<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1996
Commission file number 001-11015
THE DIAL CORP
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 36-1169950
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
DIAL TOWER, PHOENIX, ARIZONA 85077
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (602)207-4000
Indicate by check mark whether the registrant (1) has filed all
Exchange Act reports required to be filed by Section 13 or 15 (d)
of the Securities Exchange Act of 1934 during the preceding 12
months, and (2) has been subject to such filing requirements for
the past 90 days.
Yes x No
--------- ---------
As of July 31, 1996, 95,267,143 shares of Common Stock ($1.50 par
value) were outstanding.<PAGE>
<PAGE>
<TABLE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
THE DIAL CORP
CONSOLIDATED BALANCE SHEET
<CAPTION>
June 30, December 31,
(000 omitted) 1996 1995
----------- -----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 6,366 $ 16,133
Receivables, less allowance of
$16,206 and $14,793 250,592 161,600
Inventories 97,418 84,462
Deferred income taxes 27,659 31,639
Other current assets 41,637 42,170
---------- ----------
423,672 336,004
Funds, agents' receivables and
current maturities of investments
restricted for payment service
obligations, after eliminating
$90,000 and $80,000 invested in
Dial commercial paper 684,665 786,081
---------- ----------
Total current assets 1,108,337 1,122,085
Investments restricted for
payment service obligations 924,421 880,035
Property and equipment 596,339 597,488
Other investments and assets 103,061 103,508
Investments in discontinued operations 455,770 464,680
Deferred income taxes 58,133 50,633
Intangibles 527,409 519,332
---------- ----------
$ 3,773,470 $ 3,737,761
========== ==========
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
June 30, December 31,
(000 omitted, except number of shares) 1996 1995
---------- ----------
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 134,037 $ 118,212
Accrued compensation 55,793 64,918
Other current liabilities 255,378 235,081
Current portion of long-term debt 77,286 77,450
---------- ----------
522,494 495,661
Payment service obligations 1,706,679 1,739,508
---------- ----------
Total current liabilities 2,229,173 2,235,169
Long-term debt 822,938 811,841
Pension and other benefits 85,322 82,588
Other deferred items and insurance reserves 35,557 33,044
Minority interests 8,242 20,353
$4.75 Redeemable preferred stock 6,601 6,597
Common stock and other equity:
Common stock, $1.50 par value,
200,000,000 shares authorized,
97,108,724 shares issued 145,663 145,663
Additional capital 357,398 362,205
Retained income 332,328 322,439
Cumulative translation adjustments (6,741) (18,380)
Unearned employee benefits (189,990) (213,996)
Unrealized gain (loss) on securities
available for sale (7,329) 1,456
Common stock in treasury, at cost,
2,471,711 and 2,877,500 shares (45,692) (51,218)
---------- ----------
Total common stock and other equity 585,637 548,169
---------- ----------
$ 3,773,470 $ 3,737,761
========== ==========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
THE DIAL CORP
STATEMENT OF CONSOLIDATED INCOME
<CAPTION>
Quarter ended June 30, 1996 1995
(000 omitted, except per share data) ---------- ----------
<S> <C> <C>
REVENUES $ 597,153 $ 506,123
---------- ----------
Costs and expenses:
Costs of sales and services 537,228 454,537
Unallocated corporate expense
and other items, net 8,886 7,669
Spin-off transaction costs 12,000
Interest expense 14,381 13,106
Minority interests 481 536
---------- ----------
572,976 475,848
---------- ----------
Income before income taxes 24,177 30,275
Income taxes 11,579 8,999
---------- ----------
INCOME FROM CONTINUING OPERATIONS 12,598 21,276
Income from discontinued operations 1,520 26,190
---------- ----------
NET INCOME $ 14,118 $ 47,466
========== ==========
INCOME PER COMMON SHARE:
Continuing operations $ 0.13 $ 0.24
Discontinued operations 0.02 0.30
---------- ----------
NET INCOME PER COMMON SHARE $ 0.15 $ 0.54
========== ==========
Dividends declared per common share $ 0.16 $ 0.15
========== ==========
Average outstanding common
and equivalent shares 90,911 88,348
========== ==========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
THE DIAL CORP
STATEMENT OF CONSOLIDATED INCOME
<CAPTION>
Six months ended June 30, 1996 1995
(000 omitted, except per share data) ---------- ----------
<S> <C> <C>
REVENUES $ 1,152,015 $ 997,429
---------- ----------
Costs and expenses:
Costs of sales and services 1,058,491 915,399
Unallocated corporate expense
and other items, net 17,913 16,548
Spin-off transaction costs 12,000
Interest expense 28,708 26,521
Minority interests 635 740
---------- ----------
1,117,747 959,208
---------- ----------
Income before income taxes 34,268 38,221
Income taxes 14,556 11,721
---------- ----------
INCOME FROM CONTINUING OPERATIONS 19,712 26,500
Income from discontinued operations 18,900 42,473
---------- ----------
Income before cumulative effect of change in
accounting principle 38,612 68,973
Cumulative effect, net of tax benefit of $7,554,
to January 1, 1995, of initial application of
SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived
Assets to Be Disposed Of" (17,696)
---------- ----------
NET INCOME $ 38,612 $ 51,277
========== ==========
INCOME (LOSS) PER COMMON SHARE
Continuing operations $ 0.21 $ 0.30
Discontinued operations 0.21 0.48
---------- ----------
Income before cumulative effect of change in
accounting principle 0.42 0.78
Cumulative effect of change in accounting
principle (0.20)
---------- ----------
NET INCOME PER COMMON SHARE $ 0.42 $ 0.58
========== ==========
Dividends declared per common share $ 0.32 $ 0.30
========== ==========
Average outstanding common
and equivalent shares 90,847 88,211
========== ==========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
THE DIAL CORP
STATEMENT OF RETAINED INCOME
<CAPTION>
Six months ended June 30, 1996 1995
(000 omitted) ---------- ----------
<S> <C> <C>
Balance, beginning of year $ 322,439 $ 393,233
