Commission upon request.
4.B Copy of Amended and Restated Credit Agreement dated as
of December 15, 1993, among Dial, the Banks parties
thereto, Bank of America National Trust and Savings
Association as Agent and Reporting Agent and Citibank,
N.A. as Agent and Funding Agent.*
10.A Copy of Employment Agreement between Dial and John W.
Teets dated April 14, 1987, filed as Exhibit (10)(A) to
Dial's 1989 Form 10-K, is hereby incorporated by
reference.+
10.B Sample forms of Contingent Agreements relating to
funding of Supplemental Executive Pensions, filed as
Exhibit (10)(T) to Dial's 1989 Form 10-K, is hereby
incorporated by reference.+
10.C Copy of The Dial Corp Supplemental Pension Plan,
amended and restated as of January 1, 1987, filed as
Exhibit (10)(F) to Dial's 1986 Form 10-K, is hereby
incorporated by reference.+
10.C1 Copy of amendment dated February 21, 1991, to The Dial
Corp Supplemental Pension Plan, filed as Exhibit
(10)(G)(i) to Dial's 1990 Form 10-K, is hereby
incorporated by reference.+
10.D Copy of The Dial Corp 1992 Deferred Compensation Plan
for Directors, adopted November 20, 1980, as amended
through February 21, 1991, filed as Exhibit (10)(H) to
Dial's 1990 Form 10-K, is hereby incorporated by
reference.+
10.E Copy of The Dial Corp Management Incentive Plan.*+
10.F1 Copy of form of Executive Severance Agreement between
Dial and three executive officers, filed as Exhibit
(10)(G)(i) to Dial's 1991 Form 10-K, is hereby
incorporated by reference.+
10.F2 Copy of forms of The Dial Corp Executive Severance
Plans covering certain executive officers, filed as
Exhibit (10)(G)(ii) to Dial's 1992 Form 10-K, is hereby
incorporated by reference.+
10.G Copy of Travelers Express Company, Inc. Supplemental
Pension Plan, filed as Exhibit (10)(L) to Dial's 1984
Form 10-K, is hereby incorporated by reference.+
10.H Copy of Greyhound Dial Corporation 1983 Stock Option
and Incentive Plan, filed as Exhibit (28) to Dial's
Registration Statement on Form S-8 (Registration No.
33-23713), is hereby incorporated by reference.+
10.I Copy of The Dial Corp 1992 Stock Incentive Plan, filed
as Exhibit (10)(J) to Dial's 1991 Form 10-K, is hereby
incorporated by reference.+
10.J Description of Spousal Income Continuation Plan, filed
as Exhibit 10(Q) to Dial's 1985 Form 10-K, is hereby
incorporated by reference.+
10.K Copy of The Dial Corp Director's Retirement Benefit
Plan, filed as Exhibit (10)(R) to Dial's 1988 Form 10-
K, is hereby incorporated by reference.+
10.L Copy of The Dial Corp Performance Unit Incentive
Plan.*+
10.M Copy of The Dial Corp Supplemental Trim Plan, filed as
Exhibit (10)(S) to Dial's 1989 Form 10-K, is hereby
incorporated by reference.+
10.N Copy of Employment Agreement between Greyhound
Exposition Services and Norton Rittmaster dated May 20,
1982, filed as Exhibit (10)(O) to Dial's 1992 Form 10-
K, is hereby incorporated by reference.+
10.O Copy of Greyhound Exposition Services, Inc. Incentive
Compensation Plan, filed as Exhibit (10)(P) to Dial's
1992 Form 10-K, is hereby incorporated by reference.+
10.P Copy of The Dial Corp Performance-Based Stock Plan.*+
10.Q Copy of The Dial Corp Deferred Compensation Plan.*+
11 Statement Re Computation of Per Share Earnings.*
22 List of Subsidiaries of Dial.*
23 Consent of Independent Auditors to the incorporation by
reference into specified registration statements on
Form S-3 or on Form S-8 of their reports contained in
or incorporated by reference into this report.*
24 Power of Attorney signed by directors of Dial.*
*Filed herewith.
+Management contract or compensation plan or arrangement.
Note: The 1993 Annual Report to Securityholders will be
furnished to the Commission when, or before, it is sent
to securityholders.
(b) REPORTS ON FORM 8-K.
A report on Form 8-K dated October 1, 1993, was filed by the
Registrant. The Form 8-K reported under Item 5 the
reclassifications of previously filed financial statements and
other financial information related to the disposition of Dial's
Transportation Manufacturing and Service Parts segment. Included
with the 8-K report as Exhibit No. 28 were financial statements
and other financial information reflecting the restatements
required by such disposition. The financial statements and
financial information contained in Dial's 1992 Annual Report on
Form 10-K and Quarterly Reports on Form 10-Q for the quarters
ended March 31, 1993, and June 30, 1993, were modified or
superseded to the extent that the information contained in the
Form 8-K modified or superseded such statements and other
information.
SIGNATURES
Pursuant to the requirements of Section 13 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, in Phoenix, Arizona, on the 25th day of March, 1994.
THE DIAL CORP
By: /s/ John W. Teets
John W. Teets
Chairman, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act
of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on
the dates indicated:
Principal Executive Officer
Date: March 25, 1994 By: /s/ John W. Teets
John W. Teets
Director; Chairman, President
and Chief Executive Officer
Principal Financial Officer
Date: March 25, 1994 By: /s/ F. Edward Lake
F. Edward Lake
Vice President-Finance
Principal Accounting Officer
Date: March 25, 1994 By: /s/ Richard C. Stephan
Richard C. Stephan
Vice President-Controller
Directors
James E. Cunningham
Joe T. Ford
Thomas L. Gossage
Donald E. Guinn
Jess Hay
Judith K. Hofer
Jack F. Reichert
Linda Johnson Rice
Dennis C. Stanfill
A. Thomas Young
Date: March 25, 1994 By: /s/ Richard C. Stephan
Richard C. Stephan
Attorney-in-Fact
<PAGE>
<PAGE>
ANNEX "A"
THE DIAL CORP
1993 FINANCIAL INFORMATION
<PAGE>
<PAGE>
<TABLE>
THE DIAL CORP
SELECTED FINANCIAL AND OTHER DATA
<CAPTION>
Year ended December 31, 1993 1992 1991 1990 1989
------------ ------------ ------------ ------------ ------------
OPERATIONS (000 omitted)
<S> <C> <C> <C> <C> <C>
Revenues $ 3,000,342 $ 2,874,088 $ 2,827,849 $ 2,851,535 $ 2,744,611
============ ============ ============ ============ ============
Income from continuing operations (1) $ 110,273 $ 74,351 $ 25,755 $ 75,418 $ 40,990
Income (loss) from discontinued operations (2) 32,120 (45,125) (83,363) (59,045) 67,721
------------ ------------ ------------ ------------ ------------
Income (loss) before extraordinary charge
and cumulative effect of change in
accounting principle 142,393 29,226 (57,608) 16,373 108,711
Extraordinary charge for early retirement of debt (21,908)
Cumulative effect of change in
accounting principle - SFAS No. 106 (110,741)
------------ ------------ ------------ ------------ ------------
Net income (loss) $ 120,485 $ (81,515) $ (57,608) $ 16,373 $ 108,711
============ ============ ============ ============ ============
INCOME (LOSS) PER COMMON SHARE (dollars)
Continuing operations (1) $ 2.56 $ 1.74 $ 0.62 $ 1.87 $ 1.02
Discontinued operations (2) 0.75 (1.07) (2.09) (1.49) 1.73
------------ ------------ ------------ ------------ ------------
Income (loss) before extraordinary charge
and cumulative effect of change in
accounting principle 3.31 0.67 (1.47) 0.38 2.75
Extraordinary charge (0.51)
Cumulative effect of change in
accounting principle (2.64)
------------ ------------ ------------ ------------ ------------
Net income (loss) per common share $ 2.80 $ (1.97) $ (1.47) $ 0.38 $ 2.75
============ ============ ============ ============ ============
Dividends declared per common share (3) $ 1.12 $ 1.19 $ 1.40 $ 1.36 $ 1.32
============ ============ ============ ============ ============
Average outstanding common and
equivalent shares (000 omitted) 42,703 42,013 39,911 39,625 39,128
============ ============ ============ ============ ============
<PAGE>
<PAGE>
FINANCIAL POSITION AT YEAR-END (000 omitted)
Total assets $ 3,281,088 $ 3,156,998 $ 3,493,656 $ 3,417,956 $ 3,411,862
Total debt 635,892 707,111 550,017 543,540 532,258
$4.75 Redeemable preferred stock 6,624 6,620 6,615 6,610 6,605
Common stock and other equity (3) 469,688 390,395 940,721 1,027,382 1,074,969
============ ============ ============ ============ ============
PEOPLE
Stockholders of record 51,300 50,688 56,358 59,623 63,440
Employees of continuing businesses (average) 25,025 26,765 29,042 32,009 31,916
============ ============ ============ ============ ============
<FN>
(1) After deducting restructuring and other charges of $19,800,000 (after-tax) or $0.47 per share in 1992 and
$54,871,000 (after-tax) or $1.37 per share in 1991. See Note C of Notes to Consolidated Financial Statements.
Also after deducting $9,128,000 (after-tax), or $0.22 per share, in 1992 for increased ongoing expense
following adoption of SFAS No. 106 effective as of January 1, 1992. Years prior to 1992 do not include such
expenses.
(2) See Note D of Notes to Consolidated Financial Statements.
(3) The declines in dividends declared per common share in 1993 and 1992 and in common stock and other equity in
1992 reflect the spin-off of GFC Financial as discussed further in Note D of Notes to Consolidated Financial
Statements.
</TABLE>
<PAGE>
<PAGE>
MANAGEMENT'S REPORT ON RESPONSIBILITY FOR FINANCIAL REPORTING
The management of The Dial Corp and its subsidiaries has the
responsibility for preparing and assuring the integrity and
objectivity of the accompanying financial statements and other
financial information in this report. The financial statements
were developed using generally accepted accounting principles and
appropriate policies, consistently applied, except for the change
in 1992 to comply with new accounting requirements for
postretirement benefits other than pensions as discussed in Note
L of Notes to Consolidated Financial Statements. They reflect,
where applicable, management's best estimates and judgments and
include disclosures and explanations which are relevant to an
understanding of the financial affairs of the Company.
The Company's financial statements have been audited by Deloitte
& Touche, independent auditors elected by the stockholders.
Management has made available to Deloitte & Touche all of the
Company's financial records and related data, and has made
appropriate and complete written and oral representations and
disclosures in connection with the audit.
Management has established and maintains a system of internal
control that it believes provides reasonable assurance as to the
integrity and reliability of the financial statements, the
protection of assets and the prevention and detection of
fraudulent financial reporting. The system of internal control is
believed to provide for appropriate division of responsibilities
and is documented by written policies and procedures that are
utilized by employees involved in the financial reporting
process. Management also recognizes its responsibility for
fostering a strong ethical climate. This responsibility is
characterized and reflected in the Company's Code of Corporate
Conduct, which is communicated to all of the Company's executives
and managers.
The Company also maintains a comprehensive internal auditing
function which independently monitors compliance and assesses the
effectiveness of the internal controls and recommends possible
improvements thereto. In addition, as part of their audit of the
Company's financial statements, the independent auditors review
and evaluate selected internal accounting and other controls to
establish a basis for reliance thereon in determining the audit
tests to be applied. There is close coordination of audit
planning and coverage between the Company's internal auditing
function and the independent auditors. Management has considered
the recommendations of both internal auditing and the independent
auditors concerning the Company's system of internal control and
has taken actions believed to be cost-effective in the
circumstances to implement appropriate recommendations and
otherwise enhance controls. Management believes that the
Company's system of internal control accomplishes the objectives
discussed herein.
The Board of Directors oversees the Company's financial reporting
through its Audit Committee, which regularly meets with
management representatives and, jointly and separately, with the
independent auditors and internal auditing management to review
accounting, auditing and financial reporting matters.
/s/ Ermo S. Bartoletti
Ermo S. Bartoletti
Vice President - Internal Auditing
/s/ Richard C. Stephan
Richard C. Stephan
Vice President - Controller
<PAGE>
<PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of The Dial Corp:
We have audited the accompanying consolidated balance sheets of
The Dial Corp as of December 31, 1993 and 1992, and the related
consolidated statements of income, common stock and other equity
and of cash flows for each of the three years in the period ended
December 31, 1993. These financial statements are the
responsibility of the Company's management. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, such consolidated financial statements present
fairly, in all material respects, the financial position of The
Dial Corp as of December 31, 1993 and 1992, and the results of
its operations and its cash flows for each of the three years in
the period ended December 31, 1993 in conformity with generally
accepted accounting principles.
As discussed in Note L of Notes to Consolidated Financial
Statements, the Company changed its method of accounting for
postretirement benefits other than pensions in 1992.
/s/ Deloitte & Touche
Deloitte & Touche
Phoenix, Arizona
February 25, 1994
<PAGE>
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION OF THE DIAL CORP
RESULTS OF OPERATIONS:
Dial is a diversified company which sells products and provides
services in many markets. Because of this diversity, components
of net income are affected, some favorably, others unfavorably,
by general economic conditions and other fluctuations which occur
in the various markets each year. Inflation has not materially
affected operations in recent years.
Dial sold its Transportation Manufacturing and Service Parts
Group in 1993 and spun-off GFC Financial Corporation ("GFC
Financial") in 1992. The Transportation Manufacturing and Service
Parts Group and GFC Financial are presented as discontinued
operations for all periods. Such dispositions are discussed
further in Note D of Notes to Consolidated Financial Statements.
1993 VS. 1992:
Revenues for 1993 were $3 billion compared with $2.9 billion in
1992.
Income from continuing operations was $110.3 million in 1993, or
$2.56 per share. Before restructuring and other charges, income
from continuing operations in 1992 was $94.2 million, or $2.21
per share. After restructuring and other charges of $19.8
million, or $0.47 per share, Dial had income from continuing
operations of $74.4 million, or $1.74 per share, in 1992.
<TABLE>
<CAPTION>
Year ended December 31, 1993 1992
------------ ------------
<S> <C> <C>
INCOME FROM CONTINUING OPERATIONS (000 omitted):
BEFORE RESTRUCTURING AND OTHER CHARGES $ 110,273 $ 94,151
Restructuring and other charges (19,800)
------------ ------------
INCOME FROM CONTINUING OPERATIONS $ 110,273 $ 74,351
============ ============
INCOME PER COMMON SHARE FROM
CONTINUING OPERATIONS (dollars):
BEFORE RESTRUCTURING AND OTHER CHARGES $ 2.56 $ 2.21
Restructuring and other charges (0.47)
------------ ------------
INCOME PER COMMON SHARE FROM
CONTINUING OPERATIONS $ 2.56 $ 1.74
============ ============
</TABLE>
CONSUMER PRODUCTS. The Consumer Products Group's revenues were up
$144.7 million, or 11 percent from those in 1992. Operating
income was up $20.6 million, or 17 percent over 1992 amounts.
Personal Care Division revenues declined $700,000 due primarily
to a decline in the sales of Breck hair care products. Offsetting
this decline were strong showings by all other personal care
products, especially the Dial label products. Personal Care
Division operating income increased by $6.4 million due primarily
to the increase in Dial product revenues and reduced
manufacturing costs. The Breck decline was substantially offset
by reduced marketing costs.
Food Division revenues increased $11.6 million from those of 1992
due to increases in the canned meat line offset in part by a
decline in microwaveable product revenue. Operating income
increased by $2.3 million primarily due to the favorable sales
mix, the pricing of canned meats and reductions in manufacturing
costs of microwaveable products.
Household and Laundry Division revenues increased $130 million
from 1992, led by strong performances in liquid detergents and
liquid fabric softeners. The addition of Rinse 'n Soft as a new
product in the liquid fabric softener category and the
acquisition of Renuzit during the 1993 second quarter contributed
to the favorable comparisons between periods. Operating income
increased $10.8 million over 1992 amounts, reflecting higher
revenue and improved margins. Margins increased as a result of
reduced marketing expenses associated with a modified everyday
low pricing strategy.
International revenues and operating results increased $3.8
million and $1.1 million, respectively, from those of 1992 due
primarily to an expansion program.
SERVICES. During 1993, Dial redefined its Services business into
three principal segments for financial reporting purposes.
Excluding certain airport concession operations, which were sold
in September, 1992, and excluding the effects of $30 million of
restructuring charges in 1992, combined Services revenues and
operating income increased $109.6 million, or 8 percent, and
$11.3 million, or 9 percent, respectively.
AIRLINE CATERING AND OTHER FOOD SERVICES. Revenues of the
Airline Catering and Other Food Services Group declined $26.2
million from those of 1992, while operating income increased $6.1
million. Airline catering revenues decreased $21.4 million from
those of 1992 due primarily to service cutbacks by major airlines
and the effects of the air fare discounts which had boosted 1992
volume; however, operating income was up $600,000 due to new
customers and stringent cost controls. The contract food service
companies' revenues were down $4.8 million, due primarily to
closing marginal locations in 1992. Operating income increased
$5.5 million from last year's results, due primarily to a gain
from curtailment of a postretirement benefit plan in 1993.
CONVENTION SERVICES. Convention Services Group revenues and
operating income increased $117.6 million and $7.6 million,
respectively, from those in 1992. Growth in existing business,
the inclusion of operations of United Exposition Service Co.,
Inc. and Andrews, Bartlett and Associates, Incorporated, which
were acquired during the second and fourth quarters,
respectively, contributed to the increases.
TRAVEL AND LEISURE AND PAYMENT SERVICES. Revenues for the
Travel and Leisure and Payment Services Group declined $109.9
million, and, excluding the effects of $30 million of
restructuring charges in 1992, operating income declined $11.7
million from 1992 results. The declines were primarily
attributable to the sale, in late September 1992, of most of
Dial's food and merchandise airport terminal concession
operations; as a result, revenues and operating income of sold
and miscellaneous operations declined $113.9 million and $6.8
million, respectively, from those in 1992.
Revenues and operating income for aircraft fueling and other
ground-handling services declined $3.7 million and $100,000,
respectively, due primarily to lower foreign exchange rates.
Revenues and operating income of the transportation services
companies increased $5.5 million and $2.9 million, respectively,
from those of 1992. Continued emphasis on cost control programs,
the acquisition of a small transportation services company in
late 1992 and a gradually recovering Canadian economy contributed
to the improved operating results.
Cruise revenues were down $20.4 million and operating results
decreased $8.3 million from those of 1992 due to lower passenger
counts, increased competition, the major dry-dock of the Oceanic
in the 1993 first quarter and the introduction of a new itinerary
for the Majestic out of Port Everglades during the second quarter
of 1993. Reductions in operating expenses from ongoing cost
reduction programs helped limit the decline in operating results.
Travel tour service revenues and operating income decreased $5
million and $3.9 million, respectively, due to lower results from
the U.K. tour operation which is suffering from a slowly
recovering economy. In addition, passenger volume to Florida for
1993 was down 30% from the volume in 1992.
Duty Free and shipboard concession revenues were up $34.5 million
due primarily to new business. Operating income increased
$900,000 from that of 1992 despite start-up costs associated with
a major new contract.
Payment service revenues decreased $6.9 million due primarily to
reduced money order revenues and lower investment income due to
lower market interest rates and increased investment in
tax-exempt securities. Operating income was $2.7 million ahead of
last year's results due primarily to terminating unprofitable
business even though investment income was lower for the reasons
stated above.
UNALLOCATED CORPORATE EXPENSE AND OTHER ITEMS, NET. Unallocated
corporate expense and other items, net, increased $6.5 million
from that in 1992, due primarily to the expiration in early 1993
of subleases of buses and related amortization of deferred
intercompany and sale-leaseback profit.
INTEREST EXPENSE. Interest expense was down $6.1 million from
that in 1992, due primarily to lower short-term interest rates
and the prepayment of certain high-coupon, fixed-rate debt at the
end of the third quarter of 1993.
1992 VS. 1991:
Revenues for 1992 were $2.9 billion, compared to $2.8 billion in
1991.
Income from continuing operations before restructuring and other
charges described below, was $94.2 million, or $2.21 per share,
compared with $80.6 million, or $1.99 per share, in 1991. After
restructuring and other charges of $19.8 million, or $0.47 per
share, Dial had income from continuing operations of $74.4
million, or $1.74 per share, for the year, compared with $25.8
million, or $0.62 per share, in 1991 after restructuring and
other charges and spin-off transaction costs of $54.9 million, or
$1.37 per share.
<TABLE>
<CAPTION>
Year ended December 31, 1992 1991
------------ ------------
<S> <C> <C>
INCOME FROM CONTINUING OPERATIONS (000 omitted):
BEFORE RESTRUCTURING AND OTHER CHARGES $ 94,151 $ 80,626
Restructuring and other charges and, in 1991,
spin-off transaction costs (19,800) (54,871)
------------ ------------
INCOME FROM CONTINUING OPERATIONS $ 74,351 $ 25,755
============ ============
INCOME PER COMMON SHARE FROM
CONTINUING OPERATIONS (dollars):
BEFORE RESTRUCTURING AND OTHER CHARGES $ 2.21 $ 1.99
Restructuring and other charges and, in 1991,
spin-off transaction costs (0.47) (1.37)
------------ ------------
INCOME PER COMMON SHARE FROM
CONTINUING OPERATIONS $ 1.74 $ 0.62
============ ============
</TABLE>
The adoption of Statement of Financial Accounting Standards No.
106, "Employers' Accounting for Postretirement Benefits Other
Than Pensions" ("SFAS No. 106") was mandatory for all U.S. public
companies beginning in 1993. The statement requires recognition
of liabilities for postretirement benefits other than pensions
over the period that services are provided by employees, but does
not change the pattern of cash payments for such benefits. Dial
adopted the new standard in 1992, and recorded the cumulative
effect of such initial application rather than amortizing such
amount over 20 years, as permitted by the statement. Accordingly,
results for 1992 include a one-time charge as of January 1, 1992,
for the cumulative effect of the initial application of SFAS No.
106 of $110.7 million (after-tax), or $2.64 per share, and an
ongoing annual expense increase of $9.1 million (after-tax), or
$0.22 per share.
RESTRUCTURING AND OTHER CHARGES. Dial recorded restructuring and
other charges of $19.8 million (after-tax), or $0.47 per share,
in the fourth quarter of 1992, attributable to the Travel and
Leisure and Payment Services Group, primarily to provide for
termination of an unfavorable airport concession contract and
related matters, and to provide for costs to reposition the
cruise line to compete more effectively in the Caribbean market.
In the fourth quarter of 1991, Dial provided for restructuring
and other charges and spin-off transaction costs of $54.9 million
(after-tax), or $1.37 per share. Of this amount, $26 million
(after-tax) was charged to the Travel and Leisure and Payment
Services Group primarily to provide for estimated losses on an
unfavorable airport concession contract and for losses as a
result of the bankruptcy of a large money order agent in its
payment services subsidiary. The remaining provision of $28.9
million (after-tax) was made primarily to provide for transaction
costs arising from the spin-off of GFC Financial and for certain
income tax matters related to prior years.
CONSUMER PRODUCTS. The Consumer Products Group reported a $78.9
million increase in revenues over 1991 amounts, and before the
$6.8 million ongoing expense increase for 1992 resulting from the
adoption of SFAS No. 106, operating income increased $14.8
million over 1991 amounts. The following comments exclude the
effects of the ongoing expense increase for 1992 resulting from
the adoption of SFAS No. 106.
Revenues and operating income of the Personal Care Division were
up $58.9 million and $7 million, respectively, from those of
1991. The increases were due primarily to strong sales volume
performance for Dial Soap and Liquid Dial.
The Food Division revenues declined $25.9 million from those of
1991, due primarily to new pricing strategies for microwaveables
to adopt everyday low prices, increased competition in the
microwaveable meals category and lower meat prices. Operating
income of the Food Division increased $3.2 million as the decline
in revenues was offset by lower ingredient costs and other
efficiencies.
Household and Laundry Division revenues and operating income
increased $33.3 million and $7.7 million, respectively, due to
increased sales of higher margin detergent products.
International revenues increased $12.6 million while operating
income decreased $3.1 million from 1991 amounts. The decline in
operating results was due primarily to expansion and product
introduction costs.
SERVICES. Combined Services companies reported a $32.7 million
decrease in revenues from those of 1991 due primarily to the sale
of most airport concession operations in late September 1992.
Excluding the effects of $30 million and $40 million of
restructuring and other charges in 1992 and 1991, respectively,
and before the $1 million, $700,000 and $1.5 million expense
increases for Airline Catering and Other Food Services,
Convention Services, and Travel and Leisure and Payment Services,
respectively, for 1992 resulting from the adoption of SFAS No.
106, combined Services operating income increased $11.6 million
over 1991 amounts. The following comments exclude the effects of
restructuring and other charges and the ongoing expense increase
for 1992 resulting from the adoption of SFAS No. 106.
AIRLINE CATERING AND OTHER FOOD SERVICES. Revenues of the
Airline Catering and Other Food Services Group were down $19.8
million, while operating income increased $6.3 million from 1991.
Airline catering revenues and operating income were up $27.5
million and $5.5 million, respectively, primarily as a result of
new customers and growth from existing customers, aided in part
by the traffic increase from the air fare discounts in the summer
of 1992. Contract food service revenues declined $47.3 million,
while operating income increased $800,000. The sale or closure of
unprofitable locations in 1992 contributed to the reduction in
contract food revenues.
CONVENTION SERVICES. Revenues and operating income of the
Convention Services Group increased $25.9 million and $4.2
million, respectively, due primarily to growth in existing
convention show services, new customers and somewhat improved
margins.
TRAVEL AND LEISURE AND PAYMENT SERVICES. Revenues for the
Travel and Leisure and Payment Services Group declined $38.8
million and operating income increased $1.1 million from 1991
amounts. The decline in revenues was attributable primarily to
the sale, in late September, of most of Dial's food and
merchandise airport terminal concession operations. Food and
merchandise airport terminal concession and related operations
revenues declined $41.8 million due to the September sale, while
operating income was up $10.8 million from the prior year, aided
by increased traffic from summer air fare discounts up to the
sale date.
Aircraft fueling and other ground-handling services revenues and
operating income increased $8.2 million and $1 million,
respectively, due to new customers and growth from existing
customers.
Revenues and operating income of the transportation services
companies were down $16.2 million and $2.2 million, respectively,
from those of 1991, reflecting a decrease in ridership as the
stagnant Canadian economy continued to lag behind the U.S.
recovery. Cost reduction programs helped limit the decline in
operating income.
Cruise revenues increased $1.4 million from those of 1991 due
primarily to increased onboard revenues, offset partially by
lower passenger counts and per diems. Deep discounting in selling
prices, resulting from continued sluggish demand, contributed to
lower per diems. The heavy discounts in selling prices and higher
promotional costs accounted for the $1 million decrease in
operating income from that of 1991.
Travel tour service revenues and operating income increased $6.7
million and $2.3 million, respectively, from 1991 results due
primarily to the full-year inclusion of Crystal Holidays Limited
which was acquired in mid-1991. In addition, 1991 results were
depressed due to the Persian Gulf War and its aftereffects.
Duty Free and shipboard concession revenues and operating income
were up $8.9 million and $600,000, respectively, from those in
1991 as airport terminal traffic increased and the revenue per
passenger on vessels where duty free shops are operated
increased.
Payment service revenues were down $6 million due primarily to
lower revenue on investments, money order fees and gains on sale
of investments. Operating income was about even with that of 1991
as lower revenues were offset by lower expenses, due primarily to
lower provisions for credit losses.
UNALLOCATED CORPORATE EXPENSE AND OTHER ITEMS, NET. Before the
$4.4 million ongoing expense increase for 1992 resulting from the
adoption of SFAS No. 106, unallocated corporate expense and other
items, net, decreased $500,000 from that of 1991.
INTEREST EXPENSE. Interest expense was down $700,000 from that in
1991, due primarily to lower short-term interest rates and the
repayment of certain higher cost debt, partially offset by higher
average short-term borrowings of commercial paper and promissory
notes. Also, the 1991 period had benefited from a reduction of
interest previously accrued for a federal tax audit.
LIQUIDITY AND CAPITAL RESOURCES:
Dial's total debt at December 31, 1993 was $636 million compared
to $707 million at December 31, 1992. The debt to capital ratio
was 0.55 to 1 and 0.62 to 1 at December 31, 1993 and December 31,
1992, respectively. Capital is defined as total debt plus
minority interests, preferred stock and common stock and other
equity.
During the third quarter of 1993, Dial utilized the proceeds from
the sale of MCII to repurchase approximately 1,000,000 shares of
common stock on the open market and to reduce outstanding
short-term debt. Dial also prepaid $187 million principal amount
of long-term, fixed-rate debt having a weighted average interest
rate of 10%. These prepayments resulted in an extraordinary
charge for early extinguishment of debt of $21.9 million (net of
tax benefit of $11.8 million).
During 1993, Dial filed a $300 million Senior Debt Securities
Shelf Registration with the Securities and Exchange Commission
under which Dial could issue senior notes for various amounts and
at various rates and maturities. During 1993, Dial issued $230
million of debt under the program with maturities of five to
eleven years. Subsequent to December 31, 1993, Dial issued the
remaining $70 million of debt under the senior note program with
maturities of six to fifteen years.
With respect to working capital, in order to minimize the effects
of borrowing costs on earnings, Dial strives to maintain current
assets (principally cash, inventories and receivables) at the
lowest practicable levels while at the same time taking advantage
of the payment terms offered by trade creditors. These efforts
notwithstanding, working capital requirements will fluctuate
significantly from seasonal factors as well as changes in levels
of receivables and inventories caused by numerous business
factors.
Dial satisfies a portion of its working capital and other
financing requirements with short-term borrowings (through
commercial paper, bank note programs and bank lines of credit)
and the sale of receivables. Short-term borrowings are supported
by long-term revolving bank credit agreements or short-term lines
of credit. At December 31, 1993, Dial had a $500 million
long-term revolving credit line in place, of which $257 million
was being used to support $225 million of commercial paper and
promissory notes and the guarantee of a $32 million ESOP loan.
Dial's subsidiaries have agreements to sell $115 million of
accounts receivable under which the purchaser has agreed to
invest collected amounts in new purchases, providing a stable
level of purchased accounts. The commitments to purchase accounts
receivable, which are fully utilized, mature in January of each
year, but are expected to be extended annually by mutual
agreement. The agreements are currently extended to January 1995.
As discussed in Note I of Notes to Consolidated Financial
Statements, in September 1992, Dial sold 5,245,900 shares of
treasury stock to The Dial Corp Employee Equity Trust (the
"Trust") at $38.125 per share. This Trust is being used to fund
certain existing employee compensation and benefit plans over the
scheduled 15-year term of the Trust. The Trust acquired the
shares of common stock from Dial for a promissory note valued at
$200 million at the date of sale. Proceeds from sales of shares
released by the Trust are used to repay Dial's note and thereby
satisfy benefit obligations. At December 31, 1993, a total of
3,923,933 shares remained in the Trust and are available to fund
future benefit obligations.
Capital spending has been reduced by obtaining, where
appropriate, equipment and other property under operating leases.
Dial's capital asset needs and working capital requirements are
expected to be financed primarily with internally generated
funds. Generally, cash flows from operations and the proceeds
from the sale of businesses during the past three years along
with increased proceeds from the exercise of stock options have
been sufficient to finance capital expenditures, the purchase of
businesses and cash dividends to shareholders. Dial expects these
trends to continue with operating cash flows and proceeds from
stock issuances generally being sufficient to finance its
business. Should financing requirements exceed such sources of
funds, Dial believes it has adequate external financing sources
available to cover any such shortfall.
As indicated in Note L of Notes to Consolidated Financial
Statements, although Dial has paid the minimum funding required
by applicable regulations, certain pension plans remain
underfunded while others are overfunded. The deficiency in
funding of the underfunded plans is expected to be reduced
through the payment of the minimum funding requirement over a
period of several years. Unfunded pension and other
postretirement benefit plans require payments over extended
periods of time. Such payments are not likely to materially
affect Dial's liquidity.
As of December 31, 1993, Dial has recorded U.S. deferred income
tax benefits under SFAS No. 109 totaling $170 million, which Dial
believes to be fully realizable in future years. The realization
of such benefits will require average annual taxable income over
the next 15 years (the current Federal loss carryforward period)
of approximately $30 million. Dial's average U.S. pretax reported
income, exclusive of nondeductible goodwill amortization but
after deducting restructuring and other charges, over the past
three years has been approximately $113 million. Furthermore,
approximately $112 million of the deferred income tax benefits
relate to pensions and other postretirement benefits which will
become deductible for income tax purposes as they are paid, which
will occur over many years.
Dial is subject to various environmental laws and regulations of
the United States as well as of the states in whose jurisdictions
Dial operates. As is the case with many companies, Dial faces
exposure to actual or potential claims and lawsuits involving
environmental matters. Dial believes that any liabilities
resulting therefrom should not have a material adverse effect on
Dial's financial position or results of operations.
BUSINESS OUTLOOK AND RECENT DEVELOPMENTS:
In November 1993, Dial announced the finalization of an agreement
to purchase 15 in-flight catering kitchens from United Airlines.
Dial purchased the first four kitchens on December 30, with the
remaining kitchens expected to be phased-in during the first and
second quarters of 1994. In February 1994, Dial announced that
it had reached an agreement to acquire the assets of Steels
Aviation Services Limited, a British airline caterer that
operates four airline catering kitchens in England and Scotland.
Management anticipates financing the acquisitions through cash
flow from operations and long-term debt.
The business outlook holds many uncertainties. Proposed
legislation, health care costs, interest rates, tax law changes,
environmental issues, competitive pressures from within the
marketplace and the unpredictable economic environment, will all
affect the growth and future of Dial. Dial remains aggressive in
its commitment to monitor and reduce costs and expenses,
positioning Dial to continue to produce positive results in the
years ahead.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
THE DIAL CORP CONSOLIDATED BALANCE SHEET
December 31, (000 omitted) 1993 1992
------------ ------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 10,659 $ 43,917
Receivables, less allowance of
$22,597 and $28,708 199,996 126,536
Inventories 216,837 167,930
Deferred income taxes 46,373 46,142
Other current assets 43,082 29,963
------------ ------------
516,947 414,488
Funds and agents' receivables
restricted for payment service
obligations, after eliminating
$65,000 invested in Dial commercial paper 535,657 653,102
------------ ------------
Total current assets 1,052,604 1,067,590
Investments restricted for
payment service obligations 574,094 376,078
Property and equipment 740,724 648,694
Other investments and assets 59,757 79,202
Investment in discontinued operations 248,664
Deferred income taxes 124,096 137,863
Intangibles 729,813 598,907
------------ ------------
$ 3,281,088 $ 3,156,998
============ ============
</TABLE>
<PAGE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
December 31, (000 omitted) 1993 1992
------------ ------------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term bank loans $ 8,935 $ 2,492
Accounts payable 248,975 190,895
Accrued compensation 69,060 69,186
Other current liabilities 272,430 241,088
Current portion of long-term debt 2,295 20,936
------------ ------------
601,695 524,597
Payment service obligations 1,147,063 1,085,042
------------ ------------
Total current liabilities 1,748,758 1,609,639
Long-term debt 624,662 683,683
Pension and other benefits 295,656 310,114
Other deferred items and insurance reserves 99,834 118,886
Commitments and contingent liabilities
(Notes B, I, M, N and O)
Minority interests 35,866 37,661
$4.75 Redeemable preferred stock 6,624 6,620
Common stock and other equity:
Common stock, $1.50 par value,
200,000,000 shares authorized,
48,554,362 shares issued 72,832 72,832
Additional capital 378,814 390,790
Retained income 304,481 234,655
Cumulative translation adjustments (9,889) (11,341)
Unearned employee benefits related to:
Employee Equity Trust (158,429) (211,571)
Guarantee of ESOP debt (31,511) (33,584)
Common stock in treasury, at cost,
2,536,354 and 1,647,493 shares (86,610) (51,386)
------------ ------------
Total common stock and other equity 469,688 390,395
------------ ------------
$ 3,281,088 $ 3,156,998
============ ============
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
THE DIAL CORP STATEMENT OF CONSOLIDATED INCOME
Year ended December 31,
(000 omitted, except per share data) 1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
REVENUES $ 3,000,342 $ 2,874,088 $ 2,827,849
------------ ------------ ------------
Costs and expenses:
Costs of sales and services 2,725,049 2,621,372 2,591,571
Restructuring and other charges 30,000 64,000
Unallocated corporate expense
and other items, net 50,061 43,519 39,587
Interest expense 49,965 56,049 56,768
Minority interests 3,618 2,814 3,543
------------ ------------ ------------
2,828,693 2,753,754 2,755,469
------------ ------------ ------------
Income before income taxes 171,649 120,334 72,380
Income taxes 61,376 45,983 46,625
------------ ------------ ------------
INCOME FROM CONTINUING OPERATIONS 110,273 74,351 25,755
Income (loss) from discontinued operations 32,120 (45,125) (83,363)
------------ ------------ ------------
Income (loss) before extraordinary charge
and cumulative effect of change in
accounting principle 142,393 29,226 (57,608)
Extraordinary charge for early
retirement of debt, net of
tax benefit of $11,833 (21,908)
Cumulative effect, net of tax benefit
of $63,542, to January 1, 1992, of
initial application of SFAS No. 106,
"Employers' Accounting for Postretirement
Benefits Other Than Pensions" (110,741)
------------ ------------ ------------
NET INCOME (LOSS) $ 120,485 $ (81,515) $ (57,608)
============ ============ ============
INCOME (LOSS) PER COMMON SHARE:
Continuing operations $ 2.56 $ 1.74 $ 0.62
Discontinued operations 0.75 (1.07) (2.09)
------------ ------------ ------------
Income (loss) before extraordinary
charge and cumulative effect of
change in accounting principle 3.31 0.67 (1.47)
Extraordinary charge (0.51)
Cumulative effect to January 1, 1992,
of initial application of SFAS No. 106 (2.64)
------------ ------------ ------------
NET INCOME (LOSS) PER COMMON SHARE $ 2.80 $ (1.97) $ (1.47)
============ ============ ============
Dividends declared per common share $ 1.12 $ 1.19 $ 1.40
============ ============ ============
Average outstanding common
and equivalent shares 42,703 42,013 39,911
============ ============ ============
<FN>
See Notes to Consolidated Financial Statements.
