-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BH3212H4JxEr6205vhCpfFwIwnUXIrjEw8yRltg3QsEP85fxQwks8oF3E4cu2n6W Q277zxrsnp9P+c+v7zDRzA== 0000884219-96-000044.txt : 19960814 0000884219-96-000044.hdr.sgml : 19960814 ACCESSION NUMBER: 0000884219-96-000044 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 5 CONFORMED PERIOD OF REPORT: 19960630 FILED AS OF DATE: 19960813 SROS: NYSE SROS: PSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIAL CORP /DE/ CENTRAL INDEX KEY: 0000884219 STANDARD INDUSTRIAL CLASSIFICATION: SOAP, DETERGENT, CLEANING PREPARATIONS, PERFUMES, COSMETICS [2840] IRS NUMBER: 510374887 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-11015 FILM NUMBER: 96609991 BUSINESS ADDRESS: STREET 1: DIAL TOWER STREET 2: DIAL CORPORATE CNTR CITY: PHOENIX STATE: AZ ZIP: 85077 BUSINESS PHONE: 6022074000 MAIL ADDRESS: STREET 1: DIAL TOWER STREET 2: 1850 NORTH CENTRAL AVE CITY: PHOENIX STATE: AZ ZIP: 85077 10-Q 1 THE DIAL CORP 2ND QTR 10-Q 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. PART I. FINANCIAL INFORMATION Item 1. Financial Statements THE DIAL CORP CONSOLIDATED BALANCE SHEET
June 30, December 31, (000 omitted) 1996 1995 ----------- ----------- 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 ========== ==========
June 30, December 31, (000 omitted, except number of shares) 1996 1995 ---------- ---------- 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 ========== ========== See Notes to Consolidated Financial Statements.
THE DIAL CORP STATEMENT OF CONSOLIDATED INCOME
Quarter ended June 30, 1996 1995 (000 omitted, except per share data) ---------- ---------- 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 ========== ========== See Notes to Consolidated Financial Statements.
THE DIAL CORP STATEMENT OF CONSOLIDATED INCOME
Six months ended June 30, 1996 1995 (000 omitted, except per share data) ---------- ---------- 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 ========== ========== See Notes to Consolidated Financial Statements.
THE DIAL CORP STATEMENT OF RETAINED INCOME
Six months ended June 30, 1996 1995 (000 omitted) ---------- ---------- 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 ========== ========== See Notes to Consolidated Financial Statements.
THE DIAL CORP STATEMENT OF CONSOLIDATED CASH FLOWS
Six months ended June 30, 1996 1995 (000 omitted) ---------- ---------- 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 ========== ========== See Notes to Consolidated Financial Statements.
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:
June 30, December 31, 1996 1995 ----------- ----------- (000 omitted) 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 =========== ==========
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:
1996 1995 (000 omitted) ------------ ------------ 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 =========== ===========
NOTE E--Supplementary Information--Revenues and Operating Income
Quarter ended June 30, Six months ended June 30, ------------------------- -------------------------- 1996 1995 1996 1995 (000 omitted) ----------- ----------- ----------- ----------- 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 =========== =========== =========== =========== (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 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:
Quarter ended June 30, Six months ended June 30, ------------------------- -------------------------- 1996 1995 1996 1995 (000 omitted) ----------- ----------- ----------- ----------- 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 =========== =========== =========== =========== (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.