Net income 38,612 51,277
Dividends on common and preferred shares (28,913) (26,445)
Other 190 1,219
---------- ----------
Balance, end of period $ 332,328 $ 419,284
========== ==========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
THE DIAL CORP
STATEMENT OF CONSOLIDATED CASH FLOWS
<CAPTION>
Six months ended June 30, 1996 1995
(000 omitted) ---------- ----------
<S> <C> <C>
CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES:
Net income $ 38,612 $ 51,277
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization 42,014 38,510
Deferred income taxes 3,552 8,612
Discontinued operations (18,900) (42,473)
Cumulative effect of change in accounting principle 17,696
Spin-off transaction costs 12,000
Other noncash items, net 2,875 2,784
Change in operating assets and liabilities:
Receivables and inventories (99,215) (44,680)
Payment service assets and
obligations, net 97,602 97,617
Accounts payable and accrued compensation 6,621 9,346
Other assets and liabilities, net 562 (41,890)
---------- ----------
Net cash provided by operating activities 85,723 96,799
---------- ----------
CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES:
Capital expenditures (32,964) (24,943)
Purchase of cruise ship previously leased (39,447)
Acquisitions of businesses, net of cash acquired (2,451) (13,136)
Proceeds from sales of property and equipment 5,472 3,244
Investments restricted for payment service obligations:
Proceeds from sales and maturities of securities
classified as available for sale 261,927 276,816
Proceeds from maturities of securities
classified as held to maturity 7,500
Purchases of securities classified as
available for sale (232,424) (309,537)
Purchases of securities classified as
held to maturity (126,475) (61,697)
Investments in and advances from (to)
discontinued operations, net 27,810 (12,912)
Other, net (55) (17)
---------- ----------
Net cash used by investing activities (91,660) (181,629)
---------- ----------
CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES:
Proceeds from long-term borrowings 40,000
Payments on long-term borrowings (2,260) (2,163)
Net change in short-term borrowings 13,162 17,792
Dividends on common and preferred stock (28,913) (26,445)
Proceeds from sales of treasury stock 23,621 17,504
Net change in receivables sold (5,797) 36,796
Cash payments on interest rate swaps (3,643) (7,810)
---------- ----------
Net cash (used) provided by financing activities (3,830) 75,674
---------- ----------
Net decrease in cash and cash equivalents (9,767) (9,156)
Cash and cash equivalents, beginning of year 16,133 24,514
---------- ----------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 6,366 $ 15,358
========== ==========
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<PAGE>
THE DIAL CORP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A--Basis of Preparation
This information should be read in conjunction with the financial
statements set forth in The Dial Corp Annual Report to
Stockholders for the year ended December 31, 1995.
Accounting policies utilized in the preparation of the financial
information herein presented are the same as set forth in The
Dial Corp's ("Dial") annual financial statements except as
modified for interim accounting policies which are within the
guidelines set forth in Accounting Principles Board Opinion No.
28, "Interim Financial Reporting." The interim consolidated
financial information is unaudited. In the opinion of management,
all adjustments, consisting only of normal recurring accruals,
necessary to present fairly Dial's financial position as of June
30, 1996, the results of operations for the quarters and six
months ended June 30, 1996 and 1995, and the cash flows for the
six months ended June 30, 1996 and 1995 have been included.
Interim results of operations are not necessarily indicative of
the results of operations for the full year.
On July 25, 1996, Dial's Board of Directors declared a dividend
(the "Distribution") to effect the spin-off of the consumer
products business. The dividend is payable August 15, 1996 to
stockholders of record August 5, 1996. Each share of Dial's
stock (to be renamed Viad Corp on August 15, 1996 and traded
under the stock symbol VVI) will receive a dividend of one share
of The Dial Corporation stock. The consumer products business,
which will be conducted under the name The Dial Corporation, will
be traded under the stock symbol DL. Dial has received a ruling
from the Internal Revenue Service that the Distribution will
qualify as a tax-free distribution. In connection with the
Distribution, Dial will borrow approximately $280 million under a
new $350 million bank credit facility and will use the proceeds
to repay indebtedness of Dial. The credit facility and the
related liability will then be assumed by The Dial Corporation,
effectively transferring a portion of Dial's outstanding
indebtedness to The Dial Corporation. Dial has also received
assurances from its credit rating agencies that, following the
Distribution and debt assumption, the senior debt of each of Viad
Corp and The Dial Corporation will carry investment-grade
ratings.
Effective May 31, 1996, shareholders of Greyhound Lines of Canada
("GLOC") voted to separate its intercity bus transportation
business and its tourism business into two independent companies.
GLOC minority shareholders also approved an automatic share
exchange proposal whereby their ownership interests in the
tourism business, aggregating 31.5 percent, were exchanged for
Dial's 68.5 percent ownership interest in the intercity bus
transportation business such that Dial became the owner of 100
percent of the tourism business in exchange for its ownership in
the intercity bus transportation business.
The accompanying financial statements have been prepared to
reflect the historical financial position and results of
operations as adjusted for the reclassification of the consumer
products and Canadian intercity bus transportation businesses as
discontinued operations. See Note F of Notes to Consolidated
Financial Statements.