</TABLE> <PAGE>
<PAGE>
<TABLE>
<CAPTION>
THE DIAL CORP STATEMENT OF CONSOLIDATED CASH FLOWS
Year ended December 31, (000 omitted) 1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
CASH FLOWS PROVIDED (USED) BY
OPERATING ACTIVITIES:
Net income (loss) $ 120,485 $ (81,515) $ (57,608)
Adjustments to reconcile net income (loss) to
net cash provided (used) by operations:
Depreciation and amortization 100,160 100,935 97,016
Deferred income taxes 35,943 18,915 (3,521)
Extraordinary charge for early
retirement of debt 21,908
Cumulative effect of change in accounting
principle 110,741
Restructuring and other charges 30,000 64,000
(Income) loss from
discontinued operations (32,120) 45,125 83,363
(Gain) loss on sale of businesses
and property (2,128) 310 (3,968)
Other noncash items, net 25,752 15,059 (5,538)
Change in operating assets
and liabilities:
Receivables (49,657) 19,764 (30,097)
Inventories (29,692) (4,859) 3,213
Payment service assets
and obligations, net (41,717) (38,425) 10,693
Accounts payable and accrued
compensation 31,825 (22,692) 62
Other current liabilities 539 (78,222) (56,163)
Other assets and liabilities, net (11,991) (38,369) 29,020
------------ ------------ ------------
Net cash provided by operating activities 169,307 76,767 130,472
------------ ------------ ------------
CASH FLOWS PROVIDED (USED) BY
INVESTING ACTIVITIES:
Capital expenditures (114,624) (109,131) (126,260)
Acquisitions of businesses and
other assets, net of cash acquired (216,787) (7,192) (34,495)
Proceeds from sale of shares of the
Transportation Manufacturing and
Service Parts Group 245,700
Proceeds from sale of businesses and property 19,459 54,891 24,777
Investment in and advances from
discontinued operations, net 35,084 (138,563) 27,641
Other, net (288) (347) (2,155)
------------ ------------ ------------
Net cash used by investing activities (31,456) (200,342) (110,492)
------------ ------------ ------------
CASH FLOWS PROVIDED (USED) BY
FINANCING ACTIVITIES:
Proceeds from long-term borrowings 229,358
Payments on long-term borrowings (196,611) (21,557) (83,435)
Extraordinary charge for early
retirement of debt (21,908)
Net change in short-term borrowings (105,338) 178,255 94,740
Dividends on common and preferred stock (48,345) (50,180) (56,597)
Proceeds from sale of treasury stock 43,286 57,949 27,932
Common stock purchased for treasury (38,642) (417) (1,921)
Net change in receivables sold 26,800 (5,200)
Proceeds from interest rate swaps 38,257
Cash payments on interest rate swaps (32,909) (37,027) (38,250)
------------ ------------ ------------
Net cash provided (used) by
financing activities (171,109) 153,823 (24,474)
------------ ------------ ------------
Net increase (decrease) in cash
and cash equivalents (33,258) 30,248 (4,494)
Cash and cash equivalents, beginning of year 43,917 13,669 18,163
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, END OF YEAR $ 10,659 $ 43,917 $ 13,669
============ ============ ============
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
THE DIAL CORP STATEMENT OF CONSOLIDATED COMMON STOCK AND OTHER EQUITY
Year ended December 31, (000 omitted) 1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
COMMON STOCK:
Balance, beginning and end of year $ 72,832 $ 72,832 $ 72,832
============ ============ ============
ADDITIONAL CAPITAL:
Balance, beginning of year $ 390,790 $ 326,724 $ 326,127
Treasury shares issued in connection
with employee benefit plans (5,300) 2,294 (876)
Net change in unamortized amount
of restricted stock 2,063 1,195 1,473
Treasury shares sold to Employee Equity Trust 38,007
Employee Equity Trust adjustment to market value (8,723) 19,020
Treasury shares sold to ESOP 1,701
Other, net (16) 1,849
------------ ------------ ------------
Balance, end of year $ 378,814 $ 390,790 $ 326,724
============ ============ ============
RETAINED INCOME:
Balance, beginning of year $ 234,655 $ 832,539 $ 946,030
Net income (loss) 120,485 (81,515) (57,608)
Dividends on common and preferred stock (48,345) (50,180) (56,597)
SFAS No. 87 Employers' Accounting
for Pensions adjustment (2,966) (269) 710
Distribution of GFC Financial
to Dial stockholders (467,291)
Other, net 652 1,371 4
------------ ------------ ------------
Balance, end of year $ 304,481 $ 234,655 $ 832,539
============ ============ ============
CUMULATIVE TRANSLATION ADJUSTMENTS:
Balance, beginning of year $ (11,341) $ 2,083 $ 4,809
Unrealized translation loss (279) (20,226) (2,726)
Distribution of GFC Financial
to Dial stockholders 6,802
Disposition of Transportation Manufacturing
and Service Parts Group 1,731
------------ ------------ ------------
Balance, end of year $ (9,889) $ (11,341) $ 2,083
============ ============ ============
UNEARNED EMPLOYEE BENEFITS RELATED
TO EMPLOYEE EQUITY TRUST:
Balance, beginning of year $ (211,571) $ - $ -
Unearned employee benefits (200,000)
Employee benefits funded 44,419 7,449
Adjustment to market value 8,723 (19,020)
------------ ------------ ------------
Balance, end of year $ (158,429) $ (211,571) $ -
============ ============ ============
UNEARNED EMPLOYEE BENEFITS RELATED
TO GUARANTEE OF ESOP DEBT:
Balance, beginning of year $ (33,584) $ (35,414) $ (37,486)
Employee benefits earned 2,073 1,830 2,072
------------ ------------ ------------
Balance, end of year $ (31,511) $ (33,584) $ (35,414)
============ ============ ============
COMMON STOCK IN TREASURY:
Balance, beginning of year $ (51,386) $ (258,043) $ (284,930)
Purchase of shares (38,642) (417) (1,921)
Shares issued in connection
with employee benefit plans 4,167 38,078 28,808
Shares sold to Employee Equity Trust 161,993
Shares sold to ESOP 8,430
Other, net (749) (1,427)
------------ ------------ ------------
Balance, end of year $ (86,610) $ (51,386) $ (258,043)
============ ============ ============
COMMON STOCK AND OTHER EQUITY $ 469,688 $ 390,395 $ 940,721
============ ============ ============
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
THE DIAL CORP NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Years ended December 31, 1993, 1992 and 1991
A. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION-The
consolidated financial statements of The Dial Corp and
subsidiaries ("Dial") include the accounts of Dial and all of its
subsidiaries. Dial sold its Transportation Manufacturing and
Service Parts Group in 1993 and spun-off GFC Financial
Corporation ("GFC Financial") in 1992. The Transportation
Manufacturing and Service Parts Group and GFC Financial are
presented as discontinued operations for all periods. Such
dispositions are discussed further in Note D of Notes to
Consolidated Financial Statements.
The consolidated financial statements are prepared in accordance
with generally accepted accounting principles. Intercompany
accounts and transactions between Dial and its subsidiaries have
been eliminated in consolidation. Certain reclassifications have
been made to the prior years' financial statements to conform to
1993 classifications. Described below are those accounting
policies particularly significant to Dial, including those
selected from acceptable alternatives.
CASH EQUIVALENTS-Dial considers all highly liquid investments
with original maturities of three months or less from date of
purchase as cash equivalents.
INVENTORIES-Generally, inventories are stated at the lower of
cost (first-in, first-out and average cost methods) or market.
PROPERTY AND EQUIPMENT-Property and equipment are stated at cost.
Depreciation is provided principally by use of the straight-line
method at annual rates as follows:
Buildings 2% to 5%
Machinery and other equipment 5% to 33%
Leasehold improvements Lesser of lease term
or useful life
INVESTMENTS RESTRICTED FOR PAYMENT SERVICE
OBLIGATIONS-Investments restricted for payment service
obligations include U.S. Treasury and Government agency
securities, obligations of states and political subdivisions,
debt securities issued by foreign governments, corporate
securities, a corporate note and other debt securities due beyond
one year. These investments are stated at amortized cost, or at
estimated realizable value when there is other than temporary
impairment of value.
Marketable equity securities (common and preferred stocks) are
stated at the lower of aggregate cost or market. A valuation
allowance, representing the excess of cost over market of equity
securities, is included as a reduction of common stock and other
equity. The cost of investment securities sold is determined
using the specific identification method. Realized gains and
losses on the disposition of investment securities and
adjustments to reflect other than temporary impairment of the
value of investment securities are reflected in income.
INTANGIBLES-Intangibles (primarily goodwill) are carried at cost
less accumulated amortization of $113,453,000 at December 31,1993
and $99,602,000 at December 31, 1992. Intangibles of
$166,688,000, which arose prior to October 31, 1970, are not
being amortized. Intangibles arising after October 31, 1970 are
amortized on the straight-line method over the periods of
expected benefit, but not in excess of 40 years. Dial evaluates
the possible impairment of goodwill and other intangible assets
at each reporting period based on the undiscounted projected
operating income of the related business unit.
INCOME TAXES-Income taxes are provided based upon the provisions
of SFAS No. 109, "Accounting for Income Taxes," which, among
other things, requires that recognition of deferred income taxes
be measured by the provisions of enacted tax laws in effect at
the date of the financial statements.
PENSION AND OTHER BENEFITS-Trusteed, noncontributory pension
plans cover substantially all employees. Benefits are based
primarily on final average salary and years of service. Funding
policies provide that payments to pension trusts shall be at
least equal to the minimum funding required by applicable
regulations.
Dial has defined benefit postretirement plans that provide
medical and life insurance for eligible retirees and dependents.
Until 1992, the cost of these benefits was generally expensed as
claims were incurred.
Effective January 1, 1992, Dial adopted the method of accounting
for postretirement benefits other than pensions prescribed by
SFAS No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions," which requires recognition of liabilities
for such benefits over the period that services are provided by
employees. Dial elected to record the cumulative effect of
initial application of SFAS No. 106 rather than amortizing such
amount over 20 years as permitted by the standard. See Note L of
Notes to Consolidated Financial Statements for further
information.
NET INCOME (LOSS) PER COMMON SHARE-Net income (loss) per common
share is based on net income (loss) after preferred stock
dividend requirements and the weighted average number of common
shares outstanding during each year after giving effect to stock
options considered to be dilutive common stock equivalents. Fully
diluted net income (loss) per common share is not materially
different from primary net income (loss) per common share. The
average outstanding common and equivalent shares does not include
3,923,933 and 5,033,565 shares held by the Employee Equity Trust
(the "Trust") at December 31, 1993 and 1992, respectively. Shares
held by the Trust are not considered outstanding for net income
(loss) per share calculations until the shares are released from
the Trust.
<PAGE>
<PAGE>
B. ACQUISITIONS OF BUSINESSES AND OTHER ASSETS
Net cash paid, assets acquired and debt and other liabilities
assumed in all acquisitions were as follows:
<TABLE>
<CAPTION>
(000 omitted) 1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Assets acquired:
Before intangibles $ 140,468 $ 9,488 $ 11,935
Intangibles 142,724 34,824
Debt and other liabilities assumed (66,405) (2,296) (12,264)
------------ ------------ ------------
Net cash paid $ 216,787 $ 7,192 $ 34,495
============ ============ ============
</TABLE>
During 1993, Dial purchased the Renuzit line of air fresheners
and three convention services companies.
In November 1993, Dial announced the finalization of an agreement
to purchase 15 in-flight catering kitchens from United Airlines.
Dial purchased the first four kitchens on December 30, 1993. The
remaining kitchens are expected to be phased-in during 1994, at
a purchase price of approximately $111,000,000.
In December 1993, Dial acquired the remaining 49% interest in a
joint venture which constructed an office building in Phoenix,
Arizona, that serves as its corporate headquarters complex.
Acquisitions of businesses were accounted for as purchases and
the results of their operations have been included in the
Statement of Consolidated Income from the dates of acquisition.
The results of operations of the acquired companies from the
beginning of the year to the dates of acquisition are not
material.
<PAGE>
<PAGE>
C. RESTRUCTURING AND OTHER CHARGES-CONTINUING OPERATIONS
Dial recorded restructuring and other charges of $30,000,000
($19,800,000 after-tax, or $0.47 per share) in the fourth quarter
of 1992, attributable to the Travel and Leisure and Payment
Services Group primarily to provide for termination of an
unfavorable airport concession contract and related matters, and
to provide for costs to reposition the cruise line to compete
more effectively in the Caribbean market.
In the fourth quarter of 1991, Dial provided for restructuring
and other charges and spin-off transaction costs of $64,000,000
($54,871,000 after-tax, or $1.37 per share). Of this amount,
$40,000,000 ($25,971,000 after-tax) was charged to the Travel and
Leisure and Payment Services Group primarily to provide for
estimated losses on an unfavorable airport concession contract
and for losses as a result of the bankruptcy of a large money
order agent in its payment services subsidiary. The remaining
provision of $24,000,000 ($28,900,000 after-tax) was made
primarily to provide for transaction costs arising from the
spin-off of GFC Financial and for certain income tax matters
related to prior years.
Such restructuring and other charges and spin-off transaction
costs are summarized below:
<TABLE>
<CAPTION>
(000 omitted) 1992 1991
------------ ------------
<S> <C> <C>
Travel and Leisure and Payment Services $ 30,000 $ 40,000
Corporate 10,000
Transaction costs 14,000
------------ ------------
Total pretax charges 30,000 64,000
Income tax benefit (10,200) (17,429)
Tax provision related to prior years 8,300
------------ ------------
Total after-tax charges $ 19,800 $ 54,871
============ ============
</TABLE>
<PAGE>
<PAGE>
D. DISCONTINUED OPERATIONS AND DISPOSITIONS
On August 12, 1993, Dial sold, through an initial public
offering, 20 million shares of common stock of MCII, pursuant to
an underwriting agreement dated August 4, 1993. Transportation
Manufacturing Operations, Inc., Dial's Transportation
Manufacturing and Service Parts subsidiary, was transferred to
MCII in connection with the public offering of MCII shares. The
disposition of MCII, the sale of the Canadian transit bus
manufacturing business in June 1993, and the liquidation,
completed in early 1993, of a trailer manufacturing and transport
services company, concluded the disposal of the Transportation
Manufacturing and Service Parts Group.
At a special meeting on March 3, 1992, shareholders of Dial
approved the spin-off of GFC Financial, which comprised Dial's
commercial lending and mortgage insurance subsidiaries. As a
result of the spin-off, the holders of common stock of Dial
received a Distribution (the "Distribution") of one share of
common stock of GFC Financial for every two shares of Dial common
stock.
In connection with the dispositions, special charges to earnings
were made in 1992 and 1991 to cover restructuring of certain
operations, provisions against Latin American and other loans,
certain tax, spin-off transaction and other costs and, in 1993
and 1991, provisions related primarily to previously discontinued
businesses. In addition, Greyhound Lines, Inc., which was sold in
1987 and filed for bankruptcy on June 4, 1990 as the result of a
work stoppage and strike-related violence, emerged from
bankruptcy in late 1991, resulting in a partial reversal of a
loss provision made in 1990.
<PAGE>
<PAGE>
The caption "Income (loss) from discontinued operations" in the
Statement of Consolidated Income for the years ended December 31
includes the following:
<TABLE>
<CAPTION>
(000 omitted) 1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Income (loss) from operations:
Transportation Manufacturing
and Service Parts Group,
net of tax provision
(benefit) of $7,685, ($17,666),
and ($5,191) (1) $ 10,193 $ (46,364) $ (14,892)
GFC Financial, net of tax
provision of $1,798 and
$14,833 (2) 5,498 (52,471)
Gain on sale of Transportation
Manufacturing and Service
Parts Group, net of tax
provision of $47,393 40,151
Cumulative effect, net of tax
benefit of $2,458, to
January 1, 1992 of initial
application of SFAS No. 106 (4,259)
Provisions related to previously
discontinued businesses,
net of tax benefit of
$7,776 and $36,065 (18,224) (44,668)
Reversal of excess portion of
Greyhound Lines 1990 loss
provision, net of tax
provision of $14,768 28,668
------------ ------------ ------------
$ 32,120 $ (45,125) $ (83,363)
============ ============ ============
<FN>
(1) After deducting restructuring and other charges of $59,400,000
(after-tax) and $26,400,000 (after-tax) in 1992 and 1991,
respectively.
(2) After deducting restructuring and other charges of $82,729,000
(after-tax) in 1991.
</TABLE>
Businesses, other than those described above, with aggregate net
assets of $48,584,000 and $3,713,000 were sold in 1992 and 1991,
respectively.
<PAGE>
<PAGE>
E. INVENTORIES
Inventories at December 31 consisted of the following:
<TABLE>
<CAPTION>
(000 omitted) 1993 1992
------------ ------------
<S> <C> <C>
Raw materials $ 42,056 $ 25,370
Work in process 13,930 13,166
Finished goods and supplies 160,851 129,394
------------ ------------
Inventories $ 216,837 $ 167,930
============ ============
</TABLE>
F. PROPERTY AND EQUIPMENT
Property and equipment at December 31 consisted of the following:
<TABLE>
<CAPTION>
(000 omitted) 1993 1992
------------ ------------
<S> <C> <C>
Land $ 76,577 $ 67,594
Buildings and leasehold improvements 333,761 296,206
Machinery and other equipment 897,391 790,642
------------ ------------
1,307,729 1,154,442
Less accumulated depreciation 567,005 505,748
------------ ------------
Property and equipment $ 740,724 $ 648,694
============ ============
</TABLE>
<PAGE>
<PAGE>
G. SHORT-TERM DEBT
Dial satisfies its short-term borrowing requirements with bank
lines of credit and by the issuance of commercial paper and
promissory notes.
At December 31, 1993, outstanding commercial paper and promissory
notes were supported by $500,000,000 of credit commitments
available under a long-term revolving bank credit agreement. At
December 31, 1993, $256,666,000 of the long-term revolving bank
credit supported $224,666,000 of commercial paper and promissory
notes, and the guarantee of a $32,000,000 ESOP loan.
Dial's foreign subsidiaries also maintain short-term bank lines
in various currencies, which amount to approximately $12,269,000,
of which $2,335,000 was outstanding at December 31, 1993. The
short-term bank lines are subject to annual renewal and, in most
instances, can be withdrawn at any time at the option of the
banks.
The following information pertains to Dial's commercial paper and
promissory notes (classified as long-term debt) and other
short-term debt:
<TABLE>
<CAPTION>
Weighted Weighted
Average Maximum Average Average
Interest Amount Amount Interest
Rate Outstanding Outstanding Rate
Balance at at End During During During
(000 omitted) End of Year of Year (1) Year Year Year (1)
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
1993:
Commercial paper $ 58,666 3.6% $ 261,229 $ 158,227 3.4%
Short-term borrowings
from banks 174,935 3.8% 357,885 225,509 3.7%
1992:
Commercial paper 122,043 4.2% 229,422 168,156 4.2%
Short-term borrowings
from banks 216,896 4.2% 272,277 211,961 4.2%
1991:
Commercial paper 92,191 6.2% 226,775 143,190 6.5%
Short-term borrowings
from banks 68,493 5.4% 172,695 88,273 6.3%
<FN>
(1) Exclusive of the cost of maintaining compensating balances and commitment fees
on long-term revolving bank credit used to support such borrowings and the
effects of interest rate swap agreements, as set forth in Note N of Notes to
Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
H. LONG-TERM DEBT
Long-term debt at December 31 was as follows:
<TABLE>
<CAPTION>
(000 omitted) 1993 1992
------------ ------------
<S> <C> <C>
Senior debt:
Short-term borrowings supported by
long-term revolving bank credit:
Commercial paper (net of $65,000 issued
to Dial's payment services subsidiary) $ 58,666 $ 122,043
Promissory notes 166,000 214,404
Senior notes, 5.8% weighted
average interest rate, due to 2004 279,390 139,216
Guarantee of ESOP debt, floating
rate indexed to LIBOR, 2.9% at
December 31, 1993, due to 2009 32,000 34,000
Real estate mortgages and other obligations,
4.8% weighted average interest
rate, due to 2014 13,984 44,956
------------ ------------
550,040 554,619
Subordinated debt, 10.5%
debentures, due 2006 76,917 150,000
------------ ------------
626,957 704,619
Less current portion 2,295 20,936
------------ ------------
Long-term debt $ 624,662 $ 683,683
============ ============
</TABLE>
Interest paid in 1993, 1992 and 1991 was approximately
$55,807,000, $59,962,000 and $69,218,000, respectively. As a
result of Dial's management of its interest rate exposure through
interest rate swap agreements as discussed further in Note N to
the Consolidated Financial Statements, the effective interest
rate on certain debt may differ from that disclosed above.
During the third quarter of 1993, Dial utilized the proceeds from
the sale of MCII to repurchase approximately 1,000,000 shares of
Dial's common stock on the open market and to reduce outstanding
short-term debt. Dial also prepaid $187,250,000 principal amount
of long-term, fixed-rate debt, having a weighted average interest
rate of 10%. These prepayments resulted in an extraordinary
charge (after-tax) of $21,908,000.
During 1993, Dial filed a $300,000,000 Senior Debt Securities
Shelf Registration with the Securities and Exchange Commission
under which Dial could issue senior notes for various amounts and
at various rates and maturities. During 1993, Dial issued
$230,000,000 of debt under the program with maturities of five to
eleven years with a weighted average interest rate of 6.2%.
Subsequent to December 31, 1993, Dial issued the remaining
$70,000,000 of debt under the senior note program with maturities
of six to fifteen years with a weighted average interest rate of
6.1%.
A long-term revolving bank credit is available from participating
banks under an agreement which provides for a total credit of
$500,000,000. Borrowings were available at December 31, 1993 on a
revolving basis until June 30, 1997. Annually, at Dial's request
and with the participating banks' consent, the terms of the
agreement may be extended for a one-year period.
The interest rate applicable to borrowings under the agreement
is, at Dial's option, indexed to the bank prime rate or the
London Interbank Offering Rate ("LIBOR"), plus appropriate
spreads over such indices during the period of the borrowing
agreement. The agreement also provides for commitment fees. Such
spreads and fees can change moderately should Dial's debt ratings
change.
Dial, in the event that it becomes advisable, intends to exercise
its right under the agreement to borrow for the purpose of
refinancing short-term borrowings; accordingly, short-term
borrowings totaling $224,666,000 and $336,447,000 at December 31,
1993 and 1992, respectively, have been classified as long-term
debt.
Annual maturities of long-term debt due in the next five years
will approximate $2,295,000 (1994), $22,185,000 (1995),
$32,167,000 (1996), $226,714,000 (1997) and $32,043,000 (1998).
Included in 1997 is $224,666,000 which represents the maturity of
short-term borrowings assuming they had been refinanced utilizing
the revolving credit facility and the term of the facility was
not extended. However, Dial expects the term of the facility to
be extended.
Canadian revolving credit loans are available to a Canadian
Services subsidiary from banks under agreements which provide for
credit of $7,554,000.
Dial's long-term debt agreements include various restrictive
covenants and require the maintenance of certain defined
financial ratios with which Dial is in compliance.
<PAGE>
<PAGE>
I. PREFERRED STOCK AND COMMON STOCK AND OTHER EQUITY
At December 31, 1993, there were 48,554,362 shares of common
stock issued and 46,018,008 shares outstanding. At December 31,
1993, 3,923,933 of the outstanding shares were held by The Dial
Corp Employee Equity Trust.
Dial has 442,352 shares of $4.75 Preferred Stock authorized, of
which 388,352 shares are issued. The holders of the $4.75
Preferred Stock are entitled to a liquidation preference of $100
per share and to annual cumulative sinking fund redemptions of
6,000 shares. Dial presently holds 153,251 shares which will be
applied to this sinking fund requirement; therefore, the 235,101
shares held by others are scheduled to be redeemed in the years
2019 to 2058. In addition, Dial has authorized 5,000,000 and
2,000,000 shares of Preferred Stock and Junior Participating
Preferred Stock, respectively.
Dial has one Preferred Stock Purchase Right ("Right") outstanding
on each outstanding share of its common stock. The Rights contain
provisions to protect shareholders in the event of an unsolicited
attempt to acquire Dial which is not believed by the Board of
Directors to be in the best interest of shareholders. The Rights
are represented by the common share certificates and are not
exercisable or transferable apart from the common stock until
such a situation arises. The Rights may be redeemed by Dial at
$0.05 per Right prior to the time any person or group has
acquired 20% or more of Dial's shares. Dial has reserved
1,000,000 shares of Junior Participating Preferred Stock for
issuance in connection with the Rights.
During 1989, Dial arranged to fund its matching contributions to
employees' 401k plans through a leveraged Employee Stock
Ownership Plan ("ESOP"). All eligible employees of Dial and its
participating affiliates, other than certain employees covered by
collective bargaining agreements that do not expressly provide
for participation of such employees in an ESOP, may participate
in the ESOP.
In June 1989, Dial sold 1,138,791 shares of treasury stock to the
ESOP for $35.125 per share. In connection with the spin-off of
GFC Financial in March 1992, the ESOP received one share of
common stock of GFC Financial for every two shares of Dial common
stock held by the ESOP. The ESOP subsequently sold the shares of
GFC Financial on the open market and used the proceeds to
purchase 273,129 shares of Dial's common stock. ESOP shares are
treated as outstanding for net income (loss) per share
calculations.
The ESOP borrowed $40,000,000 to purchase the 1,138,791 shares of
treasury stock in 1989. The ESOP's obligation to repay this
borrowing is guaranteed by Dial; therefore, the unpaid balance of
the borrowing ($32,000,000 at December 31, 1993) has been
reflected in the accompanying balance sheet as long-term debt and
the amount representing unearned employee benefits has been
recorded as a deduction from common stock and other equity. The
liability is being reduced as the ESOP repays the borrowing, and
the amount in common stock and other equity is being reduced as
the employee benefits are charged to expense. The ESOP intends to
repay the loan (plus interest) using Dial contributions and
dividends received on the shares of common stock held by the
ESOP. Information regarding ESOP transactions for the years ended
December 31 is as follows:
<TABLE>
<CAPTION>
(000 omitted) 1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Debt repayment $ 2,000 $ 2,000 $ 2,000
Interest 946 1,199 1,949
Amounts received from Dial for:
Dividends 1,244 1,295 1,348
Capital contributions 1,696 2,026 2,601
</TABLE>
Shares are released for allocation to participants based upon the
ratio of the year's principal and interest payments to the sum of
the total principal and interest payments over the life of the
plan. Expense of the ESOP is recognized based upon the greater of
cumulative cash payments to the plan or 80% of the cumulative
expense that would have been recognized under the shares
allocated method, in accordance with Statement of Position 76-3,
"Accounting for Certain Employee Stock Ownership Plans" and
Emerging Issues Task Force Abstract No. 89-8, "Expense
Recognition for Employee Stock Ownership Plans". Under this
method, Dial has recorded expense of $1,782,000, $2,210,000 and
$2,630,000 in 1993, 1992 and 1991, respectively.
ESOP shares at December 31 were as follows:
<TABLE>
<CAPTION>
1993 1992
--------- ---------
<S> <C> <C>
Allocated shares 349,534 268,560
Shares not committed for allocation 1,062,386 1,143,360
--------- ---------
1,411,920 1,411,920
========= =========
</TABLE>
In September 1992, Dial sold 5,245,900 shares of treasury stock
to The Dial Corp Employee Equity Trust (the "Trust") for a
promissory note valued at $200,000,000 ($38.125 per share). The
Trust is being used to fund certain existing employee
compensation and benefit plans over the scheduled 15-year term.
Through December 31, 1993, the Trust had sold 1,321,967 shares to
fund such benefits. The $200,000,000, representing unearned
employee benefits, was recorded as a deduction from common stock
and other equity, and is being reduced as employee benefits are
funded.
At December 31, 1993, retained income of $75,687,000 was
unrestricted as to payment of dividends by Dial.
<PAGE>
<PAGE>
J. STOCK OPTIONS
The Board of Directors approved and on March 3, 1992, the
shareholders adopted the 1992 Stock Incentive Plan ("1992 Plan")
for the grant of options and restricted stock to officers,
directors and certain key employees. The Plan replaces the 1983
Stock Option and Incentive Plan ("1983 Plan"). No new awards will
be made under the 1983 Plan except to provide for the adjustments
hereafter described. In connection with the Distribution, each
option, related Limited Stock Appreciation Right ("LSAR") and
related Stock Appreciation Right ("SAR") held by an employee of
Dial who remained an employee of Dial after the Distribution was
adjusted so that the aggregate exercise price and the aggregate
spread before the Distribution were preserved at the time of the
Distribution. For each share of restricted stock held by a Dial
employee who remained an employee of Dial after the Distribution,
such employee received additional shares of restricted stock with
a market value which compensated for the Distribution. Options
and restricted stock held by an employee of Dial that became an
employee of GFC Financial were surrendered in accordance with the
related agreements.
The 1992 Plan provides for the following types of awards: (a)
stock options (both incentive stock options and nonqualified
stock options), (b) SARs, and (c) performance-based and
restricted stock. The Plan authorized the issuance of options for
up to 2 1/2% of the total number of shares of common stock
outstanding as of the first day of each year; provided that any
shares available for grant in a particular calendar year which
are not, in fact, granted in such year shall not be added to
shares available for grant in any subsequent calendar year. In
addition to the limitation set forth above with respect to number
of shares available for grant in any single calendar year, no
more than 5,000,000 shares of common stock shall be cumulatively
available for grant of incentive options over the life of the
Plan. In addition, 500,000 shares of Preferred Stock are reserved
for distribution under the 1992 Plan.
The stock options and SARs outstanding at December 31, 1993 are
granted for terms of ten years; 50% become exercisable after one
year and the balance become exercisable after two years from the
date of grant. Stock options and appreciation rights are
exercisable based on the market value at the date of grant. LSARs
vest fully at date of grant and are exercisable only for a
limited period (in the event of certain tenders or exchange
offers for Dial's common stock). SARs and/or LSARs are issued in
tandem with certain stock options and the exercise of one
reduces, to the extent exercised, the number of shares
represented by the other.
<PAGE>
<PAGE>
Information with respect to options granted and exercised for the
three years ended December 31, 1993 is as follows:
<TABLE>
<CAPTION>
Average
Option
Price Per
Shares Share
--------- -----------
<S> <C> <C>
Options outstanding at December 31, 1990 3,938,658 $ 31.81
Granted 817,690 35.43
Exercised (644,748) 30.55
Cancelled (1) (218,725) 32.29
---------
Options outstanding at December 31, 1991 3,892,875 32.76
Pre spin-off of GFC Financial:
Exercised (623,889) 31.82
Cancelled (1) (37,761) 33.84
Additional options
due to the Distribution, net (2) 493,779 N/A
Post spin-off of GFC Financial:
Granted 985,900 36.90
Exercised (777,473) 25.82
Cancelled (1) (279,330) 25.22
---------
Options outstanding at December 31, 1992 3,654,101 29.52
Granted 970,700 39.70
Exercised (315,979) 26.68
Cancelled (3) (425,452) 35.39
---------
Options outstanding at December 31, 1993 3,883,370 31.65
=========
<FN>
(1) Includes stock options which ceased to be exercisable due to the
exercise of related SARs during 1992 and 1991 (at average exercise
prices indicated) with respect to 134,890 shares ($23.41) and 11,250
shares ($29.85), respectively. Stock appreciation rights expense,
equivalent to the difference between the option price and the
average market price of Dial's stock on the date a right is
exercised (included in the Statement of Consolidated Income under
the caption "Unallocated corporate expense and other items, net"),
totaled $2,293,000 and $150,000 in 1992 and 1991, respectively.
There were no SARs exercised in 1993.
(2) Net of options surrendered by employees of Dial who became employees
of GFC Financial after the Distribution.
(3) Includes options cancelled upon disposition of Transportation
Manufacturing and Service Parts Group.
</TABLE>
At December 31, 1993, stock options with respect to 3,883,370
common shares are outstanding at exercise prices ranging from
$18.35 to $42.56 per share, of which 2,653,695 shares are
exercisable at an average price of $28.36 per share.
Performance-based stock awards (75,900 shares awarded in 1993)
vest over a three-year period from the date of grant. The stock
awarded vests only if performance targets relative to the S & P
500 stock index and Dial's proxy comparator group are achieved.
Restricted stock awards (89,625 shares awarded in 1991) vest
generally over periods not exceeding five years from the date of
grant. There were no restricted stock awards in 1993 and 1992.
However, 85,161 shares of restricted stock were allocated to
employees of Dial in 1992 to compensate for the effect of the
Distribution. A holder of the performance-based and restricted
stock has the right to receive dividends and vote the shares but
may not sell, assign, transfer, pledge or otherwise encumber the
stock.
<PAGE>
<PAGE>
K. INCOME TAXES
Deferred income tax assets (liabilities) included in the
Consolidated Balance Sheet at December 31 related to the
following:
<TABLE>
<CAPTION>
(000 omitted) 1993 1992
------------ ------------
<S> <C> <C>
Property and equipment $ (55,954) $ (47,675)
Interest rate swaps 25,043
Pension and other employee benefits 111,797 113,674
Provisions for losses 51,872 57,850
Amortization of intangibles 4,114 (664)
Advertising and promotion costs
capitalized for tax 14,729
Foreign loss carryforward 3,551 2,438
Alternative minimum tax credits 10,148
Deferred state income taxes 11,405 9,219
Other deferred income tax assets 33,460 21,586
Other deferred income tax liabilities (20,505) (25,614)
------------ ------------
154,469 166,005
Foreign deferred tax liabilities included above 16,000 18,000
------------ ------------
United States deferred tax assets $ 170,469 $ 184,005
============ ============
</TABLE>
Deferred income tax assets (liabilities) at December 31, 1993,
relating to interest rate swaps, amortization of intangibles and
advertising and promotion costs capitalized for tax, reflect
adjustments in 1993 resulting from the settlement of Internal
Revenue Service examinations for 1985 and 1986.
The consolidated provision (benefit) for income taxes on income
from continuing operations for the years ended December 31
consisted of the following:
<TABLE>
<CAPTION>
(000 omitted) 1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Current:
United States:
Federal $ 12,226 $ 13,644 $ 36,538
State 7,855 8,289 6,784
Foreign 5,352 5,135 6,824
------------ ------------ ------------
25,433 27,068 50,146
------------ ------------ ------------
Deferred:
United States 33,271 16,997 (4,320)
Foreign 2,672 1,918 799
------------ ------------ ------------
35,943 18,915 (3,521)
------------ ------------ ------------
Provision for income taxes $ 61,376 $ 45,983 $ 46,625
============ ============ ============
</TABLE>
Income taxes paid in 1993, 1992 and 1991, amounted to
$12,206,000, $35,160,000 and $35,391,000, respectively.
Certain tax benefits related primarily to stock options and
dividends paid to the ESOP are credited to common stock and other
equity and amounted to $1,913,000, $5,382,000 and $1,240,000 in
1993, 1992 and 1991, respectively.
Eligible subsidiaries (including MCII and GFC Financial and
certain of their subsidiaries up to the sale and Distribution
date, respectively) are included in the consolidated federal and
other applicable income tax returns of Dial.
Certain benefits of tax losses and credits, which would not have
been currently available to certain subsidiaries, or MCII and GFC
Financial, on a separate return basis, have been credited to
those subsidiaries, or MCII and GFC Financial, by Dial. These
benefits are included in the determination of the income taxes of
those subsidiaries and MCII and GFC Financial and this policy has
been documented by written agreements.
A reconciliation of the provision for income taxes on income from
continuing operations and the amount that would be computed using
statutory federal income tax rates on income before income taxes
for the years ended December 31 is as follows:
<TABLE>
<CAPTION>
(000 omitted) 1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Computed income taxes
at statutory federal income
tax rate of 35% (1993) and
34% (1992 and 1991) $ 60,077 $ 40,914 $ 24,609
Nondeductible goodwill amortization 3,122 3,140 3,192
Minority interests 1,266 957 1,205
State income taxes 4,303 5,231 4,479
Foreign tax differences 2,346 552 1,747
Tax-exempt income (2,047) (379) (5)
Restructuring and other charges (1,649) 13,060
Adjustment of deferred tax assets
at January 1, 1993 for enacted
change in tax rate (4,386)
Other, net (3,305) (2,783) (1,662)
------------ ------------ ------------
Provision for income taxes $ 61,376 $ 45,983 $ 46,625
============ ============ ============
</TABLE>
United States and foreign income before income taxes from
continuing operations for the years ended December 31 is as
follows:
<TABLE>
<CAPTION>
(000 omitted) 1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
United States $ 155,426 $ 101,214 $ 55,099
Foreign 16,223 19,120 17,281
------------ ------------ ------------
Income before income taxes $ 171,649 $ 120,334 $ 72,380
============ ============ ============
</TABLE>
In the first quarter of 1992, Dial adopted SFAS No. 109,
"Accounting for Income Taxes," which had no material effect on
the consolidated financial statements.
<PAGE>
<PAGE>
L. PENSIONS AND OTHER BENEFITS
PENSION BENEFITS
Net periodic pension cost for the three years ended December
31, 1993 included the following components:
<TABLE>
<CAPTION>
United States Foreign
----------------------------------- -----------------------------------
(000 omitted) 1993 1992 1991 1993 1992 1991
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Service cost benefits
earned during the period $ 9,560 $ 9,238 $ 9,149 $ 2,097 $ 2,343 $ 3,135
Interest cost on projected
benefit obligation 19,323 17,647 16,938 6,106 6,238 5,533
Actual return on plan assets (20,405) (19,675) (28,965) (6,390) (6,453) (6,132)
Net amortization and deferral 4,415 4,869 14,505 122 205 (217)
Other items, primarily defined
contribution and multiemployer
plans 8,706 7,372 5,715 1,503 2,550 2,213
----------- ----------- ----------- ----------- ----------- -----------
Net pension cost $ 21,599 $ 19,451 $ 17,342 $ 3,438 $ 4,883 $ 4,532
=========== =========== =========== =========== =========== ===========
</TABLE>
Weighted average assumptions used were:
<TABLE>
<CAPTION>
United States Foreign
----------------------------------- -----------------------------------
December 31, 1993 1992 1991 1993 1992 1991
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Discount rate for obligation 7.75% 9.0% 9.0% 9.0% 9.0% 9.0%
Rate of increase
in compensation levels 5.0% 6.0% 6.0% 7.0% 7.0-8.0% 7.0-8.0%
Long-term rate of return on assets 9.5% 9.5% 9.5% 9.0% 9.0% 9.0%
</TABLE>
<PAGE>
<PAGE>
The following table indicates the plans' funded status and
amounts recognized in Dial's consolidated balance sheet at
December 31, 1993 and 1992:
<TABLE>
<CAPTION>
United States Foreign
--------------------------------------------------- ------------------------
Underfunded and
Overfunded Plans Unfunded Plans Overfunded Plans
------------------------- ------------------------ ------------------------
(000 omitted) 1993 1992 1993 1992 1993 1992
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
Actuarial present value of
benefit obligations:
Vested benefit obligation $ 124,833 $ 94,249 $ 80,767 $ 62,634 $ 49,007 $ 51,818
=========== =========== =========== =========== =========== ===========
Accumulated benefit obligation $ 136,544 $ 102,545 $ 85,700 $ 67,066 $ 50,900 $ 54,010
=========== =========== =========== =========== =========== ===========
Projected benefit obligation $ 175,389 $ 140,591 $ 91,658 $ 72,610 $ 69,174 $ 70,083
Market value of plan assets,
primarily equity and fixed
income securities 177,902 167,384 60,837 27,587 70,684 71,041
----------- ----------- ----------- ----------- ----------- -----------
Plan assets over (under)
projected benefit obligation 2,513 26,793 (30,821) (45,023) 1,510 958
Unrecognized transition
(asset) obligation (6,609) (7,516) 4,987 5,840 (5,073) (6,160)
Unrecognized prior service
cost reduction 1,448 1,381 7,799 5,266 7,296 7,806
Unrecognized net (gain) loss 15,921 (1,086) 6,951 224 4,674 3,109
Additional minimum liability (14,451) (6,868)
----------- ----------- ----------- ----------- ----------- -----------
Prepaid (accrued) pension cost $ 13,273 $ 19,572 $ (25,535) $ (40,561) $ 8,407 $ 5,713
=========== =========== =========== =========== =========== ===========
</TABLE>
Dial recorded an additional minimum liability of $14,451,000,
an intangible asset of $8,587,000, a deferred tax asset of
$2,053,000 and a reduction of retained income of $3,811,000 at
December 31, 1993; and, an additional minimum liability of
$6,868,000, an intangible asset of $5,587,000, a deferred tax
asset of $436,000 and a reduction of retained income of
$845,000 at December 31, 1992. There are restrictions on the
use of excess pension plan assets in the event of a defined
change in control of Dial.<PAGE>
<PAGE>
POSTRETIREMENT BENEFITS OTHER THAN PENSIONS
Dial and its subsidiaries have defined benefit postretirement
plans that provide medical and life insurance for eligible
employees, retirees and dependents. In addition, Dial retained
the obligations for such benefits for eligible retirees of
Greyhound Lines, Inc. (sold in 1987) and Armour and Company (sold
in 1983). Benefits applicable to retirees of the businesses sold
were recorded as accrued liabilities on an estimated present
value basis at the respective dates of sale.