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). 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) EX-11 2 Exhibit 11 Page 1 of 2 THE DIAL CORP STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (000 omitted)
Quarter ended June 30, ---------------------------- Primary: 1996 1995 ------------ ------------ 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 ============ ============
Quarter ended June 30, --------------------------------------------------------- 1996 1995 -------------------------- ---------------------------- Common Net Common Net Fully Diluted: Shares Income Shares Income ------------ ------------ ------------ ------------ 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 ============ ============
Exhibit 11 Page 2 of 2 THE DIAL CORP STATEMENT RE COMPUTATION OF PER SHARE EARNINGS (000 omitted)
Six months ended June 30, ---------------------------- Primary: 1996 1995 ------------ ------------ 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 ============ ============
Six months ended June 30, --------------------------------------------------------- 1996 1995 -------------------------- ---------------------------- Common Net Common Net Fully Diluted: Shares Income Shares Income ------------ ------------ ------------ ------------ 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 ============ ============
EX-27 3
5 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. 1,000
Exhibit 27 THE DIAL CORP FINANCIAL DATA SCHEDULE DEC-31-1996 JUN-30-1996 6-MOS 6,366 0 266,798 16,206 97,418 1,108,337 1,004,372 408,033 3,773,470 2,229,173 822,938 145,663 6,601 0 439,974 3,773,470 0 1,152,015 0 1,058,491 29,913 0 28,708 34,268 14,556 19,712 18,900 0 0 38,612 0.42 0.42
EX-27 4
5 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. 1,000
Exhibit 27 THE DIAL CORP RESTATED FINANCIAL DATA SCHEDULE DEC-31-1995 DEC-31-1994 DEC-31-1993 DEC-31-1995 DEC-31-1994 DEC-31-1993 YEAR YEAR YEAR 16,133 24,514 48,727 0 0 0 176,393 155,349 146,456 14,793 16,210 18,262 84,462 70,226 58,789 1,122,085 947,626 831,223 980,546 840,518 737,570 383,058 337,122 309,382 3,737,761 3,262,332 2,740,038 2,235,169 1,833,476 1,473,329 811,841 718,774 620,673 145,663 145,663 72,832 6,597 6,590 6,586 0 0 0 402,506 409,430 396,856 3,737,761 3,262,332 2,740,038 0 0 0 2,072,051 1,902,853 1,441,822 0 0 0 1,947,039 1,741,265 1,316,238 31,197 32,594 29,710 0 0 0 54,751 47,247 50,175 36,435 79,468 43,797 6,147 25,873 14,658 30,288 53,599 29,139 (29,151) 86,712 112,947 0 0 (21,601) (17,696) 0 0 (16,559) 140,311 120,485 (0.20) 1.61 1.40 (0.20) 1.61 1.40
EX-27 5
5 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." 1,000
Exhibit 27 THE DIAL CORP RESTATED FINANCIAL DATA SCHEDULE DEC-31-1996 DEC-31-1995 DEC-31-1995 DEC-31-1995 MAR-31-1996 SEP-30-1995 JUN-30-1995 MAR-31-1995 3-MOS 9-MOS 6-MOS 3-MOS 20,842 10,902 15,358 8,364 0 0 0 0 202,494 152,276 158,683 173,975 15,988 14,806 15,710 16,220 90,100 70,319 74,920 70,952 924,483 886,082 851,212 815,336 989,829 952,255 888,228 879,565 396,679 368,287 355,525 344,877 3,543,755 3,364,286 3,349,902 3,226,757 2,010,223 1,961,453 1,829,046 1,713,520 822,733 728,338 750,347 765,079 145,663 145,663 145,663 145,663 6,599 6,596 6,594 6,592 0 0 0 0 420,042 383,629 473,050 421,807 3,543,755 3,364,286 3,349,902 3,226,757 0 0 0 0 554,862 1,540,104 997,429 491,306 0 0 0 0 521,263 1,455,758 915,399 460,862 9,027 22,857 16,548 8,879 0 0 0 0 14,327 40,618 26,521 13,415 10,091 18,198 38,221 7,946 2,977 3,820 11,721 2,722 7,114 14,378 26,500 5,224 17,380 (35,142) 42,473 16,283 0 0 0 0 0 (17,696) (17,696) (17,696) 24,494 (38,460) 51,277 3,811 0.27 (0.44) 0.58 0.04 0.27 (0.44) 0.57 0.04
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