NOTE B--Investments Restricted for Payment Service Obligations
Investments restricted for payment service obligations include
the following debt and equity securities:
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
----------- -----------
(000 omitted)
<S> <C> <C>
Securities available for sale, at
fair value (amortized cost of
$669,353 and $701,143) $ 658,011 $ 703,450
Securities held to maturity, at
amortized cost (fair value of
$302,002 and $191,186) 309,113 190,271
----------- ----------
967,124 893,721
Less current maturities (42,703) (13,686)
----------- ----------
$ 924,421 $ 880,035
=========== ==========
</TABLE>
NOTE C--Debt
At June 30, 1996 and December 31, 1995, Dial classified as long-
term debt $390 million and $377 million, respectively, of short-
term borrowings supported by unused commitments under a long-term
revolving bank credit agreement. See Note A of Notes to
Consolidated Financial Statements and Management's Discussion and
Analysis of Financial Condition and Results of Operations--
Liquidity and Capital Resources.
NOTE D--Income Taxes
A reconciliation of the provision for income taxes and the amount
that would be computed using statutory federal income tax rates
on income before income taxes for the six months ended June 30,
is as follows:
<TABLE>
<CAPTION>
1996 1995
(000 omitted) ------------ ------------
<S> <C> <C>
Computed income taxes at statutory
federal income tax rate of 35% $ 11,994 $ 13,377
Nondeductible goodwill amortization 1,966 1,710
Minority interests 222 259
State income taxes 1,912 1,313
Tax-exempt income (5,868) (4,792)
Spin-off transaction costs 4,200
Other, net 130 (146)
----------- -----------
Provision for income taxes $ 14,556 $ 11,721
=========== ===========
</TABLE>
<PAGE>
<PAGE>
NOTE E--Supplementary Information--Revenues and Operating Income
<TABLE>
<CAPTION>
Quarter ended June 30, Six months ended June 30,
------------------------- --------------------------
1996 1995 1996 1995
(000 omitted) ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenues:
Airline Catering
and Services $ 214,719 $ 206,509 $ 407,982 $ 390,965
Convention Services 192,904 131,588 387,916 285,985
Travel and Leisure
and Payment
Services (1) 189,530 168,026 356,117 320,479
----------- ----------- ----------- -----------
$ 597,153 $ 506,123 $ 1,152,015 $ 997,429
=========== =========== =========== ===========
Operating Income:
Airline Catering
and Services $ 19,478 $ 17,932 $ 31,269 $ 28,958
Convention
Services (2) 18,669 16,629 35,803 31,630
Travel and Leisure
and Payment
Services (1) 21,778 17,025 26,452 21,442
----------- ----------- ----------- -----------
59,925 51,586 93,524 82,030
Unallocated
corporate expense
and other
items, net (8,886) (7,669) (17,913) (16,548)
Spin-off transaction
costs (12,000) (12,000)
----------- ----------- ----------- -----------
$ 39,039 $ 43,917 $ 63,611 $ 65,482
=========== =========== =========== ===========
<FN>
(1) Dial's payment services subsidiary is investing increasing amounts in tax-
exempt securities. On a fully taxable equivalent basis, revenues and operating
income would be higher by $4,672,000 and $3,929,000 for the 1996 and 1995
quarter, respectively, and by $9,027,000 and $7,372,000 for the 1996 and 1995
six month periods, respectively.
(2) Operating income for the quarter and six months ended June 30, 1995
includes a one-time gain of $3,477,000 (pre-tax) due to the curtailment of
certain postretirement medical benefits in a convention services subsidiary.
/TABLE
<PAGE>
<PAGE>
NOTE F--Discontinued Operations
The caption, "Income from discontinued operations" presented in the
Statement of Consolidated Income includes the following, after
income taxes where applicable:
<TABLE>
<CAPTION>
Quarter ended June 30, Six months ended June 30,
------------------------- --------------------------
1996 1995 1996 1995
(000 omitted) ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Consumer products
business:
Income from
operations before
spin-off
transaction
costs (1) $ 21,701 $ 25,985 $ 39,349 $ 42,480
Spin-off trans-
action costs (2) (4,000) (4,000)
----------- ----------- ----------- -----------
17,701 25,985 35,349 42,480
----------- ----------- ----------- -----------
Canadian intercity
bus transportation
business, net of
minority interests:
Income (loss) from
operations (315) 205 (583) (7)
Spin-off and exchange
transaction costs
and loss on
disposition (3) (3,600) (3,600)
Recognition of
previously
unrealized foreign
currency
translation
losses (3) (12,266) (12,266)
----------- ----------- ----------- -----------
(16,181) 205 (16,449) (7)
----------- ----------- ----------- -----------
Discontinued
operations $ 1,520 $ 26,190 $ 18,900 $ 42,473
=========== =========== =========== ===========
<FN>
(1) In conjunction with the spin-off of Dial's consumer products business,
certain liabilities and deferred income tax assets related to specified pension
and postretirement plans of former employees of Armour and Company, which was
previously a subsidiary of Dial, were transferred to and assumed by the consumer
products business. Income from operations of the consumer products business is
net of expenses arising from such items.
(2) In connection with the spin-off of Dial's consumer products business,
estimated spin-off transaction costs totaling $16,000,000 (without tax benefit)
were recorded in the second quarter of 1996, of which $4,000,000 was allocated to
the consumer products business.