Effective January 1, 1992, Dial and its U.S. subsidiaries adopted
the provisions of SFAS No. 106, "Employers' Accounting for
Postretirement Benefits Other Than Pensions" ("OPEB") which
requires that estimated OPEB benefits be accrued during the years
the employees provide services. Dial elected to recognize the
accumulated postretirement benefit obligation as a one-time
charge to income. The accumulated postretirement benefit
obligation is the aggregate amount that would have been accrued
for OPEB benefits in the years prior to adoption of SFAS No. 106
had the new standard been in effect for those years. The adoption
of SFAS No. 106 has no cash impact because the plans are not
funded and the pattern of benefit payments did not change. Dial
expects to adopt SFAS No. 106 for its foreign subsidiaries in
1995, and anticipates that the effect of such adoption will not
be material to the consolidated financial statements.
The status of the plans as of December 31, was as follows:
<TABLE>
<CAPTION>
(000 omitted) 1993 1992
------------ ------------
<S> <C> <C>
Accumulated postretirement benefit obligation:
Retirees $ 221,847 $ 209,741
Fully eligible active plan participants 25,107 22,608
Other active plan participants 54,369 49,387
------------ ------------
Accumulated postretirement benefit obligation 301,323 281,736
Unrecognized prior service cost 133
Unrecognized net loss (17,634)
------------ ------------
Accrued postretirement benefit cost $ 283,822 $ 281,736
============ ============
Discount rate for obligation 7.75% 9.0%
</TABLE>
The assumed health care cost trend rate used in measuring the
accumulated postretirement benefit obligation was 14.5% in 1993
gradually declining to 5.5% by the year 2002 and remaining at
that level thereafter for retirees below age 65, and 11% in 1993
gradually declining to 5.5% by the year 2002 and remaining at
that level thereafter for retirees above age 65. This is a 1/2%
decrease from the trend rates used for 1993 and later years in
1992's valuations.
A one-percentage-point increase in the assumed health care cost
trend rate for each year would increase the accumulated
postretirement benefit obligation as of December 31, 1993 by
approximately 11% and the ongoing annual expense by approximately
13%.
The net periodic postretirement benefit cost at December 31
includes the following components:
<TABLE>
<CAPTION>
(000 omitted) 1993 1992
------------ ------------
<S> <C> <C>
Service cost benefits attributed
to service during the period $ 4,233 $ 4,624
Interest cost on the accumulated
postretirement benefit obligation 23,413 23,658
Net amortization and deferral of
unrecognized past service cost (10)
------------ ------------
Net periodic postretirement benefit cost (1) $ 27,636 $ 28,282
============ ============
Curtailment gains due to termination
of certain benefits $ (5,475)
============
<FN>
(1) Benefit costs applicable to retirees of sold businesses, which are
included in the Statement of Consolidated Income under the caption,
"Unallocated corporate expense and other items, net", totaled
$15,000,000 and $14,700,000 for 1993 and 1992, respectively. Prior
to the adoption of SFAS No. 106, the cost of medical and life
insurance benefits for retirees was $14,174,000 for 1991, including
$12,200,000 interest cost on the accrued liability for sold
businesses.
</TABLE>
<PAGE>
<PAGE>
M. LEASES
Certain airport and other retail facilities, cruise ships,
plants, offices and equipment are leased. The leases expire in
periods ranging generally from one to 30 years and some provide
for renewal options ranging from one to 29 years. Also, certain
leases contain purchase options. Leases which expire are
generally renewed or replaced by similar leases.
At December 31, 1993, future minimum rental payments and related
sublease rentals receivable with respect to noncancellable
operating leases with terms in excess of one year were as
follows:
<TABLE>
<CAPTION>
Operating Leases
----------------------------------------- Rentals
Receivable
Cruise Under
(000 omitted) Ships Other Total Subleases
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
1994 $ 9,343 $ 46,483 $ 55,826 $ 1,854
1995 9,632 41,137 50,769 486
1996 1,719 37,576 39,295 300
1997 27,354 27,354 140
1998 23,814 23,814 136
Thereafter 111,530 111,530 28
------------ ------------ ------------ ------------
Total $ 20,694 $ 287,894 $ 308,588 $ 2,944
============ ============ ============ ============
</TABLE>
At the end of the lease terms, Dial has options to purchase the
cruise ships and certain other leased assets for an aggregate
purchase price of $136,250,000. If the purchase options are not
exercised, Dial will make residual guarantee payments aggregating
$93,207,000 which are refundable to the extent that the lessors'
subsequent sales prices exceed certain levels.
As discussed in Note B of Notes to Consolidated Financial
Statements, in November 1993, Dial entered into an agreement to
purchase 15 in-flight catering kitchens from United Airlines.
Future minimum rental payments for leases related to the kitchens
expected to be phased in during 1994 are as follows: $3,875,000
(1994), $4,267,000 (1995), $4,265,000 (1996), $4,275,000 (1997),
$4,265,000 (1998), and $90,135,000 thereafter. These amounts are
not included in the table of future minimum rental payments at
December 31, 1993.
<PAGE>
<PAGE>
Information regarding net operating lease rentals for the three
years ended December 31 is as follows:
<TABLE>
<CAPTION>
(000 omitted) 1993 1992 1991
------------ ------------ ------------
<S> <C> <C> <C>
Minimum rentals $ 115,386 $ 147,492 $ 156,215
Contingent rentals 35,292 31,451 25,612
Sublease rentals (25,713) (46,644) (48,371)
------------ ------------ ------------
Total rentals, net (1) $ 124,965 $ 132,299 $ 133,456
============ ============ ============
<FN>
(1) Includes net rentals of $7,700,000, $9,419,000 and $8,300,000 for
1993, 1992 and 1991, respectively, for Dial's corporate headquarters
which was leased from a joint venture up to December 1993, when Dial
acquired the remaining interest in the joint venture.
</TABLE>
Contingent rentals on operating leases are based primarily on
sales and revenues for buildings and leasehold improvements and
usage for other equipment.
Dial is a 50% partner in a joint venture which owns a resort and
conference hotel in Oakbrook, Illinois. Dial has leased the hotel
through September 1, 2002, and the future rental payments are
included in the table of future minimum rental payments. In
addition, Dial and a third party have agreed to lend the joint
venture $10,000,000 and $5,000,000, respectively, at 8 3/4% on
July 1, 1997 to be secured by a second mortgage on the property
to prepay $15,000,000 of the joint venture's nonrecourse first
mortgage obligation. If the joint venture is unable to repay or
refinance the first mortgage note, Dial has an option to purchase
the note from the lender on September 30, 2002, its due date, at
its then unpaid principal amount which is expected to be
approximately $24,650,000. If the purchase option is not
exercised, Dial will make residual guarantee payments equal to
the greater of $5,000,000 or 150% of any shortfall in fair market
value of the hotel compared to the unpaid principal amount of the
note on such date.
<PAGE>
<PAGE>
N. FINANCIAL INSTRUMENTS WITH OFF-BALANCE-SHEET RISK AND FAIR
VALUE OF FINANCIAL INSTRUMENTS
FINANCIAL ISNTRUMENTS WITH OFF-BALANCE-SHEET RISK
Dial is a party to financial instruments with off-balance-sheet
risk which are entered into in the normal course of business to
meet its financing needs and to manage its exposure to
fluctuations in interest and foreign exchange rates. These
financial instruments include revolving sale of receivable
agreements, interest rate swap agreements and foreign exchange
forward contracts. The instruments involve, to a varying degree,
elements of credit, interest rate and exchange rate risk in
addition to amounts recognized in the financial statements.
At December 31, 1993, Dial's subsidiaries have agreements to sell
up to $115,000,000 of accounts receivable with a major financial
institution under which the financial institution has agreed to
invest collected amounts in new purchases, providing a stable
level of purchased accounts. The agreements to purchase accounts
receivable, which were fully utilized at December 31, 1993 and
December 31, 1992, mature in January of each year, but are
expected to be extended annually by mutual agreement. They are
currently extended to January 1995. Average monthly proceeds from
the sale of accounts receivable were $103,700,000, $91,200,000
and $90,900,000 during 1993, 1992 and 1991, respectively. Dial's
exposure to credit loss for receivables sold is represented by
the recourse provision under which Dial is obligated to
repurchase uncollectible receivables sold subject to certain
limitations.
Dial enters into interest rate swap agreements as a means of
managing its interest rate exposure. The agreements are with
major financial institutions which are expected to fully perform
under the terms of the agreements thereby mitigating the credit
risk from the transactions. The agreements are contracts to
exchange fixed and floating interest rate payments periodically
over the life of the agreements without the exchange of the
underlying notional amounts. The notional amounts of such
agreements are used to measure interest to be paid or received
and do not represent the amount of exposure to credit loss. The
amounts to be paid or received under the interest rate swap
agreements are accrued consistent with the terms of the
agreements and market interest rates.
At December 31, 1993, Dial had $140,000,000 notional amount of
interest rate swap agreements in effect which exchange floating
rate interest payments for fixed rate interest payments with a
weighted average interest rate of 9.3%. These swap agreements
expire as follows: $100,000,000 (1995), and $40,000,000 (1998).
Dial also had $250,000,000 notional amount of interest rate swap
agreements in effect at December 31, 1993, which exchange fixed
rate interest payments with a weighted average interest rate of
5.6% for floating rate interest payments. These swap agreements,
which were entered into during 1993, expire as follows:
$50,000,000 (1994), and $200,000,000 (2003).
In addition, Dial had $332,600,000 notional amount of interest
rate swap agreements in effect at December 31, 1993 which were
counterswapped, fixing the future net payments owed by Dial
against the cash proceeds received by Dial when the swap
agreements were entered, at discount rates ranging from 7.1% to
10.4%. The swap and related counterswap agreements expire as
follows: $65,000,000 (1994), $67,600,000 (1995), and $200,000,000
(1996), except for $67,600,000 expiring in 1995 and $100,000,000
expiring in 1996, for which the related counterswap agreement
expires in 2000. Following the period that the swap agreements
expire through 2000, Dial will pay a fixed rate of interest in
exchange for a floating rate.
Cash consideration received on the swaps is amortized as an
offset to expense from future net swap payments over the life of
the related swap. Net expense of $13,999,000, $18,856,000 and
$14,048,000 for 1993, 1992 and 1991, respectively, is included in
the Statement of Consolidated Income under the caption,
"Unallocated corporate expense and other items, net." The
unamortized balance ($37,780,000 and $57,709,000 at December 31,
1993 and 1992, respectively) of such consideration is included in
the Consolidated Balance Sheet under the caption, "Other deferred
items and insurance reserves."
Dial also enters into foreign exchange forward contracts to hedge
foreign currency transactions. These contracts are purchased to
reduce the impact of foreign currency fluctuations on operating
results. Dial does not engage in foreign currency speculation.
The contracts do not subject Dial to risk due to exchange rate
movements as gains and losses on the contracts offset gains and
losses on the transactions being hedged. At December 31, 1993,
Dial had approximately $125,000,000 of foreign exchange forward
contracts outstanding. Dial's theoretical risk in these
transactions is the cost of replacing, at current market rates,
these contracts in the event of default by the other party.
Management believes the risk of incurring such losses is remote
as the contracts are entered into with major financial
institutions.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS
No. 107, "Disclosures About Fair Value of Financial Instruments."
The estimated fair value amounts have been determined by Dial
using available market information and valuation methodologies
described below. However, considerable judgment is required in
interpreting market data to develop the estimates of fair value.
Accordingly, the estimates presented herein may not be indicative
of the amounts that Dial could realize in a current market
exchange. The use of different market assumptions or valuation
methodologies may have a material effect on the estimated fair
value amounts.
<PAGE>
<PAGE>
The carrying values of cash and cash equivalents, receivables,
accounts payable and payment service obligations approximate fair
values due to the short-term maturities of these instruments. The
carrying amounts and estimated fair values of Dial's other
financial instruments at December 31, 1993 are as follows:
<TABLE>
<CAPTION>
Carrying Fair
(000 omitted) Amount Value
------------ ------------
<S> <C> <C>
Investments restricted for payment
service obligations (1) $ 1,109,751 $ 1,105,788
Equity and debt investments and
notes receivable 16,456 31,423
Total debt (635,892) (654,971)
Interest rate swaps (37,780) (63,778)
Foreign exchange forward contracts - (1,436)
<FN>
(1) Includes $506,941,000 of cash and cash equivalents which are assumed
to approximate fair values due to their short-term maturities.
</TABLE>
The methods and assumptions used to estimate the fair values of
the financial instruments are summarized as follows:
Investments restricted for payment service obligations and equity
and debt investments and notes receivable-The fair values of
investments were estimated using either quoted market prices or,
to the extent there are no quoted market prices, market prices of
investments of a similar nature. For notes receivable, the
carrying amounts approximate fair values because the rates on
such notes are floating rates.
Debt-The fair value of debt was estimated by discounting the
future cash flows using rates currently available for debt of
similar terms and maturity. The carrying values of short-term
bank loans, commercial paper and promissory notes were assumed to
approximate fair values due to their short-term maturities.
Interest rate swaps-The fair values were estimated by discounting
the expected cash flows using rates currently available for
interest rate swaps of similar terms and maturities. The fair
value represents the estimated amount that Dial would pay to the
dealer to terminate the swap agreement at December 31, 1993.
Foreign exchange forward contracts (used for hedging purposes)-
The fair value is estimated using quoted exchange rates.
<PAGE>
<PAGE>
O. LITIGATION AND CLAIMS
Dial and certain subsidiaries are plaintiffs or defendants to
various actions, proceedings and pending claims. Certain of these
pending legal actions are or purport to be class actions. Some of
the foregoing involve, or may involve, compensatory, punitive or
other damages in material amounts. Litigation is subject to many
uncertainties and it is possible that some of the legal actions,
proceedings or claims referred to above could be decided against
Dial. Although the amount of liability at December 31, 1993 with
respect to these matters is not ascertainable, Dial believes that
any resulting liability should not materially affect Dial's
financial condition or results of operations.
Dial is subject to various environmental laws and regulations of
the United States as well as of the states in whose jurisdictions
Dial operates. As is the case with many companies, Dial faces
exposure to actual or potential claims and lawsuits involving
environmental matters. It is Dial's policy to accrue
environmental and clean-up costs when it is probable that a
liability has been incurred and the amount of the liability is
reasonably estimable. Although Dial is a party to certain
environmental disputes, Dial believes that any liabilities
resulting therefrom, after taking into consideration Dial's
insurance coverage and amounts already provided for, should not
have a material adverse effect on Dial's financial position or
results of operations.
<PAGE>
<PAGE>
P. PRINCIPAL BUSINESS SEGMENTS
For 1993, Dial's Services companies, previously reported as a
single principal business segment, were separated into three
principal business segments for financial reporting purposes.
Prior year data have been restated to reflect this change. The
business activities included in each segment are set forth
elsewhere in this Annual Report.
Operating income by segment represents revenues less costs of
sales and services before unallocated corporate and other
items, net, interest expense, minority interests and income
taxes.
<TABLE>
<CAPTION>
Year ended December 31,
(000 omitted) 1993 1992 1991 1990 1989
------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenues:
Consumer Products $ 1,420,173 $ 1,275,447 $1,196,499 $ 1,122,726 $ 1,083,179
------------ ------------ ------------ ------------ ------------
Services:
Airline Catering and
Other Food Services 583,487 609,662 629,474 636,225 638,290
Convention Services 356,267 238,694 212,828 208,408 184,634
Travel and Leisure and
Payment Services 640,415 750,285 789,048 884,176 838,508
------------ ------------ ------------ ------------ ------------
Total Services 1,580,169 1,598,641 1,631,350 1,728,809 1,661,432
------------ ------------ ------------ ------------ ------------
$ 3,000,342 $ 2,874,088 $ 2,827,849 $ 2,851,535 $ 2,744,611
============ ============ ============ ============ ============
Operating Income (1):
Consumer Products $ 139,213 $ 118,616 $ 110,605 $ 96,554 $ 80,522
------------ ------------ ------------ ------------ ------------
Services:
Airline Catering and
Other Food Services 44,724 38,605 33,263 24,945 24,752
Convention Services 27,849 20,281 16,795 18,786 9,560
Travel and Leisure and
Payment Services 63,507 45,214 35,615 99,424 88,871
------------ ------------ ------------ ------------ ------------
Total Services 136,080 104,100 85,673 143,155 123,183
------------ ------------ ------------ ------------ ------------
Total principal business segments 275,293 222,716 196,278 239,709 203,705
Unallocated corporate expense
and other items, net (50,061) (43,519) (63,587) (41,916) (52,218)
------------ ------------ ------------ ------------ ------------
$ 225,232 $ 179,197 $ 132,691 $ 197,793 $ 151,487
============ ============ ============ ============ ============
<FN>
(1) After deducting restructuring and other charges of $30,000,000 and $40,000,000 for Travel and Leisure and
Payment Services in 1992 and 1991, respectively, and $24,000,000 charged to unallocated corporate expense in
1991. Also after deducting $6,800,000, $965,000, $749,000, $1,486,000 and $4,400,000 in 1992 for Consumer
Products, Airline Catering and Other Food Services, Convention Services, Travel and Leisure and Payment
Services and Unallocated corporate expense, respectively, for increased ongoing expense following the adoption
of SFAS No. 106 effective as of January 1, 1992. Years prior to 1992 do not include such expenses.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Services
----------------------------------------------------
Airline Travel and
Catering and Leisure and
Consumer Other Food Convention Payment Total Corporate
(000 omitted) Products Services Services Services Services and Other Total
------------ ------------ ------------ ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C> <C>
1993:
Assets at year end:
Before
intangibles
and restricted
assets $ 513,293 $ 176,481 $ 118,467 $ 326,432 $ 621,380 $ 306,851 $ 1,441,524
Assets restricted
for payment
service
obligations 1,109,751 1,109,751 1,109,751
Intangibles 340,831 239,116 80,806 62,910 382,832 6,150 729,813
------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 854,124 $ 415,597 $ 199,273 $ 1,499,093 $ 2,113,963 $ 313,001 $ 3,281,088
============ ============ ============ ============ ============ ============ ============
Capital expenditures $ 40,605 $ 21,685 $ 11,838 $ 38,859 $ 72,382 $ 1,637 $ 114,624
============ ============ ============ ============ ============ ============ ============
Depreciation
and amortization:
Depreciation $ 28,071 $ 16,019 $ 8,181 $ 26,444 $ 50,644 $ 3,785 $ 82,500
Amortization
of intangibles 5,512 7,168 743 4,237 12,148 17,660
------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 33,583 $ 23,187 $ 8,924 $ 30,681 $ 62,792 $ 3,785 $ 100,160
============ ============ ============ ============ ============ ============ ============
1992:
Assets at year end:
Before
intangibles,
restricted
assets and
discontinued
operations $ 413,224 $ 158,593 $ 58,639 $ 337,581 $ 554,813 $ 312,210 $ 1,280,247
Assets restricted
for payment
service
obligations 1,029,180 1,029,180 1,029,180
Investment in
discontinued
operations 248,664 248,664
Intangibles 265,281 246,181 15,933 66,877 328,991 4,635 598,907
------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 678,505 $ 404,774 $ 74,572 $ 1,433,638 $ 1,912,984 $ 565,509 $ 3,156,998
============ ============ ============ ============ ============ ============ ============
Capital expenditures $ 45,508 $ 20,718 $ 7,336 $ 34,815 $ 62,869 $ 754 $ 109,131
============ ============ ============ ============ ============ ============ ============
Depreciation
and amortization:
Depreciation $ 25,036 $ 15,662 $ 4,466 $ 33,237 $ 53,365 $ 4,189 $ 82,590
Amortization
of intangibles 6,506 7,100 241 4,498 11,839 18,345
------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 31,542 $ 22,762 $ 4,707 $ 37,735 $ 65,204 $ 4,189 $ 100,935
============ ============ ============ ============ ============ ============ ============
1991:
Assets at year end:
Before
intangibles,
restricted
assets and
discontinued
operations $ 400,536 $ 157,792 $ 54,889 $ 436,918 $ 649,599 $ 288,318 $ 1,338,453
Assets restricted
for payment
service
obligations 960,426 960,426 960,426
Investment in
discontinued
operations 580,699 580,699
Intangibles 268,960 252,574 16,174 71,362 340,110 5,008 614,078
------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 669,496 $ 410,366 $ 71,063 $ 1,468,706 $ 1,950,135 $ 874,025 $ 3,493,656
============ ============ ============ ============ ============ ============ ============
Capital expenditures $ 53,398 $ 17,261 $ 5,294 $ 41,420 $ 63,975 $ 8,887 $ 126,260
============ ============ ============ ============ ============ ============ ============
Depreciation
and amortization:
Depreciation $ 22,526 $ 15,800 $ 4,177 $ 31,559 $ 51,536 $ 4,710 $ 78,772
Amortization
of intangibles 6,802 7,227 261 3,954 11,442 18,244
------------ ------------ ------------ ------------ ------------ ------------ ------------
$ 29,328 $ 23,027 $ 4,438 $ 35,513 $ 62,978 $ 4,710 $ 97,016
============ ============ ============ ============ ============ ============ ============
</TABLE>
<PAGE>
<PAGE>
Q. CONDENSED CONSOLIDATED QUARTERLY RESULTS (UNAUDITED)
<TABLE>
<CAPTION>
First Quarter Second Quarter Third Quarter Fourth Quarter
---------------------- ---------------------- ---------------------- ----------------------
(000 omitted) 1993 1992 1993 1992 1993 1992 1993 1992
----------- ---------- ----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Revenues:
Consumer Products $ 293,183 $ 269,880 $ 385,140 $ 351,940 $ 345,260 $ 304,783 $ 396,590 $ 348,844
----------- ---------- ----------- ----------- ----------- ----------- ----------- -----------
Services:
Airline
Catering
and Other
Food Services 143,584 145,019 145,420 151,877 152,522 170,878 141,961 141,888
Convention
Services 68,112 66,112 81,583 57,881 89,944 47,672 116,628 67,029
Travel and
Leisure and
Payment
Services 133,177 184,656 161,852 204,537 182,675 219,835 162,711 141,257
----------- ---------- ----------- ----------- ----------- ----------- ----------- -----------
Total Services 344,873 395,787 388,855 414,295 425,141 438,385 421,300 350,174
----------- ---------- ----------- ----------- ----------- ----------- ----------- -----------
$ 638,056 $ 665,667 $ 773,995 $ 766,235 $ 770,401 $ 743,168 $ 817,890 $ 699,018
=========== ========== =========== =========== =========== =========== =========== ===========
Operating Income:
Consumer Products $ 25,659 $ 22,910 $ 43,443 $ 38,094 $ 35,442 $ 30,050 $ 34,669 $ 27,562
----------- ---------- ----------- ----------- ----------- ----------- ----------- -----------
Services:
Airline
Catering
and Other
Food Services 6,411 5,298 10,674 9,030 13,584 14,315 14,055 9,962
Convention
Services 5,988 7,390 7,419 4,562 4,972 517 9,470 7,812
Travel and
Leisure and
Payment
Services (1) 4,910 3,022 17,923 19,916 29,375 35,730 11,299 (13,454)
----------- ---------- ----------- ----------- ----------- ----------- ----------- -----------
Total Services 17,309 15,710 36,016 33,508 47,931 50,562 34,824 4,320
----------- ---------- ----------- ----------- ----------- ----------- ----------- -----------
Total principal
business
segments 42,968 38,620 79,459 71,602 83,373 80,612 69,493 31,882
Unallocated
corporate
expense and
other items,
net (12,480) (10,220) (12,982) (11,293) (12,401) (10,939) (12,198) (11,067)
----------- ---------- ----------- ----------- ----------- ----------- ----------- -----------
$ 30,488 $ 28,400 $ 66,477 $ 60,309 $ 70,972 $ 69,673 $ 57,295 $ 20,815
=========== ========== =========== =========== =========== =========== =========== ===========
Income (Loss):
Continuing
operations (2) $ 11,159 $ 9,934 $ 33,379 $ 29,603 $ 37,184 $ 32,334 $ 28,551 $ 2,480
Discontinued
operations (3) 3,472 2,641 6,294 3,486 22,354 116 (51,368)
Extraordinary
charge (21,908)
Cumulative effect
of change in
accounting
principle (110,741)
----------- ---------- ----------- ----------- ----------- ----------- ---------- -----------
Net income (loss) $ 14,631 $ (98,166) $ 39,673 $ 33,089 $ 37,630 $ 32,450 $ 28,551 $ (48,888)
=========== ========== =========== =========== =========== =========== ========== ===========
Income (Loss) per
Common Share
(dollars):
Continuing
operations (2) $ 0.25 $ 0.24 $ 0.77 $ 0.71 $ 0.87 $ 0.76 $ 0.67 $ 0.03
Discontinued
operations (3) 0.08 0.06 0.15 0.08 0.52 (1.21)
Extraordinary
charge (0.51)
Cumulative
effect of
change in
accounting
principle (2.64)
----------- ---------- ----------- ----------- ----------- ----------- ----------- -----------
Net income (loss)
per common share $ 0.33 $ (2.34) $ 0.92 $ 0.79 $ 0.88 $ 0.76 $ 0.67 $ (1.18)
=========== ========== =========== =========== =========== =========== =========== ===========
<FN>
(1) After deducting restructuring and other charges of $30,000,000 in the fourth quarter of 1992.
(2) After deducting restructuring and other charges of $19,800,000 (after-tax) or $0.47 per share in the fourth
quarter of 1992.
(3) The third quarter of 1993 includes income from operations of the Transportation Manufacturing and Service Parts
Group of $427,000, or $0.01 per share, and a gain of $40,151,000, or $0.94 per share, attributable to the sale
of the Transportation Manufacturing and Service Parts Group, and is after deducting $18,224,000, or $0.43 per
share, for provisions related to previously discontinued businesses. The first quarter of 1992 includes income
from operations of $1,402,000, or $0.03 per share, and $5,498,000, or $0.13 per share, for Transportation
Manufacturing and Service Parts Group and GFC Financial, respectively, and is after deducting $4,259,000, or
$0.10 per share, for the cumulative effect of initial application of SFAS No. 106. The fourth quarter of 1992 is
after deducting restructuring and other charges of $59,400,000, or $1.41 per share.
</TABLE> <PAGE>
INDEPENDENT AUDITORS' REPORT
To the Stockholders and Board of Directors of
The Dial Corp:
We have audited the consolidated financial statements of The Dial
Corp as of December 31, 1993 and 1992, and for the three years in
the period ended December 31, 1993, and have issued our report
thereon dated February 25, 1993; such report is included
elsewhere in this Form 10-K. Our audits also included the
financial statement schedules of The Dial Corp listed in Item 14.
These financial statement schedules are the responsibility of the
Company's management. Our responsibility is to express an
opinion based on our audits. In our opinion, such financial
statement schedules, when considered in relation to the basic
consolidated financial statements taken as a whole, present
fairly in all material respects the information set forth
therein.
/s/ Deloitte & Touche
Deloitte & Touche
Phoenix, Arizona
February 25, 1994
F-1<PAGE>
<PAGE>
<TABLE>
Schedule I
THE DIAL CORP
MARKETABLE SECURITIES--
OTHER SECURITY INVESTMENTS
(000 omitted)
<CAPTION>
December 31, 1993
- -----------------------------------------------------------------------
Name of Issue and Title Par Market Book
of Each Issue Value Cost Value Value
- ------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
U. S. Government agencies $ 5,000 $ 5,127 $ 5,126 $ 5,124
Obligations of states and
political subdivisions 240,175 245,531 246,280 245,330
Corporate securities 156,750 163,904 159,823 163,755
Mortgage-backed and other
asset-backed securities 72,896 87,035 73,530 74,393
Other debt securities and
corporate note 94,820 80,939 81,799 85,492
---------
Investments restricted for
payment service obligations $ 574,094
=========
</TABLE>
<TABLE>
<CAPTION>
December 31, 1992
- -----------------------------------------------------------------------
Name of Issue and Title Par Market Book
of Each Issue Value Cost Value Value
- ------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
U. S. Government agencies $ 11,598 $ 11,787 $ 12,177 $ 11,748
Obligations of states and
political subdivisions 71,465 74,318 74,944 74,289
Corporate securities 54,400 55,211 54,129 53,970
Mortgage-backed and other
asset-backed securities 171,904 328,117 211,262 225,921
Other debt securities 10,150 10,150 10,150 10,150
---------
Investments restricted for
payment service obligations $ 376,078
=========
</TABLE>
F-2
<PAGE>
<PAGE>
<TABLE>
Schedule X
THE DIAL CORP
SUPPLEMENTARY INCOME STATEMENT INFORMATION
(000 omitted)
<CAPTION>
Year Ended December 31,
-----------------------------
1993 1992 1991
--------- --------- ---------
<S> <C> <C> <C>
Maintenance and repairs $ 47,223 $ 45,457 $ 49,108
Advertising costs 120,188 123,697 107,391
</TABLE>
All other required items are presented elsewhere in
this document or are less than 1% of revenues.
F-3
<PAGE>
EXHIBIT 4.B
U.S. $500,000,000
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of December 15, 1993
Among
THE DIAL CORP
as Borrower
and
THE BANKS NAMED HEREIN
as Lenders
and
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION
and
CITIBANK, N.A.
as Agents
and
CITIBANK, N.A.
as Funding Agent
and
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION
as Reporting Agent
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS. . . . . . . . 2
SECTION 1.01. Certain Defined Terms. . . . . . . . . . . . 2
SECTION 1.02. Computation of Time Periods. . . . . . . . . 14
SECTION 1.03. Accounting Terms . . . . . . . . . . . . . . 14
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES. . . . . . . . 14
SECTION 2.01. The Advances . . . . . . . . . . . . . . . . 14
SECTION 2.02. Making the Advances. . . . . . . . . . . . . 14
SECTION 2.03. Fees . . . . . . . . . . . . . . . . . . . . 17
SECTION 2.04. Termination and Reduction of the
Commitments . . . . . . . . . . . . . . . . . 18
SECTION 2.05. Repayment and Prepayment of
Advances. . . . . . . . . . . . . . . . . . . 19
SECTION 2.06. Interest on Advances . . . . . . . . . . . . 20
SECTION 2.07. Interest Rate Determination. . . . . . . . . 21
SECTION 2.08. Voluntary Conversion or
Continuation of Advances. . . . . . . . . . . 21
SECTION 2.09. Increased Costs. . . . . . . . . . . . . . . 22
SECTION 2.10. Payments and Computations. . . . . . . . . . 23
SECTION 2.11. Taxes. . . . . . . . . . . . . . . . . . . . 24
SECTION 2.12. Sharing of Payments, Etc . . . . . . . . . . 26
SECTION 2.13. Evidence of Debt . . . . . . . . . . . . . . 27
SECTION 2.14. Use of Proceeds. . . . . . . . . . . . . . . 27
SECTION 2.15. Extension of the Commitment
Termination Date. . . . . . . . . . . . . . . 28
SECTION 2.16. Substitution of Lenders. . . . . . . . . . . 29
ARTICLE III
CONDITIONS OF LENDING. . . . . . . . . . . 29
SECTION 3.01. Condition Precedent to Effective
Date. . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.02. Conditions Precedent to Each
Borrowing . . . . . . . . . . . . . . . . . . 31
ARTICLE IV
REPRESENTATIONS AND WARRANTIES . . . . . . . . 31
SECTION 4.01. Representations and Warranties of
the Borrower. . . . . . . . . . . . . . . . . 31
ARTICLE V
COVENANTS OF THE BORROWER. . . . . . . . . . 35
SECTION 5.01. Affirmative Covenants. . . . . . . . . . . . 35
SECTION 5.02. Negative Covenants . . . . . . . . . . . . . 39
ARTICLE VI
EVENTS OF DEFAULT. . . . . . . . . . . . 42
SECTION 6.01. Events of Default. . . . . . . . . . . . . . 42
ARTICLE VII
THE FUNDING AGENT AND THE AGENTS. . . . . . . . 45
SECTION 7.01. Authorization and Action . . . . . . . . . . 45
SECTION 7.02. Agents' Reliance, Etc. . . . . . . . . . . . 45
SECTION 7.03. Citibank, B of A and Affiliates. . . . . . . 46
SECTION 7.04. Lender Credit Decision . . . . . . . . . . . 46
SECTION 7.05. Indemnification. . . . . . . . . . . . . . . 47
SECTION 7.06. Successor Agent. . . . . . . . . . . . . . . 47
ARTICLE VIII
MISCELLANEOUS. . . . . . . . . . . . . 48
SECTION 8.01. Amendments, Etc. . . . . . . . . . . . . . . 48
SECTION 8.02. Notices, Etc . . . . . . . . . . . . . . . . 48
SECTION 8.03. No Waiver; Remedies. . . . . . . . . . . . . 49
SECTION 8.04. Costs, Expenses and
Indemnification . . . . . . . . . . . . . . . 49
SECTION 8.05. Right of Set-off . . . . . . . . . . . . . . 50
SECTION 8.06. Binding Effect . . . . . . . . . . . . . . . 51
SECTION 8.07. Assignments and Participations . . . . . . . 51
SECTION 8.08. Confidentiality. . . . . . . . . . . . . . . 54
SECTION 8.09. Governing Law. . . . . . . . . . . . . . . . 54
SECTION 8.10. Execution in Counterparts. . . . . . . . . . 54
SECTION 8.11. Consent to Jurisdiction; Waiver of
Immunities. . . . . . . . . . . . . . . . . . 55
SECTION 8.12. Waiver of Trial by Jury. . . . . . . . . . . 55
Schedule I - List of Applicable Lending Offices
Exhibit A - Notice of Borrowing
Exhibit B - Assignment and Acceptance
Exhibit C - Form of Opinion of Counsel for the Borrower
Exhibit D - Form of Opinion of Counsel to the Agents
Exhibit E - Form of Extension Request
Exhibit F - Form of Compliance Certificate
Exhibit G - Form of Note
<PAGE>
AMENDED AND RESTATED
CREDIT AGREEMENT
Dated as of December 15, 1993
This Amended and Restated Credit Agreement is
among The Dial Corp, a Delaware corporation (the
"Borrower"), the banks (the "Banks") listed on the signature
pages hereof, Bank of America National Trust and Savings
Association ("B of A") and Citibank, N.A. ("Citibank") as
agents for the Lenders hereunder (individually referred to
herein as an "Agent" and collectively as the "Agents" which
term shall also include Citibank in its capacity as the
Funding Agent), Citibank as funding agent for the Lenders
hereunder (in such capacity, the "Funding Agent"), and Bank
of America National Trust and Savings Association as
reporting agent for the Lenders hereunder (in such capacity,
the "Reporting Agent").
PRELIMINARY STATEMENT
The Borrower, certain of the Banks, certain of the
Exiting Banks (as defined below), and Citibank, as Agent,
are parties to that certain Credit Agreement dated as of
October 31, 1987, as such agreement has been amended from
time to time (the "Citibank Existing Agreement") and the
Borrower, certain of the Banks, certain of the Exiting Banks
and B of A, as Agent, are parties to that certain amended
and restated credit agreement, dated October 1, 1987, as
such agreement has been amended from time to time (the "B of
A Existing Agreement", and together with the Citibank
Existing Agreement, the "Existing Agreements").
The Borrower, the Banks, and the Agents desire to
amend and restate the Existing Agreements in their entirety
and to combine the Existing Agreements into one agreement.
Each bank that is a party to an Existing Agreement
that is not a party to this Agreement (an "Exiting Bank")
and the Borrower have agreed, pursuant to those certain
letter agreements dated as of December 15, 1993, that all
funding obligations and other obligations of the Exiting
Banks under the Existing Agreements have been terminated
and, except as set forth in such letter agreements, all
payment obligations and other obligations of the Borrower
with respect to the Exiting Banks under the Existing
Agreements have been satisfied.
NOW, THEREFORE, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in
this Agreement, the following terms shall have the following
meanings (such meanings to be equally applicable to both the
singular and plural forms of the terms defined):
"Additions to Capital" means the sum of (i) the
aggregate net proceeds, including cash and the fair
market value of property other than cash (as determined
in good faith by the Board of Directors of the Borrower
as evidenced by a Board resolution), received by the
Borrower from the issue or sale (other than to a
Subsidiary) of capital stock of the Borrower and
(ii) the aggregate of 25% of the after tax gain
realized from unusual, extraordinary, and major
nonrecurring items including, but not limited to, the
sale, transfer, or other disposition of (x) any of the
stock of any of the Borrower's Subsidiaries or
(y) substantially all of the assets of any geographic
or other division or line of business of the Borrower
or any of its Subsidiaries (but excluding any after tax
loss realized on any such unusual, extraordinary, and
major nonrecurring items to the extent they exceed any
after tax gains on such items).
"Adjusted Eurodollar Rate" means, for any Interest
Period for each Eurodollar Rate Advance comprising part
of the same Borrowing, an interest rate per annum equal
to the rate per annum obtained by dividing (a) the
average (rounded upward to the nearest whole multiple
of 1/16 of 1% per annum, if such average is not such a
multiple) of the rate per annum at which deposits in
U.S. dollars are offered by the principal office of
each of the Reference Banks in London, England to prime
banks in the London interbank market at 11:00 A.M.
(London time) two Business Days before the first day of
such Interest Period in an amount substantially equal
to the respective Reference Bank's Eurodollar Rate
Advance comprising part of such Borrowing and for a
period equal to such Interest Period by (b) a
percentage equal to 100% minus the Eurodollar Rate
Reserve Percentage. The Adjusted Eurodollar Rate for
any Interest Period for each Eurodollar Rate Advance
comprising part of the same Borrowing shall be
determined by the Funding Agent on the basis of
applicable rates furnished to and received by the
Funding Agent from the Reference Banks two Business
Days before the first day of such Interest Period,
subject, however, to the provisions of Section 2.07.
"Advance" means an advance by a Lender to the
Borrower as part of a Borrowing and refers to a Base
Rate Advance or a Eurodollar Rate Advance, each of
which shall be a "Type" of Advance.
"Affiliate" means, as to any Person, any other
Person that, directly or indirectly, controls, is
controlled by or is under common control with such
Person.
"Agent" or "Agents" has the meaning specified in
the introductory paragraph of this Agreement; provided,
that, for purposes of Sections 7.02, 7.04, 7.05, 8.04,
8.07(b)(iv) and 8.12 of this Agreement the term "Agent"
or "Agents", as the case may be, shall include BA
Securities, Inc., Citicorp Securities, Inc., and the
Reporting Agent.
"Agreement" means this Amended and Restated Credit
Agreement as it may be amended, supplemented or
otherwise modified from time to time.
"Applicable Lending Office" means, with respect to
each Lender, such Lender's Domestic Lending Office in
the case of a Base Rate Advance, and such Lender's
Eurodollar Lending Office in the case of a Eurodollar
Rate Advance.
"Applicable Margin" means, for any period for
which any interest payment is to be made with respect
to any Advance, the interest rate per annum derived by
dividing (i) the sum of the Daily Margins for each of
the days included in such period by (ii) the number of
days included in such period.
"Assignment and Acceptance" means an assignment
and acceptance entered into by a Lender and an Eligible
Assignee, and accepted by the Funding Agent, in
substantially the form of Exhibit B hereto.
"Base Rate" means, for any period, a fluctuating
interest rate per annum as shall be in effect from time
to time which rate per annum shall at all times be
equal to the highest of:
(a) the rate of interest announced publicly
by Citibank in New York, New York, from time to
time, as Citibank's base rate (which is a rate set
by Citibank based upon various factors including
Citibank's costs and desired return, general
economic conditions and other factors, and is used
as a reference point for pricing some loans, which
may be priced at, above, or below such announced
rate);
(b) the sum of (A) 1/2 of one percent per
annum plus (B) the rate obtained by dividing
(x) the latest three-week moving average of
secondary market morning offering rates in the
United States for three-month certificates of
deposit of major United States money market banks
(such three-week moving average being determined
weekly by Citibank on the basis of such rates
reported by certificate of deposit dealers to and
published by the Federal Reserve Bank of New York
or, if such publication shall be suspended or
terminated, on the basis of quotations for such
rates received by Citibank, in either case
adjusted to the nearest 1/4 of one percent or, if
there is no nearest 1/4 of one percent, to the
next higher 1/4 of one percent), by (y) a
percentage equal to 100% minus the average of the
daily percentages specified during such three-week
period by the Board of Governors of the Federal
Reserve System for determining the maximum reserve
requirement (including, but not limited to, any
marginal reserve requirements for Citibank in
respect of liabilities consisting of or including
(among other liabilities) three-month nonpersonal
time deposits of at least $100,000), plus (C) the
average during such three-week period of the daily
net annual assessment rates estimated by Citibank
for determining the current annual assessment
payable by Citibank to the Federal Deposit
Insurance Corporation for insuring three-month
deposits in the United States; or
(c) 1/2 of one percent per annum above the
Federal Funds Rate.
"Base Rate Advance" means an Advance which bears
interest as provided in Section 2.06(a).
"Borrowing" means a borrowing consisting of
Advances of the same Type made on the same day pursuant
to the same Notice of Borrowing by each of the Lenders
pursuant to Section 2.01.
"Business Day" means a day of the year on which
banks are not required or authorized to close in New
York City or Los Angeles and, if the applicable
Business Day relates to any Eurodollar Rate Advances,
on which dealings are carried on in the London
interbank market.
"Capital Lease" means, with respect to any Person,
any lease of any property by that Person as lessee
which would, in conformity with GAAP, be required to be
accounted for as a capital lease on the balance sheet
of that Person.
"Cash" means money, currency or a credit balance
in a deposit account.
"Cash Equivalents" means (a) marketable direct
obligations issued or unconditionally guaranteed by the
United States government or issued by any agency
thereof and backed by the full faith and credit of the
United States, in each case maturing within one year
from the date of acquisition thereof, (b) marketable
direct obligations issued by any state of the United
States of America or any political subdivision of any
such state or any public instrumentality thereof
maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having the
highest rating generally obtainable from either S&P or
Moody's, (c) commercial paper maturing no more than one
year from the date of creation thereof and, at the time
of acquisition, having a rating of A-1 or higher from
S&P or P-1 or higher from Moody's, and (d) certificates
of deposit or bankers' acceptances maturing within one
year from the date of acquisition thereof issued by any
lender.
"Cash Flow Coverage" means a ratio of
(a) consolidated net income plus provision for taxes of
the Borrower and its Subsidiaries (excluding
extraordinary, unusual, or nonrecurring gains or
losses), plus interest expense of the Borrower and its
Subsidiaries, plus net operating lease expense (net of
operating sublease income) of the Borrower and its
Subsidiaries, plus depreciation and amortization of
intangibles of the Borrower and its Subsidiaries, less
capital expenditures (excluding the cost of
acquisitions and the purchase of the partnership
interest in Dial Tower) of the Borrower and its
Subsidiaries, divided by (b) net operating lease
expense (net of operating sublease income) of the
Borrower and its Subsidiaries plus interest expense of
the Borrower and its Subsidiaries, as determined on a
consolidated basis in conformity with GAAP.
"Code" means the Internal Revenue Code of 1986, as
amended.
"Commitment" has the meaning specified in
Section 2.01.
"Commitment Termination Date" means, with respect
to any Lender, June 30, 1997, or such later date to
which the Commitment Termination Date of such Lender
may be extended from time to time pursuant to Section
2.15 (or if any such date is not a Business Day, the
next preceding Business Day).
"Compliance Certificate" means a certificate
substantially in the form of Exhibit F hereto,
delivered to the Lenders by the Borrower pursuant to
Section 5.10(b)(iii).
"Convert," "Conversion" and "Converted" each
refers to a conversion of Advances of one Type into
Advances of another Type pursuant to Section 2.08.
"Daily Margin" means, for any date of
determination, for the designated Level, Utilization
Ratio applicable to such date of determination and Type
of Advance, the following interest rates per annum:
Daily Margin when
Daily Margin when Utilization Ratio
Utilization Ratio is greater than or
is less than 0.50:1.00 equal to 0.50:1.00
TYPE OF ADVANCE TYPE OF ADVANCE
Base Rate Eurodollar Base Rate Eurodollar
Advance Rate Advance Advance Rate Advance
Level 1 0% 0.4375% 0% 0.5000%
Level 2 0% 0.5000% 0% 0.5625%
Level 3 0% 0.6250% 0% 0.6875%
Level 4 0.25% 1.0000% 0.25% 1.1250%
For purposes of this definition, (a) "Utilization
Ratio" means, as of any date of determination, the
ratio of (1) the aggregate outstanding principal amount
of all Advances as of such date to (2) the aggregate
amount of all Commitments in effect as of such date
(whether used or unused), (b) if any change in the
rating established by S&P, Moody's or Duff & Phelps
with respect to Long-Term Debt shall result in a change
in the Level, the change in the Daily Margin shall be
effective as of the date on which such rating change is
publicly announced, and (c) if the ratings established
by any two of S&P, Moody's or Duff & Phelps with
respect to Long-Term Debt are unavailable for any
reason for any day, then the applicable level for such
day shall be deemed to be Level 4 (or, if the Requisite
Lenders consent in writing, such other Level as may be
reasonably determined by the Requisite Lenders from a
rating with respect to Long-Term Debt for such day
established by another rating agency reasonably
acceptable to the Requisite Lenders).
"Debt" means (i) indebtedness for borrowed money
or for the deferred purchase price of property or
services, (ii) obligations as lessee under Capital
Leases, (iii) obligations under guarantees in respect
of indebtedness or obligations of others of the kinds
referred to in clause (i) or (ii) above, (iv)
liabilities in respect of unfunded vested benefits
under Single Employer Plans, and (v) Withdrawal
Liability incurred under ERISA by the Borrower or any
of its ERISA Affiliates to any Multi-employer Plans;
provided that "Debt" shall not include payment
obligations in the ordinary course of the business of
Travelers Express Company, Inc. ("Travelers Express")
arising from (x) payments made by banks on checks or
money orders issued by Travelers Express and presented
to such banks and (y) contingent obligations of
Travelers Express to banks which have issued official
checks drawn on Travelers Express and have paid to
Travelers Express the amounts of such official checks,
to repay to such banks such amounts if such official
checks are not negotiated.
"Domestic Lending Office" means, with respect to
any Lender, the office of such Lender specified as its
"Domestic Lending Office" opposite its name on
Schedule I hereto or in the Assignment and Acceptance
pursuant to which it became a Lender, or such other
office of such Lender as such Lender may from time to
time specify to the Borrower and the Agents.
"Duff & Phelps" means Duff & Phelps Inc.
"Effective Date" means the date, on or before
December 21, 1993, on which the conditions precedent
set forth in Section 3.01 have been satisfied.
"Eligible Assignee" means (i) a commercial bank
organized under the laws of the United States, or any
state thereof, and having a combined capital and
surplus of at least $100,000,000; (ii) a commercial
bank organized under the laws of any other country
which is a member of the Organization for Economical
Cooperation and Development (the "OECD"), or a
political subdivision of any such country and having a
combined capital and surplus of at least $100,000,000,
provided that such bank is acting through a branch or
agency located in the country in which it is organized
or another country which is also a member of the OECD;
and (iii) any Person engaged primarily in the business
of commercial banking and that is a Subsidiary of a
Lender or of a Person of which a Lender is
a Subsidiary.
"Environmental Law" means any and all statutes,
laws, regulations, ordinances, rules, judgments,
orders, decrees, permits, concessions, grants,
franchises, licenses, agreements or other governmental
restrictions of any federal, state or local
governmental authority within the United States or any
State or territory thereof and which relate to the
environment or the release of any materials into the
environment.
"ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time,
and the regulations promulgated and rulings issued
thereunder.
"ERISA Affiliate" means any Person who for
purposes of Title IV of ERISA is a member of the
Borrower's controlled group, or under common control
with the Borrower, within the meaning of Section 414 of
the Code and the regulations promulgated and rulings
issued thereunder.
"ERISA Event" means (i) the occurrence of a
reportable event, within the meaning of Section 4043 of
ERISA, unless the 30-day notice requirement with
respect thereto has been waived by the PBGC; (ii) the
provision by the administrator of any Pension Plan of a
notice of intent to terminate such Pension Plan
pursuant to Section 4041(a)(2) of ERISA (including any
such notice with respect to a plan amendment referred
to in Section 4041(e) of ERISA); (iii) the cessation of
operations at a facility in the circumstances described
in Section 4062(e) of ERISA; (iv) the withdrawal by the
Borrower or an ERISA Affiliate from a Multiple Employer
Plan during a plan year for which it was a substantial
employer, as defined in Section 4001(a)(2) of ERISA;
(v) the failure by the Borrower or any ERISA Affiliate
to make a payment to a Pension Plan required under
Section 302(f)(1) of ERISA, which Section imposes a
lien for failure to make required payments; (vi) the
adoption of an amendment to a Pension Plan requiring
the provision of security to such Pension Plan,
pursuant to Section 307 of ERISA; or (vii) the institu-
tion by the PBGC of proceedings to terminate a Pension
Plan, pursuant to Section 4042 of ERISA, or the
occurrence of any event or condition which, in the
reasonable judgment of the Borrower, might constitute
grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer, a
Pension Plan.
"Eurocurrency Liabilities" has the meaning
assigned to that term in Regulation D of the Board of
Governors of the Federal Reserve System, as in effect
from time to time.
"Eurodollar Lending Office" means, with respect to
any Lender, the office of such Lender specified as its
"Eurodollar Lending Office" opposite its name on
Schedule I hereto or in the Assignment and Acceptance
pursuant to which it became a Lender (or, if no such
office is specified, its Domestic Lending Office), or
such other office of such Lender as such Lender may
from time to time specify to the Borrower and the
Funding Agent.
"Eurodollar Rate Advance" means an Advance which
bears interest as provided in Section 2.06(b).
"Eurodollar Rate Reserve Percentage" for any
Interest Period for any Eurodollar Rate Advance means
the reserve percentage applicable during such Interest
Period (or if more than one such percentage shall be so
applicable, the daily average of such percentages for
those days in such Interest Period during which any
such percentage shall be so applicable) under
regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve
requirements (including, without limitation, any
emergency, supplemental or other marginal reserve
requirement) for member banks in the Federal Reserve
System with respect to liabilities or assets consisting
of or including Eurocurrency Liabilities having a term
equal to such Interest Period.
"Events of Default" has the meaning specified in
Section 6.01.
"Federal Funds Rate" means, for any period, a
fluctuating interest rate per annum equal for each day
during such period to the weighted average of the rates
on overnight Federal funds transactions with members of
the Federal Reserve System arranged by Federal funds
brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business
Day) by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a
Business Day, the average of the quotations for such
day on such transactions received by the Funding Agent
from three Federal funds brokers of recognized standing
selected by it.
"Funded Debt" means outstanding Debt of the
Borrower and its Subsidiaries of the kind described in
clauses (i), (ii) and (iii) of the definition of Debt.
"Funding Agent" means Citibank, or any Person
serving as its successor agent.
"GAAP" means generally accepted accounting
principles set forth in the opinions and pronouncements
of the Accounting Principles Board of the American
Institute of Certified Public Accountants and
statements and pronouncements of the Financial
Accounting Standards Board or in such other statements
by such other entity as may be approved by a
significant segment of the accounting profession, which
are applicable to the circumstances as of the date of
determination.
"Insufficiency" means, with respect to any Pension
Plan, the amount, if any, of its unfunded benefit
liabilities, as defined in Section 4001(a)(18) of
ERISA.
"Interest Period" means, for each Eurodollar Rate
Advance comprising part of the same Borrowing, the
period commencing on the date of such Eurodollar Rate
Advance, or on the date of continuation of such Advance
as a Eurodollar Rate Advance upon expiration of
successive Interest Periods applicable thereto, or on
the date of Conversion of a Base Rate Advance into a
Eurodollar Rate Advance, and ending on the last day of
the period selected by the Borrower pursuant to the
provisions below. The duration of each such Interest
Period shall be one, two, three or six months, as the
Borrower may select in the Notice of Borrowing or the
Notice of Conversion/Continuation for such Advance;
provided, however, that:
(i) the Borrower may not select any Interest
Period which ends after the earliest Commitment
Termination Date of any Lender then in effect;
(ii) Interest Periods commencing on the same
date for Advances comprising part of the same
Borrowing shall be of the same duration; and
(iii) whenever the last day of any Interest
Period would otherwise occur on a day other than a
Business Day, the last day of such Interest Period
shall be extended to occur on the next succeeding
Business Day, provided, that if such extension
would cause the last day of such Interest Period
to occur in the next following calendar month, the
last day of such Interest Period shall occur on
the next preceding Business Day.
"Lenders" means the Banks listed on the signature
pages hereof and each Eligible Assignee that shall
become a party hereto pursuant to Section 8.07.
"Level" means Level 1, Level 2, Level 3 or Level
4, as the case may be.
"Level 1" means that, as of any date of
determination, the Borrower's Long-term Debt rating is
equal to or higher than at least two of the following:
BBB+ from S&P, Baa1 from Moody's and/or BBB+ from Duff
& Phelps.
"Level 2" means that, as of any date of
determination, the Borrower's Long-term Debt rating is
equal to at least two of the following: BBB from S&P,
Baa2 from Moody's and/or BBB from Duff & Phelps.
"Level 3" means that, as of any date of
determination, the Borrower's Long-term Debt rating is
equal to at least two of the following: BBB- from S&P,
Baa3 from Moody's and/or BBB- from Duff & Phelps.
"Level 4" means that, as of any date of
determination, the Borrower's Long-term Debt rating is
lower than at least two of the following: BBB- from
S&P, Baa3 from Moody's and/or BBB- from Duff & Phelps.
"Leverage" means (i)(a) Funded Debt minus (b)
Cash and Cash Equivalents; divided by (ii) (x) Funded
Debt minus (y) Cash and Cash Equivalents plus (z)
Shareholders Equity.
"Lien" means any lien, mortgage, pledge, security
interest, charge or encumbrance of any kind (including
any conditional sale or other title retention agreement
and any lease in the nature thereof).
"Loan Documents" means this Agreement and the
related documents.
"Long-Term Debt" means senior, unsecured, long
term debt securities of the Borrower.
"Margin Stock" has the meaning assigned to that
term in Regulation U promulgated by the Board of
Governors of the Federal Reserve System, as in effect
from time to time.
"Material Subsidiary" means any Subsidiary of the
Borrower having total assets in excess of $10,000,000.
"Moody's" means Moody's Investors Service, Inc.
"Multiemployer Plan" means a "multiemployer plan"
as defined in Section 4001(a)(3) of ERISA to which the
Borrower or any ERISA Affiliate of the Borrower is
making, or is obligated to make, contributions or has
within any of the preceding six plan years been
obligated to make or accrue contributions.
"Multiple Employer Plan" means a single employer
plan, as defined in Section 4001(a)(15) of ERISA, which
(i) is maintained for employees of the Borrower or an
ERISA Affiliate and at least one Person other than the
Borrower and its ERISA Affiliates or (ii) was so
maintained and in respect of which the Borrower or an
ERISA Affiliate could have liability under Section
4063, 4064 or 4069 of ERISA in the event such plan has
been or were to be terminated.
"Net Income" means net income in accordance with
GAAP.
"Net Worth" means minority interests, preferred
stock and common stock and other equity, as shown on
the consolidated balance sheet of the Borrower and its
Subsidiaries.
"Notice of Borrowing" has the meaning specified in
Section 2.02(a).
"Notice of Conversion/Continuation" has the
meaning specified in Section 2.08.
"PBGC" means the U.S. Pension Benefit Guaranty
Corporation.
"Pension Plan" means a Single Employer Plan or a
Multiple Employer Plan or both.
"Person" means an individual, partnership,
corporation, business trust, joint stock company,
trust, unincorporated association, joint venture or
other entity, or a government or any political
subdivision or agency thereof.
"Potential Event of Default" means a condition or
event which, after notice or lapse of time or both,
would constitute an Event of Default if that condition
or event were not cured or removed within any
applicable grace or cure period.
"Reference Banks" means, B of A, Citibank,
Chemical Bank and Bank of Montreal.
"Reporting Agent" means B of A, or any Person
serving as its successor agent.
"Register" has the meaning specified in
Section 8.07(c).
"Requisite Lenders" means at any time Lenders
holding at least 66-2/3% of the then aggregate unpaid
principal amount of the Advances held by Lenders, or,
if no such principal amount is then outstanding,
Lenders having at least 66-2/3% of the Commitments
(provided that, for purposes hereof, neither the
Borrower, nor any of its Affiliates, if a Lender, shall
be included in (i) the Lenders holding such amount of
the Advances or having such amount of the Commitments
or (ii) determining the aggregate unpaid principal
amount of the Advances or the total Commitments).
"S&P" means Standard & Poor's Corporation.
"SEC" means the Securities and Exchange Commission
and any successor agency.
"Shareholders Equity" means Net Worth plus the
"Employee Equity Trust" contra account and "Guaranty of
ESOP Debt" contra account as set forth on the
consolidated balance sheet of the Borrower and its
Subsidiaries.
"Single Employer Plan" means a single employer
plan, as defined in Section 4001(a)(15) of ERISA, which
(i) is maintained for employees of the Borrower or any
ERISA Affiliate and no Person other than the Borrower
and its ERISA Affiliates or (ii) was so maintained and
in respect of which the Borrower or an ERISA Affiliate
could have liability under Section 4062 or 4069 of
ERISA in the event such plan has been or were to be
terminated.
"Subsidiary" of any Person means any corporation,
association, partnership or other business entity of
which at least 50% of the total voting power of shares
of stock or other securities entitled to vote in the
election of directors, managers or trustees thereof is
at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other
Subsidiaries of that Person or a combination thereof.
"Termination Date" means, with respect to any
Lender, the earlier of (i) the Commitment Termination
Date of such Lender and (ii) the date of termination in
whole of the Commitments of all Lenders pursuant to
Section 2.04 or 6.01.
"Type" means, with reference to an Advance, a Base
Rate Advance or a Eurodollar Rate Advance.
"Withdrawal Liability" has the meaning given such
term under Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Computation of Time Periods. In
this Agreement in the computation of periods of time from a
specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until"
each means "to but excluding".
SECTION 1.03. Accounting Terms. All accounting
terms not specifically defined herein shall be construed
in accordance with GAAP. All computations determining
compliance with financial covenants or terms, including
definitions used therein, shall be prepared in accordance
with generally accepted accounting principles in effect at
the time of the preparation of, and in conformity with those
used to prepare, the historical financial statements
delivered to the Lenders pursuant to Section 4.01(e). If at
any time the computations for determining compliance with
financial covenants or provisions relating thereto utilize
generally accepted accounting principles different than
those then being utilized in the financial statements being
delivered to the Lenders, such financial statements shall be
accompanied by a reconciliation statement.
ARTICLE II
AMOUNTS AND TERMS OF THE ADVANCES
SECTION 2.01. The Advances. Each Lender
severally agrees, on the terms and conditions hereinafter
set forth, to make Advances to the Borrower from time to
time on any Business Day during the period from the
Effective Date until the Termination Date of such Lender in
an aggregate amount not to exceed at any time outstanding
the amount set opposite such Lender's name on the signature
pages hereof or, if such Lender has entered into any
Assignment and Acceptance, set forth for such Lender in the
Register maintained by the Funding Agent pursuant to Section
8.07(c), as such amount may be reduced pursuant to Section
2.04 (such Lender's "Commitment"). Each Borrowing shall be
in an aggregate amount not less than $5,000,000 or an
integral multiple of $1,000,000 in excess thereof and shall
consist of Advances of the same Type made on the same day by
the Lenders ratably according to their respective
Commitments. Within the limits of each Lender's Commitment,
the Borrower may from time to time borrow, prepay pursuant
to Section 2.05(c) and reborrow under this Section 2.01.
SECTION 2.02. Making the Advances. (a) Each
Borrowing shall be made on notice, given not later than
(x) 11:00 A.M. (New York City time) on the date of a
proposed Borrowing consisting of Base Rate Advances and
(y) 11:00 A.M. (New York City time) on the third Business
Day prior to the date of a proposed Borrowing consisting of
Eurodollar Rate Advances, by the Borrower to the Funding
Agent, which shall give to each Lender prompt notice thereof
by telecopier, telex or cable. Each such notice of a
Borrowing (a "Notice of Borrowing") shall be by telecopier,
telex or cable, confirmed immediately in writing, in
substantially the form of Exhibit A hereto, specifying
therein the requested (i) date of such Borrowing, (ii) Type
of Advances comprising such Borrowing, (iii) aggregate
amount of such Borrowing, and (iv) in the case of a
Borrowing comprised of Eurodollar Rate Advances, the initial
Interest Period for each such Advance. The Borrower may,
subject to the conditions herein provided, borrow more than
one Borrowing on any Business Day. Each Lender shall,
before 2:00 P.M. (New York City time) in the case of a
Borrowing consisting of Base Rate Advances and before 11:00
A.M. (New York City time) in the case of a Borrowing
consisting of Eurodollar Rate Advances, in each case on the
date of such Borrowing, make available for the account of
its Applicable Lending Office to the Funding Agent at its
address referred to in Section 8.02, in same day funds, such
Lender's ratable portion of such Borrowing. After the
Funding Agent's receipt of such funds and upon fulfillment
of the applicable conditions set forth in Article III, the
Funding Agent will make such funds available to the Borrower
at the Funding Agent's aforesaid address.
(b) Anything in subsection (a) above to the
contrary notwithstanding,
(i) the Borrower may not select Eurodollar
Rate Advances for any Borrowing or with respect to
the Conversion or continuance of any Borrowing if the
aggregate amount of such Borrowing or such Conversion
or continuance is less than $5,000,000;
(ii) there shall be no more than five Interest
Periods relating to Eurodollar Rate Advances
outstanding at any time;
(iii) if any Lender shall, at least one Business
Day before the date of any requested Borrowing, notify
the Funding Agent that the introduction of or any
change in or in the interpretation of any law or
regulation makes it unlawful, or that any central bank
or other governmental authority asserts that it is
unlawful, for such Lender or its Eurodollar Lending
Office to perform its obligations hereunder to make
Eurodollar Rate Advances or to fund or maintain
Eurodollar Rate Advances hereunder, the Commitment of
such Lender to make Eurodollar Rate Advances or to
Convert all or any portion of Base Rate Advances shall
forthwith be suspended until the Funding Agent shall
notify the Borrower that such Lender has determined
that the circumstances causing such suspension no
longer exist and such Lender's then outstanding
Eurodollar Rate Advances, if any, shall be Base Rate
Advances; to the extent that such affected Eurodollar
Rate Advances become Base Rate Advances, all payments
of principal that would have been otherwise applied to
such Eurodollar Rate Advances shall be applied instead
to such Lender's Base Rate Advances; provided that if
Requisite Lenders are subject to the same illegality or
assertion of illegality, then the right of the Borrower
to select Eurodollar Rate Advances for such Borrowing
or any subsequent Borrowing or to Convert all or any
portion of Base Rate Advances shall forthwith be
suspended until the Funding Agent shall notify the
Borrower that the circumstances causing such suspension
no longer exist, and each Advance comprising such
Borrowing shall be a Base Rate Advance;
(iv) if fewer than two Reference Banks furnish
timely information to the Funding Agent for determining
the Adjusted Eurodollar Rate for any Eurodollar Rate
Advances comprising any requested Borrowing, the right
of the Borrower to select Eurodollar Rate Advances for
such Borrowing or any subsequent Borrowing shall be
suspended until the Funding Agent shall notify the
Borrower and the Lenders that the circumstances causing
such suspension no longer exist, and each Advance
comprising such Borrowing shall be made as a Base Rate
Advance; and
(v) if the Requisite Lenders shall, at least one
Business Day before the date of any requested
Borrowing, notify the Funding Agent that the Adjusted
Eurodollar Rate for Eurodollar Rate Advances comprising
such Borrowing will not adequately reflect the cost to
such Requisite Lenders of making, funding or
maintaining their respective Eurodollar Rate Advances
for such Borrowing, the right of the Borrower to select
Eurodollar Rate Advances for such Borrowing or any
subsequent Borrowing shall be suspended until the
Funding Agent shall notify the Borrower and the Lenders
that the circumstances causing such suspension no
longer exist, and each Advance comprising such
Borrowing shall be made as a Base Rate Advance.
(c) Each Notice of Borrowing shall be irrevocable
and binding on the Borrower. In the case of any Borrowing
which the related Notice of Borrowing specifies is to be
comprised of Eurodollar Rate Advances, the Borrower shall
indemnify each Lender against any loss, cost or expense
incurred by such Lender by reason of the liquidation or
reemployment of deposits or other funds acquired by such
Lender to fund the Advance to be made by such Lender as part
of such Borrowing or by reason of the termination of hedging
or other similar arrangements, in each case when such
Advance is not made on such date (other than by reason of a
breach of a Lender's obligations hereunder), including
without limitation, as a result of any failure to fulfill on
or before the date specified in such Notice of Borrowing for
such Borrowing the applicable conditions set forth in
Article III.
(d) Unless the Funding Agent shall have received
notice from a Lender prior to the date of any Borrowing that
such Lender will not make available to the Funding Agent
such Lender's ratable portion of such Borrowing, the Funding
Agent may assume that such Lender has made such portion
available to the Funding Agent on the date of such Borrowing
in accordance with subsection (a) of this Section 2.02 and
the Funding Agent may, in reliance upon such assumption,
make available to the Borrower on such date a corresponding
amount. If and to the extent that such Lender shall not
have so made such ratable portion available to the Funding
Agent, such Lender and the Borrower severally agree to repay
to the Funding Agent forthwith on demand such corresponding
amount together with interest thereon, for each day from the
date such amount is made available to the Borrower until the
date such amount is repaid to the Funding Agent, at (i) in
the case of the Borrower, the interest rate applicable at
the time to Advances comprising such Borrowing and (ii) in
the case of such Lender, the Federal Funds Rate. If such
Lender shall repay to the Funding Agent such corresponding
amount, such amount so repaid shall constitute such Lender's
Advance as part of such Borrowing for purposes of this
Agreement.
(e) The failure of any Lender to make the Advance
to be made by it as part of any Borrowing shall not relieve
any other Lender of its obligation, if any, hereunder to
make its Advance on the date of such Borrowing, but no
Lender shall be responsible for the failure of any other
Lender to make the Advance to be made by such other Lender
on the date of any Borrowing.
SECTION 2.03. Fees. (a) Commitment Fees. The
Borrower agrees to pay to the Funding Agent for the account
of each Lender a commitment fee on the average daily unused
portion of such Lender's Commitment, from the Effective Date
in the case of each Lender and from the effective date
specified in the Assignment and Acceptance pursuant to which
it became a Lender in the case of each other Lender until
the Termination Date of such Lender, payable in arrears on
the last day of each March, June, September and December
during the term of such Lender's Commitment, commencing
December 31, 1993, and on the Termination Date of such
Lender, in an amount equal to the product of (i) the average
daily unused portion of such Lender's Commitment in effect
during the period for which such payment that is to be made
times (ii) the weighted average rate per annum that is
derived from the following rates: (a) a rate of 0.175% per
annum with respect to each day during such period that the
ratings with respect to Long-Term Debt were at Level 1,
(b) a rate of 0.200% per annum with respect to each day
during such period that such ratings were at Level 2, (c) a
rate of 0.250% per annum with respect to each day during
such period that such ratings were at Level 3, and (d) a
rate of 0.375% per annum with respect to each day during
such period that such ratings were at Level 4. If any
change in the rating established by S&P, Moody's or Duff &
Phelps with respect to Long-Term Debt shall result in a
change in the Level, the change in the commitment fee shall
be effective as of the date on which such rating change is
publicly announced. If the ratings established by any two
of S&P, Moody's or Duff & Phelps with respect to Long-Term
Debt are unavailable for any reason for any day, then the
applicable level for purposes of calculating the commitment
fee for such day shall be deemed to be Level 4 (or, if the
Requisite Lenders consent in writing, such other Level as
may be reasonably determined by the Requisite Lenders from a
rating with respect to Long-Term Debt for such day
established by another rating agency reasonably acceptable
to the Requisite Lenders). For purposes of this Section
2.03, the Commitments shall be deemed to be used only to the
extent of Advances actually made.
(b) Closing Fee. The Borrower agrees to pay to
each Bank on the Effective Date the fees payable to each
Bank pursuant to that certain fee letter dated December 15,
1993 among the Borrower and the Agents on behalf of the
Banks.
(c) Agents' Fees. The Borrower agrees to pay to
the Agents the fees payable to the Agents pursuant to that
certain fee letter dated as of December 9, 1993 among the
Borrower and the Agents, in the amounts and at the times
specified in such letter.
SECTION 2.04. Termination and Reduction of the
Commitments.
(a) Mandatory Termination. In the event that a
mandatory prepayment in full of the Advances is required by
the Requisite Lenders pursuant to Section 2.05(b) (whether
or not there are Advances outstanding), the Commitments of
the Lenders shall immediately terminate.
(b) Optional Reductions. The Borrower shall have
the right, upon at least four Business Days' notice to the
Funding Agent, to terminate in whole or reduce ratably in
part the unused portions of the respective Commitments of
the Lenders, provided that each partial reduction shall be
in the aggregate amount of $5,000,000 or an integral
multiple of $1,000,000 in excess thereof.
SECTION 2.05. Repayment and Prepayment of
Advances.
(a) Mandatory Repayment on Termination Date. The
Borrower shall repay the outstanding principal amount of
each Advance made by each Lender on the Termination Date of
such Lender.
(b) Mandatory Prepayment in Certain Events. If
any one of the following events shall occur:
(i) any Person or Persons acting in concert
shall acquire beneficial ownership of more than 40% of
the Borrower's voting stock; or
(ii) during any period of up to 12 months,
individuals who at the beginning of such period were
directors of the Borrower shall cease to constitute a
majority of the Borrower's board of directors; or
(iii) any Debt which is outstanding in a
principal amount of at least $15,000,000 in the
aggregate (but excluding Debt arising under this
Agreement) of the Borrower or any of its Subsidiaries
(as the case may be) shall be required to be prepaid
(other than by a regularly scheduled required
prepayment or by a required prepayment of insurance
proceeds or by a required prepayment as a result of
formulas based on asset sales or excess cash flow),
redeemed, purchased or defeased, or an offer to prepay,
redeem, purchase or defease such Debt shall be required
to be made, in each case prior to the stated maturity
thereof (other than as set forth in Section 6.01(d));
then, and in any such event, if the Funding Agent shall have
received notice from the Requisite Lenders that they elect
to have the Advances prepaid in full and the Funding Agent
shall have provided notice to the Borrower that the Advances
are to be prepaid in full, the Borrower shall immediately
prepay in full the Advances, together with interest accrued
to the date of prepayment and will reimburse the Lenders in
respect thereof pursuant to Section 8.04(b).
(c) Voluntary Prepayments of Borrowings. The
Borrower shall have no right to prepay any principal amount
of any Advances other than as provided in this subsection
(c). The Borrower may, upon notice to the Funding Agent on
the day the Borrower proposes to prepay Advances in the case
of Base Rate Advances and at least three Business Days'
notice to the Funding Agent in the case of Eurodollar Rate
Advances stating the proposed date and aggregate principal
amount of the prepayment, and if such notice is given the
Borrower shall, prepay the outstanding principal amounts of
the Advances comprising part of the same Borrowing in whole
or ratably in part; provided, however, that (x) each partial
prepayment shall be in an aggregate principal amount not
less than $5,000,000 and integral multiples of $1,000,000 in
excess thereof and (y) in the case of any such prepayment
of any Eurodollar Rate Advance, the Borrower shall pay all
accrued interest to the date of such prepayment on the
portion of such Eurodollar Rate Advance being prepaid and
shall be obligated to reimburse the Lenders in respect
thereof pursuant to Section 8.04(b).
SECTION 2.06. Interest on Advances. The Borrower
shall pay interest accrued on the principal amount of each
Advance outstanding from time to time from the date of such
Advance until such principal amount shall be paid in full,
at the following rates per annum:
(a) Base Rate Advances. If such Advance is a
Base Rate Advance, a rate per annum equal at all times to
the Base Rate in effect from time to time plus the
Applicable Margin, if any, payable in arrears on the last
day of each March, June, September and December during the
term of this Agreement, commencing December 31, 1993, and on
the Termination Date of the applicable Lender; provided that
any amount of principal, interest, fees and other amounts
payable under this Agreement (including, without limitation,
the principal amount of Base Rate Advances, but excluding
the principal amount of Eurodollar Rate Advances) which is
not paid when due (whether at stated maturity, by
acceleration or otherwise) shall bear interest from the date
on which such amount is due until such amount is paid in
full, payable on demand, at a rate per annum equal at all
times to 2% per annum above the Base Rate in effect from
time to time.
(b) Eurodollar Rate Advances. If such Advance
is a Eurodollar Rate Advance, a rate per annum equal at all
times during the Interest Period for such Advance to the sum
of the Adjusted Eurodollar Rate for such Interest Period
plus the Applicable Margin, payable in arrears on the last
day of such Interest Period and, if such Interest Period has
a duration of more than three months, on the day which
occurs during such Interest Period three months from the
first day of such Interest Period; provided that any
principal amount of any Eurodollar Rate Advance which is not
paid when due (whether at stated maturity, by acceleration
or otherwise) shall bear interest from the date on which
such amount is due until such amount is paid in full,
payable on demand, at a rate per annum equal at all times to
(A) during the Interest Period applicable to such Eurodollar
Rate Advance, the greater of (x) 2% per annum above the Base
Rate in effect from time to time and (y) 2% per annum above
the rate per annum required to be paid on such amount
immediately prior to the date on which such amount became
due and (B) after the expiration of such Interest Period, 2%
per annum above the Base Rate in effect from time to time.
SECTION 2.07. Interest Rate Determination.
(a) Each Reference Bank agrees to furnish to the Funding
Agent timely information for the purpose of determining
each Adjusted Eurodollar Rate. If any one or more of the
Reference Banks shall not furnish such timely information to
the Funding Agent for the purpose of determining any such
interest rate, the Funding Agent shall determine such
interest rate on the basis of timely information furnished
by the remaining Reference Banks, subject to Section
2.02(b)(iv).
(b) The Funding Agent shall give prompt notice to
the Borrower and the Lenders of the applicable interest rate
determined by the Funding Agent for purposes of Section
2.06(a) or 2.06(b), and the applicable rate, if any,
furnished by each Reference Bank for the purpose of
determining the applicable interest rate under Section
2.06(b).
SECTION 2.08. Voluntary Conversion or
Continuation of Advances.
(a) The Borrower may on any Business Day, upon
notice given to the Funding Agent not later than 12:00 noon
(New York City time) on the third Business Day prior to the
date of the proposed Conversion or continuance (a "Notice of
Conversion/Continuation") and subject to the provisions of
Section 2.02(b), (1) Convert all Advances of one Type
comprising the same Borrowing into Advances of another Type
and (2) upon the expiration of any Interest Period
applicable to Advances which are Eurodollar Rate Advances,
continue all (or, subject to Section 2.02(b), any portion
of) such Advances as Eurodollar Rate Advances and the
succeeding Interest Period(s) of such continued Advances
shall commence on the last day of the Interest Period of the
Advances to be continued; provided, however, that any
Conversion of any Eurodollar Rate Advances into Advances of
another Type shall be made on, and only on, the last day of
an Interest Period for such Eurodollar Rate Advances. Each
such Notice of Conversion/Continuation shall, within the
restrictions specified above, specify (i) the date of such
continuation or Conversion, (ii) the Advances (or, subject
to Section 2.02(b), any portion thereof) to be continued or
Converted, (iii) if such continuation is of, or such
Conversion is into, Eurodollar Rate Advances, the duration
of the Interest Period for each such Advance and (iv) in the
case of a continuation of or a Conversion into a Eurodollar
Rate Advance, that no Potential Event of Default or Event of
Default has occurred and is continuing.
(b) If upon the expiration of the then
existing Interest Period applicable to any Advance which
is a Eurodollar Rate Advance, the Borrower shall not have
delivered a Notice of Conversion/Continuation in accordance
with this Section 2.08, then such Advance shall upon such
expiration automatically be Converted to a Base Rate
Advance.
(c) After the occurrence of and during the
continuance of a Potential Event of Default or an Event of
Default, the Borrower may not elect to have an Advance be
made or continued as, or Converted into, a Eurodollar Rate
Advance after the expiration of any Interest Rate then in
effect for that Advance.
SECTION 2.09. Increased Costs. (a) If, due
to either (i) the introduction of or any change (other
than any change by way of imposition or increase of reserve
requirements in the case of Eurodollar Rate Advances
included in the Eurodollar Rate Reserve Percentage) in or in
the interpretation of any law or regulation or (ii) the
compliance with any guideline or request from any central
bank or other governmental authority (whether or not having
the force of law), there shall be any increase in the cost
to any Lender of agreeing to make or making, funding or
maintaining Eurodollar Rate Advances, then the Borrower
shall from time to time, upon demand by such Lender (with a
copy of such demand to the Funding Agent), pay to the
Funding Agent for the account of such Lender additional
amounts sufficient to compensate such Lender for such
increased cost. A reasonably detailed certificate as to the
amount and manner of calculation of such increased cost,
submitted to the Borrower and the Funding Agent by such
Lender, shall be conclusive and binding for all purposes,
absent manifest error.
(b) If any Lender determines that compliance with
any law or regulation or any guideline or request from any
central bank or other governmental authority (whether or not
having the force of law) affects or would affect the amount
of capital required or expected to be maintained by such
Lender or any corporation controlling such Lender and that
the amount of such capital is increased by or based upon the
existence of such Lender's commitment to lend hereunder and
other commitments of this type, then, upon demand by such
Lender (with a copy of such demand to the Funding Agent),
the Borrower shall immediately pay to the Funding Agent for
the account of such Lender, from time to time as specified
by such Lender, additional amounts sufficient to compensate
such Lender or such corporation in the light of such
circumstances, to the extent that such Lender reasonably
determines such increase in capital to be allocable to the
existence of such Lender's commitment to lend hereunder. A
reasonably detailed certificate as to such amounts and the
manner of calculation thereof submitted to the Borrower and
the Funding Agent by such Lender shall be conclusive and
binding for all purposes, absent manifest error.