(3) Spin-off and exchange transaction costs totaling $1,579,000, associated with
the May 31, 1996 disposition of the Canadian intercity bus transportation
business, were recorded in the second quarter of 1996, along with a noncash loss
on the disposition of $2,021,000 and the recognition of previously unrealized
foreign currency translation losses of $12,266,000. The translation losses had
previously been deducted from common stock and other equity in accordance with
SFAS No. 52.
</TABLE>
<PAGE>
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
RESULTS:
On July 25, 1996, Dial's Board of Directors declared a dividend
(the "Distribution") to effect the spin-off of the consumer
products business from Dial's services business. The dividend is
payable August 15, 1996 to stockholders of record August 5, 1996.
Each share of Dial's stock (to be renamed Viad Corp on August 15,
1996 and traded under the stock symbol VVI) will receive a dividend
of one share of The Dial Corporation stock. The consumer products
business, which will be conducted under the name The Dial
Corporation, will be traded under the stock symbol DL. Dial has
received a ruling from the Internal Revenue Service that the
Distribution will qualify as a tax-free distribution. In
connection with the Distribution, Dial will borrow approximately
$280 million under a new $350 million bank credit facility and will
use the proceeds to repay indebtedness of Dial. The credit
facility and the related liability will then be assumed by The Dial
Corporation, effectively transferring a portion of Dial's
outstanding indebtedness to The Dial Corporation. Dial has also
received assurances from its credit rating agencies that, following
the Distribution and debt assumption, the senior debt of each of
Viad Corp and The Dial Corporation will carry investment-grade
ratings.
Effective May 31, 1996, shareholders of Greyhound Lines of Canada
("GLOC") voted to separate its intercity bus transportation
business and its tourism business into two independent companies.
GLOC minority shareholders also approved an automatic share
exchange proposal whereby their ownership interests in the tourism
business, aggregating 31.5 percent, were exchanged for Dial's 68.5
percent ownership interest in the intercity bus transportation
business such that Dial became the owner of 100 percent of the
tourism business in exchange for its ownership in the intercity bus
transportation business.
The accompanying financial statements have been prepared to reflect
the historical financial position and results of operations as
adjusted for the reclassification of the consumer products and
Canadian intercity bus transportation businesses as discontinued
operations.
COMPARISON OF SECOND QUARTER OF 1996 TO THE SECOND QUARTER OF 1995:
In the second quarter of 1996, revenues increased $91.0 million, or
18.0 percent, to $597.2 million. Excluding the 1995 second quarter
one-time gain of $3.5 million (pre-tax) on curtailment of certain
postretirement medical benefits in the convention services segment,
1996 second quarter operating income of Dial's principal business
segments increased $11.8 million, or 25 percent, over that of the
1995 second quarter.
Income from continuing operations for the second quarter of 1996
was $12.6 million, or $0.13 per share, after deducting a one-time
provision for estimated spin-off transaction costs of $12.0
million, or $0.13 per share. Income from continuing operations for
the second quarter of 1995 was $21.3 million, or $0.24 per share,
which included the curtailment gain of $2.3 million, or $0.03 per
share, after-tax.
Net income for the second quarter of 1996 was $14.1 million, or
$0.15 per share, compared to net income of $47.5 million, or $0.54
per share in the 1995 second quarter. The 1996 second quarter
included income from discontinued operations of $1.5 million while
the 1995 second quarter included $26.2 million income from
discontinued operations. See Note F of Notes to Consolidated
Financial Statements.
AIRLINE CATERING AND SERVICES.
The second quarter 1996 revenues of the Airline Catering and
Services group were $214.7 million, a 4.0 percent increase from the
1995 second quarter revenues of $206.5 million. Operating income
increased $1.5 million, or 8.6 percent, over that of the 1995
second quarter, and operating margins improved to 9.1 percent from
1995's 8.7 percent. The increase in revenues and operating income
is attributed primarily to new business, including an eight-city
airline catering contract with a major airline being phased in
starting in March 1996.
CONVENTION SERVICES.
Convention Services second quarter 1996 revenues increased $61.3
million, or 46.6 percent, to $192.9 million from $131.6 million in
the 1995 second quarter, as the 1996 period benefitted from the
acquisition of Giltspur Inc. in October 1995. Excluding a one-time
gain on curtailment of certain postretirement medical benefits of
$3.5 million (pre-tax) in the second quarter of 1995, operating
income increased $5.5 million, or 41.9 percent, as a result of the
Giltspur acquisition and improved cost controls. On this same
basis, operating margins declined from 10.0 percent in the second
quarter of 1995 to 9.7 percent in the 1996 quarter, due to the
change in the mix of convention business as a result of the
addition of Giltspur.
TRAVEL AND LEISURE AND PAYMENT SERVICES.
Revenues of the Travel and Leisure and Payment Services companies
were $189.5 million for the second quarter of 1996, up $21.5
million (12.8 percent) from those of the 1995 second quarter.
Operating income increased 27.9 percent to $21.8 million. Dial's
payment services subsidiary continues to invest increasing amounts
in tax-exempt securities. On a fully taxable equivalent basis,
second quarter revenues and operating income would have been higher
by $4.7 million and $3.9 million in 1996 and 1995, respectively.
Operating margins on the fully taxable equivalent basis would have
been 13.6 percent in the second quarter of 1996, up from 12.2
percent in the 1995 second quarter.
On the fully taxable equivalent basis, payment services revenues
and operating income increased $2.8 million and $1.6 million,
respectively, over those of 1995's second quarter, primarily as a
result of increased investment income arising from greater fund
balances.