(c) If a Lender shall change its Applicable
Lending Office, such Lender shall not be entitled to receive
any greater payment under Sections 2.09 and 2.11 than the
amount such Lender would have been entitled to receive if it
had not changed its Applicable Lending Office, unless such
change was made at the request of the Borrower or at a time
when the circumstances giving rise to such greater payment
did not exist.
SECTION 2.10. Payments and Computations. (a) The
Borrower shall make each payment hereunder not later than
1:00 P.M. (New York City time) on the day when due in U.S.
dollars to the Funding Agent at its address referred to in
Section 8.02 in same day funds. Subject to the immediately
succeeding sentence, the Funding Agent will promptly
thereafter cause to be distributed like funds relating to
the payment of principal or interest or commitment fees
ratably (other than amounts payable pursuant to Section 2.09
or 2.11 or, to the extent the Termination Date is not the
same for all Lenders, pursuant to Section 2.05(a)) to the
Lenders for the account of their respective Applicable
Lending Offices, and like funds relating to the payment of
any other amount payable to any Lender to such Lender for
the account of its Applicable Lending Office, in each case
to be applied in accordance with the terms of this
Agreement. Upon receipt of principal or interest paid after
an Event of Default and an acceleration or a deemed
acceleration of amounts due hereunder, the Funding Agent
will promptly thereafter cause to be distributed like funds
relating to the payment of principal or interest ratably in
accordance with each Lender's outstanding Advances (other
than amounts payable pursuant to Section 2.09 or 2.11) to
the Lenders for the account of their respective Applicable
Lending Offices. Upon its acceptance of an Assignment and
Acceptance and recording of the information contained
therein in the Register pursuant to Section 8.07(d), from
and after the effective date specified in such Assignment
and Acceptance, the Funding Agent shall make all payments
hereunder in respect of the interest assigned thereby to the
Lender assignee thereunder, and the parties to such
Assignment and Acceptance shall make all appropriate
adjustments in such payments for periods prior to such
effective date directly between themselves.
(b) All computations of interest based on the
Base Rate shall be made by the Funding Agent on the basis
of a year of 365 or 366 days, as the case may be, and all
computations of interest based on the Adjusted Eurodollar
Rate or the Federal Funds Rate and of commitment fees shall
be made by the Funding Agent on the basis of a year of 360
days, in each case for the actual number of days (including
the first day but excluding the last day) occurring in the
period for which such interest or such fees are payable.
Each determination by the Funding Agent of an interest rate
hereunder shall be conclusive and binding for all purposes,
absent manifest error.
(c) Whenever any payment hereunder shall be
stated to be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day,
and such extension of time shall in such case be included in
the computation of payment of interest or commitment fee, as
the case may be; provided, however, if such extension would
cause payment of interest on or principal of Eurodollar Rate
Advances to be made in the next following calendar month,
such payment shall be made on the next preceding Business
Day.
(d) Unless the Funding Agent shall have received
notice from the Borrower prior to the date on which any
payment is due to the Lenders hereunder that the Borrower
will not make such payment in full, the Funding Agent may
assume that the Borrower has made such payment in full to
the Funding Agent on such date and the Funding Agent may, in
reliance upon such assumption, cause to be distributed to
each Lender on such due date an amount equal to the amount
then due such Lender. If and to the extent that the
Borrower shall not have so made such payment in full to the
Funding Agent, each Lender shall repay to the Funding Agent
forthwith on demand such amount distributed to such Lender
together with interest thereon, for each day from the date
such amount is distributed to such Lender until the date
such Lender repays such amount to the Funding Agent, at the
Federal Funds Rate.
SECTION 2.11. Taxes. (a) Any and all payments
by the Borrower hereunder shall be made, in accordance with
Section 2.10, free and clear of and without deduction for
any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities
with respect thereto, excluding (i) in the case of each
Lender and each Agent, taxes imposed on its income, and
franchise taxes imposed on it, by the jurisdiction under the
laws of which such Lender or such Agent (as the case may be)
is organized or any political subdivision thereof or in
which its principal office is located, (ii) in the case of
each Lender taxes imposed on its net income, and franchise
taxes imposed on it, by the jurisdiction of such Lender's
Applicable Lending Office or any political subdivision
thereof and (iii) in the case of each Lender and each Agent,
taxes imposed by the United States by means of withholding
at the source if and to the extent that such taxes shall be
in effect and shall be applicable on the date hereof in the
case of each Bank and on the effective date of the
Assignment and Acceptance pursuant to which it became a
Lender in the case of each other Lender, on payments to be
made to the Agents or such Lender's Applicable Lending
Office (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being
hereinafter referred to as "Taxes"). If the Borrower shall
be required by law to deduct any Taxes from or in respect of
any sum payable hereunder to any Lender or either Agent,
(i) the sum payable shall be increased as may be necessary
so that after making all required deductions (including
deductions applicable to additional sums payable under this
Section 2.11) such Lender or such Agent (as the case may be)
receives an amount equal to the sum it would have received
had no such deductions been made, (ii) the Borrower shall
make such deductions and (iii) the Borrower shall pay the
full amount deducted to the relevant taxation authority or
other authority in accordance with applicable law.
(b) In addition, the Borrower agrees to pay any
present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies which
arise from the execution, delivery or registration of, or
otherwise with respect to, this Agreement (hereinafter
referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender
and each Agent for the full amount of Taxes or Other Taxes
(including, without limitation, any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this
Section 2.11) paid by such Lender or such Agent (as the case
may be) and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether
or not such Taxes or Other Taxes were correctly or legally
asserted. This indemnification shall be made within 30 days
from the date such Lender or such Agent (as the case may be)
makes written demand therefor.
(d) Within 30 days after the date of any payment
of Taxes, the Borrower will furnish to the Funding Agent, at
its address referred to in Section 8.02, the original or a
certified copy of a receipt evidencing payment thereof.
(e) Each Lender organized under the laws of a
jurisdiction outside the United States, on or prior to the
date of its execution and delivery of this Agreement in the
case of each Bank and on the date of the Assignment and
Acceptance pursuant to which it becomes a Lender in the case
of each other Lender, and from time to time thereafter if
requested in writing by the Borrower (but only so long as
such Lender remains lawfully able to do so), shall provide
the Borrower with Internal Revenue Service form 1001 or
4224, as appropriate, or any successor form prescribed by
the Internal Revenue Service, certifying that such Lender is
entitled to benefits under an income tax treaty to which
the United States is a party which reduces the rate of
withholding tax on payments of interest or certifying
that the income receivable pursuant to this Agreement is
effectively connected with the conduct of a trade or
business in the United States. If the form provided by a
Lender at the time such Lender first becomes a party to this
Agreement indicates a United States interest withholding tax
rate in excess of zero, withholding tax at such rate shall
be considered excluded from "Taxes" as defined in Section
2.11(a).
(f) For any period with respect to which a Lender
has failed to provide the Borrower with the appropriate form
described in Section 2.11(e) (other than if such failure is
due to a change in law occurring subsequent to the date on
which a form originally was required to be provided, or if
such form otherwise is not required under the first sentence
of subsection (e) above), such Lender shall not be entitled
to indemnification under Section 2.11(a) with respect to
Taxes imposed by the United States; provided, however, that
should a Lender become subject to Taxes because of its
failure to deliver a form required hereunder, the Borrower
shall, at the expense of such Lender, take such steps as the
Lender shall reasonably request to assist the Lender to
recover such Taxes.
(g) Without prejudice to the survival of any
other agreement of the Borrower hereunder, the agreements
and obligations of the Borrower contained in this Section
2.11 shall survive the payment in full of principal and
interest hereunder.
SECTION 2.12. Sharing of Payments, Etc. If
any Lender shall obtain any payment (whether voluntary,
involuntary, through the exercise of any right of set-off,
or otherwise) on account of the Advances made by it (other
than pursuant to Section 2.09 or 2.11 or, to the extent the
Termination Date is not the same for all Lenders, pursuant
to Section 2.05(a)) in excess of its ratable share of
payments on account of the Advances obtained by all the
Lenders, such Lender shall forthwith purchase from the other
Lenders such participations in the Advances made by them as
shall be necessary to cause such purchasing Lender to share
the excess payment ratably with each of them, provided,
however, that if all or any portion of such excess payment
is thereafter recovered from such purchasing Lender, such
purchase from each Lender shall be rescinded and such Lender
shall repay to the purchasing Lender the purchase price to
the extent of such recovery together with an amount equal to
such Lender's ratable share (according to the proportion of
(i) the amount of such Lender's required repayment to
(ii) the total amount so recovered from the purchasing
Lender) of any interest or other amount paid or payable by
the purchasing Lender in respect of the total amount so
recovered. The Borrower agrees that any Lender so
purchasing a participation from another Lender pursuant to
this Section 2.12 may, to the fullest extent permitted by
law, exercise all its rights of payment (including the right
of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Borrower in
the amount of such participation.
SECTION 2.13. Evidence of Debt.
(a) Each Lender shall maintain in accordance
with its usual practice an account or accounts evidencing
the indebtedness of the Borrower to such Lender resulting
from each Advance owing to such Lender from time to time,
including the amounts of principal and interest payable and
paid to such Lender from time to time hereunder.
(b) The Register maintained by the Funding Agent
pursuant to Section 8.07(c) shall include a control account,
and a subsidiary account for each Lender, in which accounts
(taken together) shall be recorded (i) the date, amount and
tenor, as applicable, of each Borrowing, the Type of
Advances comprising such Borrowing and the Interest Period
applicable thereto, (ii) the terms of each Assignment and
Acceptance delivered to and accepted by it, (iii) the amount
of any principal or interest due and payable or to become
due and payable from the Borrower to each Lender hereunder,
and (iv) the amount of any sum received by the Funding Agent
from the Borrower hereunder and each Lender's share thereof.
(c) The entries made in the Register shall be
conclusive and binding for all purposes, absent manifest
error.
(d) Any Lender may at any time request that the
Borrower execute and deliver to such Lender a Note,
substantially in the form of Exhibit G annexed hereto, to
evidence such Lender's Advances hereunder. The Borrower
agrees promptly upon its receipt of any such request from a
Lender to execute and deliver a Note to such Lender.
SECTION 2.14. Use of Proceeds.
(a) Advances shall be used by the Borrower for
commercial paper backup and for general corporate purposes.
(b) No portion of the proceeds of any Advances
under this Agreement shall be used by the Borrower or any of
its Subsidiaries in any manner which might cause the
Advances or the application of such proceeds to violate, or
require any Lender to make any filing or take any other
action under, Regulation G, Regulation U, Regulation T, or
Regulation X of the Board of Governors of the Federal
Reserve System or any other regulation of such Board or to
violate the Securities Exchange Act of 1934, in each case as
in effect on the date or dates of such Advances and such use
of proceeds.
SECTION 2.15. Extension of the Commitment
Termination Date. The Borrower may not more than once in
any calendar year and not later than 13 months prior to the
then existing Commitment Termination Date of the Eligible
Lenders (as defined below), request that the Commitment
Termination Date of all Eligible Lenders be extended for a
period of one year by delivering to the Agents a signed copy
of an extension request (an "Extension Request") in
substantially the form of Exhibit E hereto; provided, that,
if such request is made no earlier than 15 months prior to
(and no later than 13 months prior to) the then existing
Commitment Termination Date of the Eligible Lenders, the
Borrower may request that the Commitment Termination Date of
all Eligible Lenders be extended for a period of two years.
The Reporting Agent on behalf of the Agents shall promptly
notify each Eligible Lender of its receipt of such Extension
Request. On or prior to June 20 of each calendar year in
which there has been an Extension Request (the
"Determination Date"), each Eligible Lender shall notify
each Agent and the Borrower of its willingness or
unwillingness to extend its Commitment Termination Date
hereunder. Any Eligible Lender that shall fail to so notify
each Agent and the Borrower on or prior to the Determination
Date shall be deemed to have declined to so extend. In the
event that, on or prior to the Determination Date, Eligible
Lenders representing 66-2/3% or more of the aggregate amount
of the Commitments of all Eligible Lenders then in effect
shall consent to such extension, upon confirmation by the
Agents of such consent, the Reporting Agent on behalf of the
Agents shall so advise the Lenders and the Borrower, and,
subject to execution of documentation evidencing such
extension and consents, the Commitment Termination Date of
each Eligible Lender (each a "Consenting Lender") that has
consented on or prior to the Determination Date to so extend
shall be extended to the date one year or two years, as
applicable, after the Commitment Termination Date of such
Eligible Lender in existence on the date of the related
Extension Request. Thereafter, (i) for each Consenting
Lender, the term "Commitment Termination Date" shall at
all times refer to such date, unless it is later extended
pursuant to this Section 2.15, and (ii) for each Lender that
is not an Eligible Lender and for each Eligible Lender that
either has declined on or prior to the Determination Date
to so extend or is deemed to have so declined, the term
"Commitment Termination Date" shall at all times refer to
the date which was the Commitment Termination Date of such
Lender immediately prior to the delivery to the Agents of
such Extension Request. In the event that, as of the
Determination Date, the Consenting Lenders represent less
than 66-2/3% of the aggregate amount of the Commitments of
all Eligible Lenders then in effect, and the Agents confirm
the same, the Reporting Agent on behalf of the Agents shall
so advise the Lenders and the Borrower, and none of the
Lenders' Commitment Termination Dates shall be extended to
the date indicated in the Extension Request and each
Lender's Commitment Termination Date shall continue to be
the date which was the Commitment Termination Date of such
Lender immediately prior to the delivery to the Agents of
such Extension Request. For purposes of this Section 2.15,
the term "Eligible Lenders" means, with respect to any
Extension Request, (i) all Lenders if no Lender's Commitment
Termination Date had been extended pursuant to this Section
2.15 prior to the delivery to the Agents of such Extension
Request, and (ii) in all other cases, those Lenders which
had extended their Commitment Termination Date in the most
recent extension of any Commitment Termination Date effected
pursuant to this Section 2.15.
SECTION 2.16. Substitution of Lenders. If any
Lender requests compensation from the Borrower under Section
2.09(a) or (b) or Section 2.11 or if any Lender declines to
extend its Commitment Termination Date pursuant to Section
2.15, the Borrower shall have the right, with the assistance
of the Agents, to seek one or more Eligible Assignees (which
may be one or more of the Lenders) reasonably satisfactory
to the Agents and the Borrower to purchase the Advances and
assume the Commitments of such Lender, and the Borrower, the
Agents, such Lender, and such Eligible Assignees shall
execute and deliver an appropriately completed Assignment
and Acceptance pursuant to Section 8.07(a) hereof to effect
the assignment of rights to and the assumption of
obligations by such Eligible Assignees; provided that such
requesting Lender shall be entitled to compensation under
Section 2.09 and 2.11 for any costs incurred by it prior to
its replacement.
ARTICLE III
CONDITIONS OF LENDING
SECTION 3.01. Condition Precedent to Effective
Date. The obligation of each Lender to make its initial
Advance is subject to the condition precedent that (a) the
Agents shall have received on or before the Effective Date
the following, each dated the Effective Date unless
otherwise indicated, and each in form and substance
satisfactory to the Agents and in sufficient copies for each
Lender:
(i) Copies of resolutions of the Board of
Directors of the Borrower (or its Executive Committee,
together with evidence of the authority of the
Executive Committee) approving this Agreement, and of
all documents evidencing other necessary corporate
action and governmental approvals, if any, with respect
to this Agreement, certified as of a recent date prior
to the Effective Date.
(ii) A certificate of the Secretary or an
Assistant Secretary of the Borrower certifying the
names and true signatures of the officers of the
Borrower authorized to sign this Agreement and the
other documents to be delivered by the Borrower
hereunder.
(iii) Certified copies of the Borrower's
Certificate of Incorporation, together with good
standing certificates from the state of Delaware and
the jurisdiction of the Borrower's principal place of
business, each to be dated a recent date prior to the
Effective Date;
(iv) Copies of the Borrower's Bylaws, certified
as of the Effective Date by their respective Secretary
or an Assistant Secretary;
(v) Executed originals of this Agreement and
the other documents to be delivered by the Borrower
hereunder;
(vi) A favorable opinion of the General Counsel
of the Borrower, substantially in the form of Exhibit C
hereto;
(vii) A favorable opinion of O'Melveny & Myers,
counsel for the Agents, substantially in the form of
Exhibit D hereto;
(viii) The Borrower's form 8-K dated October 1,
1993, which includes restated audited financial
statements as of December 31, 1992 to present the
Borrower's transportation manufacturing and service
parts group as a discontinued operation, in the form
sent to the Securities and Exchange Commission; and
(ix) A certificate of an authorized officer of
the Company to the effect that since December 31, 1992,
there has been no material adverse change in the
operations, business or financial or other condition or
properties of the Borrower and its Subsidiaries, taken
as a whole; and
(b) the Agents shall have received the fees set
forth in Section 2.03 (b) and (c) if such fees are payable
to the Agents and the Banks on the Effective Date.
SECTION 3.02. Conditions Precedent to Each
Borrowing. The obligation of each Lender to make an Advance
on the occasion of each Borrowing (including the initial
Borrowing) shall be subject to the further conditions
precedent that (x) the Funding Agent shall have received a
Notice of Borrowing with respect thereto in accordance with
Section 2.02 and (y) on the date of such Borrowing (a) the
following statements shall be true (and each of the giving
of the applicable Notice of Borrowing and the acceptance by
the Borrower of the proceeds of such Borrowing shall
constitute a representation and warranty by the Borrower
that on the date of such Borrowing such statements are
true):
(i) The representations and warranties of the
Borrower contained in Section 4.01 are correct on and
as of the date of such Borrowing, before and after
giving effect to such Borrowing and to the application
of the proceeds therefrom, as though made on and as of
such date, except to the extent that any such
representation or warranty expressly relates only to an
earlier date, in which case they were correct as of
such earlier date; and
(ii) No event has occurred and is continuing, or
would result from such Borrowing or from the
application of the proceeds therefrom, which
constitutes an Event of Default, or a Potential Event
of Default;
and (b) the Agents shall have received such other approvals,
opinions or documents as the Requisite Lenders through the
Agents may reasonably request.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 4.01. Representations and Warranties of
the Borrower. The Borrower represents and warrants as
follows:
(a) Due Organization, etc. The Borrower and each
Material Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of
the jurisdiction of its incorporation. The Borrower
and each of its Material Subsidiaries are qualified to
do business in and are in good standing under the laws
of each jurisdiction in which failure to be so
qualified would have a material adverse effect on the
Borrower and its Subsidiaries, taken as a whole.
(b) Due Authorization, etc. The execution,
delivery and performance by the Borrower of this
Agreement and the other Loan Documents are within the
Borrower's corporate powers, have been duly authorized
by all necessary corporate action, and do not
contravene (i) the Borrower's Certificate of
Incorporation or (ii) applicable law or any material
contractual restriction binding on or affecting the
Borrower.
(c) Governmental Consent. No authorization or
approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body is
required for the due execution, delivery and
performance by the Borrower of this Agreement and the
other Loan Documents.
(d) Validity. This Agreement is the legal,
valid and binding obligation of the Borrower
enforceable against the Borrower in accordance with its
terms subject to the effect of applicable bankruptcy,
insolvency, arrangement, moratorium and other similar
laws affecting creditors' rights generally and to the
application of general principles of equity.
(e) Condition of the Borrower. The balance sheet
of the Borrower and its Subsidiaries as at December 31,
1992, and the related statements of income and retained
earnings of the Borrower and its Subsidiaries for the
fiscal year then ended, copies of which have been
furnished to each Bank pursuant to Section
3.01(a)(viii), fairly present the financial condition
of the Borrower and its Subsidiaries as at such date
and the results of the operations of the Borrower and
its Subsidiaries for the period ended on such date, all
in accordance with GAAP consistently applied, and as of
the Effective Date, there has been no material adverse
change in the business, condition (financial or
otherwise), operations or properties of the Borrower
and its Subsidiaries, taken as a whole, since
December 31, 1992.
(f) Litigation. (i) There is no pending
action or proceeding against the Borrower or any of its
Subsidiaries before any court, governmental agency or
arbitrator, and (ii) to the knowledge of the Borrower,
there is no pending or threatened action or proceeding
affecting the Borrower or any of its Subsidiaries
before any court, governmental agency or arbitrator,
which in either case, in the reasonable judgement of
the Borrower could reasonably be expected to materially
adversely affect the financial condition or operations
of the Borrower and its Subsidiaries, taken as a whole,
or with respect to actions of third parties which
purports to affect the legality, validity or
enforceability of this Agreement.
(g) Margin Regulations. The Borrower is not
engaged in the business of extending credit for the
purpose of purchasing or carrying margin stock (within
the meaning of Regulation U issued by the Board of
Governors of the Federal Reserve System), and no
proceeds of any Advance will be used to purchase or
carry any margin stock or to extend credit to others
for the purpose of purchasing or carrying any margin
stock in any manner that violates, or would cause a
violation of, Regulation G, Regulation T, Regulation U
or Regulation X. Less than 25 percent of the fair
market value of the assets of (i) the Borrower or
(ii) the Borrower and its Subsidiaries consists of
Margin Stock.
(h) Payment of Taxes. The Borrower and each of
its Subsidiaries have filed or caused to be filed all
material tax returns (federal, state, local and
foreign) required to be filed and paid all material
amounts of taxes shown thereon to be due, including
interest and penalties, except for such taxes as are
being contested in good faith and by proper proceedings
and with respect to which appropriate reserves are
being maintained by the Borrower or any such
Subsidiary, as the case may be.
(i) Governmental Regulation. The Borrower
is not subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act
of 1940, each as amended, or to any Federal or state
statute or regulation limiting its ability to incur
indebtedness for money borrowed. No Subsidiary of the
Borrower is subject to any regulation that would limit
the ability of the Borrower to enter into or perform
its obligations under this Agreement.
(j) ERISA.
(i) No ERISA Event which might result in
liability of the Borrower or any of its ERISA
Affiliates in excess of $10,000,000 (or, in the
case of an event described in clause (v) of the
definition of ERISA Event, $750,000) (other than
for premiums payable under Title IV of ERISA) has
occurred or is reasonably expected to occur with
respect to any Pension Plan.
(ii) Schedule B (Actuarial Information) to
the most recently completed annual report prior to
the Effective Date (Form 5500 Series) for each
Pension Plan, copies of which have been filed with
the Internal Revenue Service and furnished to the
Agents, is complete and, to the best knowledge of
the Borrower, accurate, and since the date of such
Schedule B there has been no material adverse
change in the funding status of any such Pension
Plan.
(iii) Neither the Borrower nor any ERISA
Affiliate has incurred, or, to the best knowledge
of the Borrower, is reasonably expected to incur,
any Withdrawal Liability to any Multiemployer Plan
which has not been satisfied or which is or might
be in excess of $10,000,000.
(iv) Neither the Borrower nor any ERISA
Affiliate has been notified by the sponsor of a
Multiemployer Plan that such Multiemployer Plan is
in reorganization or has been terminated, within
the meaning of Title IV of ERISA, and, to the best
knowledge of the Borrower, no Multiemployer Plan
is reasonably expected to be in reorganization or
to be terminated within the meaning of Title IV of
ERISA.
(k) Environmental Matters. (i) The Borrower
and each of its Subsidiaries is in compliance in all
material respects with all Environmental Laws the non-
compliance with which could reasonably be expected to
have a material adverse effect on the financial
condition or operations of the Borrower and its
Subsidiaries, taken as a whole, and (ii) there has
been no "release or threatened release of a hazardous
substance" (as defined by the Comprehensive
Environmental Response, Compensation and Liability
Act of 1980, as amended, 42 U.S.C. Section 9601 et
seq.) or any other release, emission or discharge into
the environment of any hazardous or toxic substance,
pollutant or other materials from the Borrower's or its
Subsidiaries' property other than as permitted under
applicable Environmental Law and other than those
which would not have a material adverse effect on the
financial condition or operations of the Borrower and
its Subsidiaries, taken as a whole. Other than
disposals for which the Borrower has been indemnified
in full, all "hazardous waste" (as defined by the
Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901 et seq. (1976) and the regulations
thereunder, 40 CFR Part 261 ("RCRA")) generated at the
Borrower's or any Subsidiaries' properties have in the
past been and shall continue to be disposed of at sites
which maintain valid permits under RCRA and any
applicable state or local Environmental Law.
ARTICLE V
COVENANTS OF THE BORROWER
SECTION 5.01. Affirmative Covenants. So long as
any Advance shall remain unpaid or any Lender shall have any
Commitment hereunder, the Borrower will, unless the
Requisite Lenders shall otherwise consent in writing:
(a) Compliance with Laws, Etc. Comply, and cause
each of its Subsidiaries to comply, with all applicable
laws, rules, regulations and orders, such compliance to
include, without limitation, (i) complying with all
Environmental Laws and (ii) paying before the same
become delinquent all taxes, assessments and
governmental charges imposed upon it or upon its
property except to the extent contested in good faith,
except where failure to so comply would not have a
material adverse effect on the business, condition
(financial or otherwise), operations or properties of
the Borrower and its Subsidiaries, taken as a whole.
(b) Reporting Requirements. Furnish to the
Reporting Agent (in sufficient quantity for delivery to
each Lender) for prompt distribution by the Reporting
Agent to the Lenders and furnish to Citibank (and in
the case of clause (xii), to the Funding Agent):
(i) as soon as available and in any event
within 60 days after the end of each of the first
three quarters of each fiscal year of the
Borrower, consolidated balance sheets as of the
end of such quarter and consolidated statements of
source and application of funds of the Borrower
and its Subsidiaries and consolidated statements
of income and retained earnings of the Borrower
and its Subsidiaries for such quarter and the
period commencing at the end of the previous
fiscal year and ending with the end of such
quarter and certified by the chief financial
officer or chief accounting officer of the
Borrower;
(ii) as soon as available and in any event
within 120 days after the end of each fiscal year
of the Borrower, a copy of the annual audit
report for such year for the Borrower and its
Subsidiaries, containing financial statements
(including a consolidated balance sheet and
consolidated statement of income and cash flows of
the Borrower and its Subsidiaries) for such year,
certified by and accompanied by an opinion of
Deloitte & Touche or other nationally recognized
independent public accountants. The opinion shall
be unqualified (as to going concern, scope of
audit and disagreements over the accounting or
other treatment of offsets) and shall state that
such consolidated financial statements present
fairly in all material respects the financial
position of the Borrower and its Subsidiaries as
at the dates indicated and the results of their
operations and cash flow for the periods indicated
in conformity with GAAP and that the examination
by such accountants in connection with such
consolidated financial statements has been made in
accordance with generally accepted auditing
standards;
(iii) together with each delivery of the
report of the Borrower and its Subsidiaries
pursuant to subsections (i) and (ii) above, a
Compliance Certificate for the year executed by
the chief financial officer or treasurer of the
Borrower demonstrating in reasonable detail
compliance during and at the end of such
accounting periods with the restrictions contained
in Section 5.02(e), (f) and (g) (and setting forth
the arithmetical computation required to show such
compliance) and stating that the signer has
reviewed the terms of this Agreement and has made,
or caused to be made under his or her supervision,
a review in reasonable detail of the transactions
and condition of the Borrower and its Subsidiaries
during the accounting period covered by such
financial statements and that such review has not
disclosed the existence during or at the end of
such accounting period, and that the signer does
not have knowledge of the existence as at the date
of the compliance certificate, of any condition
or event that constitutes an Event of Default or
Potential Event of Default or, if any such
condition or event existed or exists, specifying
the nature and period of existence thereof and
what action the Borrower has taken, is taking and
proposes to take with respect thereto;
(iv) as soon as possible and in any event
within five days after the occurrence of each
Event of Default and each Potential Event of
Default, continuing on the date of such statement,
a statement of an authorized financial officer of
the Borrower setting forth details of such Event
of Default or event and the action which the
Borrower has taken and proposes to take with
respect thereto;
(v) promptly after any material change in
accounting policies or reporting practices, notice
and a description in reasonable detail of such
change;
(vi) promptly and in any event within 30 days
after the Borrower or any ERISA Affiliate knows or
has reason to know that any ERISA Event referred
to in clause (i) of the definition of ERISA Event
with respect to any Pension Plan has occurred
which might result in liability to the PBGC a
statement of the chief accounting officer of the
Borrower describing such ERISA Event and the
action, if any, that the Borrower or such ERISA
Affiliate has taken or proposes to take with
respect thereto;
(vii) promptly and in any event within 15 days
after the Borrower or any ERISA Affiliate knows or
has reason to know that any ERISA Event (other
than an ERISA Event referred to in (vi) above)
with respect to any Pension Plan has occurred
which might result in liability to the PBGC in
excess of $100,000, a statement of the chief
accounting officer of the Borrower describing such
ERISA Event and the action, if any, that the
Borrower or such ERISA Affiliate has taken or
proposes to take with respect thereto;
(viii) promptly and in any event within five
Business Days after receipt thereof by the
Borrower or any ERISA Affiliate from the PBGC,
copies of each notice from the PBGC of its
intention to terminate any Pension Plan or to have
a trustee appointed to administer any Pension
Plan;
(ix) promptly and in any event within 15 days
after receipt thereof by the Borrower or any ERISA
Affiliate from the sponsor of a Multiemployer
Plan, a copy of each notice received by the
Borrower or any ERISA Affiliate concerning (w) the
imposition of Withdrawal Liability by a
Multiemployer Plan in excess of $100,000, (x) the
determination that a Multiemployer Plan is, or is
expected to be, in reorganization within the
meaning of Title IV of ERISA, (y) the termination
of a Multiemployer Plan within the meaning of
Title IV of ERISA or (z) the amount of liability
incurred, or expected to be incurred, by the
Borrower or any ERISA Affiliate in connection with
any event described in clause (w), (x) or (y)
above;
(x) promptly after the commencement
thereof, notice of all material actions, suits
and proceedings before any court or government
department, commission, board, bureau, agency or
instrumentality, domestic or foreign, affecting
the Borrower or any of its Subsidiaries, of the
type described in Section 4.01(f);
(xi) promptly after the occurrence thereof,
notice of (A) any event which makes any of the
representations contained in Section 4.01(k)
inaccurate in any material respect or (B) the
receipt by the Borrower of any notice, order,
directive or other communication from a
governmental authority alleging violations of or
noncompliance with any Environmental Law which
could reasonably be expected to have a material
adverse effect on the financial condition of the
Borrowers and its Subsidiaries, taken as a whole;
(xii) promptly after any change in the rating
established by S&P, Moody's or Duff & Phelps, as
applicable, with respect to Long-Term Debt, a
notice of such change, which notice shall specify
the new rating, the date on which such change was
publicly announced, and such other information
with respect to such change as any Lender through
either Agent may reasonably request;
(xiii) promptly after the sending or filing
thereof, copies of all reports which the Borrower
sends to any of its public security holders, and
copies of all reports and registration statements
which the Borrower files with the SEC or any
national security exchange;
(xiv) promptly after the Borrower or any ERISA
Affiliate creates any employee benefit plan to
provide health or welfare benefits (through the
purchase of insurance or otherwise) for any
retired or former employee of the Borrower or any
of its ERISA Affiliates (except as provided in
Section 4980B of the Code and except as provided
under the terms of any employee welfare benefit
plans provided pursuant to the terms of collective
bargaining agreements) under the terms of which
the Borrower and/or any of its ERISA Affiliates
are not permitted to terminate such benefits, a
notice detailing such plan; and
(xv) such other information respecting the
condition or operations, financial or otherwise,
of the Borrower or any of its Subsidiaries as any
Lender through either Agent may from time to time
reasonably request.
(c) Corporate Existence, Etc. The Borrower will,
and will cause each of its Subsidiaries to, at all
times preserve and maintain its fundamental business
and preserve and keep in full force and effect its
corporate existence (except as permitted under Section
5.02(b) hereof) and all rights, franchises and licenses
necessary or desirable in the normal conduct of its
business; provided, however, that this paragraph (c)
shall not apply in any case when, in the good faith
business judgment of the Borrower, such preservation or
maintenance is neither necessary nor appropriate for
the prudent management of the business of the Borrower.
(d) Inspection. The Borrower will permit and
will cause each of its Subsidiaries to permit any
authorized representative designated by either Agent or
any Lender at the expense of such Agent or such Lender,
to visit and inspect any of the properties of the
Lender or any of its Subsidiaries, including its and
their financial and accounting records, and to take
copies and to take extracts therefrom, and discuss its
and their affairs, finances and accounts with its and
their officers and independent public accountants, all
during normal hours, upon reasonable notice and as
often as may be reasonably requested.
(e) Insurance. The Borrower will maintain and
will cause each of its Subsidiaries to maintain
insurance to such extent and covering such risks as is
usual for companies engaged in the same or similar
business and on request will advise the Lenders of all
insurance so carried.
SECTION 5.02. Negative Covenants. So long as
any Advance shall remain unpaid or any Lender shall have any
Commitment hereunder, without the written consent of the
Requisite Lenders:
(a) Liens, Etc. The Borrower will not create
or suffer to exist, or permit any of its Subsidiaries
to create or suffer to exist, any Lien, upon or with
respect to any of its properties, whether now owned or
hereafter acquired, or assign, or permit any of its
Subsidiaries to assign, any right to receive income, in
each case to secure or provide for the payment of any
Debt of any Person, unless the Borrower's obligations
hereunder shall be secured equally and ratably with,
or prior to, any such Debt; provided however that the
foregoing restriction shall not apply to the following
Liens which are permitted:
(i) Liens on assets of any Subsidiary of the
Borrower existing at the time such Person becomes
a Subsidiary (other than any such Lien created in
contemplation of becoming a Subsidiary);
(ii) Liens on accounts receivable resulting
from the sale of such accounts receivable, so long
as, at any time, the aggregate outstanding amount
of cash advanced to the Borrower and attributable
to the sale of such accounts receivable does not
exceed $200,000,000;
(iii) purchase money Liens upon or in any
property acquired or held by the Borrower or any
Subsidiary in the ordinary course of business to
secure the purchase price of such property or to
secure Debt incurred solely for the purpose of
financing the acquisition of such property
(provided that the amount of Debt secured by such
Lien does not exceed 100% of the purchase price of
such property and transaction costs relating to
such acquisition) and Liens existing on such
property at the time of its acquisition (other
than any such Lien created in contemplation of
such acquisition); and the interest of the lessor
thereof in any property that is subject to a
Capital Lease;
(iv) any Lien securing Debt that was incurred
prior to or during construction or improvement of
property for the purpose of financing all or part
of the cost of such construction or improvement,
provided that the amount of Debt secured by such
Lien does not exceed 100% of the fair market value
of such property after giving effect to such
construction or improvement;
(v) any Lien securing Debt of a Subsidiary
owing to the Borrower;
(vi) Liens resulting from any extension,
renewal or replacement (or successive extensions,
renewals or replacements), in whole or in part, of
any Debt secured by any Lien referred to in
clauses (i), (iii) and (iv) above so long as (x)
the aggregate principal amount of such Debt shall
not increase as a result of such extension,
renewal or replacement and (y) Liens resulting
from any such extension, renewal or replacement
shall cover only such property which secured the
Debt that is being extended, renewed or replaced;
and
(vii) Liens other than Liens described in
clauses (i) through (vi) hereof, whether now
existing or hereafter arising, securing Debt in an
aggregate amount not exceeding $50,000,000.
(b) Restrictions on Fundamental Changes. The
Borrower will not, and will not permit any of its
Material Subsidiaries to, merge or consolidate with or
into, or convey, transfer, lease or otherwise dispose
of (whether in one transaction or in a series of
transactions) all or a substantial portion of its
assets (whether now owned or hereafter acquired) to any
Person, or enter into any partnership, joint venture,
syndicate, pool or other combination, unless no Event
of Default or Potential Event of Default has occurred
and is continuing or would result therefrom and, in the
case of a merger or consolidation of the Borrower,
(i) the Borrower is the surviving entity or (ii) the
surviving entity assumes all of the Borrower's
obligations under this Agreement in a manner
satisfactory to the Requisite Lenders.
(c) Plan Terminations. The Borrower will not,
and will not permit any ERISA Affiliate to, terminate
any Pension Plan so as to result in liability of the
Borrower or any ERISA Affiliate to the PBGC in excess
of $15,000,000, or permit to exist any occurrence of an
event or condition which reasonably presents a material
risk of a termination by the PBGC of any Pension Plan
with respect to which the Borrower or any ERISA
Affiliate would, in the event of such termination,
incur liability to the PBGC in excess of $15,000,000.
(d) Margin Stock. The Borrower will not permit
25% or more of the fair market value of the assets of
(i) the Borrower or (ii) the Borrower and its
Subsidiaries to consist of Margin Stock.
(e) Minimum Cash Flow Coverage. The Borrower
will not permit Cash Flow Coverage for the twelve-month
period ending on the last day of each fiscal quarter to
be less than 1.25 to 1.00.
(f) Maximum Leverage. The Borrower will not
permit at any time Leverage to be greater than 0.55 to
1.00.