Duty Free and shipboard concession revenues increased $14.0 million
over those of the 1995 second quarter, due primarily to revision of
an airport concession contract in December 1995 as well as an
increase in the number of shipboard passenger days. Operating
income improved $700,000 as the revenue increases were largely
offset by additional expenses of the revised airport concession
contract.
Cruise revenues increased $2.1 million over those of the 1995
second quarter due to increased occupancy and higher revenue yield
per passenger day. Operating results increased $5.0 million over
that of 1995 due to the increased revenues and lower lease expense
resulting from the 1995 purchase of a cruise ship previously
leased.
Travel tour service revenues and operating income improved $3.7
million and $200,000, respectively, over those of the 1995 second
quarter. Revenues were augmented by tour operations acquired later
in 1995 as well as increased hotel occupancy and icefield revenues
in 1996. The 1995 second quarter included the expense of
terminating a small joint venture, while the 1996 second quarter
included off-season operating losses of the acquired tour
operations.
Food service companies revenues and operating income declined
$500,000 and $100,000, respectively, from those of the 1995 second
quarter due primarily to the closure of two fast food locations and
a lower occupancy rate at Glacier Park hotels caused by poor spring
weather.
UNALLOCATED CORPORATE EXPENSE AND OTHER ITEMS, NET.
There was an increase of $1.2 million over 1995 in these expenses.
INTEREST EXPENSE.
Interest expense increased $1.3 million over 1995's second quarter.
The effect of increased debt over 1995 levels was partially offset
by lower interest rates on floating-rate debt. The increased debt
levels were due to expenditures for acquisitions in 1995, including
Giltspur in October 1995 and purchase of the previously leased
Star/Ship Atlantic in July 1995.
INCOME TAXES.
Excluding the effects of the $12.0 million one-time provision for
estimated spin-off transaction costs without tax benefit, the
effective tax rate in the 1996 second quarter was 32.0 percent, up
from 29.7 percent in 1995.
COMPARISON OF FIRST SIX MONTHS OF 1996 TO THE
FIRST SIX MONTHS OF 1995:
Revenues for the first six months of 1996 increased $154.6 million,
or 15.5 percent, to $1.2 billion from $1.0 billion in the same
period of 1995. Excluding the 1995 second quarter one-time gain of
$3.5 million (pre-tax) on curtailment of certain postretirement
medical benefits in the convention services segment, 1996 six month
operating income of Dial's principal business segments increased
$15.0 million, or 19.1 percent, over that of the 1995 six month
period.
Income from continuing operations for the first six months of 1996
was $19.7 million, or $0.21 per share, after deducting a one-time
provision for estimated spin-off transaction costs of $12.0
million, or $0.13 per share. Income from continuing operations for
the first six month of 1995 was $26.5 million, or $0.30 per share,
which included the curtailment gain of $2.3 million, or $0.03 per
share, after-tax.
For the first six months of 1996, net income was $38.6 million, or
$0.42 per share, compared to net income of $51.3 million, or $0.58
per share, for the first six months of 1995. The 1996 and 1995 six
month periods included income from discontinued operations of $18.9
million and $42.5 million, respectively. See Note F of Notes to
Consolidated Financial Statements. The 1995 period also included a
one-time noncash charge of $17.7 million, or $0.20 per share, to
record the cumulative effect to January 1, 1995, of the initial
application of SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of."
There were 2.6 million more average common and equivalent shares
outstanding in 1996 than in 1995, due primarily to the effects of
stock option exercises and other issuances related to employee
benefit and dividend reinvestment plans.
AIRLINE CATERING AND SERVICES.
Six month revenues of the Airline Catering and Services companies
were $408.0 million, a $17.0 million or 4.4 percent increase from
those of the first six months of 1995, while operating income
increased $2.3 million or 8.0 percent to $31.3 million. New
business, including an eight-city airline catering contract with a
major airline, offset the adverse impact from severe weather
conditions in the Southeast and on the East Coast which hampered
operations and airline schedules during the first quarter of 1996.
Operating margins improved to 7.7 percent from 1995's 7.4 percent.
CONVENTION SERVICES.
Convention Services' first half revenues of $387.9 million were
$101.9 million, or 35.6 percent, greater than the 1995 six month
period, as 1996 benefitted from the acquisition of Giltspur in
October 1995. Excluding the one-time curtailment gain described
above, operating income increased 27.2 percent to $35.8 million, as
a result of the Giltspur acquisition and improved cost controls.
Operating margins decreased to 9.2 percent from 9.8 percent, as the
mix of convention business changed with the addition of Giltspur.
TRAVEL AND LEISURE AND PAYMENT SERVICES.
For the first six months of 1996, revenues of the Travel and
Leisure and Payment Services companies were $356.1 million, up
$35.6 million, or 11.1 percent, from those of the 1995 first half,
while operating income increased 23.4 percent to $26.5 million.
Dial's payment services subsidiary continues to invest increasing
amounts in tax-exempt securities. On a fully taxable equivalent
basis, revenues and operating income would have been $9.0 million
and $7.4 million higher in 1996 and 1995, respectively. Operating
margins on the fully taxable equivalent basis would be 9.7 percent
in the 1996 first half, up from 8.8 percent in the comparable
period of 1995.
On the fully taxable equivalent basis, revenues and operating
income of payment services increased $8.3 million and $3.5 million,
respectively, over those of 1995's first six months, due
principally to increased investment income arising from greater
fund balances.
Duty Free airport and shipboard concession revenues increased $27.7
million over those of the first half of 1995, due primarily to a
revised airport concession contract as well as an increase in the
number of shipboard passenger days. Operating income improved
$700,000 as the revenue increases were offset by additional
expenses of the revised airport concession contract.