(g) Minimum Net Worth. The Borrower will not
permit at any time Net Worth to be less than the sum
of (i) $410 million and (ii) 25% of Net Income
(excluding losses) from October 1, 1993 to the then
most recent June 30 or December 31 and (iii) all
Additions to Capital from October 1, 1993 to the then
most recent June 30 or December 31.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6.01. Events of Default. If any of
the following events ("Events of Default") shall occur and
be continuing:
(a) The Borrower shall fail to pay any principal
of any Advance when the same becomes due and payable or
the Borrower shall fail to pay any interest on any
Advance or any fees or other amounts payable hereunder
within five days of the date due; or
(b) Any representation or warranty made or deemed
made by the Borrower herein or by the Borrower pursuant
to this Agreement (including any notice, certificate or
other document delivered hereunder) shall prove to have
been incorrect in any material respect when made; or
(c) The Borrower shall fail to perform or observe
(i) any term, covenant or agreement contained in this
Agreement (other than any term, covenant or agreement
contained in Section 5.01(b)(iv), 5.01(c) or 5.02) on
its part to be performed or observed and the failure to
perform or observe such other term, covenant or
agreement shall remain unremedied for 30 days after the
Borrower obtains knowledge of such breach or (ii) any
term, covenant or agreement contained in Section 5.02
and either of the Agents or the Requisite Lenders shall
have notified the Borrower that an Event of Default has
occurred, or (iii) any term, covenant or agreement
contained in Section 5.01(b)(iv) or 5.01(c); or
(d) The Borrower or any of its Subsidiaries shall
fail to pay any principal of or premium or interest on
any Debt which is outstanding in a principal amount of
at least $15,000,000 in the aggregate (but excluding
Debt arising under this Agreement) of the Borrower or
such Subsidiary (as the case may be), when the same
becomes due and payable (whether by scheduled maturity,
required prepayment, acceleration, demand or other-
wise), and such failure shall continue after the
applicable grace period, if any, specified in the
agreement or instrument relating to such Debt; or the
Borrower or any of its Subsidiaries shall fail to
perform or observe any other agreement, term or
condition contained in any agreement or instrument
relating to any such Debt (or if any other event or
condition of default under any such agreement or
instrument shall exist) and such failure, event or
condition shall continue after the applicable grace
period, if any, specified in such agreement or
instrument, if the effect of such failure, event or
condition is to accelerate, or to permit the
acceleration of, the maturity of such Debt; or any such
Debt shall be declared to be due and payable as a
result of such failure, event or condition; or
(e) The Borrower or any of its Material
Subsidiaries shall generally not pay its debts as such
debts become due, or shall admit in writing its
inability to pay its debts generally, or shall make a
general assignment for the benefit of creditors; or any
proceeding shall be instituted by or against the
Borrower or any of its Material Subsidiaries seeking to
adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief, or composition of it or
its debts under any law relating to bankruptcy,
insolvency or reorganization or relief of debtors, or
seeking the entry of an order for relief or the
appointment of a receiver, trustee, custodian or other
similar official for it or for a substantial part of
its property and, in the case of any such proceeding
instituted against it (but not instituted by it),
either such proceeding shall remain undismissed or
unstayed for a period of 60 days, or any of the actions
sought in such proceeding (including, without
limitation, the entry of an order for relief against,
or the appointment of a receiver, trustee, custodian or
other similar official for, it or for any substantial
part of its property) shall occur; or the Borrower or
any of its Material Subsidiaries shall take any
corporate action to authorize any of the actions set
forth above in this subsection (e); or
(f) Any judgment or order for the payment of
money in excess of $25,000,000 shall be rendered
against the Borrower or any of its Material
Subsidiaries and either (i) enforcement proceedings
shall have been commenced by any creditor upon a final
or nonappealable judgment or order or (ii) there shall
be any period of 10 consecutive days during which a
stay of enforcement of such judgment or order, by
reason of a pending appeal or otherwise, shall not be
in effect;
(g) (i) Any ERISA Event with respect to a
Pension Plan shall have occurred and, 30 days
after notice thereof shall have been given to the
Borrower by either of the Agents, (x) such ERISA
Event shall still exist and (y) the sum
(determined as of the date of occurrence of such
ERISA Event) of the Insufficiency of such Pension
Plan and the Insufficiency of any and all other
Pension Plans with respect to which an ERISA Event
shall have occurred and then exist (or in the case
of a Pension Plan with respect to which an ERISA
Event described in clause (iii) through (vi) of
the definition of ERISA Event shall have occurred
and then exist, the liability related thereto) is
equal to or greater than $25,000,000; or
(ii) The Borrower or any ERISA Affiliate
shall have been notified by the sponsor of a
Multiemployer Plan that it has incurred an
aggregate Withdrawal Liability for all years to
such Multiemployer Plan in an amount that, when
aggregated with all other amounts then required to
be paid to Multiemployer Plans by the Borrower and
its ERISA Affiliates as Withdrawal Liability
(determined as of the date of such notification),
exceeds $25,000,000 and it is reasonably likely
that all amounts then required to be paid to
Multiemployer Plans by the Borrower and its ERISA
Affiliates as Withdrawal Liability will exceed
$25,000,000; or
(iii) The Borrower or any ERISA Affiliate
shall have been notified by the sponsor of a
Multiemployer Plan that such Multiemployer Plan is
in reorganization or is being terminated, within
the meaning of Title IV or ERISA, and it is
reasonably likely that as a result of such
reorganization or termination the aggregate annual
contributions of the Borrower and its ERISA
Affiliates to all Multiemployer Plans that are
then in reorganization or being terminated have
been or will be increased over the amounts
contributed to such Multiemployer Plans for the
plan year of such Multiemployer Plan immediately
preceding the plan year in which the
reorganization or termination occurs by an amount
exceeding $25,000,000;
then, and in any such event, either of the Agents (i) shall
at the request, or may with the consent, of the Requisite
Lenders, by notice to the Borrower, declare the obligation
of each Lender to make Advances to be terminated, whereupon
the same shall forthwith terminate, and (ii) shall at the
request, or may with the consent, of the Requisite Lenders,
by notice to the Borrower, declare the Advances, all
interest thereon and all other amounts payable under this
Agreement to be forthwith due and payable, whereupon the
Advances, all such interest and all such amounts shall
become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind,
all of which are hereby expressly waived by the Borrower;
provided, however, that in the event of an actual or deemed
entry of an order for relief with respect to the Borrower or
any of its Subsidiaries under the Federal Bankruptcy Code,
(A) the obligation of each Lender to make Advances shall
automatically be terminated and (B) the Advances, all such
interest and all such amounts shall automatically become and
be due and payable, without presentment, demand, protest or
any notice of any kind, all of which are hereby expressly
waived by the Borrower.
ARTICLE VII
THE FUNDING AGENT AND THE AGENTS
SECTION 7.01. Authorization and Action. Each
Lender hereby appoints and authorizes Citibank and B of A to
act as Agents under this Agreement, Citibank to act as
Funding Agent under this Agreement and B of A to act as
Reporting Agent under this Agreement and authorizes each
Agent to take such action as agent on its behalf and to
exercise such powers under this Agreement as are delegated
to each Agent by the terms hereof, together with such powers
as are reasonably incidental thereto. As to any matters not
expressly provided for by the Loan Documents (including,
without limitation, enforcement or collection of the
Advances and other amounts owing hereunder), no Agent shall
be required to exercise any discretion or take any action,
but shall be required to act or to refrain from acting (and
shall be fully protected in so acting or refraining from
acting) upon the instructions of the Requisite Lenders, and
such instructions shall be binding upon all Lenders;
provided, however, that no Agent shall be required to take
any action which exposes such Agent to personal liability or
which is contrary to any of the Loan Documents or applicable
law. Each Agent agrees to give to each Lender prompt notice
of each notice given to it by the Borrower pursuant to the
terms of the Loan Documents.
SECTION 7.02. Agents' Reliance, Etc. Neither the
Agents nor any of their respective directors, officers,
agents or employees shall be liable for any action taken or
omitted to be taken by it or them under or in connection
with any of the Loan Documents, except for its or their own
gross negligence or willful misconduct. Without limitation
of the generality of the foregoing, the Agents: (i) may
treat the payee of any Advance as the holder thereof until
the Funding Agent receives and accepts an Assignment and
Acceptance entered into by the Lender which is the payee of
such Advance, as assignor, and an Eligible Assignee, as
assignee, as provided in Section 8.07; (ii) may consult with
legal counsel (including counsel for the Borrower),
independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (iii) make
no warranty or representation to any Lender and shall not be
responsible to any Lender for any statements, warranties or
representations (whether written or oral) made in or in
connection with any of the Loan Documents; (iv) shall not
have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or
conditions of any of the Loan Documents on the part of the
Borrower or to inspect the property (including the books and
records) of the Borrower; (v) shall not be responsible to
any Lender for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any of
the Loan Documents or any other instrument or document
furnished pursuant hereto; and (vi) shall incur no liability
under or in respect of any of the Loan Documents by acting
upon any notice, consent, certificate or other instrument or
writing (which may be by telecopier, telegram, cable or
telex) believed by it to be genuine and signed or sent by
the proper party or parties.
SECTION 7.03. Citibank, B of A and Affiliates.
With respect to its respective Commitment and the respective
Advances made by it, Citibank and B of A shall each have the
same rights and powers under this Agreement as any other
Lender and may exercise the same as though it were not an
Agent; and the term "Lender" or "Lenders" shall, unless
otherwise expressly indicated, include B of A and Citibank
respectively in its individual capacity. B of A or Citibank
and their respective affiliates may accept deposits from,
lend money to, act as trustee under indentures of, and
generally engage in any kind of business with, the Borrower,
any of its subsidiaries and any Person who may do business
with or own securities of the Borrower or any such
subsidiary, all as if B of A or Citibank, as the case may be
was not Agent and without any duty to account therefor to
the Lenders.
SECTION 7.04. Lender Credit Decision. Each
Lender acknowledges that it has, independently and without
reliance upon either the Agents or any other Lender and
based on the financial statements referred to in Section
4.01 and such other documents and information as it has
deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also
acknowledges that it will, independently and without
reliance upon the Agents or any other Lender and based on
such documents and information as it shall deem appropriate
at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement.
SECTION 7.05. Indemnification. The Lenders agree
to indemnify each Agent (to the extent not reimbursed by the
Borrower), ratably according to the respective principal
amounts of the Advances then held by each of them (or if no
Advances are at the time outstanding or if any Advances are
held by Persons which are not Lenders, ratably according to
the respective amounts of their Commitments), from and
against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind or nature whatsoever
which may be imposed on, incurred by, or asserted against
such Agent in any way relating to or arising out of any of
the Loan Documents or any action taken or omitted by such
Agent under any of the Loan Documents, provided that no
Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from any
Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender agrees to reimburse
each Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including counsel fees) incurred by
such Agent in connection with the preparation, execution,
delivery, administration, syndication, modification,
amendment or enforcement (whether through negotiations,
legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, the Loan
Documents, to the extent that such Agent is not reimbursed
for such expenses by the Borrower.
SECTION 7.06. Successor Agent. Each Agent may
resign at any time by giving written notice thereof to the
Lenders and the Borrower and may be removed at any time with
or without cause by the Requisite Lenders. Upon any such
resignation or removal, the Requisite Lenders shall have the
right to appoint a successor Agent. If no successor Agent
shall have been so appointed by the Requisite Lenders, and
shall have accepted such appointment, within 30 days after
the retiring Agent's giving of notice of resignation or the
Requisite Lenders' removal of the retiring Agent, then the
retiring Agent may, on behalf of the Lenders, appoint a
successor Agent which shall be a commercial bank organized
under the laws of the United States of America or of any
State thereof or any Bank and, in each case having a
combined capital and surplus of at least $50,000,000. Upon
the acceptance of any appointment as an Agent hereunder by a
successor Agent, such successor Agent shall thereupon
succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and
obligations under the Loan Documents. After any retiring
Agent's resignation or removal hereunder as Agent, the
provisions of this Article VII shall inure to its benefit as
to any actions taken or omitted to be taken by it while it
was Agent under the Loan Documents.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. Amendments, Etc. No amendment or
waiver of any provision of this Agreement, nor consent to
any departure by the Borrower therefrom, shall in any event
be effective unless the same shall be in writing and signed
by the Requisite Lenders, and then such waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given; provided, however, that no
amendment, waiver or consent shall, unless in writing and
signed by all the Lenders, do any of the following:
(a) waive any of the conditions specified in Section 3.01,
(b) increase the Commitments of the Lenders or subject the
Lenders to any additional obligations, (c) reduce the
principal of, or interest on, the Advances or any fees or
other amounts payable hereunder, (d) postpone any date fixed
for any payment of principal of, or interest on, the
Advances or any fees or other amounts payable hereunder,
(e) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Advances, or the
number of Lenders, which shall be required for the Lenders
or any of them to take any action hereunder or (f) amend
Section 2.15 or this Section 8.01; and provided, further,
that no amendment, waiver or consent shall, unless in
writing and signed by an Agent in addition to the Lenders
required above to take such action, affect the rights or
duties of such Agent under this Agreement.
SECTION 8.02. Notices, Etc. All notices and
other communications provided for hereunder shall be in
writing (including telecopier, telegraphic, telex or cable
communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered, if to the Borrower, at its address at
Dial Tower, Phoenix, Arizona 85077-2343, Attn: Treasurer; if
to any Bank, at its Domestic Lending Office specified
opposite its name on Schedule I hereto; if to any other
Lender, at its Domestic Lending Office specified in the
Assignment and Acceptance pursuant to which it became a
Lender; if to the Funding Agent at its address at Citicorp
Bank Loan Syndications Operations, 1 Court Square, Long
Island City, New York 11120; if to Citibank as Agent c/o
Citicorp North America, Inc., One Sansome Street, San
Francisco, California 94104, Attn: Rosanna Bartolazo and if
to B of A as either Agent or Reporting Agent at its address
at 1455 Market Street, San Francisco, California 94103,
Global Agency, No. 5596; or, as to the Borrower or either
Agent, at such other address as shall be designated by such
party in a written notice to the other parties and, as to
each other party, at such other address as shall be
designated by such party in a written notice to the Borrower
and the Agents. All such notices and communications shall,
when personally delivered, mailed, telecopied, telegraphed,
telexed or cabled, be effective when personally delivered,
after five (5) days after being deposited in the mails, when
confirmed by telecopy response, when delivered to the
telegraph company, when confirmed by telex answerback or
when delivered to the cable company, respectively, except
that notices and communications to any Agent pursuant to
Article II or VII shall not be effective until received by
such Agent.
SECTION 8.03. No Waiver; Remedies. No failure on
the part of any Lender or either Agent to exercise, and no
delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of
any such right preclude any other or further exercise
thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any
remedies provided by law.
SECTION 8.04. Costs, Expenses and
Indemnification. (a) The Borrower agrees to pay promptly on
demand all reasonable costs and out-of-pocket expenses of
the Agents in connection with the preparation, execution,
delivery, administration, syndication, modification and
amendment of this Agreement, and the other documents to be
delivered hereunder or thereunder, including, without
limitation, the reasonable fees and out-of-pocket expenses
of counsel for the Agents (including the allocated time
charges of each Agent's legal departments, as their
respective internal counsel) with respect thereto and with
respect to advising the Agents as to their rights and
responsibilities under this Agreement. The Borrower further
agrees to pay promptly on demand all costs and expenses of
the Agents and of each Lender, if any (including, without
limitation, reasonable counsel fees and out-of-pocket
expenses), in connection with the enforcement (whether
through negotiations, legal proceedings or otherwise) of
this Agreement and the other documents to be delivered
hereunder or thereunder, including, without limitation,
reasonable counsel fees and out-of-pocket expenses in
connection with the enforcement of rights under this
Section 8.04(a).
(b) If any payment of principal of any Eurodollar
Rate Advance is made other than on the last day of the
interest period for such Advance, as a result of a payment
pursuant to Section 2.05 or acceleration of the maturity of
the Advances pursuant to Section 6.01 or for any other
reason, the Borrower shall, upon demand by any Lender (with
a copy of such demand to the Funding Agent), pay to the
Funding Agent for the account of such Lender any amounts
required to compensate such Lender for any additional
losses, costs or expenses which it may reasonably incur as a
result of such payment, including, without limitation, any
loss, cost or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by any
Lender to fund or maintain such Advance.
(c) The Borrower agrees to indemnify and hold
harmless each Agent, each Lender and each director, officer,
employee, agent, attorney and affiliate of each Agent and
each Lender (each an "indemnified person") in connection
with any expenses, losses, claims, damages or liabilities to
which an Agent, a Lender or such indemnified persons may
become subject, insofar as such expenses, losses, claims,
damages or liabilities (or actions or other proceedings
commenced or threatened in respect thereof) arise out of the
transactions referred to in this Agreement or arise from any
use or intended use of the proceeds of the Advances, or in
any way arise out of activities of the Borrower that violate
Environmental Laws, and to reimburse each Agent, each Lender
and each indemnified person, upon their demand, for any
reasonable legal or other out-of-pocket expenses incurred in
connection with investigating, defending or participating in
any such loss, claim, damage, liability, or action or other
proceeding, whether commenced or threatened (whether or not
such Agent, such Lender or any such person is a party to any
action or proceeding out of which any such expense arises).
Notwithstanding the foregoing, the Borrower shall have no
obligation hereunder to an indemnified person with respect
to indemnified liabilities which have resulted from the
gross negligence, bad faith or willful misconduct of such
indemnified person.
SECTION 8.05. Right of Set-off. Upon (i) the
occurrence and during the continuance of any Event of
Default and (ii) the making of the request or the granting
of the consent specified by Section 6.01 to authorize the
Agents to declare the Advances due and payable pursuant to
the provisions of Section 6.01, each Lender is hereby
authorized at any time and from time to time, to the fullest
extent permitted by law, to set off and apply any and all
deposits (time or demand, provisional or final, or general,
but not special) at any time held and other indebtedness at
any time owing by such Lender to or for the credit or the
account of the Borrower against any and all of the
obligations of the Borrower now or hereafter existing under
this Agreement that are then due and payable, whether or not
such Lender shall have made any demand under this Agreement.
Each Lender agrees promptly to notify the Borrower after any
such set-off and application made by such Lender, provided
that the failure to give such notice shall not affect the
validity of such set-off and application. The rights of
each Lender under this Section are in addition to other
rights and remedies (including, without limitation, other
rights of set-off) which such Lender may have.
SECTION 8.06. Binding Effect. This Agreement
shall be deemed to have been executed and delivered when it
shall have been executed by the Borrower and the Agents and
when the Agents shall have been notified by each Bank that
such Bank has executed it and thereafter shall be binding
upon and inure to the benefit of the Borrower, each Agent
and each Lender and their respective successors and
permitted assigns, except that the Borrower shall not have
the right to assign its rights hereunder or any interest
herein without the prior written consent of all Lenders.
SECTION 8.07. Assignments and Participations.
(a) Each Lender may assign to one or more Eligible Assignees
all or a portion of its rights and obligations under this
Agreement (including, without limitation, all or a portion
of its Commitment and the Advances owing to it); provided,
however, that (i) each such assignment shall be of a
constant, and not a varying, percentage of all rights and
obligations under this Agreement, (ii) after giving effect
to any such assignment, (1) the assigning Lender shall no
longer have any Commitment or (2) the amount of the
Commitment of both the assigning Lender and the Eligible
Assignee party to such assignment (in each case determined
as of the date of the Assignment and Acceptance with respect
to such assignment) shall not be less than the lesser of (A)
$10,000,000 and (B) the quotient derived from dividing the
product of (x) $10,000,000 times (y) the aggregate amount of
all Commitments (determined as of the date of the Assignment
and Acceptance with respect to such assignment) by
$500,000,000, (iii) each such assignment shall be to an
Eligible Assignee, (iv) the parties to each such assignment
shall execute and deliver to the Funding Agent and the
Reporting Agent, for its acceptance and recording in the
Register, an Assignment and Acceptance, and a processing and
recordation fee of $1,250 to the Funding Agent and $1,250 to
the Reporting Agent, and (v) the Borrower and the Agents
shall have consented to such assignment, which consent shall
not be unreasonably withheld. Upon such execution,
delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance,
(x) the assignee thereunder shall be a party hereto and, to
the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance,
have the rights and obligations of a Lender hereunder and
(y) the Lender assignor thereunder shall, to the extent that
rights and obligations hereunder have been assigned by it
pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning
Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto). Any Lender may at
any time pledge or assign all or any portion of its rights
hereunder to a Federal Reserve Bank; provided, that no such
pledge or assignment shall release such Lender from any of
its obligations hereunder.
(b) By executing and delivering an Assignment
and Acceptance, the Lender assignor thereunder and the
assignee thereunder confirm to and agree with each other and
the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such assigning
Lender makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with any of the
Loan Documents or the execution, legality, validity,
enforceability, genuineness, sufficiency or value of any of
the Loan Documents or any other instrument or document
furnished pursuant hereto or thereto; (ii) such assigning
Lender makes no representation or warranty and assumes no
responsibility with respect to the financial condition of
the Borrower or the performance or observance by the
Borrower of any of its obligations under any of the Loan
Documents or any other instrument or document furnished
pursuant hereto or thereto; (iii) such assignee confirms
that it has received a copy of the Loan Documents, together
with copies of the financial statements referred to in
Section 4.01 and such other documents and information as it
has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance
upon the Agents, such assigning Lender or any other Lender
and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit
decisions in taking or not taking action under the Loan
Documents; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes each
Agent to take such action as agent on its behalf and to
exercise such powers under the Loan Documents as are
delegated to such Agent by the terms hereof, together with
such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in
accordance with their terms all of the obligations which by
the terms of the Loan Documents are required to be performed
by it as a Lender.
(c) The Funding Agent shall maintain at its
address referred to in Section 8.02 a copy of each
Assignment and Acceptance delivered to and accepted by it
and a register for the recordation of the names and
addresses of the Lenders and the Commitment of, the
Commitment Termination Date of, and principal amount of the
Advances owing to, each Lender from time to time (the
"Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest
error, and the Borrower, the Agents and the Lenders may
treat each Person whose name is recorded in the Register as
a Lender hereunder for all purposes of the Loan Documents.
The Register shall be available for inspection by the
Borrower or any Lender at any reasonable time and from time
to time upon reasonable prior notice.
(d) Within five days of its receipt of an
Assignment and Acceptance executed by an assigning Lender
and an assignee representing that it is an Eligible Assignee
(together with a processing and recordation fee of $2,500
with respect thereto) and upon evidence of consent of the
Borrower and the Agents thereto, which consent shall not be
unreasonably withheld, the Funding Agent shall, if such
Assignment and Acceptance has been completed and is in
substantially the form of Exhibit B hereto, (1) accept such
Assignment and Acceptance and (2) record the information
contained therein in the Register. All communications with
the Borrower with respect to such consent of the Borrower
shall be either sent pursuant to Section 8.02.
(e) Each Lender may sell participations to one
or more banks or other entities in or to all or a portion of
its rights and obligations under this Agreement (including,
without limitation, all or a portion of its Commitment and
the Advances owing to it; provided, however, that (i) such
Lender's obligations under this Agreement (including,
without limitation, its Commitment to the Borrower
hereunder) shall remain unchanged, (ii) such Lender shall
remain solely responsible to the other parties hereto for
the performance of such obligations, (iii) such Lender shall
remain the holder of any such Advance for all purposes of
this Agreement, (iv) the Borrower, the Agents and the other
Lenders shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and
obligations under the Loan Documents, (v) no Lender shall
grant any participation under which the participant shall
have rights to require such Lender to take or omit to take
any action hereunder or under the other Loan Documents or
approve any amendment to or waiver of this Agreement or the
other Loan Documents, except to the extent such amendment or
waiver would: (A) extend the Termination Date of such
Lender; or (B) reduce the interest rate or the amount of
principal or fees applicable to Advances or the Commitment
in which such participant is participating or change the
date on which interest, principal or fees applicable to
Advances or the Commitment in which such participant is
participating are payable, (vi) such Lender shall notify the
Borrower of the sale of the participation, and (vii) the
Person purchasing such participation shall agree to
customary provisions relating to the confidentiality of non-
public information received by such Person in connection
with its purchase of the participation.
(f) Any Lender may, in connection with any
assignment or participation or proposed assignment or
participation pursuant to this Section 8.07, disclose to the
assignee or participant or proposed assignee or participant,
any information relating to the Borrower furnished to such
Lender by or on behalf of the Borrower; provided that, prior
to any such disclosure, the assignee or Participant or
proposed assignee or participant shall agree to preserve the
confidentiality of any confidential information relating to
the Borrower received by it from such Lender.
SECTION 8.08. Confidentiality. Each Lender
agrees, insofar as is legally possible, to use its best
efforts to keep in confidence all financial data and other
information relative to the affairs of the Borrower
heretofore furnished or which may hereafter be furnished to
it pursuant to the provisions of this Agreement; provided,
however, that this Section 8.08 shall not be applicable to
information otherwise disseminated to the public by the
Borrower; and provided further that such obligation of each
Bank shall be subject to each Bank's (a) obligation to
disclose such information pursuant to a request or order
under applicable laws and regulations or pursuant to a
subpoena or other legal process, (b) right to disclose any
such information to bank examiners, its affiliates
(including, without limitation, in the case of B of A, BA
Securities, Inc. and in the case of Citibank, Citicorp
Securities, Inc.), bank, auditors, accountants and its
counsel and other Banks, and (c) right to disclose any such
information, (i) in connection with the transactions set
forth herein including assignments and sales of
participation interests pursuant to Section 8.07 hereof or
(ii) in or in connection with any litigation or dispute
involving the Banks and the Borrower or any transfer or
other disposition by such Bank of any of its Advances or
other extensions of credit by such Bank to the Borrower or
any of its Subsidiaries, provided that information disclosed
pursuant to this proviso shall be so disclosed subject to
such procedures as are reasonably calculated to maintain the
confidentiality thereof.
SECTION 8.09. Governing Law. This Agreement
shall be governed by, and construed in accordance with, the
laws of the State of New York.
SECTION 8.10. Execution in Counterparts. This
Agreement may be executed in any number of counterparts and
by different parties hereto in separate counterparts, each
of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the
same agreement.
SECTION 8.11. Consent to Jurisdiction; Waiver of
Immunities. The Borrower hereby irrevocably submits to the
jurisdiction of any New York state or Federal court sitting
in New York, New York in any action or proceeding arising
out of or relating to this Agreement, and the Borrower
hereby irrevocably agrees that all claims in respect of such
action or proceeding may be heard and determined in such New
York state or Federal court. The Borrower hereby
irrevocably waives, to the fullest extent it may effectively
do so, the defense of an inconvenient forum to the
maintenance of such action or proceeding. The Borrower
agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Section 8.11 shall affect
the right of any Lender or Agent to serve legal process in
any other manner permitted by law or affect the right of any
Lender or Agent to bring any action or proceeding against
the Borrower or its property in the courts of any other
jurisdiction.
SECTION 8.12. Waiver of Trial by Jury. THE
BORROWER, THE BANKS, THE AGENTS AND, BY ITS ACCEPTANCE OF
THE BENEFITS HEREOF, OTHER LENDERS EACH HEREBY AGREES TO
WAIVE ITS RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR
CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT.
The scope of this waiver is intended to be all-encompassing
of any and all disputes that may be filed in any court and
that relate to the subject matter of this transaction,
including without limitation contract claims, tort claims,
breach of duty claims and all other common law and statutory
claims. The Borrower, the Banks, the Agents and, by its
acceptance of the benefits hereof, other Lenders each
(i) acknowledges that this waiver is a material inducement
for the Borrower, the Lenders and the Agents to enter into a
business relationship, that the Borrower, the Lenders and
the Agents have already relied on this waiver in entering
into this Agreement or accepting the benefits thereof, as
the case may be, and that each will continue to rely on this
waiver in their related future dealings and (ii) further
warrants and represents that each has reviewed this waiver
with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following
consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent
to a trial by the court.
IN WITNESS WHEREOF, the parties hereto have caused
this Agreement to be executed by their respective officers
thereunto duly authorized, as of the date first above
written.
THE DIAL CORP, a Delaware
corporation
By: /s/ R.G. Nelson
Title: Vice President-
Treasurer
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
as Agent and Reporting Agent
By: /s/ Kay S. Warren
Title: Vice President
CITIBANK, N.A., as Agent and
Funding Agent
By: /s/ Barbara A. Cohen
Title: Vice President
$36,000,000 BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ Robert Troutman
Title: Vice President
$36,000,000 CITIBANK, N.A.
By: /s/ Barbara A. Cohen
Title: Vice President
$24,000,000 BANK OF MONTREAL
By: /s/ J. Donald Higgins
Title: Managing Director
$24,000,000 THE CHASE MANHATTAN BANK, N.A.
By: /s/ Elyse O'Hora
Title: Managing Director
$24,000,000 CHEMICAL BANK
By: /s/ Jeffry Howe
Title: Vice President
$24,000,000 CIBC, INC.
By: /s/ R.A. Mendoza
Title: Vice President
$24,000,000 CONTINENTAL BANK, N.A.
By: /s/ Wyatt Ritchie
Title: Vice President
$24,000,000 NATIONSBANK OF TEXAS, N.A.
By: /s/ Frank M. Johnson
Title: Vice President
$24,000,000 ROYAL BANK OF CANADA
By: /s/ Tom Oberaigner
Title: Manager
$20,000,000 BANK ONE, ARIZONA, N.A.
By: /s/ Clifford Payson
Title: Vice President
$20,000,000 CREDIT SUISSE
By: /s/ Steve Flynn
Title: MOSM (Member of
Senior Management)
By: /s/ Eric Noyes
Title: Assoc.
$20,000,000 FIRST INTERSTATE BANK OF
ARIZONA, N.A.
By: /s/ Gary Frandson
Title: Vice President
$20,000,000 THE FIRST NATIONAL BANK OF
CHICAGO
By: /s/ L. Gene Beube
Title: Senior Vice President
$20,000,000 THE INDUSTRIAL BANK OF JAPAN,
LIMITED, LOS ANGELES AGENCY
By: /s/ Steven Savoldelli
Title: Senior Vice President
Executed: December 30, 1993
$20,000,000 THE LONG-TERM CREDIT BANK OF
JAPAN, LTD., LOS ANGELES
AGENCY
By: /s/ Hiroshi Norizuki
Title: Deputy General Manager
By: /s/ T. Morgan Edwards
Title: Vice President
$20,000,000 MARINE MIDLAND BANK, N.A.
By: /s/ William M. Holland
Title: Vice President
$20,000,000 MELLON BANK, N.A.
By: /s/ V. Charles Jackson
Title: Senior Vice President
$20,000,000 THE MITSUI TRUST & BANKING
CO., LTD. LOS ANGELES AGENCY
By: /s/ Yusaku Otani
Title: General Manager &
Agent
$10,000,000 MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By: /s/ Diana H. Imhof
Title: Associate
$10,000,000 J.P. MORGAN DELAWARE
By: /s/ Philip S. Detjens
Title: Vice President
$20,000,000 NBD BANK, N.A.
By: /s/ Jack J. Csernits
Title: Vice President
$20,000,000 THE NORTHERN TRUST COMPANY
By: /s/ Michelle D. Griffin
Title: Vice President
$20,000,000 UNION BANK
By: /s/ Ali Moghaddan
Title: Vice President
<PAGE>
SCHEDULE I
LIST OF APPLICABLE LENDING OFFICES
Name of Bank
Domestic Lending Office
Eurodollar Lending Office
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS
ASSOCIATION
1850 Gateway Blvd.
Concord, CA 94520
Attn: Barbara Garibaldi
1850 Gateway Blvd.
Concord, CA 94520
Attn: Barbara Garibaldi
CITIBANK, N.A.
c/o Citicorp Securities,
Inc.
One Court Square
Long Island City, NY 11120
Attn: Barbara Kobalt
c/0 Citicorp Securities,
Inc.
One Court Square
Long Island City, NY 11120
Attn: Barbara Kobalt
BANK OF MONTREAL
601 S. Figueroa Street
Suite 4900
Los Angeles, CA 90017
Attn: Alberta Rosby
601 S. Figueroa Street
Suite 4900
Los Angeles, CA 90017
Attn: Alberta Rosby
CIBC, INC.
Two Paces Pelling Road
#1200
Atlanta, Georgia 30331
Attn: Anita Williams
Two Paces Pelling Road
#1200
Atlanta, Georgia 30331
Attn: Anita Williams
THE CHASE MANHATTAN BANK,
N.A.
1 Chase Manhattan Plaza
5th Floor
New York, New York 10081
Attn: Stephen McArdle
1 Chase Manhattan Plaza
5th Floor
New York, New York 10081
Attn: Stephen McArdle
CHEMICAL BANK
270 Park Avenue
New York, New York 10017
Attn: Abigail Garcia
270 Park Avenue
New York, New York 10017
Attn: Abigail Garcia
CONTINENTAL BANK, N.A.
231 S. LaSalle Street
Chicago, IL 60697
Attn: Sandy Kramer
231 S. LaSalle Street
Chicago, IL 60697
Attn: Sandy Kramer
NATIONSBANK OF TEXAS, N.A.
c/o NationsBank
901 Main Street
67th Floor
Dallas, TX 75202
Attn: Karen Puente
c/o NationsBank
901 Main Street
67th Floor
Dallas, TX 75202
Attn: Karen Puente
ROYAL BANK OF CANADA
Pierrepont Plaza
300 Cadman Plaza West
14th Floor
Brooklyn, NY 11201-2701
Attn: Liz Gonzales
Pierrepont Plaza
300 Cadman Plaza West
14th Floor
Brooklyn, NY 11201-2701
Attn: Liz Gonzales
BANK ONE, ARIZONA, N.A.
P.O. Box 71
Phoenix, AZ 95001
241 N. Central Avenue
11th Floor
Phoenix, Arizona 95004
Attn: Lisa Martina
P.O. Box 71
Phoenix, AZ 95001
241 N. Central Avenue
11th Floor
Phoenix, Arizona 95004
Attn: Lisa Martina
CREDIT SUISSE
500 Wilshire Blvd.
Los Angeles, CA 90017
Attn: Rita Asa
500 Wilshire Blvd.
Los Angeles, CA 90017
Attn: Rita Asa
FIRST INTERSTATE BANK OF
ARIZONA, N.A.
P.O. Box 29742
Phoenix, AZ 85038-9742
Attn: Jacqueline Cox
P.O. Box 29742
Phoenix, AZ 85038-9742
Attn: Jacqueline Cox
THE INDUSTRIAL BANK OF
JAPAN, LIMITED, LOS ANGELES
AGENCY
350 S. Grand Ave., Suite
1500
Los Angeles, CA 90071
Attn: Jane Chang/Jeanie
Song
350 S. Grand Ave., Suite
1500
Los Angeles, CA 90071
Attn: Jane Chang/Jeanie
Song
THE LONG-TERM CREDIT BANK OF
JAPAN, LTD.
444 S. Flower St., Suite
3700
Los Angeles, CA 90071
Attn: Diane Hoyen/Cindy Ly
444 S. Flower St., Suite
3700
Los Angeles, CA 90071
Attn: Diane Hoyen/Cindy Ly
MELLON BANK, N.A.
Three Mellon Bank Center
Room 2303
Pittsburgh, PA 15259
Attn: Janine Moriarity
Three Mellon Bank Center
Room 2303
Pittsburgh, PA 15259
Attn: Janine Moriarity
NBD BANK, N.A.
611 Woodward Avenue
Detroit, MI 48226
Attn: Kristi Williams
611 Woodward Avenue
Detroit, MI 48226
Attn: Kristi Williams
THE FIRST NATIONAL BANK OF
CHICAGO
One First National Plaza
0634/1-10
Chicago, Illinois 60670
Attn: Marilyn Fisher
One First National Plaza
0634/1-10
Chicago, Illinois 60670
Attn: Marilyn Fisher
MARINE MIDLAND BANK, N.A
140 Broadway, 6th Floor
New York, NY 10005-1180
Attn: Cornelia Hurt
140 Broadway, 6th Floor
New York, NY 10005-1180
Attn: Cornelia Hurt
THE MITSUI TRUST & BANKING
CO. LTD., LOS ANGELES AGENCY
611 W. Sixth St., Suite 3800
Los Angeles, CA 90017
Attn: Bonjai Kulapalanont
611 W. Sixth St., Suite 3800
Los Angeles, CA 90017
Attn: Bonjai Kulapalanont
MORGAN GUARANTY TRUST
COMPANY OF NEW YORK
60 Wall Street
New York, NY 10060-0060
Attn: Loan Department
Nassau, Bahamas Office
c/o J.P. Morgan Services,
Inc.
Loan Operations - 3rd Floor
500 Stanton - Christiana
Road
Newark, Delaware 19713
J.P. MORGAN DELAWARE
500 Stanton-Christiana Road
Newark, DE 19713-2107
Attn: Loan Department
500 Stanton-Christiana Road
Newark, DE 19713-2107
Attn: Loan Department
THE NORTHERN TRUST COMPANY
50 S. La Salle
Chicago, IL 60675
Attn: Linda Honda
50 S. La Salle
Chicago, IL 60675
Attn: Linda Honda
UNION BANK
445 S. Figueroa Street
15th Floor
Los Angeles, CA 90071
Attn: Wendy Frear
445 S. Figueroa Street
15th Floor
Los Angeles, CA 90071
Attn: Wendy Frear
<PAGE>
EXHIBIT A
[FORM OF NOTICE OF BORROWING]
NOTICE OF BORROWING
Citibank, N.A., as Funding Agent
for the Lenders party
to the Credit Agreement
referred to below
c/o Citicorp Bank Loan
Syndications Operations
One Court Square
Long Island City, New York 11120
[Date]
Attention: [_________________________]
Gentlemen:
Each of the undersigned and The Dial Corp (the "Borrower")
refers to the Amended and Restated Credit Agreement dated as of
December 15, 1993 (as amended from time to time, the "Credit Agreement",
the terms defined therein being used herein as therein defined), among
the Borrower, certain Lenders party thereto, Bank of America National
Trust and Savings Association and Citibank, N.A., as Agents for said
Lenders, Citibank, N.A., as Funding Agent for said Lenders and Bank of
America National Trust and Savings Association, as Reporting Agent for
said Lenders. The Borrower hereby gives you notice, irrevocably,
pursuant to Section 2.02 of the Credit Agreement, that the Borrower
hereby requests a Borrowing under the Credit Agreement, and in that
connection sets forth below the information relating to such Borrowing
(the "Proposed Borrowing") as required by Section 2.02(a) of the Credit
Agreement:
(i) The Business Day of the Proposed Borrowing is
___________, 19__.
(ii) The Type of Advances comprising the Proposed Borrowing
is [Base Rate Advances] [Eurodollar Rate Advances].
(iii) The aggregate amount of the Proposed Borrowing is
$______________.
(iv) If the Type of Advances comprising the Proposed
Borrowing is Eurodollar Rate Advances, the Interest Period for
each Advance made as part of the Proposed Borrowing is _____
month[s].
Each of the undersigned hereby certifies that the following
statements are true on the date hereof, and will be true on the date of
the Proposed Borrowing:
(A) the representations and warranties contained in Section
4.01 of the Credit Agreement are correct, before and after giving
effect to the Proposed Borrowing and to the application of the
proceeds therefrom, as though made on and as of such date, except
to the extent that any such representation or warranty expressly
relates only to an earlier date, in which case they were correct
as of such earlier date; and
(B) no event has occurred and is continuing, or will result
from such Proposed Borrowing or from the application of the
proceeds therefrom, which constitutes an Event of Default or a
Potential Event of Default.
Very truly yours,
THE DIAL CORP
By: _________________________
Title:
<PAGE>
EXHIBIT B
[FORM OF ASSIGNMENT AND ACCEPTANCE]
ASSIGNMENT AND ACCEPTANCE
Dated ________, 19__
Reference is made to the Amended and Restated Credit
Agreement dated as of December 15, 1993 (as amended from time to time,
the "Credit Agreement") among The Dial Corp (the "Borrower"), the
Lenders (as defined in the Credit Agreement), Bank of America National
Trust and Savings Association and Citibank, N.A., as Agents for the
Lenders, Citibank, N.A., as Funding Agent for the Lenders and Bank of
America National Trust and Savings Association, as Reporting Agent for
the Lenders. Terms defined in the Credit Agreement and not defined
herein are used herein with the same meaning.
_________________ (the "Assignor") and ______________ (the
"Assignee") agree as follows:
1. The Assignor hereby sells and assigns without recourse
to the Assignee, and the Assignee hereby purchases and assumes from the
Assignor, that interest in and to all of the Assignor's rights and
obligations under the Credit Agreement as of the Effective Date which
represents the percentage interest specified on Schedule 1 of all
outstanding rights and obligations under the Credit Agreement,
including, without limitation, such interest in the Assignor's
Commitment and the Advances owing to the Assignor. After giving effect
to such sale and assignment, the Assignee's Commitment, the amount of
the Advances owing to the Assignee, and the Commitment Termination Date
of the Assignee will be as set forth in Section 2 of Schedule 1. In
consideration of Assignor's assignment, Assignee hereby agrees to pay to
Assignor, on the Effective Date, the amount of $_________ in immediately
available funds by wire transfer to Assignor's office at
_______________.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse claim;
(ii) makes no representation or warranty and assumes no responsibility
with respect to any statements, warranties or representations made in or
in connection with the Credit Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of the
Credit Agreement or any other instrument or document furnished pursuant
thereto; and (iii) makes no representation or warranty and assumes no
responsibility with respect to the financial condition of the Borrower
or the performance or observance by the Borrower of any of its
obligations under the Credit Agreement or any other instrument or
document furnished pursuant thereto.