Cruise revenues for the first six months of 1996 were $4.0 million
higher than those of 1995, as drydocks for ship repairs impacted
1995 revenues. Operating results improved $7.9 million due to the
increased revenues as well as lower lease expense resulting from
the 1995 purchase of two cruise ships previously leased.
Travel tour service revenues improved $6.3 million over the first
six months of 1995, while operating results declined $900,000. The
revenue increases are attributed to tour operations acquired in
1995. Operating results decreased due to the off-season fixed
expenses of the acquired tour operations.
Revenues and operating income of the food service companies for the
first half of 1996 were down $1.5 million and $1.6 million,
respectively, from the same period in 1995. A General Motors
strike in March 1996 temporarily closed plants served by Restaura's
contract foodservice operation. In addition, two fast food
locations were closed and poor spring weather affected the
occupancy rate at Glacier Park hotels.
UNALLOCATED CORPORATE EXPENSE AND OTHER ITEMS, NET.
These items increased $1.4 million over those of 1995.
INTEREST EXPENSE.
Interest expense for the first six months of 1996 increased $2.2
million over the first six months of 1995. The effect of increased
debt over 1995 levels was partially offset by lower interest rates
on floating-rate debt. The increased debt levels were due to
expenditures for acquisitions in 1995, including Giltspur in
October 1995 and purchases of the Star/Ship Majestic in February
1995 and the Star/Ship Atlantic in July 1995 (both ships were
previously leased).
INCOME TAXES.
Excluding the effects of the $12.0 million one-time provision for
estimated spin-off transaction costs without tax benefit, the
effective tax rate for the first six months of 1996 was 31.5
percent, up from 30.7 percent in the comparable period of 1995.
LIQUIDITY AND CAPITAL RESOURCES:
The Dial Corp's total debt at June 30, 1996 was $900.2 million
compared with $889.3 million at December 31, 1995. The debt-to-
capital ratio at June 30, 1996 and December 31, 1995 was 0.60 to 1
and 0.61 to 1, respectively. On a pro forma basis, after giving
effect to the Distribution of the consumer products business, total
debt is expected to be reduced by approximately $280 million as
discussed in Note A of Notes to Consolidated Financial Statements
which, together with the reduction of equity upon the Distribution,
would result in a debt-to-capital ratio of approximately 0.58 to 1
at June 30, 1996. Dial's short-term borrowings are supported by
unused commitments under a $500 million long-term revolving bank
credit agreement. Following the Distribution, Viad Corp's reduced
borrowings will be supported by unused commitments under a $400
million long-term revolving bank credit agreement.
Dial has received assurances from its credit rating agencies that,
following the Distribution, the senior debt of each of Viad Corp
and The Dial Corporation will carry investment-grade ratings.
Fluctuations in the balances of payment service assets and
obligations result from varying levels of sales of money orders and
other payment instruments, the timing of the collections of agents'
receivables and the timing of the presentment of such instruments.
Other than the Distribution of Dial's consumer products business
and the Disposition of its Canadian intercity bus transportation
business described earlier, there were no material changes in The
Dial Corp's financial condition nor were there any substantive
changes relative to matters discussed in the Liquidity and Capital
Resources section of Management's Discussion and Analysis of
Results of Operations and Financial Condition as presented in The
Dial Corp Annual Report to Stockholders for the year ended December
31, 1995.
PART II. OTHER INFORMATION
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual meeting of stockholders of The Dial Corp was
held May 14, 1996.
(b) Not applicable--(i) proxies for the meeting were solicited
pursuant to Regulation 14 under the Securities Exchange
Act of 1934, (ii) there was no solicitation in opposition
to management's nominees as listed in the proxy statement,
and (iii) all such nominees were elected.
(c) Matters voted upon at the annual meeting for which proxies
were solicited pursuant to Regulation 14 under the
Securities Exchange Act of 1934:
1. The election of Directors as follows:
Donald E. Guinn
---------------
Affirmative Vote................ 73,503,744
Against......................... 0
Withheld........................ 1,381,974
Abstentions..................... 0
Broker non-votes................ 0
Judith K. Hofer
---------------
Affirmative Vote................ 73,509,092
Against......................... 0
Withheld........................ 1,376,626
Abstentions..................... 0
Broker non-votes................ 0
Jack F. Reichert
----------------
Affirmative Vote................ 73,492,402
Against......................... 0
Withheld........................ 1,393,316
Abstentions..................... 0
Broker non-votes................ 0
2. The appointment of Deloitte & Touche LLP to audit the
accounts of Dial and its subsidiaries for the fiscal year
1996.
Affirmative Vote................ 73,397,929
Against......................... 1,223,319
Withheld........................ 0
Abstentions..................... 264,470
Broker non-votes................ 0
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit No. 11 - Statement Re Computation of Per Share
Earnings.
Exhibit No. 27 - Financial Data Schedule
(b) A report on Form 8-K dated June 13, 1996 was
filed by the registrant during the quarter for
which this report is filed. The Form 8-K
reported under Item 2 a) a proposal for a
strategic restructuring which would separate
Dial's consumer products and services
businesses into two publicly traded companies
and b) the disposition of Dial's 68.5 percent
ownership interest in the Canadian intercity
bus transportation business. Pro forma
financial statements reflecting the historical
financial position and results of continuing
operations as adjusted for reclassification of
the consumer products and Canadian intercity
bus transportation businesses as discontinued
operations were filed under Item 7(b).
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
THE DIAL CORP
(Registrant)
August 13, 1996 By /s/Richard C. Stephan
------------------------
Richard C. Stephan
Vice President-Controller
(Chief Accounting Officer
and Authorized Officer)
<PAGE>
<TABLE>
Exhibit 11
Page 1 of 2
THE DIAL CORP
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(000 omitted)
<CAPTION>
Quarter ended June 30,
----------------------------
Primary: 1996 1995
------------ ------------
<S> <C> <C>
Net income $ 14,118 $ 47,466
Less: Preferred stock dividends (281) (281)
------------ ------------
$ 13,837 $ 47,185
============ ============
Weighted average common shares outstanding
before common equivalents 88,712 86,562
Common equivalent stock options 2,199 1,904
------------ ------------
90,911 88,466
============ ============
Net income per share (dollars) $ 0.15 $ 0.54
============ ============
</TABLE>
<TABLE>
<CAPTION>
Quarter ended June 30,
---------------------------------------------------------
1996 1995
-------------------------- ----------------------------
Common Net Common Net
Fully Diluted: Shares Income Shares Income
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Weighted average common
and equivalent shares
and net income
per above 90,911 $ 13,837 88,466 $ 47,185
Common equivalent stock
options
------------ ------------ ------------ ------------
90,911 $ 13,837 88,466 $ 47,185
============ ============ ============ ============
Net income per
share (dollars) $ 0.15 $ 0.54
============ ============
</TABLE>
<PAGE>
<TABLE>
Exhibit 11
Page 2 of 2
THE DIAL CORP
STATEMENT RE COMPUTATION OF PER SHARE EARNINGS
(000 omitted)
<CAPTION>
Six months ended
June 30,
----------------------------
Primary: 1996 1995
------------ ------------
<S> <C> <C>
Net income $ 38,612 $ 51,277
Less: Preferred stock dividends (562) (562)
------------ ------------
$ 38,050 $ 50,715
============ ============
Weighted average common shares outstanding
before common equivalents 88,494 86,335
Common equivalent stock options 2,353 1,876
------------ ------------
90,847 88,211
============ ============
Net income per share (dollars) $ 0.42 $ 0.58
============ ============
</TABLE>
<TABLE>
<CAPTION>
Six months ended June 30,
---------------------------------------------------------
1996 1995
-------------------------- ----------------------------
Common Net Common Net
Fully Diluted: Shares Income Shares Income
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Weighted average common
and equivalent shares
and net income
per above 90,847 $ 38,050 88,211 $ 50,715
Common equivalent
stock options 84
------------ ------------ ------------ ------------
90,847 $ 38,050 88,295 $ 50,715
============ ============ ============ ============
Net income per
share (dollars) $ 0.42 $ 0.57
============ ============
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE DIAL CORP'S
FORM 10-Q FOR THE QUARTERLY PERIOD ENDED
JUNE 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
<MULTIPLIER> 1,000
<CAPTION>
Exhibit 27
THE DIAL CORP
FINANCIAL DATA SCHEDULE
<S> <C>
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> JUN-30-1996
<PERIOD-TYPE> 6-MOS
<CASH> 6,366
<SECURITIES> 0
<RECEIVABLES> 266,798
<ALLOWANCES> 16,206
<INVENTORY> 97,418
<CURRENT-ASSETS> 1,108,337
<PP&E> 1,004,372
<DEPRECIATION> 408,033
<TOTAL-ASSETS> 3,773,470
<CURRENT-LIABILITIES> 2,229,173
<BONDS> 822,938
<COMMON> 145,663
6,601
0
<OTHER-SE> 439,974
<TOTAL-LIABILITY-AND-EQUITY> 3,773,470
<SALES> 0
<TOTAL-REVENUES> 1,152,015
<CGS> 0
<TOTAL-COSTS> 1,058,491
<OTHER-EXPENSES> 29,913
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 28,708
<INCOME-PRETAX> 34,268
<INCOME-TAX> 14,556
<INCOME-CONTINUING> 19,712
<DISCONTINUED> 18,900
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 38,612
<EPS-PRIMARY> 0.42
<EPS-DILUTED> 0.42
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE DIAL CORP'S
FORM 10-K FOR THE YEAR ENDED DECEMBER 31,
1995 AND FROM THE DIAL CORP'S FORM 8-K
DATED JUNE 13, 1996 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
THE ANNUAL STATEMENTS THE YEARS ENDED
DECEMBER 31, 1995, 1994 AND 1993 HAVE BEEN
RESTATED TO REFLECT THE HISTORICAL
FINANCIAL POSITION AND RESULTS OF
OPERATIONS AS ADJUSTED FOR THE
RECLASSIFICATION OF THE CONSUMER PRODUCTS
AND CANADIAN INTERCITY BUS TRANSPORTATION
BUSINESSES AS DISCONTINUED OPERATIONS.