3. The Assignee (i) confirms that it has received a copy of
the Credit Agreement, together with copies of the financial statements
referred to in Section 4.01 thereof and such other documents and
information as it has deemed appropriate to make its own credit analysis
and decision to enter into this Assignment and Acceptance; (ii) agrees
that it will, independently and without reliance upon the Agents, the
Assignor or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit
Agreement; (iii) confirms that it is an Eligible Assignee; (iv) appoints
and authorizes each Agent to take such action as agent on its behalf and
to exercise such powers under the Credit Agreement as are delegated to
such Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; (v) agrees that it will perform in
accordance with their terms all of the obligations which by the terms of
the Credit Agreement are required to be performed by it as a Lender; and
(vi) specifies as its Domestic Lending Office (and address for notices)
and Eurodollar Lending Office the offices set forth beneath its name on
the signature pages hereof [and (vii) attaches the forms prescribed by
the Internal Revenue Service of the United States certifying as to the
Assignee's status for purposes of determining exemption from United
States withholding taxes with respect to all payments to be made to the
Assignee under the Credit Agreement or such other documents as are
necessary to indicate that all such payments are subject to such rates
at a rate reduced by an applicable tax treaty].
4. Following the execution of this Assignment and
Acceptance by the Assignor and the Assignee, it will be delivered to the
Funding Agent for acceptance and recording by the Funding Agent. The
effective date of this Assignment and Acceptance shall be the date of
acceptance thereof by the Funding Agent, unless otherwise specified on
Schedule 1 hereto (the "Effective Date").
5. Upon such acceptance and recording by the Funding Agent,
as of the Effective Date, (i) the Assignee shall be a party to the
Credit Agreement and, to the extent provided in this Assignment and
Acceptance, have the rights and obligations of a Lender thereunder and
(ii) the Assignor shall, to the extent provided in this Assignment and
Acceptance, relinquish its rights and be released from its obligations
under the Credit Agreement.
6. Upon such acceptance and recording by the Funding Agent,
from and after the Effective Date, the Funding Agent shall make all
payments under the Credit Agreement in respect of the interest assigned
hereby (including, without limitation, all payments of principal,
interest and fees with respect thereto) to the Assignee. The Assignor
and Assignee shall make all appropriate adjustments in payments under
the Credit Agreement for periods prior to the Effective Date directly
between themselves.
7. This Assignment and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed by their respective officers
thereunto duly authorized, as of the date first above written, such
execution being made on Schedule 1 hereto.
<PAGE>
Schedule 1
to
Assignment and Acceptance
Dated _____, 19__
Section 1.
Percentage Interest: ______%
Section 2.
Assignee's Commitment: $______
Aggregate Outstanding Principal
Amount of Advances owing to the Assignee: $______
Advances payable to the Assignee
Principal amount: _______
Advances payable to the Assignor
Principal amount: _______
Assignee's Commitment Termination Date: _________, 199_
Section 3.
Effective Date*: ________, 199_
[NAME OF ASSIGNOR]
By:____________________________
Title:
[NAME OF ASSIGNEE]
By:____________________________
Title:
Domestic Lending Office (and
address for notices):
[Address]
Eurodollar Lending Office:
[Address]
Accepted this ____ day
of _____________, 199_
CITIBANK, N.A., as Funding Agent
By:___________________________
Title:
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION, as Reporting Agent
By:__________________________
Title:
THE DIAL CORP
By:___________________________
Title:
* This date should be no earlier than the date of acceptance by the
Funding Agent.
<PAGE>
EXHIBIT C
[FORM OF OPINION OF COUNSEL TO BORROWER]
[EFFECTIVE DATE]
Bank of America National Trust and
Savings Association, as Agent and
Reporting Agent and Citibank, N.A.,
as Agent and Funding Agent
under the Credit Agreement
(as hereinafter defined), and each
of the lending institutions party
to the Credit Agreement and listed
on Schedule I attached hereto
(collectively, the "Banks")
[Address]
Re: Amended and Restated Credit Agreement
dated as of December 15, 1993, among The
Dial Corp, the Banks, Bank of America
National Trust and Savings Association,
as Agent and Reporting Agent and Citibank,
N.A., as Agent and Funding Agent
Ladies and Gentlemen:
I am Vice President and General Counsel of The Dial Corp, a
Delaware corporation (the "Borrower") and as such have acted as counsel
to the Borrower in connection with the negotiation, execution and
delivery by the Borrower of the Amended and Restated Credit Agreement
dated as of December 15, 1993 (the "Credit Agreement") among the
Borrower, the Banks, Bank of America National Trust and Savings
Association and Citibank, N.A., as Agents, Citibank, N.A., as Funding
Agent and Bank of America National Trust and Savings Association, as
Reporting Agent. Terms defined in the Credit Agreement and not
otherwise defined herein are used herein as therein defined.
This opinion is delivered to you pursuant to Section
3.01(a)(vi) of the Credit Agreement. I have examined the Credit
Agreement and I have examined or am familiar with originals or copies,
the authenticity of which has been established to my satisfaction of
such other documents, corporate records, agreements and instruments, and
certificates of public officials and of officers of the Borrower as I
have deemed necessary or appropriate to enable me to express the
opinions set forth below. As to questions of fact material to such
opinions, I have, when relevant facts were not independently
established, relied upon certification by officers of the Borrower,
which I believe to be reliable.
The opinions hereinafter expressed are subject to the fact
that I am a member of the State Bar of Arizona and do not hold myself
out as an expert on the laws of other states or jurisdictions except the
Federal Laws of the United States of America, the General Corporation
Law of the State of Delaware and to the extent necessary for the
opinions below, the laws of the State of New York.
Based upon the foregoing and having regard to legal
consideration which I have deemed relevant, it is my opinion that:
1. The Borrower is a corporation validly existing and in
good standing under the laws of the State of Delaware and is duly
qualified to do business as a foreign corporation in good standing in
all other jurisdictions which require such qualification, except to the
extent that failure to so qualify would not have a material adverse
effect on the Borrower. The Borrower has all requisite corporate power
and authority to own and operate its properties, to conduct its business
as presently conducted, and to execute, deliver and perform its
obligations under the Credit Agreement.
2. The Credit Agreement has been duly authorized by all
necessary corporate action on the part of the Borrower and has been duly
executed and delivered by the Borrower. The Credit Agreement
constitutes the legal, valid and binding obligation of the Borrower,
enforceable against the Borrower in accordance with its terms, except as
such enforceability may be limited by Bankruptcy, insolvency and
reorganization laws and other similar laws governing the enforcement of
lessors' or creditors' rights and by the effects of specific
performance, injunctive relief and other equitable remedies.
3. Neither the execution and delivery by the Borrower of
the Credit Agreement, nor consummation of the transactions contemplated
thereby, nor compliance on or prior to the date hereof with the terms
and conditions thereof by the Borrower conflicts with or is a violation
of, its certificate of incorporation or by-laws, each as in effect on
the date hereof. Neither the execution and delivery by the Borrower of
the Credit Agreement, nor the consummation of the transactions
contemplated thereby, nor compliance on or prior to the date hereof with
the terms and conditions thereof by the Borrower will result in a
violation of any applicable federal or New York law, governmental rule
or regulation or of the Corporation Law of the State of Delaware or
conflicts with, will result in a breach of, or constitutes a default
under, any provision of any indenture, agreement or other instrument to
which the Borrower is a party or any of its properties may be bound
("Material Agreements"), or any order, judgment or decree to which the
Borrower or any of its assets are bound ("Judicial Orders"), or will
result in the creation or imposition of any lien upon any property or
assets of the Borrower pursuant to any Material Agreement or Judicial
Order.
4. Neither the making of the Advances on the Effective Date
pursuant to, nor application of the proceeds thereof in accordance with,
the Credit Agreement, will violate Regulations G, T, U or X promulgated
by the Board of Governors of the Federal Reserve System.
5. No consent, approval or authorization of, and no
registration, declaration or filing with, any administrative,
governmental or other public authority of the United States of America
or the State of New York or under the Corporation Law of the State of
Delaware is required by law to be obtained or made by the Borrower for
the execution, delivery and performance by the Borrower of the Credit
Agreement, except such filings as may be required in the ordinary course
to keep in full force and effect rights and franchises material to the
business of the Borrower and in connection with the payment of taxes.
6. The Borrower is not an "investment company" or a Person
directly or indirectly "controlled" by or "acting on behalf of" an
"investment company" within the meaning of the Investment Company Act of
1940, as amended.
This opinion is delivered to the Agents and the Banks as of
the date hereof in connection with the Credit Agreement, and may not be
relied upon by any person other than the Agents and the Banks and their
permitted assignees, or by them in any other context, and may not be
furnished to any other person or entity without my prior written
consent, provided that each Bank and its permitted assignees may provide
this opinion (i) to bank examiners and other regulatory authorities
should they so request or in connection with their normal examination,
(ii) to the independent auditors and attorneys of such Bank, (iii)
pursuant to order or legal process of any court or governmental agency,
(iv) in connection with any legal action to which the Bank is a party
arising out of the transactions contemplated by the Credit Agreement, or
(v) in connection with the assignment of or sale of participations in
the Advances.
Very truly yours,
<PAGE>
SCHEDULE I
Bank of America National Trust
and Savings Association
Citibank, N.A.
Bank of Montreal
Bank One, Arizona, N.A.
The Chase Manhattan Bank, N.A.
Chemical Bank
CIBC, Inc.
Continental Bank, N.A.
Credit Suisse
First Interstate Bank of Arizona, N.A.
The First National Bank of Chicago
The Industrial Bank of Japan Limited,
Los Angeles Agency
J.P. Morgan Delaware NBD Bank, N.A.
The Long-Term Credit Bank of Japan Ltd.,
Los Angeles Agency
Marine Midland Bank, N.A.
Mellon Bank, N.A.
The Mitsui Trust & Banking Co., Ltd.
Los Angeles Agency
Morgan Guaranty Trust Company of New York
Nationsbank of Texas, N.A.
NBD Bank, N.A.
The Northern Trust Company
Royal Bank of Canada
Union Bank
<PAGE>
EXHIBIT D
[FORM OF OPINION OF O'MELVENY & MYERS]
[EFFECTIVE DATE]
Bank of America National Trust
and Savings Association, as Agent
and Reporting Agent
1455 Market Street
San Francisco, California 94103
Citibank, N.A., as Agent and Funding Agent
One Sansome Street
San Francisco, California 94104
and
The Banks Party to the Credit Agreement
Referred to Below
Re: Amended and Restated Credit Agreement dated as of
December 15, 1993 among The Dial Corp, the Banks named
therein, Bank of America National Trust and Savings
Association, as Agent and Reporting Agent and Citibank,
N.A., as Agent and Funding Agent
Gentlemen:
We have participated in the preparation of the Amended and
Restated Credit Agreement dated as of December 15, 1993 (the "Credit
Agreement"; capitalized terms defined therein and not otherwise defined
herein are used herein as therein defined) among The Dial Corp (the
"Borrower"), the Banks named therein (the "Banks"), Bank of America
National Trust and Savings Association, as Agent, Citibank, N.A., as
Agent, Citibank, N.A., as Funding Agent and Bank of America National
Trust and Savings Association, as Reporting Agent, and have acted as
special counsel for the Agents for the purpose of rendering this opinion
pursuant to Section 3.01(a)(vii) of the Credit Agreement.
We have participated in various conferences and telephone
conferences with representatives of the Borrower and the Agents and
conferences and telephone calls with counsel to the Borrower, and with
your representatives, during which the Credit Agreement and related
matters have been discussed, and we have also participated in the
meeting held on the date hereof (the "Closing") incident to the
effectiveness of the Credit Agreement. We have reviewed the forms of
the Credit Agreement and the exhibits thereto, and the opinion of L.
Gene Lemon, General Counsel of the Borrower (the "Opinion"), and
officers' certificates and other documents delivered at the Closing. We
have assumed the genuineness of all signatures, the authenticity of all
documents submitted to us as originals or copies, the due authority of
all persons executing the same, and we have relied as to factual matters
on the documents which we have reviewed.
Although we have not independently considered all of the
matters covered by the Opinion to the extent necessary to enable us to
express the conclusions therein stated, we believe that the Credit
Agreement and the exhibits thereto are in substantially acceptable legal
form.
Respectfully submitted,
<PAGE>
EXHIBIT E
[FORM OF EXTENSION REQUEST]
THE DIAL CORP
REQUEST FOR EXTENSION OF COMMITMENT
TERMINATION DATE
[Date]
[Name and Address of Eligible Lender]
Pursuant to that certain Amended and Restated Credit
Agreement dated as of December 15, 1993 (as amended from time to time,
the "Credit Agreement", the terms defined therein being used herein as
therein defined) among The Dial Corp (the "Borrower"), certain Lenders
party thereto, Bank of America National Trust and Savings Association
and Citibank, N.A., as Agent for said Lenders, Citibank, N.A., as
Funding Agent for said Lenders and Bank of America National Trust and
Savings Association, as Reporting Agent for said Lenders, this
represents the Borrower's request to extend the Commitment Termination
Date of each Eligible Lender to [1] pursuant to Section 2.15 of the
Credit Agreement.
The Borrower hereby certifies that the following statements
are true on the date hereof, and will be true on the date of the
effectiveness of the extension requested hereby ("Proposed Extension"):
(a) the representations and warranties contained in Section
4.01 of the Credit Agreement are correct, before and after giving
effect to the Proposed Extension;
(b) no event has occurred and is continuing, or would result
from the Proposed Extension, which constitutes an Event of Default
or a Potential Event of Default; and
(c) the balance sheet of the Borrower and its Subsidiaries
as at ___________, 199_[2], and the related statements of income
and retained earnings of the Borrower and its Subsidiaries for the
fiscal year then ended, copies of each of which have been
furnished to each Lender, fairly present the financial condition
of the Borrower and its Subsidiaries as at such applicable date
and the results of the operations of the Borrower and its
Subsidiaries for the fiscal year ended on such applicable date,
all in accordance with GAAP consistently applied, and since
_______________, 199_[2], there has been no material adverse
change in the business, condition (financial or otherwise),
operations or properties of the Borrower and its Subsidiaries,
taken as a whole.
Please indicate your consent to such extension of the
Commitment Termination Date by signing the attached copy of this request
in the space provided below and returning the same to the undersigned.
Very truly yours,
THE DIAL CORP
By _________________________
Title:
The undersigned Eligible Lender
hereby consents to the extension
of its Commitment Termination
Date as requested above. This
consent is subject to the terms
of Section 2.15 of the Credit
Agreement.
DATED: ___________________
[ELIGIBLE LENDER]
By: ______________________
Title:____________________
[1] Insert date which is one year or two years after the latest
Commitment Termination Date in effect.
[2] Insert date of the most recent audited balance sheet of the
Borrower and its Subsidiaries.
<PAGE>
EXHIBIT F
[FORM OF COMPLIANCE CERTIFICATE]
The undersigned certifies that: (i) this Certificate is as of
__________ and pertains to the period from _________ to _________, (ii)
the undersigned has reviewed the terms of the Amended and Restated
Credit Agreement, dated as of December 15, 1993, among The Dial Corp,
the Banks named therein, Bank of America National Trust and Savings
Association and Citibank, N.A., as Agents, Citibank, N.A., as Funding
Agent, and Bank of America National Trust and Savings Association, as
Reporting Agent (as it may be amended from time to time, the "Credit
Agreement") and has made, or caused to be made under the undersigned's
supervision, a review in reasonable detail of the transactions and
condition of the Borrower and its Subsidiaries during the period set
forth above and (iii) such review has not disclosed the existence during
or at the end of such period, and the undersigned does not have
knowledge of the existences as of the date of this Certificate, of any
condition or event that constitutes an Event of Default or Potential
Event of Default.[1] Capitalized terms used herein shall have the
meanings set forth in the Credit Agreement.
A. Cash Flow Coverage.
For the Borrower and its Subsidiaries:
(i) consolidated net income plus $__________
provision for taxes (excluding)
extraordinary, unusual, or
nonrecurring gains or losses
(ii) interest expense $__________
(iii) net operating lease expense $__________
(net of operating sublease income)
(iv) depreciation and amortization of $__________
intangibles
(v) capital expenditures (excluding $__________
the cost of acquisitions
(vi) total of (i) plus (ii) plus (iii) $__________
plus (iv) minus (v)
(vii) net operating lease expense (net $__________
of operating sublease income)
(viii) interest expense $__________
(ix) total of (vii) plus (viii) $__________
(x) Cash Flow Coverage [(vi) divided $__________
by (ix)]
(xi) Minimum Cash Flow Coverage required $__________
under Credit Agreement
B. Leverage.
For the Borrower and its Subsidiaries:
(i) indebtedness for borrowed money $__________
or for the deferred purchase price
of property or services
(ii) obligations as lessee under leases $__________
which shall have been or should
be, in accordance with GAAP,
recorded as capital leases
(iii) obligations under guarantees in $__________
respect of indebtedness or
obligations of others of the kinds
referred to in clauses (i) and
(ii) of this Section B
(iv) Funded Debt [(i) plus (ii) $__________
plus (iii)]
(v) Cash $__________
(vi) Cash Equivalents $__________
(vii) Total of (iv) minus (v) minus (vi) $__________
(viii) Net Worth $__________
(ix) "Employee Equit Trust" contra $__________
account
(x) "Guaranty of ESOP Debt" contra $__________
account
(xi) Shareholders Equity [(viii) plus $__________
(ix) plus (x)]
(xii) Total of (iv) minus (v) minus (vi) $__________
plus (xi)
(xiii) Leverage [(vii) divided by (xii)] ___:1.00
(xiv) Maximum Leverage permitted under 0.55:1.00
Credit Agreement
C. Net Worth.
For the Borrower and its Subsidiaries:
(i) Net Income (excluding losses) from $__________
October 1, 1993 to most recent
June 30 or December 31
(ii) aggregate net proceeds, including $__________
cash and the fair market value
of property other than cash,
received by the Borrower from the
issue or sale of capital stock of
the Borrower from October 1, 1993
to the most recent June 30 or
December 31
(iii) aggregate of 25% of the after tax $__________
gains realized from unusual,
extraordinary, and major
nonrecurring items from October 1,
1993 to the most recent June 30
or December 31
(iv) Additions to Capital [(ii) plus $__________
(iii)]
(v) 25% multiplied (i) $__________
(vi) Minimum Net Worth permitted under $__________
Credit Agreement [$410 million
plus (iv) plus (v)]
(vii) Net Worth $__________
By:_____________________________
Title:__________________________
[1] If any event or condition that constitutes an Event of Default or
Potential Event of Default exists, the Certificate should include
the nature and period of existence of such event or condition and
what action the Borrower has taken, is taking and proposes to take
with respect thereto.
<PAGE>
EXHIBIT G
[FORM OF NOTE]
THE DIAL CORP
PROMISSORY NOTE
New York, New York
________ __, 19__
For value received, The Dial Corp, a Delaware corporation (the
"Borrower"), hereby promises to pay to the order of
_____________________ (the "Lender"), for the account of its Applicable
Lending Office, the unpaid principal amount of each Advance made by the
Lender to the Borrower pursuant to the Credit Agreement referred to
below on the Termination Date of the Lender. The Borrower promises to
pay interest on the unpaid principal amount of each such Advance on the
dates and at the rate or rates provided for in the Credit Agreement.
All such payments of principal and interest shall be made in United
States dollars in same day funds at the Funding Agent's office, as
specified in the Credit Agreement.
All Advances made by the Lender, the respective maturities
thereof and all repayments of principal thereof shall be recorded by the
Lender and, prior to any transfer hereof, appropriate notations to
evidence the foregoing information with respect to each such Advance
then outstanding shall be endorsed by the Lender on the schedule
attached hereto, or on a continuation of such schedule attached to and
made a part hereof, or in the records of such Lender in accordance with
its usual practice; provided that the failure of the Lender to make any
such recordation or endorsement shall not affect the obligations of the
Borrower hereunder or under the Credit Agreement.
This promissory note is one of the promissory notes referred
to in Section 2.13(d) of the Credit Agreement dated as of December 15,
1993, among the Borrower, the Lenders named therein, Bank of America
National Trust and Savings Association as Agent and Reporting Agent and
Citibank, N.A., as Agent and Funding Agent (said Credit Agreement, as
amended, supplemented or otherwise modified from time to time, the
"Credit Agreement"). Terms defined in the Credit Agreement are used
herein with the same meanings. Reference is hereby made to the Credit
Agreement for provisions relating to this promissory note, including,
without limitation, the mandatory and optional prepayment hereof and the
acceleration of the maturity hereof.
THE DIAL CORP
By____________________________
Title:
<PAGE>
Schedule to Promissory Note
ADVANCES AND PAYMENTS OF PRINCIPAL
Amount of
Amount of Type of Principal Maturity Notation
Date Advance Advance Repaid Date By
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
________________________________________________________________________
<PAGE>
EXHIBIT 10.E
THE DIAL CORP
MANAGEMENT INCENTIVE PLAN
I. PURPOSE:
The purpose of The Dial Corp Management Incentive Plan
(Plan) is to provide key executives of The Dial Corp and its
subsidiaries with an incentive to achieve goals as set forth
under this Plan for each calendar year (Plan Year) for their
respective companies and to provide effective management and
leadership to that end.
II. PHILOSOPHY:
The Plan will provide key executives incentive bonuses based
upon appropriately weighted pre-defined net income, net
capital employed or other cash flow measure (in the case of
subsidiaries), and return on actual or pro forma equity or
similar measures of performance.
III. SUBSIDIARIES, SUBSIDIARY GROUPS, AND DIVISIONS:
A. Each subsidiary, subsidiary group, line of business or
division listed below is a "Company" for the purposes
of this Plan:
Name of Company
---------------
Aircraft Service International group
Brewster Transport Company Limited
Consumer Products group
Food Division
Household Division
International Division
Laundry Division
Soap Division
Crystal Holidays, Limited
Dobbs International Services, Inc. group
Exhibitgroup, Inc.
Greyhound Exposition Services, Inc. group*
Greyhound Leisure Services, Inc. group
Greyhound Lines of Canada Ltd.
Jetsave Inc. group
Premier Cruise Lines, Inc.
Restaura, Inc. group
Travelers Express Company, Inc. group
The Dial Corp may, by action of its Board of Directors,
add or remove business units on the list of participant
companies from time to time.
*For purposes of group and Corporate accruals only.
B. PERFORMANCE GOALS:
1. BASE EARNINGS:
A realistic "base earnings" target for the plan
year for each Company will be recommended by the
Chief Executive Officer of The Dial Corp to the
Executive Compensation Committee of The Dial Corp
Board of Directors (Committee) for approval taking
into account historical income, plan year
financial plan income (on the same basis as
determined below), overall corporate objectives,
and, if appropriate, other circumstances.
Income for subsidiary base earnings determination
and for calculating the bonus pool of each Company
shall mean net income (after deducting charges
against income for all incentives earned,
including those earned under this Plan) adjusted
to appropriately exclude the effects of gains and
losses from the sale or other disposition of
capital assets other than equipment utilized in
rental or leasing operations and vehicles.
Further, there will be a deduction from (addition
to) actual net income for the amount by which a
Company's excess of 90-day and over receivables
over its allowance for doubtful accounts has
increased (decreased) during the year.
Special treatment of any other significant unusual
or non-recurring items (for purposes of base
earnings and/or return on equity and/or net
capital employed or other cash flow calculations)
arising after a subsidiary's targets are set may
be recommended by the Chief Executive Officer of
The Dial Corp to the Committee for approval,
including, for example, appropriate adjustment of
base earnings and/or return on equity and/or net
capital employed targets to reflect planned
effects of an acquisition approved after targets
are set. Other examples include extraordinary
items, effects of a change in accounting
principles or a change in federal income tax
rates. In certain extreme cases, unplanned
effects of major litigation, remediation of
environmental matters, significant uninsured
losses or a significant restructuring, or the
bankruptcy of a major vendor or customer are
further examples of the types of items which could
be (but are not required to be) considered for
possible special treatment.
2. RETURN ON THE DIAL CORP PRO FORMA EQUITY (Except
Travelers Express Company, Inc. group):
A return on equity calculation for each Company
will be made by dividing each year's net earnings
after tax by the average quarterly (beginning of
year and each quarter-end, including year-end) pro
forma equity. For purposes of this calculation,
pro forma equity shall be deemed to be 65% of the
sum of each Company's actual equity plus its debt,
including intercompany accounts payable less
intercompany accounts receivable (net capital
employed) and net income shall be adjusted (1) to
exclude 65% of intercompany interest income and
(2) to deduct (or add) 65% of the pro forma
interest, calculated at 8% per annum, on the
excess (or deficiency) of 35% of the average
beginning and ending balance of net capital
employed over the average beginning and ending
balance of outstanding debt (pro forma additional
or excess debt), so that each Company's return on
equity is based on a pro forma 65% equity and 35%
debt structure (equivalent to a debt/equity ratio
of .54 to 1 or a debt/capital ratio of 35%) for
the net capital employed by it. A realistic
return on equity target for the Plan Year will be
recommended by the Chief Executive Officer of The
Dial Corp for approval to the Committee, taking
into account historical return on equity data,
plan year financial plan return on equity (on the
same basis as previously described), overall
corporate objectives, and, where appropriate,
other circumstances.
3. RETURN ON THE DIAL CORP EQUITY (Travelers Express
Company, Inc. group):
A return on equity calculation for the Travelers
Express Company, Inc. group will be made by
dividing each year's net income after taxes by the
average quarterly (beginning of year and each
quarter-end, including year-end) equity. A
realistic return on equity target for the Plan
Year will be recommended by the Chief Executive
Officer of The Dial Corp for approval to the
Committee, taking into account historical return
on equity data, plan year financial plan return on
equity (on the same basis as previously
described), overall corporate objectives, and,
where appropriate, other circumstances.
4. NET CAPITAL EMPLOYED (or other cash flow measure):
Realistic monthly net capital employed (as defined
in [2] above) targets for the Plan Year will be
recommended by the Chief Executive Officer of The
Dial Corp for approval to the Committee, taking
into account planned capital expenditures and
working capital levels, overall corporate
objectives, and, where appropriate, other
circumstances. The effects of any major unplanned
sale of assets, acquisition, or capital
expenditures will be considered on an individual
basis in determining performance as compared to
target.
5. ESTABLISHING TARGETS:
The actual targets for base earnings, return on
equity and net capital employed will be
established by the Committee after receiving the
recommendations of the Chief Executive Officer of
The Dial Corp.
C. PARTICIPANT ELIGIBILITY:
The Committee will select the Executive Officers as
defined under Section 16b of the Securities Exchange
Act eligible for participation prior to the beginning
of the year. Other personnel will be eligible for
participation as designated by each Company President
or Chief Executive Officer and recommended to the Chief
Executive Officer of The Dial Corp for approval,
limited only to those executives who occupy a position
in which they can significantly affect operating
results as pre-defined by appropriate and consistent
criteria, i.e., base salary not less than $49,000 per
year, or base salary not less than 50% of the Company's
Chief Executive Officer, or position not more than the
third organizational level below the Company Chief
Executive Officer or another applicable criteria.
NOTE: Individuals not qualifying under the criteria
established for the Plan Year who were included in the
previous year will be grandfathered (continue as
qualified participants until retirement, reassignment,
or termination of employment) if designated by the
Company President or Chief Executive Officer, and
approved by the Chief Executive Officer of The Dial
Corp.
D. TARGET BONUSES:
Target bonuses will be approved by the Committee for
each Executive Officer in writing within the following
parameters prior to the beginning of the Plan Year and
will be expressed as a percentage of salary. Target
bonuses for other eligible personnel will be
established in writing within the following parameters
subject to approval by the Chief Executive Officer of
The Dial Corp.
Actual bonus awards will be dependent on Company
performance versus the targets established prior to the
beginning of the year. A threshold performance will be
required before any bonus award is earned. Awards will
also be capped when stretch performance levels are
achieved.
AS A PERCENTAGE OF SALARY
SUBSIDIARY
POSITIONS THRESHOLD** TARGET CAP***
- ---------- ----------- ------ ------
Chief Executive
Officer/President* 22.5% 45% 76.5%
20.0% 40% 68.0%
Executive Vice
President, Senior
Vice President,
and Other Operating
Executives 20.0% 40% 68.0%
Vice Presidents* 17.5% 35% 59.5%
15.0% 30% 51.0%
Key Management
Reporting to Officers* 12.5% 25% 42.5%
10.0% 20% 34.0%
Staff Professionals* 7.5% 15% 25.5%
5.0% 10% 17.0%
- ----------------------------
* Target Bonus, as determined by the Committee, is dependent
upon organizational reporting relationships.
** Reflects minimum achievement of both performance targets.
Threshold could be one-half of this amount if minimum
achievement of only one performance target is met.
*** Cap could be up to 105% of amounts shown if net capital
employed (or other cash flow measure) targets are achieved.
E. BONUS POOL TARGET:
1. The "Bonus Pool Target" will be initially
established prior to the beginning of the Plan
Year and will be adjusted to equal the sum of the
target bonuses of all designated participants in
each Company based upon actual Plan Year salaries,
as outlined in paragraph D above, plus 15% for
Special Achievement Awards.
2. The bonus pool will accrue ratably such that
a) on 50% of the sum of target bonuses:
i) no bonus will be earned if less than 80%
of the base earnings target is achieved;
ii) 50% to 100% will be earned if 80% to
100% of the base earnings target is
achieved;
iii) 100% to 170% will be earned if 100% to
120% of the base earnings target is
achieved; and
iv) the bonus pool earned shall be subject
to a further calculation whereby 90%,
95%, 100%, 105%, or 110% of such base
earnings bonus pool otherwise accruable
will be the final bonus pool hereunder,
depending on the average of the twelve
months' achievement against net capital
employed (or other cash flow) targets.
b) on 50% of the sum of target bonuses:
i) no bonus will be earned if less than 80%
of the return on equity target is
achieved;
ii) 50% to 100% will be earned if 80% to
100% of the return on equity target is
achieved; and
iii) 100% to 170% will be earned if 100% to
120% of the return on equity target is
achieved.
c) Notwithstanding 2. a) i), ii), and iii); and
b) i), ii), and iii); of this paragraph E,
the ratable accrual of either or both targets
may be established for threshold within the
range of above 80% up to and including 95%
and for maximum within the range of below
120% down to 110%, for certain subsidiaries
of this Company as may be designated by the
Committee after considering the
recommendations of the Chief Executive
Officer of The Dial Corp.
3. Bonus pool accruals not paid out shall not be
carried forward to any succeeding year.
F. INDIVIDUAL BONUS AWARDS:
1. Indicated bonus awards will be equal to the
product of the target bonus percentage times the
weighted average percentage of bonus pool accrued
as determined in paragraph E above times the
individual's actual base salary earnings during
the Plan Year, subject to adjustments as follows:
a) discretionary upward or downward adjustment
of formula bonus awards by the Committee
after considering the recommendation of the
Company President or Chief Executive Officer
with the approval of the Chief Executive
Officer of The Dial Corp, and
b) discretionary downward adjustment of awards
by the Committee for those executive officers
affected by Section 162(m) of the Internal
Revenue Code, and
c) no individual award may exceed the
individual's capped target award and the
aggregate recommended bonuses may not exceed
the bonus pool accrued for other than Special
Achievement Awards.
2. Bonuses awarded to the participating management
staff of subsidiary groups may be paid from funds
accrued based upon the bonus pool target for such
participants times the weighted average
performance of the Companies in the subsidiary
group, subject to adjustments as above.
IV. THE DIAL CORP CORPORATE STAFF:
A. PERFORMANCE GOALS:
1. BASE EARNINGS PER SHARE:
A realistic "base earnings per share" from
continuing operations target for The Dial Corp
will be recommended by the Chief Executive Officer
of The Dial Corp to the Committee for approval
after considering historical earnings per share
from continuing operations, plan year financial
plan income, overall corporate objectives, and, if
appropriate, other circumstances.
Special treatment of any significant unusual or
non-recurring items (for purposes of base earnings
per share and/or return on equity calculations)
arising after targets are set for Corporate staff
may be recommended by the Chief Executive Officer
of The Dial Corp for approval by the Committee,
including appropriate adjustment of base earnings
per share and/or return on equity targets to
reflect planned effects of a major acquisition or
change in capital structure approved after targets
are set. Other examples include extraordinary
items, one time gains or losses arising from
discontinued operations, effects of a change in
accounting principles or a change in federal
income tax rates. Reclassification of a major
business unit to discontinued operations status
after targets have been set would also require
adjustment because of effect on continuing
operations results. Generally, restructuring
charges, gain or loss on sale of a smaller
subsidiary, or other one-time income or loss items
mentioned in the subsidiary section would not be
considered for special treatment for corporate
staff, as the corporate mission is to successfully
manage the effects of such items.
2. RETURN ON COMMON STOCKHOLDERS' EQUITY:
A return on common stockholders' equity
calculation will be made by dividing each year's
net income (after taxes) from continuing
operations, less preferred stock dividend
requirements, by the monthly average of common
stockholders' equity (return on common equity).
Consideration will be given to any known or
anticipated changes in equity structure and
appropriate industry averages, and a realistic
return on common stockholders' equity target for
the Plan Year will be recommended by the Chief
Executive Officer of The Dial Corp to the
Committee for approval, taking into account
historical return on common stockholders' equity
data, Plan Year financial plan return on common
stockholders' equity (on the same basis as
previously described), overall corporate
objectives, and, if appropriate, other
circumstances.
B. PARTICIPANT ELIGIBILITY:
The Committee will select the Executive Officers as
defined under Section 16b of the Securities Exchange
Act eligible for participation prior to the beginning
of the year. Other personnel will be eligible for
participation as recommended by the appropriate staff
Vice President and as approved by the Chief Executive
Officer of The Dial Corp, limited only to those
executives who occupy a position in which they can
significantly affect operating results as defined by
the following criteria:
a) Salary grade 25 and above; and
b) Not more than Organizational Level Four below the
Chief Executive Officer.
NOTE: Individuals not qualifying under the criteria
established for the Plan Year who were included in the
previous year will be grandfathered (continue as
qualified participants until retirement, reassignment,
or termination of employment) if designated by the
appropriate Vice President and approved by the Chief
Executive Officer of The Dial Corp.
C. TARGET BONUSES:
Target bonuses will be approved by the Committee for
each Executive Officer in writing within the following
parameters prior to the beginning of the Plan Year and
will be expressed as a percentage of salary. Target
bonuses for other eligible personnel will be
established in writing within the following parameters
subject to approval by the Chief Executive Officer of
The Dial Corp.
Actual bonus awards will be dependent on Company
performance versus the targets established prior to the
beginning of the year. A threshold performance will be
required before any bonus award is earned. Awards also
will be capped when stretch performance levels are
achieved.
AS A PERCENTAGE OF SALARY
CORPORATE
POSITIONS THRESHOLD** TARGET CAP***
- ---------- ----------- ------ ------
Chairman, 30.00% 60% 102.0%
President &
Chief Executive
Officer
Senior Advisory 22.50% 45% 76.5%
Group
Corporate Staff 20.00% 40% 68.0%
Officers
Staff Directors* 17.50% 35% 59.5%
15.00% 30% 51.0%
12.50% 25% 42.5%
10.00% 20% 34.0%
Staff 7.50% 15% 25.5%
Professionals* 5.00% 10% 17.0%
- ------------------------------
* Target Bonus, as determined by the Committee, is dependent
upon Organizational Reporting Relationships.
** Reflects minimum of achievement of both performance targets.
Threshold could be one-half of this amount if minimum
achievement of only one performance target is met.
D. BONUS POOL TARGET
1. The "Bonus Pool Target" will be established prior
to the beginning of the Plan Year and will be
adjusted to equal the sum of the target bonuses of
all qualified participants based upon actual Plan
Year base salaries, as outlined in paragraph C
above, plus 15% for Special Achievement Awards.
2. The bonus pool will accrue ratably such that
a) on 50% of the sum of the target bonuses:
i) no bonus will be earned if less than 80%
of earnings per share target is
achieved;
ii) 50% to 100% will be earned if 80% to
100% of earnings per share target is
achieved; and
iii) 100% to 170% will be earned if 100% to
120% of earnings per share target is
achieved.
b) on 50% of the sum of target bonuses:
i) no bonus will be earned if less than 80%
of the return on equity target is
achieved;
ii) 50% to 100% will be earned if 80% to
100% of the return on equity target is
achieved; and
iii) 100% to 170% will be earned if 100% to
120% of the return on equity target is
achieved
provided no less than an amount equal to 12.5% of
the actual bonus accruals earned under section III
of this Plan or any spin-off Line of Business
Incentive Plan established after 1984, for
participants under section III herein will be
earned hereunder, up to an aggregate maximum of
170% of Bonus Pool Target and transferred by the
companies covered in section III, herein, to The
Dial Corp. For purposes of this determination
only, the 170% (plus up to 8.5% upward cash flow
adjustment) upper limit shall not apply on such
actual bonus accrual calculations for
subsidiaries, subsidiary groups and divisions.
c) Notwithstanding 2. a)i),ii) and iii); and
b)i),ii), and iii); of this paragraph D, the
ratable accrual of either or both targets may
be established for threshold within the range
of 80% up to and including 95% and for
maximum within the range of below 120% down
to 105% as may be designated by the
Committee.
3. Bonus pool accruals not paid out shall not be
carried forward to any succeeding year.
E. INDIVIDUAL BONUS AWARDS:
Indicated bonus awards will be equal to the product of
the target bonus percentage times the weighted average
percentage of bonus pool accrued as determined in
paragraph D above times the individual's actual Plan
Year base salary earnings, subject to adjustments as
follows:
a) discretionary upward or downward adjustment
of formula awards by the Committee after
considering the recommendations of the Chief
Executive Officer of The Dial Corp,
b) discretionary downward adjustment of awards
by the Committee for those Executive Officers
affected by Section 162(m) of the Internal
Revenue Code, and
c) no individual award may exceed the
individual's capped target award and the
aggregate recommended bonuses may not exceed
the bonus pool accrued for other than Special
Achievement Awards.
V. SPECIAL ACHIEVEMENT AWARDS:
Special bonuses of up to 15% of base salary for exceptional
performance to exempt employees who are not participants in
this Plan, including newly hired employees, may be
recommended at the discretion of the Chief Executive Officer
to the Committee from the separate funds for discretionary
awards provided for under paragraphs III E and IV D.
Special Achievement Awards may be granted to participants in
exceptional cases from any funds accrued under this Plan, as
recommended by the Chief Executive Officer to the Committee
for approval.
VI. APPROVAL AND DISTRIBUTION:
The individual incentive bonus amounts and the terms of
payment thereof will be fixed following the close of the
Plan Year by the Committee. Any award made under this Plan
is subject to the approval of this Plan by the stockholders
of The Dial Corp.
VII. COMPENSATION ADVISORY COMMITTEE:
The Compensation Advisory Committee is appointed by the
Chief Executive Officer of The Dial Corp to assist the
Committee in the implementation and administration of this
Plan. The Compensation Advisory Committee shall propose
administrative guidelines to the Committee to govern
interpretations of this Plan and to resolve ambiguities, if
any, but the Compensation Advisory Committee will not have
the power to terminate, alter, amend, or modify this Plan or
any actions hereunder in any way at any time.