<RESTATED>
<MULTIPLIER> 1,000
<CAPTION>
Exhibit 27
THE DIAL CORP
RESTATED FINANCIAL DATA SCHEDULE
<S> <C> <C> <C>
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1994 DEC-31-1993
<PERIOD-END> DEC-31-1995 DEC-31-1994 DEC-31-1993
<PERIOD-TYPE> YEAR YEAR YEAR
<CASH> 16,133 24,514 48,727
<SECURITIES> 0 0 0
<RECEIVABLES> 176,393 155,349 146,456
<ALLOWANCES> 14,793 16,210 18,262
<INVENTORY> 84,462 70,226 58,789
<CURRENT-ASSETS> 1,122,085 947,626 831,223
<PP&E> 980,546 840,518 737,570
<DEPRECIATION> 383,058 337,122 309,382
<TOTAL-ASSETS> 3,737,761 3,262,332 2,740,038
<CURRENT-LIABILITIES> 2,235,169 1,833,476 1,473,329
<BONDS> 811,841 718,774 620,673
<COMMON> 145,663 145,663 72,832
6,597 6,590 6,586
0 0 0
<OTHER-SE> 402,506 409,430 396,856
<TOTAL-LIABILITY-AND-EQUITY> 3,737,761 3,262,332 2,740,038
<SALES> 0 0 0
<TOTAL-REVENUES> 2,072,051 1,902,853 1,441,822
<CGS> 0 0 0
<TOTAL-COSTS> 1,947,039 1,741,265 1,316,238
<OTHER-EXPENSES> 31,197 32,594 29,710
<LOSS-PROVISION> 0 0 0
<INTEREST-EXPENSE> 54,751 47,247 50,175
<INCOME-PRETAX> 36,435 79,468 43,797
<INCOME-TAX> 6,147 25,873 14,658
<INCOME-CONTINUING> 30,288 53,599 29,139
<DISCONTINUED> (29,151) 86,712 112,947
<EXTRAORDINARY> 0 0 (21,601)
<CHANGES> (17,696) 0 0
<NET-INCOME> (16,559) 140,311 120,485
<EPS-PRIMARY> (0.20) 1.61 1.40
<EPS-DILUTED> (0.20) 1.61 1.40
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND> THIS SCHEDULE CONTAINS SUMMARY FINANCIAL
INFORMATION EXTRACTED FROM THE DIAL CORP'S
FORMS 10-Q FOR THE QUARTERLY PERIODS ENDED
MARCH 31, 1996, SEPTEMBER 30, 1995, JUNE
30, 1995, AND MARCH 31, 1995 AND FROM THE
DIAL CORP'S FORM 8-K DATED JUNE 13, 1996
AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
THE INTERIM STATEMENTS FOR THE QUARTERLY
PERIODS ENDED MARCH 31, 1996, SEPTEMBER
30, 1995, JUNE 30, 1995 AND MARCH 31, 1995
HAVE BEEN RESTATED TO REFLECT THE
HISTORICAL FINANCIAL POSITION AND RESULTS
OF OPERATIONS AS ADJUSTED FOR THE
RECLASSIFICATION OF THE CONSUMER PRODUCTS
AND CANADIAN INTERCITY BUS TRANSPORTATION
BUSINESSES AS DISCONTINUED OPERATIONS.
THE SEPTEMBER 30, 1995 AND JUNE 30, 1995
INTERIM STATEMENTS HAVE ALSO BEEN RESTATED
TO REFLECT THE EARLY ADOPTION (ADOPTED IN
THE FOURTH QUARTER OF 1995) OF SFAS NO.
121, "ACCOUNTING FOR THE IMPAIRMENT OF
LONG-LIVED ASSETS AND FOR LONG-LIVED
ASSETS TO BE DISPOSED OF."
<RESTATED>
<MULTIPLIER> 1,000
<CAPTION>
Exhibit 27
THE DIAL CORP
RESTATED FINANCIAL DATA SCHEDULE
<S> <C> <C> <C> <C>
<FISCAL-YEAR-END> DEC-31-1996 DEC-31-1995 DEC-31-1995 DEC-31-1995
<PERIOD-END> MAR-31-1996 SEP-30-1995 JUN-30-1995 MAR-31-1995
<PERIOD-TYPE> 3-MOS 9-MOS 6-MOS 3-MOS
<CASH> 20,842 10,902 15,358 8,364
<SECURITIES> 0 0 0 0
<RECEIVABLES> 202,494 152,276 158,683 173,975
<ALLOWANCES> 15,988 14,806 15,710 16,220
<INVENTORY> 90,100 70,319 74,920 70,952
<CURRENT-ASSETS> 924,483 886,082 851,212 815,336
<PP&E> 989,829 952,255 888,228 879,565
<DEPRECIATION> 396,679 368,287 355,525 344,877
<TOTAL-ASSETS> 3,543,755 3,364,286 3,349,902 3,226,757
<CURRENT-LIABILITIES> 2,010,223 1,961,453 1,829,046 1,713,520
<BONDS> 822,733 728,338 750,347 765,079
<COMMON> 145,663 145,663 145,663 145,663
6,599 6,596 6,594 6,592
0 0 0 0
<OTHER-SE> 420,042 383,629 473,050 421,807
<TOTAL-LIABILITY-AND-EQUITY> 3,543,755 3,364,286 3,349,902 3,226,757
<SALES> 0 0 0 0
<TOTAL-REVENUES> 554,862 1,540,104 997,429 491,306
<CGS> 0 0 0 0
<TOTAL-COSTS> 521,263 1,455,758 915,399 460,862
<OTHER-EXPENSES> 9,027 22,857 16,548 8,879
<LOSS-PROVISION> 0 0 0 0
<INTEREST-EXPENSE> 14,327 40,618 26,521 13,415
<INCOME-PRETAX> 10,091 18,198 38,221 7,946
<INCOME-TAX> 2,977 3,820 11,721 2,722
<INCOME-CONTINUING> 7,114 14,378 26,500 5,224
<DISCONTINUED> 17,380 (35,142) 42,473 16,283
<EXTRAORDINARY> 0 0 0 0
<CHANGES> 0 (17,696) (17,696) (17,696)
<NET-INCOME> 24,494 (38,460) 51,277 3,811
<EPS-PRIMARY> 0.27 (0.44) 0.58 0.04
<EPS-DILUTED> 0.27 (0.44) 0.57 0.04
</TABLE>