VIII. SPECIAL COMPENSATION STATUS:
All bonuses paid under this Plan shall be deemed to be
special compensation and, therefore, unless otherwise
provided for in another plan or agreement, will not be
included in determining the earnings of the recipients for
the purposes of any pension, group insurance or other plan
or agreement of a Company or of The Dial Corp. Participants
in this Plan shall not be eligible for any contractual or
other short-term (sales, productivity, etc.) incentive plan
except in those cases where participation is weighted
between this Plan and any such other short-term incentive
plan.
IX. DEFERRALS:
Participants subject to taxation of income by the United
States may submit to the Committee, prior to November 15 of
the year in which the bonus is being earned a written
request that all or a portion, but not less than $1,000, of
their bonus awards to be determined, if any, be irrevocably
deferred substantially in accordance with the terms and
conditions of a deferred compensation plan approved by the
Board of Directors of The Dial Corp or, if applicable, one
of its subsidiaries. Participants subject to taxation of
income by other jurisdictions may submit to the Committee a
written request that all or a portion of their bonus awards
be deferred in accordance with the terms and conditions of a
plan which is adopted by the Board of Directors of a
participant's Company. Upon the receipt of any such
request, the Committee thereunder shall determine whether
such request should be honored in whole or in part and shall
forthwith advise each participant of its determination on
such request.
X. PLAN TERMINATION:
This Plan shall continue in effect until such time as it may
be canceled or otherwise terminated by action of the Board
of Directors of The Dial Corp and will not become effective
with respect to any Company unless and until its Board of
Directors adopts a specific plan for such Company. While it
is contemplated that incentive awards from the Plan will be
made, the Board of Directors of The Dial Corp, or any other
Company hereunder, may terminate, amend, alter, or modify
this Plan at any time and from time to time. Participation
in the Plan shall create no right to participate in any
future year's Plan.
XI. EMPLOYEE RIGHTS:
No participant in this Plan shall be deemed to have a right
to any part or share of this Plan. This Plan does not
create for any employee or participant any right to be
retained in service by any Company, nor affect the right of
any such Company to discharge any employee or participant
from employment. Except as provided for in administrative
guidelines, a participant who is not an employee of The Dial
Corp or one of its subsidiaries on the date bonuses are paid
will not receive a bonus payment.
<PAGE>
EXHIBIT 10.L
THE DIAL CORP
PERFORMANCE UNIT INCENTIVE PLAN
1. PURPOSE:
The purpose of the Plan is to promote the long-term interests of
the Corporation and its shareholders by providing a means for
attracting and retaining designated key executives of the
Corporation and its Affiliates through a system of cash rewards
for the accomplishment of long-term predefined objectives.
2. DEFINITIONS:
The following definitions are applicable to the Plan:
"Affiliate" - Any "Parent Corporation" or "Subsidiary
Corporation" of the Corporation as such terms are defined in
Section 425(e) and (f), or the successor provisions, if any,
respectively, of the Code (as defined herein).
"Award" - The grant by the Committee of a Performance Unit
or Units as provided in the Plan.
"Board" - The Board of Directors of The Dial Corp.
"Code" - The Internal Revenue Code of 1986, as amended, or
its successor general income tax law of the United States.
"Committee" - The Executive Compensation Committee of the
Board.
"Corporation" - The Dial Corp.
"Participant" - Any executive of the Corporation or any of
its Affiliates who is selected by the Committee to receive
an Award.
"Performance Period" - The period of time selected by the
Committee for the purpose of determining performance goals
and measuring the degree of accomplishment. Generally, the
Performance Period will be a period of three successive
fiscal years of the Corporation.
"Performance Unit Award" - An Award.
"Plan" - The Performance Unit Incentive Plan of the
Corporation.
"Unit" - The basis for any Award under the Plan.
3. ADMINISTRATION:
The Plan shall be administered by the Committee. Except as
limited by the express provisions of the Plan, the Committee
shall have sole and complete authority and discretion to (i)
select Participants and grant Awards; (ii) determine the number
of Units to be subject to Awards generally, as well as to
individual Awards granted under the Plan; (iii) determine the
targets that must be achieved in order for the Awards to be
payable and the other terms and conditions upon which Awards
shall be granted under the Plan; (iv) prescribe the form and
terms of instruments evidencing such grants; and (v) establish
from time to time regulations for the administration of the Plan,
interpret the Plan, and make all determinations deemed necessary
or advisable for the administration of the Plan.
4. PERFORMANCE GOALS:
The Performance Unit Incentive Plan is intended to provide
Participants with a substantial incentive to achieve or surpass
two pre-defined long-range financial goals which have been
selected because they are key factors (goals) in increasing
shareholder value. One of the key goals for CORPORATE and
SUBSIDIARY Participants is Average Three-Year Return on Equity,
utilizing a pro forma return on equity calculation for
subsidiaries (other than Travelers Express) which effectively
adjusts each to the overall financial objective of a capital
structure of 35% debt and 65% equity.
The second goal for each SUBSIDIARY Participant principally
emphasizes Average Three-Year Real Earnings Growth. The targets
for this goal will take several different forms in recognition of
the need to tailor the target to the most important factors for
the unit (as well as to overall corporate objectives). For
example, while operating income is normally the best indicator of
earnings growth, the target will be based on net income when tax-
exempt income (Travelers Express) or income from equity in joint
ventures (Dobbs International, GLSI) come into play, as operating
income would not give the full picture in such circumstances.
Goals for subsidiaries should be meaningful, easily understood
and consistent with the overall objectives.
The second goal for CORPORATE Participants also emphasizes
Average Three-Year Real Earnings Growth but the target will be
based on earnings per share, the most appropriate measure in
increasing shareholder value.
5. DETERMINATION OF TARGETS:
A. Average Three-Year Subsidiary Pro Forma Return on Equity
(Except Travelers Express Company, Inc., group)
A Return on Equity calculation for each Subsidiary Company except
Travelers Express will be made by dividing each year's net
earnings after tax by the average quarterly (beginning of year
and each quarter-end, including year-end) pro forma equity. For
purposes of this calculation, pro forma equity shall be deemed to
be 65% of the sum of each Subsidiary Company's actual equity plus
its debt, including intercompany accounts payable less
intercompany accounts receivable (net capital employed). Net
income shall be adjusted (1) to exclude the after-tax effect of
intercompany interest expense and the after-tax effect of
intercompany interest income and (2) to deduct the after-tax
effect of the pro forma interest, calculated at 8% per annum, on
the excess of 35% of the average beginning and ending balance of
net capital employed over the average beginning and ending
balance of net capital employed over the average beginning and
ending balance of outstanding debt (pro forma debt), so that each
company's Return on Equity is based on a pro forma 65% equity and
35% debt structure for the net capital employed by it. In all
cases, the after-tax calculations are to be made using the
statutory federal income tax rate applicable to such year. In
establishing a realistic weighted average annual Return on Equity
target for the Performance Period, consideration will be given to
industry averages whenever known as well as the Performance
Period Financial Plan year-by-year Return on Equity (on the same
basis as previously described), overall Corporate objectives and,
where appropriate, other circumstances. An appropriate range of
values above and below such target will then be selected to
measure achievement above or below the target.
B. Average Three-Year Return on Equity (Travelers Express)
A Return on Equity calculation for Travelers Express will be made
by dividing each year's net income after taxes by the average
quarterly (beginning of year and each quarter-end, including
year-end) equity. Consideration will then be given to any known
or anticipated changes in equity structure and available industry
averages, and a realistic weighted average annual Return on
Equity target for the three-year Performance Period will be
established, taking into account all factors mentioned as well as
the three-year Performance Period Financial Plan year-by-year
Return on Equity (on the same basis as previously described),
overall Corporate objectives and, where appropriate, other
circumstances. An appropriate range of values above and below
such target will then be selected to measure achievement above or
below the target.
C. Average Three-Year Dial Return on Common Stockholders'
Equity
A return on common stockholders' equity calculation will be made
for The Dial Corp by dividing each year's net income after taxes
less preferred dividend requirements by the year's monthly
average of common stockholders' equity (return on common equity).
Consideration will then be given to any known or anticipated
changes in equity structure and to appropriate industry averages,
and a realistic weighted average annual Return on Equity target
for the three-year Performance Period will be established taking
into account all factors mentioned as well as the three-year
Performance Period Financial Plan year-by-year return on equity
(on the same basis as previously described), overall Corporate
objectives and, where appropriate, other circumstances. An
appropriate range of values above and below such target will then
be selected to measure achievement above or below the target.
D. Average Three-Year Subsidiary Earnings Growth
A realistic average three-year earnings target for the
Performance Period for each Subsidiary Company will be
established taking into account historical income, financial plan
income for the Performance Period, overall Corporate objectives,
and if appropriate, other circumstances. An appropriate range of
values above and below such target will then be selected to
measure achievement above or below the target.
E. Average Three-Year Dial Earnings Per Share Growth
A realistic "Earnings Per Share" from continuing operations
target for The Dial Corp will be established after considering
historical earnings per share from continuing operations,
financial plan income for the Performance Period, overall
Corporate objectives and, if appropriate, other circumstances.
An appropriate range of values above and below such target will
then be selected to measure achievement above or below the
target.
The appropriate targets and the Performance Period to be used as
a basis for the measurement of performance for Awards under the
Plan will be determined by the Committee after giving
consideration to the recommendations of the Chief Executive
Officer of The Dial Corp. Performance Units will be earned based
upon the degree of achievement of the pre-defined targets over
the Performance Period following the date of grant. Earned
Units can range, based on operating company performance using an
award matrix, from 0% to 200% of the target Units.
6. OTHER PLAN PROVISIONS:
Special treatment of any significant unusual or non-recurring
items (for purposes of earnings and/or Return on Equity
calculation) arising after targets are set may be recommended by
the Chief Executive Officer of The Dial Corp to the Committee for
approval including revision to either or both targets in the
event of any significant acquisition or divestiture made during
the Performance Period to give effect, as appropriate, to planned
effects of such acquisition or divestiture during the Performance
Period. Other examples include extraordinary items, gains or
losses arising from discontinued operations, effects of a change
in accounting principles or a change in federal income tax rates.
Reclassification of a major business unit to discontinued
operations status after targets have been set would also require
adjustment because of effect on continuing operations results.
For subsidiaries, in certain extreme cases, unplanned effects of
major litigation, remediation of environmental matters,
significant uninsured losses, a significant restructuring or the
bankruptcy of a major vendor or customer are further examples of
the types of items which could be (but are not required to be)
considered by the Chief Executive Officer of The Dial Corp for
recommendation to the Committee for possible special treatment.
Conversely, the general rule for Corporate measurements is that
restructuring charges affecting years after 1992, gain or loss on
sale of a smaller subsidiary or other one-time income or loss
items mentioned above regarding subsidiaries would not be
considered for special treatment as the Corporate mission is to
successfully manage the effects of such items.
Incentives to be paid under this plan must be provided out of
corporation's earnings during the Performance Period (generally
in the third year, when the amounts to be paid can be reasonably
estimated). Goals must be achieved after deducting from actual
results all incentive compensation applicable to such performance
periods, including those incentives earned under this plan.
7. AWARD MATRIX:
The range of values for the Corporation's or a Subsidiary
Company's performance is set at a minimum of 80% of target for
threshold and capped at 120% of the target. Targets may be
established for threshold within the range of above 80% up to and
including 95% and for maximum within the range of below 120% down
to 105% for certain Subsidiary Companies. The Return on Equity
target and range of values will be entered on the vertical axis
of the appropriate Performance Unit Award Matrix. The weighted
average annual Return on Equity target for the Performance
Period will represent a meaningful improvement over average
historical returns except in extremely unusual circumstances.
Actual weighted average annual Return on Equity performance for
each Participant will be determined at the end of the three-year
Performance Period based on the appropriate definition set forth
above. Similarly, the average three-year Real Earning Growth
target and range of values will be entered on the horizontal axis
of the Performance Unit Award Matrix, and actual results will be
determined at the end of the three-year Performance Period based
on the appropriate definition.
Performance Units will be earned based upon the degree of
achievement of the pre-defined goals using the Performance Unit
Award Matrix.
PERFORMANCE UNIT AWARD MATRIX:
Percent of Award Earned
-----------------------
Return 100% 125% 150% 175% 200%
on 75% 100% 125% 150% 175%
Equity 50% 75% 100% 125% 150%
25% 50% 75% 100% 125%
0% 25% 50% 75% 100%
Improvement in Net Income
-------------------------
8. PARTICIPANT ELIGIBILITY:
Personnel will be eligible for participation as recommended by
The Dial Corp Chief Executive Officer for approval by the
Committee prior to the beginning of each new Performance Period
during the life of the Plan, limited only to those key executives
who contribute in a substantial measure to the successful
performance of the Corporation or its Affiliates. The Chief
Executive Officer will recommend for approval by the Committee
which Affiliates among its Affiliates should be included in the
Plan.
9. AWARD DETERMINATION:
The number of Units to be awarded will be determined, generally,
by multiplying a factor times the Participant's annual base
salary in effect at the time the Award is granted and dividing
the result by the average of the high and low of the
Corporation's Common Stock on the date of approval of the grant
by the Committee. The Award factor will be recommended by the
Chief Executive Officer of The Dial Corp for approval by the
Committee annually prior to the beginning of each new performance
period. The Committee may adjust the number of Units awarded in
its discretion.
10. GENERAL TERMS AND CONDITIONS:
The Committee shall have full and complete authority and
discretion, except as expressly limited by the Plan, to grant
Units and to provide the terms and conditions (which need not be
identical among Participants) thereof. Without limiting the
generality of the foregoing, the Committee may specify a
Performance Period of not less than two years or not more than
five years, rather than the three-year Performance Period
provided for above, and such time period will be subsitututed as
appropriate to properly effect the specified Performance Period.
No Participant or any person claiming under or through such
person shall have any right or interest, whether vested or
otherwise, in the Plan or in any Award thereunder, contingent or
otherwise, unless and until all the terms, conditions, and
provisions of the Plan and its approved administrative
requirements that affect such Participant or such other person
shall have been complied with. Nothing contained in the Plan or
its Administrative Guidelines shall (i) require the Corporation
to segregate cash or other property on behalf of any Participant
or (ii) affect the rights and power of the Corporation or its
Affiliates to dismiss and/or discharge any Participant at any
time.
11. PAYMENT OF AWARDS:
(a) Performance Unit Awards which may become payable under
this Plan shall be calculated as determined by the
Committee but any resulting Performance Unit Award
payable shall be subject to the following calculation:
each Unit payable shall be multiplied by the average of
the daily means of the market prices of the
Corporation's Common Stock during the month following
the Performance Period. Performance Unit Awards earned
will be determined as of the third Thursday of February
following the close of the Performance Period and
distribution of the Award will be made within ninety
(90) days following the close of the Performance
Period. Awards will be subject to discretionary
downward adjustment, for those executive officers
affected by Section 162(m) of the Internal Revenue
Code, by the Committee.
(b) Performance Unit Awards granted under this Plan shall
be payable during the lifetime of the Participant to
whom such Award was granted only to such Participant;
and, except as provided in (d) and (e) of this Section
7, no such Award will be payable unless at the time of
payment such Participant is an employee of and has
continuously since the grant thereof been an employee
of, the Corporation or an Affiliate. Neither absence
on leave, if approved by the Corporation, nor any
transfer of employment between Affiliates or between an
Affiliate and the Corporation shall be considered an
interruption or termination of employment for purposes
of this Plan.
(c) Prior to the expiration of the Performance Period, all
Participants will be provided an irrevocable option to
defer all or a portion of any earned Performance Unit
Award, if there be one, but not less than $1,000, in
written form as prescribed by the Board under the
provisions of a deferred compensation plan for
executives of the Corporation and its Affiliates, if
one be adopted.
(d) If a Participant to whom a Performance Unit Award was
granted shall cease to be employed by the Corporation
or its Affiliate for any reason (other than death,
disability, or retirement) prior to the completion of
any applicable Performance Period, said Performance
Unit Award will be withdrawn and subsequent payment in
any form at any time will not be made.
(e) If a Participant to whom a Performance Unit Award was
granted shall cease to be employed by the Corporation
or its Affiliate due to early, normal, or deferred
retirement, or in the event of the death or disability
of the Participant, during the Performance Period
stipulated in the Performance Unit Award, such Award
shall be prorated for the period of time from date of
grant to date of retirement, disability or death, as
applicable, and become payable within ninety (90) days
following the close of the Performance Period to the
Participant or the person to whom interest therein is
transferred by will or by the laws of descent and
distribution. Performance Unit Awards shall be
determined at the same time and in the same manner
(except for applicable proration) as described in
Section 11(a).
(f) There shall be deducted from all payment of Awards any
taxes required to be withheld by any Federal, State, or
local government and paid over to any such government
in respect to any such payment.
12. ASSIGNMENTS AND TRANSFERS:
No Award to any Participant under the provisions of the Plan may
be assigned, transferred, or otherwise encumbered except, in the
event of death of a Participant, by will or the laws of descent
and distribution.
13. AMENDMENT OR TERMINATION:
The Board may amend, suspend, or terminate the Plan or any
portion thereof at any time provided, however, that no such
amendment, suspension, or termination shall invalidate the Awards
already made to any Participant pursuant to the Plan, without his
consent.
14. EFFECTIVE DATE AND TERM OF PLAN:
The Plan shall be effective January 1, 1994, provided however,
that any Award made under this Plan is subject to the approval of
this Plan by the stockholders of The Dial Corp.
<PAGE>
EXHIBIT 10.P
PERFORMANCE-BASED STOCK PLAN
THE DIAL CORP
MARCH, 1993
PLAN SPECIFICATIONS.
Purpose of the Plan:
Focus management on value creation as measured by returns to
shareholders.
Reward sustained performance on a relative basis.
Provide an additional vehicle for linking compensation to
company success over a longer time frame.
Retain management team.
Provide a means for building stock ownership by executives.
Concept:
Company makes grant of common stock subject to restrictions
based on both performance that is measured on pre-specified
dates and continued employment.
If performance goals are not met, a smaller number of shares
(or none) may be delivered.
Eligibility:
A select group of key managers, as recommended by the
Chairman and CEO and approved by the Executive Compensation
Committee, will participate in the Plan.
Target Award Amounts:
An example of target award sizes follows, expressed as a
percentage of base salary. Final targets should be adjusted
periodically to maintain the desired long-term incentive
grant mix and total compensation objectives.
Example of targets:
SALARY RANGE TARGET AWARD AS %
($000) OF SALARY
Over $400 50% - 60%
$300 - $400 25% - 35%
$200 - $299 20% - 35%
$150 - $199 10% - 30%
$100 - $149 7% - 20%
Individuals having salaries within the same range may have
different award sizes, due to the extent of their
participation in other incentive plans.
DETERMINATION OF INITIAL GRANT SIZE.
The actual number of shares granted to each participant is
determined by dividing the target-award dollar amount by the
value of the performance-based shares.
Example:
Salary of participant: $150,000
Target award: 15% of salary
Stock price: $43.00
Economic value of
performance-based stock: 77% of fair market value
Number of shares: 680 (see calculation below)
(Base Salary times Target Award)
divided by (Percentage Value of
Performance-Based Stock times Stock
Price) = ($150,000 x 15%) divided
by (77% x $43.00) = 680 shares
Performance Period:
Performance Period will be measured over a three-year
period, beginning April 1, 1993 and ending March 31, 1996.
A new performance cycle will begin each year.
Grant Frequency:
Grants will usually be recommended each year.
Performance Measurement:
The shares will be delivered based upon the schedule below:
Performance
Performance Percent (TSR) Relative Percent
(TSR) of to Proxy of
Relative to Shares Comparator Shares
S&P 500 Earned Group Earned
120% 50% 120% 50%
110% 40% 110% 40%
100% 30% 100% 30%
90% 15% 90% 15%
Below 90% 0% Below 90% 0%
If performance is not at threshold, no shares will be
delivered. Any shares not delivered are forfeited at the
end of the performance period.
Payout:
Within 30 days of the end of the performance period, the
Company will provide the participant with the amount of
shares that have been earned over the performance period.
Participants will receive dividends paid currently on the
entire initial grant until the end of the performance
period.
Tax Treatment:
The participant recognizes ordinary income on the fair
market value of the earned shares at the date on which the
shares are delivered. Any dividend amounts received must be
recognized as compensation income as well.
The Company incurs no tax liability at the date of grant.
It recognizes deductible compensation expense for tax
purposes at the same time as, and in the same amount as, the
participant realizes taxable income. The Company is
required to withhold income taxes to receive the deduction.
Accounting Treatment:
The Company must recognize a compensation expense that takes
into account increases in market value after the grant date
to the extent that the performance goals have been achieved.
Under the proposed changes to the accounting rules for
stock-based compensation, a modified grant-date approach
will apply to this performance-based stock plan. That is,
the compensation expense will be based on both the stock
price on the date of grant and an estimate of the outcome of
service- and performance-related conditions. Subsequent
adjustments will be made for expected changes in the
service- and performance-related factors, but not for
changes in the stock price.
<PAGE>
EXHIBIT 10.Q
THE DIAL CORP
DEFERRED COMPENSATION PLAN
1. Purpose of the Plan.
The purpose of the Deferred Compensation Plan (the Plan) is
to provide a select group of management or highly compensated
employees of The Dial Corp (the Corporation) and its subsidiaries
with an opportunity to defer the receipt of incentive
compensation awarded to them under the Management Incentive Plan,
the Performance Unit Incentive Plan and certain other incentive
plans of The Dial Corp and its subsidiaries (the Incentive Plans)
and thereby enhance the long-range benefits and purposes of the
incentive awards. Each plan year shall extend from January 1
through December 31 of each calendar year.
2. Administration of the Plan.
The Plan shall be administered by the Compensation Advisory
Committee (the Committee). Subject to the express provisions of
the Plan, and the Incentive Plans, the Committee shall have the
authority to adopt, amend and rescind such rules and regulations,
and to make such determinations and interpretations relating to
the Plan, which it deems necessary or advisable for the
administration of the Plan, but it shall not have the power to
amend, suspend or terminate the Plan. All such rules,
regulations, determinations and interpretations shall be
conclusive and binding on all parties.
3. Participation in the Plan.
(a) Participation in the Plan shall be restricted to a
select group of management or highly compensated employees of the
Corporation or one of its subsidiaries who are participants in
certain plans of The Dial Corp and its subsidiaries (the Plans)
including the Management Incentive Plan, The Dial Corp
Performance Unit Incentive Plan, and any other bonus or bonuses
or similar or successor plans, and whose timely written requests
to defer the receipt of all or a portion of any incentive
compensation which may be awarded to them, are honored in whole
or in part by the Committee. Any individual whose request for
deferral is not accepted or honored by the Committee, whether for
failure of timely submission or for any other reason, shall not
become a participant in the Plan, and the Committee's
determination in this regard shall be conclusive and binding.
(b) If a participant in the Plan shall 1) sever his
employment with the Corporation or one of its subsidiaries, 2)
engage in any activity in competition with the Corporation or any
of its subsidiaries during or following such employment, or 3)
remain in the employ of a corporation which for any reason ceases
to be a subsidiary of the Corporation, the Committee may at any
time thereafter direct, in its sole and exclusive discretion,
that his participation in the Plan shall terminate, and that he
be paid in a lump sum the aggregate amount credited to his
deferred incentive account as of the date such participation is
terminated.
(c) The Corporation and each participating subsidiary shall
be solely liable for maintenance of deferred incentive accounts
pursuant to paragraph 6 and payment of any benefits with respect
to its own employees who participate in the Plan. In the event a
participant leaves the employ of the Corporation, or a
participating subsidiary ("former employer") and is subsequently
employed by another employer, the Corporation or another
subsidiary of the Corporation ("new employer"), the former
employer may agree to transfer and the new employer may agree to
assume the benefit liability reflected in such participant's
deferred incentive account, without the consent of such
participant and subject to the approval of the Committee, in its
sole discretion. In the event of such a transfer and assumption
of liability, the former employer shall have no further liability
for any benefit under the Plan to its former employee or
otherwise with respect to such transferred account.
4. Requests for Deferral.
All requests for deferral of incentive awards must be made
in writing prior to November 15 of the year in which the bonus is
being earned and shall be in such form and shall contain such
terms and conditions as the Committee may determine. Each such
request shall specify the dollar amount or the percentage to be
deferred of incentive award which would otherwise be received in
the following calendar year, but in no event shall the amount to
be deferred be less than $1,000. Each such request shall also
specify 1) the date (no later than the employee's actual
retirement date) when payment of the aggregate amount credited to
the deferred incentive account is to commence, 2) whether such
payment is then to be made in a lump sum or in quarterly or
annual installments, and 3) if payment is to be made in
installments, the period of time (not in excess of ten years)
over which the installments are to be paid. The Committee shall,
under no circumstances, accept any request for deferral of less
than $1,000 of an incentive award or any request which is not in
writing or which is not timely submitted.
5. Deferral of Incentive Awards.
The Committee shall, prior to December 15 of the year in
which the bonus is being earned notify each individual who has
submitted a request for deferral of an incentive award whether or
not such request has been accepted and honored. If the request
has been honored in whole or in part, the Committee shall advise
the participant of the dollar amount or percentage of his
incentive compensation which the Committee has determined to be
deferred. The Committee shall further advise the participant of
its determination as to the date when payment of the aggregate
amount credited to the participant's deferred incentive account
is to commence, whether payment of the amount so credited as of
that date will then be made in a lump sum or in quarterly or
annual installments, and if payment is to be made in
installments, the period of time over which the installments will
be paid. Upon subsequently being advised of the existence of
special circumstances which are beyond the participant's control
and which impose an unforeseen severe financial hardship on the
participant or his beneficiary, the Committee may, in its sole
and exclusive discretion, modify the deferral arrangement
established for that participant to the extent necessary to
remedy such financial hardship.
6. Deferred Incentive Account.
(a) A deferred incentive account shall be maintained by his
employer for each participant in the Plan, and there shall be
credited to each participant's account, on the date incentive
compensation is paid, the incentive award, or portion thereof,
which would have been paid to such participant on said date if
the receipt thereof had not been deferred.
(b) In addition, there shall be credited on the last day of
the quarter to each participant's account, an interest credit on
his deferred incentive award at the interest rates determined by
the Committee to be payable during each calendar year, or portion
thereof, prior to the termination of such participant's deferral
period or, if the amount then credited to his deferred incentive
account is to be paid in installments, prior to the termination
of such installment period. Interest will be paid on a prorated
basis for amounts withdrawn from the account during the quarter,
with the remaining balance accruing interest for the duration of
the quarter. The interest credit shall be a rate equal to the
yield as of January 1, April 1, July 1 and October 1 on Merrill
Lynch Taxable Bond Index - Long Term Medium Quality (A3)
Industrial Bonds, unless and until otherwise determined.
(c) The Plan shall at all times be unfunded. The
Corporation shall not be required to segregate physically any
amounts of money or otherwise provide funding or security for any
amounts credited to the deferred incentive accounts of
participants in the Plan.
7. Designation of Beneficiary.
Each participant in the Plan shall deliver to the Committee
a written instrument, in the form provided by the Committee,
designating one or more beneficiaries to whom payment of the
amount credited to his deferred incentive account shall be made
in the event of his death. Unless the Committee shall otherwise
determine, such payments shall be made in such amounts and at
such times as they would otherwise have been paid to the
participant if he had survived.
8. Nonassignability of Participation Rights.
No right, interest or benefit under the Plan shall be
assignable or transferable under any circumstances other than to
a participant's designated beneficiary in the event of his death,
nor shall any such right, interest or benefit be subject to or
liable for any debt, obligation, liability or default of any
participant. The payments, benefits or rights arising by reason
of this Plan shall not in any way be subject to a participant's
debts, contracts or engagements, and shall not be subject to
attachment, garnishment, levy, execution or other legal or
equitable process.
9. Rights of Participants.
A participant in the Plan shall have only those rights,
interests or benefits as are expressly provided in the Plan and
in the Incentive Plans. The Plan shall be deemed to be ancillary
to the Incentive Plans and the rights of participants in the Plan
shall be limited as provided in the Incentive Plans.
10. Claims for Benefits.
Claims for benefits under the Plan shall be filed with the
Committee. Written notice of the disposition of a claim shall be
furnished the claimant within 60 days after the application
therefor is filed. In the event the claim is denied, the reasons
for the denial shall be specifically set forth. Pertinent
provisions of this Plan shall be cited. In addition, the written
notice shall describe any additional material or information
necessary for the claimant to perfect the claim (along with an
explanation of why such material or information is needed), and
the written notice will fully describe the claim review
procedures of Section 11 below.
11. Claim Review.
Any claimant who has been denied a benefit shall be
entitled, upon request to the Committee, to receive a written
notice of such action, together with a full and clear statement
of the reasons for the action. The claimant may also review this
Plan if he chooses. If the claimant wishes further consideration
of his position, he may request a hearing. The request, together
with a written statement of the claimant's position, shall be
filed with a Committee member no later than 60 days after receipt
of the written notification provided for above. The Committee
shall schedule an opportunity for a full and fair hearing of the
issue within the next 60 days. The decision following the
hearing shall be made within 60 days and shall be communicated in
writing to the claimant. If the claimant requests, the hearing
may be waived, in which case the Committee's decision shall be
made within 60 days from the date on which the hearing is waived
and shall be communicated in writing to the claimant.
12. Amendment, Suspension or Termination of the Plan.
The Board of Directors of the Corporation (the Board) may
from time to time amend, suspend or terminate the Plan, in whole
or in part, and if the Plan is suspended or terminated, the Board
may reinstate any or all provisions of the Plan, except that no
amendment, suspension or termination of the Plan shall, without
the consent of a participant, adversely affect such participant's
right to receive payment of the entire amount credited to his
deferred incentive account on the date of such Board action. In
the event the Plan is suspended or terminated, the Board may, in
its discretion, direct the Committee to pay to each participant
the amount credited to his account either in a lump sum or in
accordance with the Committee's prior determination regarding the
method of payment.
12. Effective Date.
The Plan shall become effective on the date of its approval
by the Executive Compensation Committee of the Dial Corp Board of
Directors or on such other date as the Executive Compensation
Committee may direct, but the Plan shall become operative with
respect to a select group of management or highly compensated
employees of each subsidiary only upon the adoption of the Plan
by that subsidiary's Board of Directors.
<PAGE>
<TABLE>
Exhibit 11
THE DIAL CORP
STATEMENT RE COMPUTATION OF NET INCOME (LOSS)
PER COMMON SHARE
(000 omitted)
<CAPTION>
Year Ended December 31,
------------------------------
PRIMARY: 1993 1992 1991
-------- -------- --------
<S> <C> <C> <C>
Net income (loss) $120,485 $(81,515) $(57,608)
Less: Preferred stock dividends (1,122) (1,122) (1,123)
Dilution due to outstanding options
of subsidiaries considered common
stock equivalents (17)
-------- -------- --------
$119,363 $(82,637) $(58,748)
======== ======== ========
Weighted average common shares outstanding
before common equivalents 42,002 41,163 39,578
Common equivalent stock options 701 850 333
-------- -------- --------
Average common and equivalent shares 42,703 42,013 39,911
======== ======== ========
Net income (loss) per share (dollars) $ 2.80 $ (1.97) $ (1.47)
======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
FULLY DILUTED:
<S> <C> <C> <C>
Adjusted net income (loss) per above $119,363 $(82,637) $(58,748)
Less: Additional dilution due to
outstanding options of
subsidiaries considered common
stock equivalents (9)
-------- -------- --------
$119,354 $(82,637) $(58,748)
======== ======== ========
Average common and equivalent shares
per above 42,703 42,013 39,911
Common equivalent stock options 42
-------- -------- --------
Average common and equivalent shares 42,745 42,013 39,911
======== ======== ========
Net income (loss) per share (dollars) $ 2.79 $ (1.97) $ (1.47)
======== ======== ========
</TABLE>
<PAGE>
EXHIBIT 22
THE DIAL CORP
ACTIVE AND INACTIVE (I) SUBSIDIARIES AND
AFFILIATES* AS OF MARCH 15, 1994
AIRLINE CATERING & OTHER FOOD SERVICES GROUP
Dobbs International (U.K.) Limited (United Kingdom)
Faber Enterprises, Inc. (Delaware)
Faber Drug Co., Inc. (Illinois) (70%)
Franklin Ventures, Inc. (Illinois)
Greyhound-Dobbs Incorporated (Delaware)
Carson International Inc. (Delaware)+
Dobbs Houses, Inc. (Delaware)+
Dobbs-Paschal Midfield Corporation (Georgia) (75%)+
DOBBS INTERNATIONAL SERVICES, INC. (Delaware)
Dobbs Houses International, Inc. (Delaware)
RESTAURA, INC. (Michigan)
Glacier Park, Inc. (Arizona) (80%)
Waterton Transport Company, Limited (Alberta)
CONSUMER PRODUCTS GROUP
Andora, S.A. (Mexico)
Ardison Properties, Inc. (Delaware)
Armour Foods (U.K.) Ltd. (United Kingdom)
Armour International Limited (United Kingdom)
ARMOUR INTERNATIONAL COMPANY (Arizona)
AIC Foreign Sales Corporation (Virgin Islands)
Armour-Dial del Ecuador, S.A. (Ecuador)
Armour Foods (Benelux) N.V. (Belgium)
Armour Foods (Canada) Limited (Ontario)
Armour Foods (Deutschland) GmbH (Germany)
The Dial Corp. (Deutschland) mbH (Germany)
The Dial Corporation (Panama), S.A. (Panama)
The Dial Corp. (Korea) Ltd. (Korea)
The Dial Corporation (Hong Kong) Limited (Hong Kong)
The Dial Corporation Mexico, S.A. de C.V. (Mexico)
The Dial Corporation (Puerto Rico), Inc. (Arizona)
The Dial Corporation (Thailand) Limited (Thailand)
Ft. Madison Dial, Inc. (Iowa)
Purex de Panama, S.A. (Panama)
CONVENTION SERVICES GROUP
EXHIBITGROUP INC. (Delaware)
Exhibitgroup (Canada) Ltd. (Canada)
David H. Gibson Company, Inc. (Texas)
Longchamp International, Inc. (Nevada) (50%)
GES EXPOSITION SERVICES, INC. (Nevada)
Andrews, Bartlett & Associates, Inc. (Ohio)
Classic Decorating, Inc. (Oregon)
Gelco Convention Services, Inc. (Florida)
Gelco Convention Services of Orlando, Inc. (Florida)
Rowan Northwestern Decorators, Inc. (Washington)
United Exposition Service Co., Inc. (Texas)
Apollo Moving & Storage, Inc. (Nevada)
Concourse Graphics, Inc. (Delaware) (50%)
Expo-Tech Electrical & Plumbing Services, Inc.
(California)
Las Vegas Transfer & Storage, Inc. (Texas)
United Exposition Service Redevelopment Corporation
(Missouri)
Las Vegas Convention Service Co. (Nevada)
CORPORATE AND OTHER
Dialcor Realty Inc. (Arizona)
Greyhound Realty of Texas Inc. (Texas)
Essex Place Inc. (Arizona)
GCMC Inc. (Arizona)
Grey Gateway Realty Corporation (Arizona)
GRT Inc. (Arizona)
GDC Insurance Company Ltd. (Bermuda)
TRAVEL & LEISURE & PAYMENT SERVICES GROUP
Air Agency, Inc. (Florida)
AIRCRAFT SERVICE INTERNATIONAL, INC. (Delaware)
ASII Holding GmbH (Germany)
Omni Aircraft Service GmbH (Germany) (50%)
Aircraft Service Limited (United Kingdom)
Bahamas Airport Services Limited (Bahama)
Freeport Flight Services Limited (Bahama)
Dispatch Services, Inc. (Florida)
Florida Aviation Fueling Company, Inc. (Florida)
GREYHOUND LEISURE SERVICES, INC. (Florida)
European Cruise Shops Limited (Cayman Islands) (51%)
Greyhound-ANA Venture Company (Florida) (51%)
International Cruise Shops, Ltd. (Cayman Islands)
Greyhound World Travel GmbH (Germany)
JETSAVE INC. (Florida)
Jetsave Travel Limited (United Kingdom)
Crystal Holidays, Limited (United Kingdom)
Charles Grimsey Associates Limited (United Kingdom)
Greyhound World Travel Limited (United Kingdom)
Jetsave Limited (United Kingdom)
Jetsave Transatlantic Limited (United Kingdom)
PREMIER CRUISE LINES, LTD. (Cayman Islands)
TRANSPORTATION LEASING CO. (California)~~
GCCP, Inc. (Delaware)~~
Greyhound Canada Holdings, Inc. (Alberta)~~
The Dial Corporation (Canada) Ltd. (Alberta)#
GREYHOUND LINES OF CANADA LTD. (Canada) (69%)
A-1 Bus Line Pick-Up Ltd. (British Columbia)
BREWSTER TRANSPORT COMPANY LIMITED (Alberta)
Banff Norquay Ski Corporation (Alberta)
(50%)**
Gray Coach Lines Inc. (Ontario)
Greyhound Courier Express Ltd. (British Columbia)
TRAVELERS EXPRESS COMPANY, INC. (Minnesota)
CAG Inc. (Nevada)
RM/BS GP Inc. (Minnesota)
Travelers Express Co. (P.R.) Inc. (Puerto Rico)
* Parent-subsidiary or affiliate relationships are shown by
marginal indentation. State, province or country of
incorporation and ownership percentage are shown in
parentheses following name, except that no ownership
percentage appears for subsidiaries owned 100% (in the
aggregate) by The Dial Corp. List does not include
companies in which the aggregate direct and indirect
interest of The Dial Corp is less than 50%.
# Indicates a Consumer Products Group Subsidiary.
~~ Indicates a Corporate and Other Subsidiary.
+ Indicates a Travel & Leisure & Payment Services Group
Subsidiary.
** Through partnership.
<PAGE>
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in The Dial Corp's
Registration Statements No.'s 33-41870, 33-57630, 33-65420, 33-
10150 and 33-65424 on Form S-8 and No.'s 33-57346 and 33-55360 on
Form S-3, of our reports dated February 25, 1994 on the
consolidated financial statements and schedules of The Dial Corp
appearing in this Annual Report on Form 10-K of The Dial Corp for
the year ended December 31, 1993.
/s/Deloitte & Touche
Deloitte & Touche
March 25, 1994
Phoenix, Arizona
<PAGE>
EXHIBIT 24
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each director whose
signature appears below constitutes and appoints Richard C.
Stephan and John W. Teets, and each of them severally, his or her
true and lawful attorneys-in-fact and agents, with full power of
substitution and resubstitution, for him or her and in his or her
name, place and stead, in any and all capacities, to sign the
Form 10-K Annual Report of The Dial Corp for the fiscal year
ended December 31, 1993, and any and all amendments thereto, and
to file the same, with all exhibits thereto, and other documents
in connection herewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and
each of them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as he or
she might or could do in person, hereby ratifying and confirming
all that said attorneys-in-fact and agents or either of them, or
their or his or her substitutes or substitute, may lawfully do or
cause to be done by virtue hereof.
/s/ Joe T. Ford February 17, 1994
/s/ Thomas L. Gossage February 17, 1994
/s/ Donald E. Guinn February 17, 1994
/s/ Jess Hay February 17, 1994
/s/ Judith K. Hofer February 17, 1994
/s/ Jack F. Reichert February 17, 1994
/s/ Linda Johnson Rice February 17, 1994
/s/ Dennis C. Stanfill February 17, 1994
/s/ A. Thomas Young February 17, 1994
/s/ James E. Cunningham February 17, 1994
